European finance chiefs sought to bolster international confidence in Greece’s ability to cut its budget deficit by endorsing the country’s austerity plan and promising to ensure the government delivers on it.
“The European members of the G-7 will make sure it is managed,” French Finance Minister Christine Lagarde told reporters on Feb. 6 after meeting counterparts and central bankers from the Group of Seven in Iqaluit, Canada. European Central Bank President Jean-Claude Trichet said the ECB is “confident” Greece will cut its deficit below the limit of 3 percent of gross domestic product in 2012 from 12.7 percent.
The struggles of the Greek government to convince investors it can reduce the largest budget gap in the European Union without outside assistance forced their way on to the agenda of the G-7 talks after the MSCI World Index of stocks fell to its lowest in four months on concern of a default.
“I just want to underscore they made it clear to us, they the European authorities, that they will manage this with great care,” U.S. Treasury Secretary Timothy F. Geithner said in Iqaluit. “The European authorities gave us a very comprehensive review of the program now in place to address the challenges faced by the Greek economy.”
Greek bonds have tumbled in the past two months, pushing the yield on the country’s 10-year debt above 7 percent, the highest since 1999, the year the euro began trading. The premium investors charge to hold Greek 10-year bonds over the benchmark German bund has widened to 356 basis points, about 10 times what it was two years ago, and credit-default swaps on Greek debt rose to a record on Feb. 5.
Foreign-Exchange Markets
“No measure of official reassurance would be enough unless the nations in question retain credibility in financial markets, which remains to be seen,” Geoffrey Yu, a currency strategist at UBS AG in London, said in a note to clients. “We expect foreign-exchange markets to continue trading on a risk-averse tone.”
Borrowing costs have also jumped for Portugal and Spain, raising concern among policy makers that Greece’s woes will be shared elsewhere in Europe and overseas as governments try to rein in the record budget deficits they ran up fighting the worst global recession since World War II.
“This is a crisis that has been on the horizon for quite a while,” Harvard University Professor Niall Ferguson told Bloomberg Television, adding that Belgium and Italy are also at risk. “The contagion is going to spread.”
‘Intense Concern’
German Finance Minister Wolfgang Schaeuble said in Iqaluit that policy makers outside Europe “have the impression that Europeans will solve this problem and that they’re aware of the problem.” Canadian Finance Minister Jim Flaherty said the size of Greece’s economy means “in global terms it’s not of intense concern.”
Schaeuble said Greece still has to “pay a price” for running up the deficit and said the euro remains “stable.”
“Euro-area members of the G-7 gave an update on the efforts and commitments by the Greece government to ensure fiscal sustainability and economic reform,” Trichet said. “We said that the euro area would continue to monitor closely the implementation of this stability program.”
Greek Prime Minister George Papandreou has already pledged to step up budget cuts if needed and EU Monetary Affairs Commissioner Joaquin Almunia, who also attended the G-7 meeting, said last month that leaders have no “plan B” to help Greece.
Painful Measures
Most Greeks object to increases in the retirement age and fuel taxes even as a majority say painful measures are needed to reduce the budget gap, according to a Kappa Research poll for To Vima newspaper, published yesterday.
Harvard’s Ferguson said Greece’s economy will suffer as it tries to restore fiscal order with the resulting increase in unemployment triggering public strikes. Teachers, hospital workers and tax collectors already have called a 24-hour strike for Feb. 10 and private-sector workers will follow two weeks later.
“It’s going to be messy,” said Ferguson, who predicted Germany and France will provide financial aid if needed. “Suddenly the markets woke up and realized these weren’t credible fiscal policies.”
Apply for our overnight online cash advance loans from $100 to $2500, deposited instantly in your bank account.
Motor Trend magazine named the Ford Fusion mid-sized sedan as its 2010 Car of the Year on Tuesday. The award includes both the gas-only and hybrid versions of the Fusion.
This year’s Car of the Year was selected from among a field of 22 different cars all of which were newly introduced or, like the Fusion, substantially redesigned for the 2010 model year.
The Fusion was first introduced in 2006 but has been substantially upgraded and redesigned for the 2010 model year.
"It’s a credit to the [Ford] team to deliver a car in the hottest selling segment in the market and to make it absolutely competitive with the benchmarks," said Motor Trend editor-in-chief Angus McKenzie at an award presentation ceremony.
The benchmark cars in the mid-sized segment are generally considered to be the Toyota Camry and Honda Accord, which have been the two top-selling cars in America for years.
McKenzie praised the Fusion for the excellence of all versions of the car including the 4-cylinder, V6 and hybrid models.
"Another thing that impressed us was the attention to detail," McKenzie said cash til payday.
While the 2010 Fusion shares much of its engineering with the previous version, the car looked and felt like a completely new car, McKenzie said.
Motor Trend, one of the most influential automotive enthusiast magazines in the United States, also gives out SUV of the Year and Truck of the Year awards. The SUV of the Year was announced earlier with the award going to the 2010 Subaru Outback. The Truck of the Year will be announced in December.
Vehicles were judged on six different criteria: design, engineering, efficiency, safety, value and how well the vehicle fulfills its intended function.
The cars were put through track tests by Motor Trends editors. Then cars that were not eliminated in the track testing process were put through additional road tests.
Derrick Kuzak, Ford Motor Co. group vice president for product development credited the Fusion with "getting Ford back into the car market" in 2006 after the carmaker had become competitive only in large trucks and SUVs.
Banks in France, including non-French ones, will no longer be allowed to offer guaranteed bonuses to traders and other staff under new rules announced Nov. 5. The only exception is for signing bonuses for new employees, and they are limited to a maximum of one year.
Among other stipulations in the government decree, which takes effect immediately: Bonus payouts will be spread over at least three years, and will be clawed back either in part or entirely if the transactions on which the bonus was calculated turn out to be less profitable than thought at the time of the award. For large bonuses, at least 60% of the total must be deferred. And, for all variable bonuses, at least half of the total must be in stock rather than cash.
The French government says it’s pioneering a tougher system of bonus awards that reflect the spirit and letter of a deal struck at the recent G20 meeting in Pittsburgh. Finance Minister Christine Lagarde says she expects other countries to follow suit with their own set of similarly restrictive rules.
The French regulations were put together with input from the national bankers’ federation, which has been regularly cajoled over the past year by President Nicolas Sarkozy to end what he’s called "scandalous" bonus payments.
The new rules were announced jointly by Lagarde and Baudoin Prot, the head of the federation and chief executive of BNP Paribas, the top French bank. Prot didn’t mention Sarkozy’s browbeating, but said that France is acting as a result of lessons learned from the financial crisis.
Privately, some top French bankers are concerned that they’ll lose some of their best staff and have difficulty recruiting talented international executives under the new restrictions.
Prot said he was "very concerned" that other countries implement similar rules, singling out the U.S. and Britain. "It’s an important test of credibility" for the G20 that others follow suit and create a level playing field, he said.
How likely is that? Banks everywhere are under fire over bonuses, and regulators are stepping up pressure. U.S. Treasury Secretary Timothy Geithner recently described huge payouts to executives at companies that were only a few months ago on the brink of failure as "deeply offensive" to the public.
In Britain, Adair Turner, the top regulator, is pushing banks to use profits from the recent market bounce to boost reserves rather than make big, and politically unpalatable, payouts to staff. In Germany, the government is also pushing for restraint.
But market pressure is market pressure, and not every country is as willing or as quick to regulate as France.
The new rules probably won’t reduce the public controversy over bonuses in France, either. That’s because, starting with this year’s payouts, banks have a new obligation to disclose the total size of the pot, the number of beneficiaries, and the division between fixed and variable payments. In other words, plenty of fodder for the critics.
The real estate investment manager who led the California Public Employees’ Retirement System, the nation’s largest pension fund, into a money-losing land venture has resigned as an adviser to the fund, according to news reports.
Victor MacFarlane, chairman and chief executive of MacFarlane Partners, “has terminated” his relationship with the $200 billion pension fund, the Wall Street Journal reported on Saturday.
A spokeswoman for MacFarlane said his resignation was voluntary and that he would continue advising Calpers through the end of the year, the Journal reported.
MacFarlane’s resignation was first reported by Reit Zone Publications.
Representatives for MacFarlane Partners and Calpers could not be reached to confirm the reports on Saturday afternoon.
MacFarlane Partners Inc is a real estate investment management firm in San Francisco that manages $10 billion in assets for some of the world’s largest pension plans and institutions, according to its website.
The firm came under fire for a $970 million investment it managed for Calpers into LandSource Communities Development, the Journal said.
LandSource filed for bankruptcy in 2008, about 18 months after Calpers had bought into the 15,000-acre (6100-hectare) tract outside Los Angeles, Calpers said in a 2008 press release.
Calpers had invested in the development through its investment partner, MW Housing Partners, which was jointly managed by MacFarlane Housing and Weyerhaeuser Realty Investors, the release said.
MW Housing held a 68 percent interest in LandSource, whose holdings were hit hard by the California real estate bust, it said.
The separation comes as Calpers examines its relationships with private equity firm Apollo Global Management and other outside money managers.
Calpers said earlier this month that its probe centers on around $50 million in payments that outside managers made over a five-year period to ARVCO Financial Ventures LLC, a firm headed by former Calpers board member Al Villalobos, to win the pension fund’s business.
Firms ranging from airlines to agribusiness would be exempt from new rules on compulsory clearing of derivatives transactions under a bill in Congress aimed at tightening oversight of the financial system.
The draft bill from Representative Barney Frank, chairman of the House of Representatives Financial Services Committee, was being circulated among lawmakers on Monday amid concern that an effort to regulate the over-the-counter (OTC) derivatives market could hurt nonfinancial firms that use it.
The $450-trillion OTC derivatives market, used to hedge against risk and speculate on prices, is widely blamed for amplifying the 2008-2009 financial crisis and authorities worldwide are debating approaches to regulating it.
Nonfinancial firms ranging from rural electric cooperatives to airlines have voiced concerns about capital and liquidity constraints they might face if they too had to front collateral to meet margin requirements involved in centralized clearing.
Frank’s bill exempts derivative swaps from new rules requiring centralized clearing, meant to bring more visibility to the market, if “one of the counterparties to the swap is not a swap dealer or major market participant.” Exempted transactions would have to be reported to authorities, under the bill.
In late August, Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler, whose agency will play a key role in policing OTC derivatives, proposed more OTC derivatives face mandatory clearing, including non-financial firms or so-called end users.
Frank said last week his committee will deal in mid-October with OTC derivatives legislation. He predicted the panel would move a bill to the House floor by the end of the month. His committee will hold a public hearing on Wednesday on reform of the OTC derivatives market. Witnesses will include Gensler.
The Senate has not yet taken up the issue, on which debate is likely to continue for several months.
In addition to exempting some end users from compulsory clearing, the Frank bill would empower regulators to ban swaps deemed “abusive” or bad for market stability and participants.
AGGREGATE DATA TARGETED
Further, it would require the CFTC to make public aggregate data on swap trading volumes and positions. It would authorize the CFTC to set position limits on commodity contracts, and on swap contracts “that perform or affect a significant price discovery function,” said a bill summary obtained by Reuters.
In deciding if a swap has a price-discovery function, the CFTC would have to look at price linkage, arbitrage and other factors, while the agency could exempt any swap or transaction from position limit requirements, the summary said.
The Securities and Exchange Commission (SEC), another key regulator, could set limits on the size of positions in any security-based swap, with similar latitude on exemptions.
The SEC would also have to publicize “aggregate data on security-based swap trading volumes and positions.”
The Frank draft begins to narrow the terms of a months-old debate about how to categorize portions of the sprawling OTC derivatives market and what to do with each category.
DETROIT — Chrysler Group LLC is getting back into the leasing business in an effort to boost sales, but don’t expect a return to the inexpensive lease deals of the past.
The automaker announced in a statement Wednesday that it will resume leasing for all 2010 Chrysler, Dodge and Jeep models starting today, and it will offer some special deals on selected vehicles through Sept. 30.
Chrysler brand CEO Peter Fong said in the statement that leases will give more options to consumers and will be competitive with the U.S. auto market low interest rate personal loans. The leases will be underwritten by Chrysler’s new preferred lender, GMAC Financial Services.
But the market isn’t as competitive as it once was. As recently as last summer, automakers were using cheap lease deals to clear dealer lots of unwanted cars and trucks.
But now most automakers have cut factory production to match lower sales, and most have record low inventories.
Dubai World, a Dubai government holding company, filed a lawsuit in the United States this week against the former head of a subsidiary it accuses of fraud costing the United Arab Emirates firm millions of dollars.
“This complaint is based on a sinister plan that was orchestrated and carried out by defendant Herve Jaubert,” said the court document. The suit was filed on Tuesday.
Jaubert was the chief executive of Dubai World subsidiary Exomos, which was established in 2004 to design and manufacture submarines, Dubai World said in a separate statement.
“Dubai World is fully confident that the U.S. court will come to the same conclusion as a Dubai court did in April 2009: that Mr. Jaubert misrepresented his ability to design and build submarines to obtain his position as CEO of Exomos, and then used that position to steal millions of dollars from Dubai World,” the firm said in the statement.
“The company is accusing him of fraud, theft and related charges linked to his time as CEO of Dubai World subsidiary Exomos,” it said, adding that the lawsuit was being filed in Florida because that is where Jaubert had fled to from the United Arab Emirates (UAE).
William Hess, a Florida lawyer representing Jaubert, said the allegations were false free credit report and score.
“I think that people are going to find it hard to believe that this multibillion corporation … was duped by Herve Jaubert and it took them years to figure it out,” he said by telephone from Stuart, Florida.
Hess said the lawsuit was little more than a “defensive” move, following Jaubert’s own suit against Dubai World, filed in a Florida state court last week.
Jaubert’s suit alleges Dubai World made promises that it did not keep in addition to false imprisonment, abuse of process and defamation.
Jaubert currently lives in the United States and is about to publish a book, “Escape From Dubai,” about his time at Exomos. (escapefromdubai.com).
Dubai, one of seven emirates in the UAE federation, has been hit badly by the financial crisis with many government and private sector firms facing financial straits.
Dubai World in June hired AlixPartners, turnaround experts advising on General Motors’ GM.UL bankruptcy, to help restructure the group as it faces $59 billion in liabilities.
(Writing by Raissa Kasolowsky; editing by Karen Foster)
Dealmakers are not known for their patience. Yet that’s what’s needed more than anything else a year after Lehman’s collapse.
It takes months longer to close a deal, the number and size of transactions has shrunk, and mergers and acquisitions fees have plummeted. Much of the M&A work now is either advising failed companies on restructurings or organizing fire sales.
“The nature of M&A has changed fundamentally,” said Antonio Weiss, Lazard global head of M&A. “On one end of the spectrum, there’s an increase in volume of distressed activity and on the other, well-capitalized corporations have a chance to revisit acquisition ideas at lower values.”
Transformational deals have been few and leveraged buyouts are just not there — yet. But there are bright spots, such as this week’s unsolicited bid by U.S. firm Kraft Foods Inc for the UK’s Cadbury Plc, and confidence has started to return.
“Many CEOs feel we’ve bottomed,” said James Stynes, global chairman of M&A at Deutsche Bank. “We are starting to see a pickup that could make 2010 more positive than people originally thought.”
That’s a sea change from last year.
“There were certain points over the last year when it was equifax free credit report… so incomprehensible to go talk to a board about a deal,” said one senior dealmaker who declined to be named. “It was just not a topic that belonged in the board room.”
CEOs had bigger fish to fry — plummeting share prices, hard-to-get credit and ballooning inventories.
“Last year was a very significant event that caused everyone to be very cautious, said Robert Kindler, global head of M&A at Morgan Stanley. “The real focus that companies have had this year hasn’t been M&A, but looking at their balance sheets.”
The transformed deals landscape caused a musical chair dance in the all-important “league tables” or deal rankings. The four top banks so far this year are Morgan Stanley, Goldman Sachs, Citigroup and JPMorgan: the same four as in 2008 but in a different order.
For graphics on the top 20 M&A advisors and fees:
here
here
BACK TO BASICS
Before the crisis hit, Wall Street was in “product mode,” said John Studzinski, global head of the advisory group at private equity firm Blackstone.
Missouri’s struggling dairy farmers are asking Gov. Jay Nixon for an infusion of cash to help keep them in business.
The Missouri Dairy Association met with the governor this week to ask for a $16.5 million emergency payment from federal stimulus funds to help the state’s roughly 2,000 dairy producers.
"We think it would be a good investment for the state," said Larry Purdom, chairman of the association and dairy farmer from Purdy, in the southwestern part of the state. "We’re losing money every day."
Dairy farmers are trying to cope with what they describe as the worst crisis to hit the industry in decades. With a rise in feed and fertilizer costs last year, along with slowing demand, dairy farmers are now losing as much as $4 or $5 per hundred pounds of milk. Prices per hundred pounds are roughly $11, while production costs are about $15. Farmers were fetching last year about $20 per hundred pounds, or hundredweight.
"It’s an unprecedented time for them, with the combination of low milk prices and high feed costs," said Scott Brown, a livestock and dairy analyst with the Food and Agricultural Research Policy Institute at the University of Missouri. "It is indeed a crisis."
Dairy farmers in Missouri, Illinois and other dairy-producing states are scrambling to pay their bills.
Credit has shriveled up, and some farmers, particularly those new to the industry, are unable to find cash to keep their operations running. Some are selling or retiring their herds and shuttering their businesses. And in the next couple of months, farmers will have more bills for fertilizing, seeding and harvesting.
"We’ve got a lot of expenses in the fall," Purdom said. "The banks are saying no, and I don’t blame them."
The crisis comes after four years of increased demand for American milk products — usually sold as powdered milk or cheese — from overseas. The global appetite for American milk products shot up, particularly in Asian countries, as drought conditions in dairy powerhouses Australia and New Zealand dried exports to a trickle. Prices for American products soared.
"Dairy farmers have gone from 2007 and 2008, with record prices, to this," said Jim Fraley, manager of the Illinois Milk Producer’s Association. "It’s tough no fax payday loans."
Troubles began last year when grain and feed prices rose, pushed up by high energy costs and demand for ethanol. Then the global economy started slowing and demand shrank. Meanwhile, in recent months, supply from Australia and New Zealand has come back into the export market, while American producers, who started producing more milk to meet global demand find themselves with an oversupply.
"We haven’t been in the world market for several months now," Brown said.
Domestic demand has slackened, too. Food manufacturers, anxious to lower costs, have turned to milk substitutes or have reformulated products, according to Brown, while fewer people are hitting their local cheese-heavy pizza joints.
For Midwest dairies, the slowing demand creates an added logistical problem. "Milk isn’t something you can store under the couch," said Fraley, "and all the powder plants are in California. We have to make it into cheese or ice cream."
To help, several states, including Arkansas, Connecticut, Louisiana, Maine and Vermont, have funneled cash to their dairy farmers. In Illinois, farm advocates have asked the state Department of Agriculture to buy some of the surplus, though the department has not taken action, Fraley said.
In late July, the U.S. Department of Agriculture announced that it would increase the amounts paid for dairy products through its Dairy Product Price Support Program, providing some relief.
But farmers say they need more help — fast.
Jon Hagler, director of the state’s Department of Agriculture, said Thursday that he’s sympathetic to the struggles of the state’s dairy farmers but wants to see what impact the federal action will have first. The governor’s office did not respond to a request for comment Thursday.
The funds requested would translate into about $2 per hundredweight of fluid milk, which could keep farmers in business long enough for prices to recover, analysts say.
"Two dollars won’t cure the crisis," Brown said. "But if that gets them another 60 or 90 days down the road, where we can see some rebound in milk prices, that’s what we’re hoping for."
U.S. criminal authorities are probing whether Corey Ribotsky, Managing Member of NIR Group, a Roslyn, New York hedge-fund, defrauded investors about their returns and the holdings of his various funds, the Wall Street Journal reported, citing people familiar with the matter.
The people told the paper that prosecutors from the U.S. Securities and Exchange Commission, Federal Bureau of Investigation and the U.S. attorney’s office in Brooklyn are looking at whether Ribotsky lied to investors as stock prices fell during the credit crisis.
The paper said the authorities have not accused Ribotsky of wrongdoing.
Ribiotsky has said he has $770 million under management, according to the paper life insurance rates.
Ribotsky’s lawyer declined to comment to the paper, saying the hedge fund manager and NIR “have no knowledge of any criminal investigation and have not been contacted by any authorities.”
Spokesmen for the SEC, FBI and U.S. attorney’s office declined to comment to the paper.
U.S. authorities could not be reached for comment by Reuters outside normal business hours, while a spokesman for NIR in Singapore was not immediately available for comment.
(Reporting by Ajay Kamalakaran in Bangalore; Editing by Anshuman Daga)
Powered by WordPress -- XHTML 1.0