Tuesday, November 2, 2010

Retail regulator to watch zoning, prices in India

To ensure orderly growth of malls in cities while protecting the interests of mom-and-pop shops and organised retailers, the government is planning to set up a retail sector regulator. According to a consultation paper floated by the department of consumer affairs, there would be a two-tier regulatory structure – at the central and state levels – on the lines of the electricity sector.
This is because development of malls and other retail outlets fall under the jurisdiction of state governments with clearances mandatory from local municipal authorities. The department has sent the consultation paper to state governments for comments.
Efforts to set up a retail regulator come at a time when the government has floated a consultation paper on whether 100% foreign direct investment should be allowed in multi-brand retail. Currently, FDI in retail sector is haphazard, lacking in uniformity. While no FDI is allowed in multi-brand retail, it is permitted up to 51% in single brand retail and 100% in cash and carry segment. Multi-brand retail, however, is the most lucrative segment where FDI has been opposed by various political parties on concerns that small grocery shops would be wiped out, leading to mass unemployment.
According officials, the paper proposes that state-level regulators earmark zones in various cities for setting up hyper markets and super markets. This would ensure that there are separate zones for them and local kirana shops. Regulators would also broadly oversee pricing of products so that small retailers do not fall prey to predatory pricing by the bigger ones.

UK Supermarket sales hit by economy fears

Tesco, which shocked the market last week with news of the surprise departure of its chief executive, Sir Terry Leahy, was expected to say that like-for-like sales over its first quarter rose by between zero and 1.5pc, according to analysts’ forecasts. Some analysts have speculated that the figure could even fall. Clive Black, retail analyst at Shore Capital, said that he expects sales to be “flattish”, between -0.5pc to 0.5pc.
Meanwhile, Sainsbury’s is expected to say on Wednesday that like-for-like sales, including VAT, rose by between 0.5pc and 1pc over its first quarter. Excluding VAT, like-for-like sales are expected to have fallen by between 0.3pc and 0.5pc, according to some analysts’ forecasts.
Supermarkets across the board have been hit recently by rising petrol prices and the removal of food inflation from the market.
Just a year ago Tesco was seeing like-for-like sales growth of around 4pc while Sainsbury’s was seeing like-for-like sales growth of 7.8pc.
Bank of America Merrill Lynch said in a note to clients last week that Tesco and Sainsbury’s are “living with thin UK like-for-like sales”.
It said: “After visiting stores and having assessed the UK consumer outlook we reset our forecasts assuming a 1pc like-for-like industry growth for the remainder of 2010 and sub-par growth in 2011. Critically, we believe that the market will remain tough but rational and hence continue to see value in the UK grocers.”
It added, however, that a recent dip in petrol prices and the football World Cup could provide some relief to the chains.
“Ebbing comparative figures and easing petrol prices will help like-for-like sales as, short-term, as will the World Cup. Yet with an austere Budget well-flagged and the consumer finally taking note, we believe consumption will remain weak and, some may argue, will decline even for food retail,” the bank said.
Many observers believe that the slowdown should not cause too much concern and is an inevitable consequence of inflation coming out of the market. Consumers need food, no matter what is happening with the overall economy and inflation, analysts say.
Food retailers are, therefore, very defensive stocks for investors, it is argued.
In a note to clients last week, Deutsche Bank said: “We expect Sainsbury’s management will reassure on the profit outlook and believe it is unlikely that we get any other significant news in the statement given that the company fully updated the market at the time of its full-year results a month ago.”

3 billion baht to develop Thailand’s another top mall

Central Pattana Plc (CPN), Thailand’s largest retail developer, is spending 3 billion baht to develop its new shopping mall in Surat Thani, which is scheduled to be completed in April 2012. Significantly, the company’s second biggest retail complex in the South after Central Festival Phuket, it would create 3,000 to 4,000 jobs for local communities, said president and CEO Kobchai Chirathivat.
The shopping mall will be built on a 62-rai site and offer 120,000 square metres of retail space, similar in size to CentralPlaza Chon Buri. It will include Robinson Department Store, Tops Supermarket, PowerBuy, B2S SuperSports, Office Depot, cinemas, 60 restaurants and 350 shops.
“We had been looking for chances to build a shopping project in Surat Thani for around 10 years but we could not find a good location until now. Surat Thani has high potential as it’s a hub for transport and many tourists travel from there,” he said. CPN is looking to attract almost one million people living within a a 90- kilometre radius from the centre as target shoppers. In addition, up to 2.8 million people in neighboring provinces such as Nakhon Si Thammarat, Ranong, Krabi, Chumphon and Phangnga are expected to visit the complex.
“In the past, shoppers just wanted the convenience of everything under one roof. What they now want is much more,” said Mr Kobchai. “In addition to convenience, they want more rewarding experiences when they visit the centre. The way we are doing that in Surat Thani is to give the whole development a resort-like atmosphere.”
CPN expects 80% of the retail space will be booked by August next year. The mall is expected to attract around 70,000 people daily.
The company also plans to develop a hotel on the land next to CentralPlaza Surat Thani in the future to support visitors of the convention centre in the shopping mall.
CPN shares closed yesterday on the Stock Exchange of Thailand at 24.20 baht, down 80 satang, in trade worth 52.57 million baht.

Indian Chicken feet dining delicacy in China

Guess what is discarded as waste in India and shipped thousands of miles to land up as a delicacy on dining tables in China? Chicken feet!
The feet, claws and all, as a gastronomical delight might sound comical to Indians who relish chicken legs but definitely nothing below. But hatcheries in Mangalore have found a thriving market for it in places like China, Hong Kong and Vietnam. A prominent hatchery in this coastal town in Karnataka exports 25 tonnes of chicken feet to the Far East every month.
Popularly known as phoenix talons in China, chicken feet is sold as street food, often deep fried, in other parts of Asia as well. It is a culinary delicacy in some regions, most notably in China and South Africa where every part of the bird is utilized to its fullest potential.
Lester D’Souza, managing partner of Souza Hatcheries, told TOI that they had started exports last year, though inquiries were made four years back. “Last year, a person came here, looked at the hatchery and gave us the specifications for the product to be exported,” he said. Neatly cut and cleaned without using detergent or chemicals, the chicken feet are shipped out in freezer units used for fish exports, once a month to China, Hong Kong and Vietnam.
Chinese restaurants in India don’t use chicken feet simply because desi palates can’t take claws on the plate. When asked, they said they never used feet for stock and they get their chicken meat without feet.

Leap of faith gives Chinese expats spiritual satisfaction

Chinese laborers working on the Haramain Rail project have spoken of their joy after embracing Islam.
There are 4,600 Chinese nationals working on the scheme, which when completed will link the holy cities of Makkah and Madinah via Jeddah and Rabigh. Among them, 370 are already born Muslims.
Last year, over 600 of them embraced Islam, causing controversy with a section of the international media slamming it as a public relations stunt.
At the time, there were calls from sections of Saudi society to replace the non-Muslim workers, who represent the majority Han community in China, with minority Muslims.
Hamza, 42, said he embraced Islam after he saw the Holy Kaaba for the first time on Saudi television.
“It had an electrifying effect on me. I watched the live transmission of prayers at the Grand Mosque and the circumambulation of the faithful around the holiest shrine in Islam,” he said.
“I asked my Muslim colleague the other day about all these things. He took me to the Call and Guidance Office for Foreigners (Jaliyat) at our company site, where I had the opportunity to learn about the various aspects of Islam.”
Hamza said he feels happier and more relaxed now that he has become a Muslim. Fifty-one-year-old Ibrahim is another Chinese worker who embraced Islam in September last year.
“While we were in China, we did not have any opportunity to learn about Islam. When I reached Makkah, I was very impressed by the behavior of many of its residents. Their equal treatment of Muslims and non-Muslims had a big impact on me,” he said.
Ibrahim, who is working with the maintenance section of the state-owned Chinese Railway Company, says that he, like Hamza, became a Muslim when he saw the Kaaba.
Abdullah Al-Baligh, 51, was inspired to embrace Islam after seeing the positive changes in his colleagues. “Six months after I arrived in Makkah, I noticed that my colleague, who was already a Muslim, had totally changed and his behavior and conduct were exemplary. I realized that Islam was the guiding force behind these changes,” he said.
“When I asked him, he told me that he had known nothing about the religion while in China. Now, he had a proper understanding of Islam and wanted to become more of a role model.”
Younus, another worker, says that he became a practicing Muslim only after his arrival in Makkah.
“Islam in China is lacking. I realized about this only after coming over to the Kingdom. Many of my Muslim colleagues and I only truly learned about Islam in the holy city, thanks to the commendable work of the Call and Guidance Office,” he said.
Zaid Al-Osaimi of the Jaliyat office in Al-Sharaie district in Makkah told Arab News that he sought permission from the Chinese Railway Company to open an office at their site.
“The company officials responded positively to our request. We erected two tents inside the site. Religious classes are being held in one of these tents while the second one is meant for recreational purposes as well as allowing our workers and the laborers to get together,” he said.
“The office holds open meetings on every Thursday. We continue to conduct study classes to teach the fundamental principles of Islam as well as helping workers memorize the Holy Qur’an,” he said.
He added that there has been a tremendous response from the Chinese workers, while the office has also been distributing Chinese translations of the Holy Qur’an as well as Islamic books and booklets free of charge.

Greenland happy as the new oil frontier

The rain was tipping down today on the cluster of multicoloured buildings in the heart of the capital of Greenland but there was no dampening the spirits of Nuuk’s residents following news that hydrocarbons had been found.
The rain was tipping down today on the cluster of multicoloured buildings in the heart of the capital of Greenland but there was no dampening the spirits of Nuuk’s residents following news that hydrocarbons had been found.
“We have always believed there was oil and gas off this island. We been waiting for something like this to happen for decades,” said Kenni Rende, a 44-year-old shop assistant at the town’s only electronics shop. “I hope it will provide income for Greenland so that we can finance our way to becoming a more independent nation,” he added.
The mood of elation was shared at the Bureau of Minerals and Petroleum, one block away, where Henrik Stendal was preparing for a presentation in a small room packed with maps and rocks.
“It is exciting. This amounts to an appetiser for all oil companies to come here and do more exploration, seismic and data,” said Stendal, who is the head of the bureau’s geology department.
Greenland’s government had been hopeful that Cairn Energy had found signs of hydrocarbons but the ultra-secretive nature of the business – and its extraordinary importance – meant the British oil company had told no one in advance.
Bill Gammell, Cairn’s chief executive, said there were signs of oil and gas bearing sands, but the hole still needed to be drilled to its target depth. Stendal said it was highly encouraging given the six wells drilled over the last 40 years had been completely “dry”. A one-in-seven hit rate would mark this area out as exceptional; the North Sea equivalent is around one in 30.
It reinforces the views of the US Geological Survey which said last year that it believed there could be 90bn barrels of oil and 50tn cubic metres of gas in the wider Arctic region.
Enormously positive then for a Greenland desperate to move away from dependence on fishing, tourism and handouts from the Danish state which has sovereignty over the world’s largest island. But nervous moments for Greenpeace and other environmentalists keen to keep one of the Earth’s last wilderness areas away from the oil industry.
Whatever the eco-warriors want, Big Oil is coming and the Cairn discovery could not be better timed.
In around two weeks time the Bureau of Minerals and Petroleum will announce the winners of a new licensing round.
Stendal would not say who they were but he admitted that most of the leading lights – that means the likes of ExxonMobil and Shell – are queuing up to drill in Baffin Bay off the west of Greenland.
And the find will heat up interest in two new licensing rounds in other parts of the country that are already being lined up to take place in 2011 and 2012.
It is not just Greenland that it keen to explore in an Arctic region whose natural environment is already being eroded by global warming.
Iceland, Norway and Russia are also looking at handing out exploration rights, although BP’s blowout in the Gulf of Mexico has sent a ripple of anxiety through the west’s safety authorities.
Cairn and the Greenland authorities claim the water depths being drilled by the Stena Don and Stena Forth floating rig and drillship are less than one-third of the 1,500 metres of the Gulf.
They also point out that there are 16 vessels working on standby around the Cairn well, T8-1, and six of them are specifically given over to guiding icebergs out of the way.
Stendal says Greenland drilling regulations are tougher than those enforced in the North Sea, and far stricter than the lax rules of the Gulf.
He is confident that all is being done to ensure that there can be no recurrence of the Deepwater Horizon blowout in freezing waters where oil would break down much more slowly than in the warm currents off Louisiana.
But this will not reassure Greenpeace, which has taken its ship Esperanza into the region to highlight its concerns.
The environmental group said the move was wrong, not least because Cairn was a relatively small company with no experience of drilling in harsh conditions and had made its name discovering onshore oil in India.
“We think it is completely irresponsible for Cairn to proceed with these operations when the US, Canada and Norway have imposed tough new restrictions on deepwater drilling until lessons can be learned about what exactly went wrong in the Gulf,” said Mads Flarup Christensen, secretary general of Greenpeace Nordic. “Drilling in these kinds of waters is very sad. It shows the way the oil industry is being forced into the last frontiers by trying to exploit tar sands and deep water.”
Cairn management recently visited the Greenland capital to reassure the public that it would stick to the highest possible safety standards in line with an agreement signed with the government. “Security has always been the most important in everything we do and so we want it to continue,” commercial director Simon Thomson said.
He does not need to convince Stendal who says that Greenpeace is “not welcome” by the people of Greenland, who see the organisation as a threat to their future economic wellbeing. “You cant live on fish alone,” he says dryly.
But at the Nota Bene electronics shop, Rende is not quite so equivocal: “We had heard of the catastrophe in the Gulf of Mexico but I hope the [Cairn] security makes us safe.”

ATM fraud haunts State Bank of India clients

Chandigarh : said it is yet to make any headway in its investigations into five cases of fraudulent ATM withdrawals here during the last one week, which have created a panic among customers about the safety of their money.
“We are working on it... to find out how this thing (the fraud) has happened only with SBI customers,” a senior SBI official said on condition of anonymity, without divulging further information.
However, he said that the bank asked its customers, who used the ATMs where the fraud took place, to change their Personal Identification Numbers (PIN) in order to prevent a repeat incident.
In the past one week, SBI customers have lost over Rs 3 lakh in a series of frauds involving withdrawal of money using “cloned ATM cards”, even though the customers had the real ATM cards with themselves.
SBI officials admit this is the first time such a fraud has occurred at the bank.
Significantly, SBI has over one lakh customers in the city in 40 branches and it has 40 ATMs located in various parts of the city.
One of the victims, A K Arora, who is a Director at the Bureau of Indian Standards (BIS), said he was shocked to know that Rs 80,060 was withdrawn from his joint account, though no such money was withdrawn by him or his wife from the account.
“I came to know that a sum of Rs 80,060 was withdrawn at different intervals through ATM of sector 37-D, Sector 30 and Sector 32 on August 18 and August 19,” he said.
Arora, who lodged a complaint with the police, today met SBI bank officials and submitted his complaint to them.
“I asked SBI officials how the money can be withdrawn when ATM card was with his wife. I also told them that the bank’s credibility was at a stake with the withdrawal of money through cloned ATM cards and the bank should do something at the earliest,” he said.
Arora claimed that when he went to SBI’s office, he found a couple of customers getting their ATM cards blocked in the wake of fraudulent withdrawals.
According to police, unscrupulous people insert a card reader device in the ATMs slot and place a micro-camera behind the ATM to record the password entered by the card-holder. On the basis of the stolen information, they make a cloned ATM card and withdraw money.
With a spate of such incidents, SBI customers are worried about the safety of their money. “These incidents have forced me to check my balance in the account on daily basis to find out whether my money is saved or not,” said Renuka, a SBI customer.

Shortcomings at Jeddah airport blasted

The National Society for Human Rights (NSHR) has criticized services provided to pilgrims and visitors at King Abdulaziz International Airport’s North Terminal.
A four-man delegation from the society’s Makkah province branch on Wednesday went on a five-hour tour of the terminal, which is used by foreign airlines, and noted at least 20 instances of bad service.
The delegation was assessing the performance of the passport police, Umrah companies and the health control center there.
The visitors added that conditions in the terminal were unsuitable.
NSHR supervisor for Makkah province Dr. Hussein Al-Sharif headed the delegation, which also included Talal Qisti, Maatouq Al-Abdullah and Hussam Malki.
The delegation said it would submit a comprehensive report on their findings to airport authorities.
Al-Sharif told Arab News that the services provided to pilgrims and visitors at the North Terminal were not up to scratch and did not match up to the standards expected in Saudi Arabia.
He said the delegation talked to a number of Chadian and Malaysian pilgrims who complained that they had been sitting inside buses from Makkah and Madinah for more than four hours at the airport, waiting for their passports to be given to them by their tour operators.
Al-Sharif said examples of bad service provided by the airport included taking too long to record passengers’ fingerprints, long delays in giving pilgrims their passports back and a general lack of coordination to avoid congestion in the lounges.
A lack of rest rooms for passport police officers, bad conditions inside the health control center as well as a lack of pharmacists there, insufficient water coolers or bathrooms, non-existence of good restaurants and a lack of seats, especially those for the old and the disabled, were the other shortcomings noted by the delegation.
“We were shocked by what we saw. We call on all concerned parties to make their efforts to act on our observations. We also suggest that the fingerprinting process be done at the Kingdom’s embassies abroad instead of at the airport,” Al-Sharif said.
The delegation also said the Ministry of Haj’s office at the airport was not easily accessible to pilgrims and visitors.
“The office is located in a difficult to reach place without any signs pointing to it,” Al-Sharif added.

Polly Peck tycoon urges Government to intervene in his case

Asil Nadir, the Polly Peck tycoon, has suggested that the new Government might intervene in the battle to clear his name as he returned from 17 years of exile.
Speaking outside his Mayfair home, the 69-year-old said: “I hope that the people ruling this country and the entire population are as interested as I am that justice is practised.
“I hope that the environment is correct for this injustice to be put to bed. Everyone should be treated as innocent until found guilty.”
Mr Nadir insisted there was nothing wrong with donating to a political party and defended giving the Conservatives £400,000 in the past.
“It’s only fair if you approve of the policies of a Government, if you want to extend their power, why not do it? It’s not criminal, it’s allowed.”
Mr Nadir, whose company Polly Peck was worth more than £1 billion by the end of the 1980s, arrived back in Britain on a specially chartered Turkish Onur Air A320 Airbus.
There were just 17 passengers on board the aircraft and during the three hour flight the pilot prefaced each message to the cabin with the words “Mr and Mrs Nadir and guests”.
Accompanied by his 26-year-old wife Nur, he landed under leaden skies at Luton airport where he was greeted by immigration authorities while still on the aircraft.
Within minutes he was escorted into a waiting gun metal grey chauffeur driven Jaguar and driven to London.
Mr Nadir, who has dual British and Turkish nationality, surrendered four passports to the authorities – including an emergency British passport specifically produced for his return.
He must stay at his London residence and guarantee a £250,000 surety before his first court appearance at the Old Bailey on September 3.
At the hearing, a judge will decide whether he must wear an electronic tag and whether he will have to abide by a curfew as the fraud investigation is re-opened.
The tycoon, dressed in a dark suit, crisp white shirt, tie and green silk handkerchief, grinned broadly as he stood on the doorstep of his £20,000 a month home.
He told reporters: “I am delighted to be here. It has been a long time.
“I have missed this country and I hope that this time I am going to live in a country which gives more value to justice and stays away from abusing it.”
As he travelled back to Britain, he said he had returned because he felt it was the “right environment” to challenge the charges levelled against him.
Mr Nadir insisted no deal had been struck before he returned, which entailed leaving behind an opulent lifestyle in northern Cyprus.
He controls the Kibris newspaper and television group and exercises notable political influence.
“I have not done a deal,” he said. “My lawyers have asked for me to be granted bail before I came to England and that was decided.
“There is no deal. There is only one deal and that is, I am hoping I will see for the first time some justice.”
Mr Nadir said he had fled Britain in 1993 because his three year battle against fraud allegations had severely damaged his health.
“My health had deteriorated and at that point I felt that, to save my life, I had to come to recuperate. I have been asking since then for the environment to be as it is today.”
The Serious Fraud Office alleges that Mr Nadir transferred millions out of Polly Peck in the years leading up to its collapse with debts of £1.3bn in 1990.
However he insists that he proved his innocence at the time, but no one would listen.
Mr Nadir said he hoped that the case against him would last no longer than three months and get thrown out due to abuse of process.
“There was an abuse of process by the authorities,” he said. “That is what is going to be addressed in the first place.
“I feel that the abuse that materialised – if I am not mistaken – has not happened in many, many decades.
“I am hoping to get a fair trial, if this matter goes to trial.
The former Tory party donor, who fled the country in 1993 while facing 66 charges of theft relating to a £34 million fraud, also indicated that he was willing to give more money to the Conservatives.
He said he hoped the new Government would be “wise enough and think highly enough of Great Britain to clear this matter”

Is poverty in India linked to shame?

A major international study will be conducted in eight countries, including India, to examine whether shame is a key part of the experience of being poor.
The half-a-million-pound study, led by Professor Robert Walker from Oxford University, will look at whether being poor necessarily results in low self esteem or feelings of shame and whether welfare policies are counterproductive when claimants are stigmatised.
The research, spanning eight countries, aims to improve our understanding of the impact of poverty to establish whether anti-poverty measures could be applied more effectively.
A team of a dozen researchers will conduct-depth interviews with children and their parents about how being poor affects the way they feel about themselves and the way they are regarded by their own community.
They will interview families in UK, Norway, China, India, Pakistan, Uganda, South Korea and Germany.
As well as comparing experiences across countries, the study will include differences between rural areas, cities and towns.
Professor Walker, from the Department of Social Policy and Social Work at the University of Oxford, said: “Very little is known about the way people in different countries experience and regard poverty. (It) has been suggested that, in China, for example, it might be more important for adults, even in poor families, to maintain \’face\’ and to uphold their own sense of dignity.
\”In parts of India and Pakistan it is possible that loss of \’family honour\’ adds to any sense of personal shame\”.
\”This is the first time an academic study has been set up to analyse the importance of shame in understanding the experience of poverty in very different cultures,\” Walker added.
The research team will analyse whether there is a link between poverty and shame: through its portrayal in literature and film; in-depth interviews with low-income households; and focus groups with middle-class people on their view of poverty.
The researchers will carry out a statistical analysis of existing data on poverty in the World Values Survey.
They will also explore the language and practices used by the agencies responsible for implementing social assistance and anti poverty programmes to see whether they are more or less likely to make people ashamed of asking for help.
Professor Walker said: \”Language is loaded with all sorts of nuances and subtleties: phrases like \’sink estates\’, \’hand-outs\’, \’deserving\’ and \’undeserving\’, even \’rights and responsibilities\’, make judgements on the poor\”.
\”We hope this study helps to inform policy development, both in the UK and abroad. Our objective is to use this research to work together with policymakers and agencies to deliver policies that tackle poverty effectively while simultaneously recognising the importance of promoting dignity and a sense of self-respect,\” he added.

The renaissance of New Orleans

On the calendar of anniversary events in New Orleans (26 August 2010) five years after Hurricane Katrina, one stands out: a party at the Eiffel Society, a new restaurant and lounge on St Charles Avenue, where guests will be asked to celebrate something good the storm left behind: a burgeoning and highly boisterous arts scene.
It’s an eruption that has provoked – and is sustained by – an influx of mostly young and creative people from across the US, all with the common hope of finding inspiration and purpose in the battered urban landscape of the city, including painters, film-makers, dancers, designers, musicians and architects.
Some will be at the party on St Charles, like the American painter Elliott Coon. This spring, she and friends with the Life is Art Foundation here in New Orleans, spent 30 days barricaded inside the octagon structure of glass and steel (it was once part of the tower in Paris), sleeping, eating, working and playing without leaving it once, though they were occasionally joined in their experiment by other artists.
The result will be on view for all the party’s guests, set to include the city’s new mayor and enthusiast for the arts, Mitch Landrieu, and the economist Jeffrey Sachs. Never mind what’s for dinner; look at the art they have installed, whether it’s the pagan-like labyrinth painted in grey and gold leaf across most of its floor by Coon or the mesmerisingly delicate embroideries of naked figures suspended like cobwebs in the central skylight by the British artist, Louise Riley. (Riley was there for much of the live-in too.)
Other pieces – there are 20 – include a book table from wood salvaged from Katrina-stricken homes by Robert Tennan, a legendary figure among New Orleans art-goers, and, hanging over the kitchen door, a slate-grey photograph of a tug surrounded by oil from the BP spill taken by Edward Burtynsky.
What may not still be there is a very large igloo sculpture by Daphane Park that diners are invited to step into.
Giving a reporter a sneak tour, Coon speaks of her own experience visiting New Orleans two-and-a-half years ago from Virginia where she was living at that time. She expected to be here for a month. “It was like there was this rebirth going on in the city. I just stayed,” she explains with a broad smile, aware that in staying she was becoming part of a club of people in New Orleans that is hardly exclusive.
Michael Martin, 24, who is doing a masters degree on the role of cultural activity in recovering economies, did the same, arriving from New York at the beginning of last year. Today, he has no plans to leave. “Most my friends are either artists or designers or architects,”he says. “We are all here doing creative things, because New Orleans is just this amazing palate that gives you space to do what you like.”
Kristian Hansen, 31, arrived a few months before Katrina from his native California and bought a house. The storm destroyed it and today he rents in the grandly eccentric (and art-stuffed) home of Tennan and his wife, Jeanne Nathan, on Esplanade Avenue. Renting is fine, he says, but best of all is the growth of a film production company he co-founded here with a friend. Called Tungsten Monkey, its newest project is a nearly completed documentary feature about a young New Orleanian from a well-to-do-family who travels to the jungles of Peru in search of salvation from drug addiction.
Hansen explains his own infatuation with the city while celebrating his business partner’s 30th birthday at Bacchanal, a free-wheeling wine bar and restaurant in the Ninth Ward, as a jazz quintet competes with thunder. The restaurant is frequently used a set for David Simon’s new HBO drama series set in New Orleans, Treme, which is itself is another testament to the city’s awakening. The same goes for Spike Lee’s new documentary film about Katrina and its aftermath, If God is Willing and Da Creek Don’t Rise which premiered on HBO.
Those projects are a reminder that the soil for creative activity has, of course, always been fertile in New Orleans. The visual arts scene may never have been as rich as it is today in the wake of the storm, but in other ways the city has always claimed its place on this country’s cultural stage, with a traditon for fiesta and carnival driven in the first instance by Catholic holidays, like lent, Easter and Christmas. It is, above all, of course, a city of jazz and of cuisine. And Mardi Gras.
“I didn’t expect to stay, but New Orleans turned out to be like a crazy girlfriend and it’s hard to leave,” Hansen says. “It is a city that has a character that is tangible. On a more pragmatic level, there are just so many options for me here much more than there would be if I stayed out west. There is work and a constant stream of film people coming in right now.”
Delighted but not surprised by the cultural re-blossoming are Tennan and his wife in their rambling Esplanade mansion. “One step up from a storage facility,” is Bob’s wry description of the house which doubles as a chaotic gallery dedicated to his art and the art of friends. They recall coming to New Orleans from New York in the mid-70s and finding that it had only two contemporary art galleries. Before long they had founded the Contemporary Arts Centre of New Orleans to help fill the void. In the wake of Katrina, Jeanne took over an abandoned school and turned it into an ad hoc crucible for new works with at one point as many as 160 artists contributing. The city has taken the school back now, however.
Outside foundations played their part offering grants and funding. Last year, New Orleans native Michale Manjarris organised a city-wide show of public art with sculptures from the likes of the laainds down, the expectation is that the scene will continue to flourish all on its own.

Statesman Print Journalism School

It was set up in 2008 by the C.R. Irani Foundation, a not-for-profit body set up in memory of Cushrow Russi Irani, who was Editor-in-Chief of The Statesman from 1991 until his death in July 2005.
The late Cushrow Irani was a distinguished newspaperman, who won the Commonwealth Astor Prize and the Freedom House Medal for his role in safeguarding freedom of the Press in India. He was twice chairman of the International Press Institute, served on the board of Article XIX with distinction, headed several important professional bodies including the Indian Newspaper Society, the Audit Bureau of Circulations and Press Trust of India, and was a member of the National Commission to Review the Constitution. The SPJS has been set up with support from Germany’s Konrad Adenauer Stiftung.

Factory growth in Asian countries outstrips Europe

Manufacturing in China, India and Russia powered ahead in August while growth slowed in European factories, emphasising a growing divide in the pace of recovery between the rich and emerging worlds.
Between the euro zone’s biggest four economies there was strong evidence of diverging fortunes, with the bloc’s manufacturing sector overall expanding at its slowest pace since February, surveys showed on Wednesday.
Equivalent figures from the United States, due at 1400 GMT, are expected to show an easing of manufacturing growth, adding to investor unease about a stalling recovery there, a concern the Federal Reserve has openly recognized.
The Markit Euro zone Manufacturing PMI for August dropped to 55.1 from 56.7 in July but nudged up from an earlier flash estimate of 55.0 and marked its 11th month above the 50.0 mark that divides growth from contraction.
Manufacturing growth in Germany slowed in August although other recent data show Europe’s biggest economy is expanding fast. Business in France accelerated but Italy and Spain saw their manufacturing indexes slip backwards.
“We are at a delicate juncture of the global business cycle. Globally there is a slowdown in the trade cycle which first affects the economies which are reliant on that,” said Silvio Peruzzo at RBS.
“Just as they were benefitting from the acceleration in Q4 2009 and Q1 2010, they will now be subject to the downturn and this will amplify the divergence we are seeing.”
Britain, a major euro zone trading partner, saw growth in its manufacturing sector slow more than expected last month, led by the weakest expansion in new orders for more than a year.
In contrast, a pair of China’s manufacturing surveys showed activity picked up last month after a government-engineered slowdown, and Indian factories stayed in top gear after Asia’s third-largest economy grew at its fastest rate in nearly three years in the last quarter.
Factories in Russia — part of the BRIC quartet of new economic powers alongside China, India and Brazil — also cranked up output, expanding at their fastest rate in 28 months largely thanks to the strong domestic demand.
HSBC’s purchasing managers’ index (PMI) for China rose to a three-month high of 51.9 in August from 49.4 in July, while the official index also rose, to 51.7 from 51.2.
Optimism that Beijing was succeeding in shifting toward more domestic-driven and sustained growth after a credit-fueled spurt early this year helped lift Asian stocks and metals markets largely dependent on demand from China.
“This reconfirms our long-held view that China is moderating rather than melting down,” said Qu Hongbin, chief economist for China at HSBC.
Its ever-growing influence showed up in Australia which grew 1.2 percent in the second quarter, beating market forecasts largely due to China’s and India’s voracious appetite for Australia’s resource riches from coal to wheat.
But even China, which by some measures has already overtaken Japan as the world’s second-largest economy, is not entirely immune to global economic headwinds with its PMI showing factory activity and new orders growth slowing markedly.
Fears that recovery in the United States was petering out and could stall the global upturn led by export-driven Asian economies as well as Germany have haunted markets, pushing the global stock index down more than 3 percent last month.
A US PMI index due from the Institute for Supply Management is expected to ease to 53 in August from 55.5, still safely above 50 that separates growth from contraction.
Investors, however, will look at new orders data for any signs whether manufacturing growth can be sustained.
With unemployment stuck near 10 percent and the impact of the government’s $862 billion economic stimulus fading, investors worry that even if the US economy avoids a double-dip recession it may face a period of near-stagnation.
The big question then would be whether Asia and Europe’s biggest powers could carry on prospering or would inevitably be dragged down with the world’s largest economy, whose markets they are still heavily reliant on for export demand.

The real shock for savers in Tony Blair’s book

Never mind the tittle tattle about how Tony Blar says he hit the bottle during his final years in Downing Street. Nor his wearily familiar defence of the dodgy dossier and our subsequent invasion of Iraq.
No, what really shocks me about Mr Blair’s autobiography is his account of how millions of ordinary people’s retirement plans were reduced to a mere bargaining chip in what sounds like a game of political strip poker between him and Gordon Brown.
The former Prime Minister describes how he supported pension reforms proposed by Adair Turner but these were opposed by the Chancellor of the Exchequer at that time. Lord Turner recommended raising the State pension age and restoring some linkage with earnings – both changes now planned by the Coalition Government – but Mr Brown was thought to be against these reforms. Now we know just how much so.
Mr Blair’s book ‘A Journey’ says: “We had been having a huge set-to about Adair Turner’s pension proposals. John Hutton (the pensions secretary) and I both thought them right but Gordon disagreed.
“He was in a venomous mood and I can truthfully say it was the ugliest meeting we had ever had…the temperature which was already below freezing point went Arctic.”
Mr Blair goes on to relate how Mr Brown threatened to call for an inquiry into allegations that wealthy friends of the Prime Minister had gained seats in the House of Lords after making donations to the Labour Party. Mr Blair claims Mr Brown said he would expose what became known as the ‘cash for honours’ scandal unless Lord Turner’s proposals were dropped.
As I pointed out in this space at the time: “The Chancellor has waited a long time to become Prime Minister and has no wish to go to the polls offering the voters the chance to “work till you drop”. One in five men and one in eight women never reach the age of 67.
“Mr Brown knows there is rising awareness of how public sector employees can still retire at 60 on pensions heavily subsidised by the taxpayer. Worse, the £5billion tax on pensions he imposed in his first Budget as “a reform of advanced corporation tax” is now widely recognised as the biggest stealth tax of all and a major contributor to company pension deficits and closures.”
As it turned out, the demographics of an ageing population eventually proved irresistible and the ‘cash for honours’ story soon seemed small beer compared to the mass fraud of the MPs’ expenses scandal. Even so, I agree with Mike Warburton of accountants Grant Thornton who said: “I find it extraordinary that something as important as pensions planning for our population, indeed I would argue that it is the single most important financial issue facing us, should be relegated to little more than a bargaining chip in the wholly unrelated matter of political party funding.”
Mr Blair’s revelation of what goes on behind closed doors in Downing Street demonstrates why our pensions have been so badly mishandled by several governments. Saving for retirement requires long term planning but, on the evidence of these memoirs, most politicians seem to struggle to think further ahead than the next publicity stunt or botched back-stabbing.

Loan fraudsters face Cibil crackdown

Mumbai: Fraudulent home loan seekers and habitual defaulters will have a tough time now as lenders have a ready pool of information available on them, with the launch of the country\’s first electronic centralised database of mortgage information called Cibil Mortgage Check.
Cibil Mortgage Check would help banks and financial institutions share and access mortgage information, exercise better due diligence, and thus help reduce fraudulent property transactions. This will also bring in more transparent and a factual mine of information about loan seekers, and more importantly about the property being sought to be mortgaged.
Cibil Mortgage Check, launched jointly by the country\’s largest credit information service provider Cibil (Credit Information Bureau of India) and TransUnion—a global leader in credit and information management services—in consultation with property market regulator National Housing Bank (NHB).
Launching this new tool here today, NHB chairman S Sridhar, who is also the CMD of Central Bank of India, said, \”Cibil Mortgage Check will help contain a lot of fraudulent activities in residential property marketplace that has been growing at a CAGR of 40 per cent since the past five years.\”
Sridhar further said, as the sectoral regulator, NHB has been working with Cibil to create this platform so that the lenders have access to ready and credible information on loan seekers as well as their properties.
Sridhar also informed that NHB is working on bringing out a property price index which will help contain excessive speculation in the marketplace.
On the proposed standards for residential property valuation, he said, NHB has already finalised a draft and sent it the Indian Bank Association for comments.
Launching the tool, Cibil managing director Arun Thukral said here today, \”lenders have been reporting rising cases of fraudulent transactions in housing sector. Realising the urgent requirement of an industry-wide system for fraud control, NHB advised us to develop an exhaustive repository of information on mortgages that will help contain defaults and fraudulent transactions by enabling informed decisions.
\”This solution will serve as a due diligence tool for credit granters before establishing business relationship with new customers,\” Thukral added.
This new service will help all sorts of lenders access ready information from Cibil and thus prevent fraudulent mortgage loan seekers from getting away.
Mortgage Check primarily offer two set of information-the personal information about the applicant, and secondly the complete chain of information about the property being sought to be mortgaged. It will also offer detailed reference database containing information on properties on which owners have already availed loans, and detail of those loans among others.
The second part assumes significance as the latest Reserve Bank report says the number of fraudulent activities such as fake and forged sales deeds, multiple copies of sales deeds, sale deeds of fictitious property and multiple financing in the home loan space, have witnessed a massive 75 per cent spike in the past five years.
Cibil has already got a data base of over 6 million and 25 lenders as members for the Mortgage Check tool. Cibil, which entered the country only in 2009, already sits over a data mine of 160 million and a customer base of 250 lenders.

Aren’t you trespassing, Milord?

Fools rush in where angels fear to tread! That’s an ancient cautionary axiom. Nevertheless this fool cannot help but rush into the hallowed territory of the Supreme Court (SC) to clarify doubts troubling his mind. Last Tuesday, the SC admonished Union food minister Sharad Pawar for daring to state that its order to distribute rotting food grains free of cost to the poor was a suggestion. The court sternly conveyed that its order was a command to be obeyed and not a suggestion to be considered. The minister had opined that the court’s suggestion was not practical to implement. The court’s order was in response to a petition.
The court’s opinion about distributing grain free to the poor instead of allowing it to rot was unexceptionable. It reflected the overwhelming view of politicians and public alike. In justification of its order the court said: “We do not say anything unreasonable.” That is absolutely correct. The court was very reasonable. But was it constitutional? Can the SC encroach, however sensibly, into the domain of the executive? This is the question that the Supreme Court and all the distinguished legal luminaries who frequently grace TV channels with their pontificating need to clarify for ignorant laymen like this scribe.
Article 50 of the Indian Constitution states: “The State shall take steps to separate the judiciary from the executive in the public services of the State.”
Citizens have certain fundamental rights. Article 32 (1) gives them “the right to move the Supreme Court by appropriate proceedings for the enforcement of the rights conferred by this Part...” The right to food has not yet been made into an Act. Therefore Article 32 (2) that states, “The Supreme Court shall have the power to issue directions or orders or writs … for the enforcement of any of the rights conferred by this Part”, cannot be applicable.
Article 38 (1) of the Constitution states: “The State shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political, shall inform all the institutions of the national life.” However Article 37 of the Constitution states: “The provisions contained in this Part shall not be enforceable by any court…”
In the light of the above articles of the Constitution, how could the SC presume to pass an Order equivalent to a command to Sharad Pawar? Any action that violates the Constitution can lead ultimately to very negative results. If indeed the SC overreached its powers, what would have happened if the minister had defied its order to create a constitutional crisis?
One does hope the judges had considered their legal mandate and were not influenced by the earlier example of their predecessors assuming the executive’s powers by overseeing the functioning of the CBI in the Jain hawala case? That left a permanent blot on the SC after it completely botched up an open and shut case. Former Chief Justice JS Verma, who headed the Bench hearing that case, is now demanding that the Jain hawala case should be reopened!
Would you enlighten us Milord, under which constitutional provision you issued your fatwa to the government?

No confrontation intended on foodgrain for poor, Centre to SC

The Centre today told the Supreme Court that it had no intention of having “any confrontation” with it on the issue of distribution of food grain to the country’s poor.
Additional solicitor-general Mr Mohan Parasaran submitted to a Bench comprising Mr Justice Dalveer Bhandari and Mr Justice Deepak Verma that reports appearing in a section of the Press were wrongly implying that the Centre wanted to take on the Supreme Court on the matter. Mr Parasaran also placed on record an affidavit highlighting the various measures taken by the government to distribute food grains at affordable prices to the needy population.
The SC, while taking on record the affidavit, said it was “very happy” at the comprehensive reply filed by the government in pursuance of its earlier direction for supply of food grains at “low cost” or “at no cost”. However, the government affidavit is silent on the SC’s direction for free distribution of food grains to the poor instead of allowing it to rot.
The ASG told the SC that pursuant to its earlier direction, the Centre had decided to allocate 25 lakh additional tonnes of food grain to the states and Union Territories for distribution at BPL prices.
The court’s directive earlier generated a controversy after Union agriculture minister Mr Sharad Pawar insisted that the government was not bound to supply free food grain to the people as the court had only made a suggestion and it was not a directive. The SC, however, clarified on 31 August that what it had issued was an order and not a mere suggestion.
During today’s hearing, the Bench urged the media to report the issue accurately, pointing out that SC orders were regularly posted on the relevant website.

US tough credit card law put in place

The Obama administration has put in place the final provisions for a new financial regulation law, called the CARD Act, which will bring unprecedented controls to bear upon the heretofore lightly regulated credit card industry in the United States.
Speaking after the Credit Card Accountability, Responsibility and Disclosure (CARD) Act was finalised, United States President Barack Obama said, “Yesterday, the final reform provisions of the CARD Act took effect. As of today, consumers will be protected against unreasonable fees and penalties for late payments, as well as unfair practices involving gift cards.”
Many advantages
Arguing that this law would put a stop to deceptive credit card practices and hold credit card companies accountable to their customers, Mr. Obama noted that it would also make the terms of credit cards more understandable and put a stop to practices designed to trap consumers. Further, the CARD Act would restrict rate increases that apply retroactively to old balances and would prevent companies from increasing rates within the first year an account is opened.
Touching upon the broader context of the Wall Street Reform and Consumer Protection Act that the President signed into law in July, he said a new Consumer Financial Protection Bureau would be empowered to look out for consumers in the U.S. financial system.
“In the wake of a terrible recession, these reforms and this independent consumer watchdog will not only protect consumers, they’ll strengthen our economy as a whole, levelling the playing field for responsible lenders and ensuring that families and small business owners are better able to make financial decisions that work for them,” he said.

Gmail to allow phone calls from computers

“Starting today, you can call any phone right from Gmail,” Robin Schriebman, a software engineer at Google, wrote on the company’s blog.
“We’ve been testing this feature internally and have found it to be useful in a lot of situations, ranging from making a quick call to a restaurant, to placing a call when you’re in an area with bad reception,” Schriebman wrote.
Google will roll out the new feature to US-based Gmail users over the next few days and is working on making it available globally, Xinhua reported.
Users can call any phone in the US and Canada for free for at least the rest of the year, while Google also promised cheap international calls.
Calls to Britain, France, Germany, China, Japan and many other countries will be billed as low as two cents per minute, Google said.
Gmail already has a voice and video chat that allows users to talk to each other.

Abu Dhabi joins bid for Channel Tunnel

The Abu Dhabi Investment Authority, or ADIA, has teamed up with infrastructure funds operated by private equity firm 3i and Morgan Stanley to put together a £1.5 billion (Dh8.63 billion) bid to acquire the Channel Tunnel rail link.

The consortium is considering submitting an offer ahead of the August 17 deadline set by UBS, which handles the auction on behalf of London and Continental Railways, the channel reports on its website, citing people close to the situation.
ADIA did not comment on the issue so far.
The sale of the 110-km High Speed 1 (HS1) line, which links central London to the Channel Tunnel, will be the first major British transport infrastructure sale since airport operator BAA sold London’s Gatwick airport late last year.
ADIA bought a 15 per cent stake in Gatwick Airport earlier this year.
Britain began the sale of the rights to operate the country’s only high-speed railway in June, helping raise much-needed funds for the public purse.
Other bidders include Channel tunnel operator Groupe Eurotunnel which is working on a bid with Goldman Sachs Infrastructure Partners, its biggest shareholder, and with Infracapital, the infrastructure arm of Prudential unit M&G, another big shareholder.
The Channel Tunnel is a 50.5-km undersea rail tunnel linking Folkestone near Dover in the United Kingdom with Coquelles, Pas-de-Calais near Calais in northern France, passing beneath the English Channel at the Strait of Dover.

Industry-led UK recovery untenable, economists warn

Suddenly it seems the world’s manufacturers hammered by the recession are firing on all cylinders. Honda has posted record profits, Renault is back in the black, Airbus and Boeing are enjoying a surge in demand, Rolls-Royce is cranking up its forecasts and chemicals group BASF has just doubled its earnings.
In the UK a resurgent manufacturing sector has helped boost overall growth and business surveys have suggested activity is at its highest in more than a decade as factories scramble to meet rising demand at home and abroad.
But economists are warning this is probably going to be as good as it gets and key industry reports published today paint the same picture. The storm clouds may be gathering. For all the talk of rising exports and profitability, manufacturers in the UK remain decidedly nervous about the outlook for a variety of reasons. Public sector spending cuts spell trouble for those companies reliant on government projects, tax rises risk hitting demand and with Greece’s financial meltdown still fresh in their minds, most companies are loathe to say the eurozone is out of the woods.
At the same time business groups warn that the boost factories are enjoying from companies re-building their stocks in the aftermath of the recession cannot last. Most warn it will likely tail off before the end of the year. This inventory-building has been credited with driving the recent jumps in manufacturing output. A closely watched monthly snapshot of the sector due out this morning is expected to show business activity continued to rise in July. But economists will also be scouring the manufacturing purchasing managers’ index for signs of waning confidence.
Analysts will also be watching for any signs of businesses looking to spend again, seen as key to sustaining the recovery given that typically when inventory rebuilding wears off, investment spending re-starts.
The portents are less than promising. The manufacturers’ organisation EEF will warn today that “low levels of investment remains an Achilles’ heel”.
Its Economic Prospects 2010 report is upbeat about the short-term. Manufacturing will grow by 3.8% this year and 3.4% in 2011 outstripping growth in the economy as a whole, forecast at 1.1% in 2010 and 2.1% in 2011.
But it believes investment by manufacturing firms will grow by only 2% in 2010 after falling by more than a third during the recession.
“Investment looks like it will remain a weak point in the remainder of this year with risks and uncertainty still lingering for both manufacturers and the wider economy,” says its chief economist Lee Hopley.
She cites the outlook for interest rates as more uncertainty for businesses. Borrowing costs are set to be held at a record low of 0.5% when the Bank of England makes its latest announcement on Thursday but further out policymakers are having to weigh up fragile demand against stubbornly high inflation.
“Whilst we have more clarity over the government’s fiscal ambitions, attention is now turning to where the cuts will hit and the difficult balancing act facing the Bank of England and when the monetary policy committee will make the next move,” said Hopley.
The EEF report, compiled with accountants BDO, also highlights risks to overseas demand particularly in developed markets such as the US. The world’s biggest economy enjoyed a quick ride out of recession at the end of last year but the pace of growth has tailed off. In the second quarter growth was slower than had been expected at a 2.4% annual rate, according to data last week that sparked more talk of a double-dip recession.
British manufacturers are also wary about the prospects for the eurozone, a key trading partner. Industry groups are already noting a divergence between those companies that export close to home and those enjoying stronger growth thanks to business with emerging markets such as China and India.
Roger Bootle, economic adviser to Deloitte is gloomy about the eurozone’s prospects and what that means for UK businesses as they battle through George Osborne’s tax rises and spending cuts.
“The prospect of a trade boost, at least in the near-term, is looking rather less promising than a few months ago,” he says.
A fall in the pound has provided UK exporters with a chance to boost their competitiveness. But Bootle notes businesses are only likely to capitalise fully on that once demand has recovered sufficiently.
“About half of the UK’s exports go to the eurozone and, given recent events, we now expect GDP growth there next year of just 0.5%... So export growth is unlikely to pick up any further over the next year or two,” he adds.
A separate survey published today suggests manufacturers remain distinctly more upbeat than those businesses in the larger services sector and yet they are still wary about demand holding up. Almost two-thirds UK manufacturing firms expect a rise in business activity, according to KPMG’s global business outlook. Manufacturers in the UK have higher hopes for the year than their peers in many global economies, including China, although they were less upbeat than those in Brazil, the US and India.
But again, any confidence about activity was not translated into plans to invest. In fact investment intentions fell, according to the survey, compiled by research firm Markit.
“I fear storm clouds may still be gathering on the European horizon. There are now a number of key economies that are actively tackling national deficits and this must surely have a significant effect on the sector some way down the line,” says KPMG’s Gautam Dalal. •Business group CBI is similarly cautious. Its quarterly survey of small and medium-sized manufacturers today shows twice as many saw output rise over the last three months than saw it fall. That was the strongest outturn for 15 years and driven by rising demand at home and abroad as customers rebuilt their stocks in the wake of the recession. But looking ahead to the next three months, firms anticipate a slight fall in output and demand while for the year ahead they expect to invest less.

Rich Indian households outnumber low income families

The growing economy has spun a wheel of fortune for Indians, with high income households outnumbering those in the low category for the first time at the end of 2009-10, according to estimates made by think-tank NCAER.
India has 46.7 million high income households as compared to 41 million in the low income category, the National Council of Applied Economic Research (NCAER) estimates on Earnings and Spendings have revealed.
“For the first time, the number of high income households is set to exceed the number of poor households in 2009-10,” the NCAER said, adding that the middle income class continued to grow.
Households earning less than Rs 40,000 per annum (at 2001-02 prices) are dubbed as low income, whereas those with earnings over Rs 1.80 lakh fall in the high income category.
Those earning between Rs 45,000-Rs 1.80 lakh per annum are considered middle income households, whose number surged to 140.7 million out of the total of 228.4 Indian million
families at the end of 2009-10.
Thus, the NCAER survey confirms that 62 per cent of Indian households belong to the middle class, which is the target of most consumer goods firms.
“The wheel of fortune continues to spin in India, with each level of household income set to move a notch higher by the end of the decade,” the survey on spending and earning patterns since 1985-86 said.
The Indian economy grew at above 9 per cent between 2005-06 and 2007-08. After slowing down in 2008-09 and 2009-10, it is projected to expand at 8.5 per cent in the current fiscal.
The data shows how the country has come a long way in the last 10 years in raising the income standards. In 2001-02, out of the total of 188.2 million households, the number of high income families was only 13.8 million, whereas those in the low income category stood at 65.2 million.
Referring to the middle class, the study said, “Their growing clout becomes even more apparent when one looks at the ownership patterns of households goods. Nearly 49 per cent of all cars are owned by the middle class, compared to just 7 per cent by the rich.”
Similarly, 53 per cent of all air conditioners are owned by middle class homes and nearly 46 per cent of all credit cards are to be found in these households.

Chinese manufacturing falls as govt. cools overheating

A purchasing managers’ index (PMI) from HSBC and analysts Markit revealed a fall to 49.4 from 50.4 in June. Some economists said this was likely to continue into the autumn as the Chinese authorities work to prevent the economy overheating and property prices running out of control.
Commodity prices, which had recovered in recent weeks from a 25% fall in May, were expected to decline as demand from Chinese manufacturers fell. A slowdown in other major economies including the US and Japan is also expected to dampen demand for oil, copper and other commodities.
A manufacturing index backed by the Chinese government showed the slowest expansion in manufacturing in 17 months in July. The index, released by the statistics bureau and the China Federation of Logistics and Purchasing, slid to 51.2, the lowest level in 17 months.
“There is no need to panic,” said Qu Hongbin, a Hong Kong-based economist at HSBC, repeating his assessment of last month that China is having a “slowdown not a meltdown”.
China’s more moderate expansion is still expected to foster full-year growth of 9.5%, up from 9.1% in 2009, although it needs to grow at least 6% to 7% to keep up with population growth.
HSBC’s manufacturing survey covers more than 400 companies and is weighted more toward smaller, privately owned business than the government’s PMI, according to the bank. The PMI released by the logistics federation and the Beijing-based National Bureau of Statistics covers more than 730 companies.
Morgan Stanley economist Wang Qing told Bloomberg that a government campaign to close energy-inefficient businesses is likely to have contributed to a slowdown in heavy industry.
A slowdown in growth in South Korea and Taiwan underscored how Beijing’s efforts to curb a property price boom have affected the rest of Asia, where export industries have been driven by Chinese demand.
China's manufacturing contracted for the first time in 16 months in July following a clampdown by the government on property speculation and tighter credit controls.
A purchasing managers' index (PMI) from HSBC and analysts Markit revealed a fall to 49.4 from 50.4 in June. Some economists said this was likely to continue into the autumn as the Chinese authorities work to prevent the economy overheating and property prices running out of control.
Commodity prices, which had recovered in recent weeks from a 25% fall in May, were expected to decline as demand from Chinese manufacturers fell. A slowdown in other major economies including the US and Japan is also expected to dampen demand for oil, copper and other commodities.
A manufacturing index backed by the Chinese government showed the slowest expansion in manufacturing in 17 months in July. The index, released by the statistics bureau and the China Federation of Logistics and Purchasing, slid to 51.2, the lowest level in 17 months.
"There is no need to panic," said Qu Hongbin, a Hong Kong-based economist at HSBC, repeating his assessment of last month that China is having a "slowdown not a meltdown".
China's more moderate expansion is still expected to foster full-year growth of 9.5%, up from 9.1% in 2009, although it needs to grow at least 6% to 7% to keep up with population growth.
HSBC's manufacturing survey covers more than 400 companies and is weighted more toward smaller, privately owned business than the government's PMI, according to the bank. The PMI released by the logistics federation and the Beijing-based National Bureau of Statistics covers more than 730 companies.
Morgan Stanley economist Wang Qing told Bloomberg that a government campaign to close energy-inefficient businesses is likely to have contributed to a slowdown in heavy industry.
A slowdown in growth in South Korea and Taiwan underscored how Beijing's efforts to curb a property price boom have affected the rest of Asia, where export industries have been driven by Chinese demand.
India bucked the trend, with its manufacturing PMI rising slightly for a 16th straight month.

Newsweek sold to audio magnate Harman

Washington: Well-known international Newsweek magazine, owned by The Washington Post Co., has been sold to 91-year-old audio magnate Sidney Harman, the founder of audio equipment maker Harman International Industries Inc.
The Washington Post Company announced today that it was selling Newsweek to Harman, ending nearly half-century ownership by the company even as editor Jon Meacham announced his departure.
“Newsweek is a national treasure. I am enormously pleased to be succeeding The Washington Post Company and the Graham family, and look forward to this great journalistic, business and technological challenge,” Harman was quoted as saying in The Post news release.
Newsweek announced that Meacham, the magazine’s editor for the past four years, is stepping down.
“It has been a privilege beyond measure to have worked for Newsweek and for The Washington Post Company for the past 15 years. I will always be grateful for the opportunity the magazine gave me to serve alongside all of you,” Meacham, the magazine’s top editor since 2006, told his staff in an e-mail.
“For half a century, the Graham family created and sustained a culture in which we were able to do good, important work, and I know Newsweek will continue to do so,” Meacham quoted in the New York Times said.
Harman started a business selling FM radios in the 1950s and built it into one of the largest audio equipment companies in the world.
Newsweek, which was acquired by The Post Co. in 1961, has been struggling to find a profitable niche amid poor economic conditions and a flood of online competition.
Declines in circulation and advertising led to a nearly USD 30 million loss in 2009, and Newsweek expects to lose money again this year, a media report said.
Harman, who doesn’t envision any radical overhaul of the magazine, has vowed to retain most of about 350 staff members.
Decline in print media has led to sale or shutdown of number of magazines and newspapers in the US amid the worst economic meltdown in generations. Bloomberg LP bought BusinessWeek last year for just a few million dollars.
“In seeking a buyer for Newsweek, we wanted someone who feels as strongly as we do about the importance of quality journalism,” Post Co. CEO Donald Graham said. “We found that person in Sidney Harman.”

Saudi women sitting on $11.9b cash mountain

RIYADH: A large portion of the Kingdom’s wealth is in the hands of its women who are believed to be sitting on cash totaling $11.9 billion.
“The Kingdom has a veritable treasure trove of human and financial capital in the form of its women who control a large portion of the country’s wealth,” said a report released on Monday by the Cayman Islands-based asset management firm Al-Masah Capital.
Women constitute almost 45 percent of the country’s population, and have a literacy rate of 79 percent. Yet, only 65 percent of them are employed, revealing the huge potential for women employment. In fact 78.3 percent of unemployed women are university graduates.
The report, titled “The Saudi Woman — A catalyst for change,” stated that women could become a major growth driver for the country’s diversification policy with their considerable wealth, which is lying idle, being channeled into the country’s money supply.
“Increasing the contribution of women in key economic sectors can speed up economic diversification. Effective channeling of the huge funds held by Saudi women that currently yield negligible returns into enterprises or investment activities can earn profitable returns as well as boost money supply,” said Shailesh Dash, founder of Al-Masah Capital.
Saudi women are not alone. Women in the Middle East controlled 22 percent or $0.7 trillion of the region’s total assets under management (AUM) in 2009. The region, consequently, ranked fifth globally in terms of AUM controlled by women.
“Women in Saudi Arabia account for a potential pool of human and financial capital with the power and ability to bring about significant social and economic change. But, this can only be done within the right parameters,” he said, adding that the change ought to be evolutionary.
“This will not be effective and long lasting if it is done outside the current norms and social etiquettes of Saudi Arabia. For this change to be effective, it needs to grow and develop organically within the boundaries of what is acceptable and understandable in Saudi society.
“The true potential lies in this development happening in parallel with positive growth in the mindset of society. Only then will we see the real impact of the Saudi woman,” said Dash.
Saudi Arabia also had the lowest national women labor participation rate, which was put at 20.1 percent in 2009 compared to neighboring countries like Qatar, the United Arab Emirates and Kuwait.
Toward that end, establishing a just workplace for both men and women can generate significant economic value. Greater educational support for women to take up jobs in IT and communications can increase the government’s return on investments in the country’s education system.
While the government was the largest employer of women in the country, their exposure to the private sector was minimal accounting for a mere 0.8 percent of total private sector employees.
Women resources can help aid Saudi Arabia in its diversification efforts from oil wealth, fostering employment opportunities on the one hand and a business-enabling environment for women entrepreneurs on the other. This is the need of the hour given their significant human capital and financial muscle, said Dash, adding that public and private sector policy should be targeted toward it.

Better Late Than Never

Quoting official sources, a newspaper report has made the welcome disclosure that Ministry of Textile Industry is taking special initiatives to raise the capacity of such vocational and technical institutes and also to go for uniform policy structure for all of them. Moreover, significantly, to make the most of this long due move, the ministry will be seen to have done well to make special arrangements for funding of these institutes for up-gradation and enhancement of their capacity. Thus, making an objective assessment of the efforts that have been made in that direction, it was noted that when the ministry of textile was created in 2004 the administrative control of training and education institutes in specific areas were transferred to it.
Again, as these institutes were set up with the financial resources provided from the Export Development Fund (EDF), to the federal government belonged all the physical and capital assets and property of these institutes. It is, however, another matter that the national textile policy, 2009, envisaged comprehensive development of textile sector, hence also including a detailed programme for skill development to support the textile sector, more so as the entire sector continues to be badly lacking in skilled manpower.
As such, in the normal scheme of things to streamline the process, the ministry is executing an agreement with respective institutes, so as to ensure a uniform policy structure. Under the strategy now adopted, the institutes would continue to impart training in the areas of particular textile associations, as in the past, their management administered by the chairmen of respective associations. Needless to point out, too much time has been lost in making a beginning in the right direction, thereby, retarding the pace of progress in a conceptual vacuum. As they say, well begun is half done, we hope the goals now set would set the pace for the stipulated results.

Tuesday, October 5, 2010

Plea for Withdrawal of Turnover Tax

Addressing a press conference in Karachi, Chairman, All Pakistan Consumer Products Distributors Association (Apcpda), Tahir Khaliq demanded withdrawal of one percent turnover tax imposed in federal budget 2010-11 on distribution of consumer products and medicine. As he put it, although the turnover of distributors is immense their margin of profit is very nominal and they are unable to pay this tax. According to his argument, distribution work would come to an end in the event of the government declines to withdraw the turnover tax, saying distributors were operating on fixed margin of profit or commission, ranging from 1.5 percent to 6 percent, and on the terms and conditions of manufacturers. However elaborating on the role of distributors, he noted that they purchase the goods at high prices from manufacturers, store the in warehouses, and then supply them shop to shop by vans, thereby, costing them a lot of money, which is met from the commission they earn.
From all available indications, the Apcpda, will appear to have built its case on the fast moving consumer goods (FMCG) which goes, generally speaking, to the advantage of the manufacturers of branded goods, and not to government from the insignificant tax on its distribution. As for the financial gains accruing from the entire business cycle, there can be no two opinions on the identity of the brand owners. More to this, the brand image, which has been defined as a symbolic construct created in the minds of people and comprising all the relevant information around the given product or service. This is why those engaged in branding are usually after associating the expectations behind the brand experience, thereby, striving to establish that the given branded product or service possesses qualities or characteristics that adds to its value in one way or the other. This is one single aspect which is emphasized the most in brand’s advertising at huge costs. Needless to point out, it does demonstrate what the brand owner is in a position to offer to the consumers. It goes without saying that brands should be taken as more than the difference between the actual cost of a product and its selling price. Moreover, his assertion that the distributors earn 1.5 percent to 6 percent on their total turnover, should allow them enough margin of profit, from the approach of economies of scale. His plea that the supply of goods and medicines would come to a standstill in the event of distributors close down their businesses, will also leave a great deal to be desired. Of course, Apcpda chief’s observation the association would contact the finance minister, members of national assembly and the senate to apprise them of the impact of turnover tax on distribution of consumer products should appeal to reason.

SCO summit begins; discusses regional stability and security

The annual 10th summit of the Shanghai
Cooperation Organization (SCO) began here Friday with a focus on
regional stability and security and to pursue development in the
The summit is being attended by heads of state from China,
Russia, Kazakhstan, Tajikistan and Uzbekistan, the delegate from
Kyrgyzstan, and leaders and delegates from SCO observer nations --
Mongolia, India, Pakistan and Iran.
President Asif Ali Zardari is representing Pakistan at the
Uzbek President Islam Karimov in his opening speech stressed
the need for strengthening political and economic cooperation and
stepping up anti-terrorism efforts to secure peace and stability
among the SCO countries.
Two agreements between the SCO states are to be signed today -
One between the SCO governments to enhance cooperation in the field
of agriculture, and the second for cooperation in combating crime.
The leaders will also approve a joint statement at the end of
the summit. The draft documents submitted for approval at the summit
include the regulations on procedure for admitting new members, and
the SCO procedure rules, aimed at further enhancing efficiency and
improving the internal mechanisms of the organization.
The SCO states will also approve the SCO Secretary General's
Report on its performance, while another resolution will deal with
performance of counter terrorism Regional Centre and review its
performance to consolidate collective anti-terrorism cooperation
within SCO states.
The theme of the summit is "to strengthen unity and
cooperation, maintain stability and pursue common development in the
The leaders and participants exchanged views on the world and
regional situation, and will coordinate strategies for combating
terrorism, separatism and extremism.
They will also focus on need to expand inter-member economic
cooperation and set up an SCO admission mechanism.

Pak-China to celebrate 60th anniversary of their diplomatic ties next year

Pakistan-China will celebrate 60th anniversary of their diplomatic ties next year to reinforce their ever-green strategic partnership.
This was stated by Federal Minister Arbab Muhammad Zahir, while addressing a farewell reception held here last night in honour of outgoing Chinese ambassador to Pakistan, Luo Zhaohui, that was largely attended by a number of federal ministers, senior officials, political figures, journalists and the elite of the city.
Huang Xilian Deputy Chief of Mission of the Chinese Embassy highlighted the personal efforts made by ambassador Luo during his about four-year tenure in strengthening Sino-Pak bilateral ties.
While paying glowing tributes to the outgoing ambassador, he said his contribution will go a long way in bringing their bilateral ties to a new height.
The Minister said, Pakistan considers friendship with China the bedrock of its foreign policy. "Our diplomatic relations which were established in 1951, have since then, grown from strength to strength. Sino-Pak all-weather friendship is based on complete trust, mutual understanding and convergence of views on all issues.
This sentiment resounds in the psyche of our people and is passing on from generation to generation."
Our relationship, he added has evolved into a long-term strategic partnership aimed at promoting peace and stability in the region and they in Pakistan rejoice over the great achievements of the Chinese people which attest to the genius, wisdom and talents of the Chinese people and their sagacious leadership.
Pakistan and China are good friends, good brothers and good neighbours and this is reflected in their professional and personal relationship with the Chinese Embassy, he added.
Arbab Zahir further said ambassador Luo Zhaohui has contributed tremendously in his capacity as Chinese Ambassador to Pakistan in enhancing and strengthening the relationship between the two countries.
"Many projects have been initiated and successfully completed during his stay in Pakistan. Chinese investment in Pakistan has increased in recent years. We wish him best of luck and good fortune in his future assignments and have full confidence that he will continue to work for Pak-China Friendship in whatever capacity he can, " he added.
The Minister reaffirmed the commitment of the government and the people of Pakistan to continue investing in the Sino- Pak relations.
In his brief remarks, Ambassador Luo said he went through a unique diplomatic experience during his stay in Pakistan that embodied with spirit of love and affection.
He said he was looking forward to act as Pakistan's ambassador in Beijing on return home. He termed his farewell meetings with President Asif Ali Zardari and Prime Minister Yousaf Raza Gilani as highly encouraging for playing more pro-active role in deepening their bilateral ties on all levels.

Saturday, October 2, 2010

Keeping it all in the family

Khalaf Al Habtoor, the founder and chairman of the Al Habtoor empire, had a well delineated succession plan in place for the family business to make a smooth transition into its second generation and ready to face up to the challenges thrown up by increasing competition and unforeseen economic forces in a rapidly globa lising world.
By making a clear separation between ownership and management, Khalaf put in place structures and rules that allocated rights and responsibilities among the children who stayed with him to continue the family business.
It is uncommon in the region to have succession plans in place before it is too late and conflicts emerge, fracturing familial relationships. Managing succession is a major challenge for the region’s private businesses, more so in the aftermath of the recent global slowdown, which is forcing changes upon them, according to the experts.
“Family businesses don’t survive that long for some inherent structural issues,” says, Mohammad Al Habtoor, son of Al Habtoor Group founder and chairman Khalaf Al Habtoor. “There is a general perception that as family size increases, the pie sometimes does not grow commensurately and different members have different views and objectives.”
He acknowledges the difficulty of keeping a family business alive beyond the second and third generations, but that can’t be a rule, he says.
Khalaf Al Habtoor, the patriarch, says he is less anxious when it comes to his family.
“Thank God my children are on the right track, and I taught them how to manage their business. But still you can’t see yourself in this modern generation and guarantee anything,” he says. “However, with prudent business planning this can be mitigated,” he adds.
Khalaf, 60, is worried how the new generations will take over the family business and stand amid the strong competition and challenges in the market, keeping the business as strong and efficient as it is now.
After working for three years with his father, the eldest, Rashid Al Habtoor, branched out on his own in 1993 to set up Al Habtoor Trading Enterprises. Today he runs his own diversified business in the Middle East and former states of the Soviet Union.
Mohammad and Ahmad, both educated in the US, and Amna, one of his three daughters, manage different segments of the group. Mohammad, 41, is CEO of the Al Habtoor Group, which is one of the biggest diversified business consortiums in the UAE — dominant in construction, hospitality and care sales — with interests in the UAE and UK. Ahmad, 32, is the chief of Habtoor Motors. Amna, who has a degree in law, looks after the education sector. But all three have had to earn it.

Foreign investors shifting focus away from emerging markets

With the US dollar strengthening due to the eurozone turbulence, the rupee is losing ground and foreign institutional investors (FIIs) are shifting their focus from emerging markets like India.
Analysts feel that the European debt crisis, which brought the euro to its lowest level in four years, coupled with a weak rupee, is leading to the FIIs cutting down their exposure in India. They are investing more in corporate and government bonds and gold in developed economies.
During the April-May period, the rupee has weakened by 3.5 per cent against the US dollar, while it had strengthened by 6.42 per cent against the euro in the same period.
“The Indian rupee continued its depreciation journey in the past fortnight as ongoing economic worries in the euro zone led to concern of another round of recession.

Obama demands more cash from BP over oil spill

President Obama will demand that BP provides more money to handle the Gulf of Mexico oil crisis and sets up a substantial fund to meet claims when he meets the company's senior executives for the first time later this week.
He wants BP to hand over the funds to an independent administrator to supervise the distribution to meet "legitimate" claims and speed up compensation payments to people and companies in southern US states who have either lost their jobs or business.
The president stepped up the pressure in advance of today's meeting of the BP board where directors will discuss whether to bow to earlier US demands to freeze dividend payments to its 314,000 shareholders. Transocean, operators of the Deepwater Horizon rig which caused the disaster after an explosion that cost the lives of 11 men, is pushing ahead with a $1bn (£687m) dividend payout to its shareholders despite calls for a standstill.
Analysis by The Daily Telegraph has revealed that BP's largest shareholders have cut their holdings in the troubled oil giant – with five of the group's top 10 shareholders selling shares in recent weeks.
The call for BP to dig deeper came as the company responded to an ultimatum to increase its efforts to contain the oil spill. US Coast Guard Rear Admiral James Watson accused BP of failing to have the right equipment or back-up plans, but the company said it was providing additional resources to recover more oil.
BP has indicated it is ready to suspend two quarterly dividend payments and place the money in an escrow account but a formal decision is unlikely before Wednesday's White House meeting between the President and Carl-Henric Svanberg, chairman, Tony Hayward, chief executive, Lamar McKay, chairman and president of BP America and Bob Dudley, a BP managing director.
President Obama, struggling to cope with public anger over his handling of the accident, plans to spend today and tomorrow in the Gulf to announce US government aid packages for the areas and businesses affected by the spill before returning to Washington for Wednesday's meeting, where observers question whether he will shake hands with Mr Hayward.
Mr Hayward is already in the US where he is being "groomed" for Wednesday's meeting and what is expected to be a tougher encounter on Thursday with a Congressional committee investigating the Gulf disaster. He will be hooked into today's board meeting by telephone.
David Axelrod, the President's chief political adviser, relayed the Obama demands for more cash on NBC's Meet The Press programme. He made it clear the President wants to see a substantial amount paid into an escrow account to meet growing claims. He said: "This is an ongoing crisis, much like an epidemic. Our mission is to hold them [BP] accountable in every appropriate way."
Bill McCollum. Florida's attorney general, has gone further, sending a letter to BP asking the company to put $2.5bn into an escrow account to cover potential losses.
BP has so far spent $1.4bn trying to cap the damaged well, contain the huge spill and provide compensation to businesses and employees. It has also promised to provide $350m for containment areas in Louisiana and has set aside $500m for long-term research into the spill.
BP's decision to consider a dividend freeze has been sharply contrasted with Transocean, the rig owner, which moved its headquarters from the US to Switzerland two years ago to ease tax bills. Transocean said the $1bn payout was announced in February and approved by shareholders on May 14, more than three weeks after the disaster and would not impact on its legal obligations resulting from the loss of the rig.
The company has also been accused of trying to limit its liabilities to just under $27m by using 159-year-old legislation, but after complaints by the US Justice Department it has agreed to consider claims under federal pollution and environmental laws.

Supermarket sales hit by economy fears

Tesco and J Sainsbury, two of the UK’s largest supermarkets, are both likely to confirm that sales across the supermarket sector have slowed markedly when they release trading updates this week.
Tesco, which shocked the market last week with news of the surprise departure of its chief executive, Sir Terry Leahy, is expected to say on Tuesday that like-for-like sales over its first quarter rose by between zero and 1.5pc, according to analysts’ forecasts. Some analysts have speculated that the figure could even fall. Clive Black, retail analyst at Shore Capital, said that he expects sales to be “flattish”, between -0.5pc to 0.5pc.
Meanwhile, Sainsbury’s is expected to say on Wednesday that like-for-like sales, including VAT, rose by between 0.5pc and 1pc over its first quarter. Excluding VAT, like-for-like sales are expected to have fallen by between 0.3pc and 0.5pc, according to some analysts’ forecasts.
Supermarkets across the board have been hit recently by rising petrol prices and the removal of food inflation from the market.
Just a year ago Tesco was seeing like-for-like sales growth of around 4pc while Sainsbury’s was seeing like-for-like sales growth of 7.8pc.
Bank of America Merrill Lynch said in a note to clients last week that Tesco and Sainsbury’s are “living with thin UK like-for-like sales”.
It said: “After visiting stores and having assessed the UK consumer outlook we reset our forecasts assuming a 1pc like-for-like industry growth for the remainder of 2010 and sub-par growth in 2011. Critically, we believe that the market will remain tough but rational and hence continue to see value in the UK grocers.”
It added, however, that a recent dip in petrol prices and the football World Cup could provide some relief to the chains.
“Ebbing comparative figures and easing petrol prices will help like-for-like sales as, short-term, as will the World Cup. Yet with an austere Budget well-flagged and the consumer finally taking note, we believe consumption will remain weak and, some may argue, will decline even for food retail,” the bank said.
Many observers believe that the slowdown should not cause too much concern and is an inevitable consequence of inflation coming out of the market. Consumers need food, no matter what is happening with the overall economy and inflation, analysts say.
Food retailers are, therefore, very defensive stocks for investors, it is argued.
In a note to clients last week, Deutsche Bank said: “We expect Sainsbury’s management will reassure on the profit outlook and believe it is unlikely that we get any other significant news in the statement given that the company fully updated the market at the time of its full-year results a month ago.”

Greece requests EU-IMF rescue in Euro’s biggest test

Greece called for activation of a financial lifeline of as much as 45 billion euros ($60 billion) this year in an unprecedented test of the euro's stability and European political cohesion.The appeal for help from the European Union and International Monetary Fund follows a surge in borrowing costs to what Greek Prime Minister George Papandreou called unsustainable levels that undermine efforts to cut a budget deficit of more than four times the EU limit. Greek bonds and stocks rallied after the announcement.
"There was no response from the markets, either because they didn't believe in the political will of the EU or because they decided to go on with speculation," Papandreou said today. "The situation threatens to demolish not only the sacrifices of the people but also the regular course of the economy. All the efforts by the Greek people are in danger of being in vain."
With national debt of almost 300 billion euros and investors demanding almost triple what they charge Germany for its 10-year bonds, Greece faces a fiscal mess that threatened to spread to Spain and Portugal, forcing the EU to set up a standby aid facility. At stake is the future of the euro 11 years after its creators gave the European Central Bank responsibility for interest rates while leaving budget policy in national capitals.
Rating Cut
The request came one day after the yield on the country's benchmark two-year note topped 11 percent, nearing that of Pakistan, and Moody's Investors Service lowered Greece's creditworthiness by one notch to A3, saying it was considering further cuts. After Papandreou's announcement, the 2-year yield declined 82 basis points to 9.41 percent.
The euro, which has slumped 7 percent this year as Greece undermined confidence in the single currency, rose from a one- year low yesterday of $1.3261 to $1.3311 today. Greece's ASE stock index gained 1.7 percent to 1892.32. The benchmark has shed almost a third of its value in the past six months as banks, the biggest holders of Greek bonds, slumped and concerns the crisis will lead to a prolonged recession hurt the rest of the market.
Activating the aid and turning over economic policy to EU and IMF oversight was "a new Odyssey for Greece," Papandreou said. "But we know the road to Ithaca and have charted the waters," referring to the return of mythological hero Ulysses to his island home.
One Roof
Economists including Harvard University Professor Martin Feldstein have said the single currency would falter because divergent economies couldn't fit under one monetary roof.
The Greek request needs approval from all 15 other euro- area countries including Germany, where surveys have shown public opposition to aiding Greece. BlackRock Inc., the world's largest money manager, has expressed concerns about a "backlash" from citizens in EU nations prepared to offer a lifeline.
"We want to see the EU countries really get behind it and see that they've gelled around the idea of providing this support at the government level, at the senior policy maker level," Curtis Arledge, chief investment officer of fixed income at BlackRock, said on April 13. "If you see the backlash, they need to get their people on board."
Discount Loans
The aid facility for Greece offers as much as 30 billion euros in three-year loans from euro-area nations this year at a below-market interest rate of around 5 percent. Another 15 billion euros are available from the IMF at even lower rates, EU officials have said. Greek officials started talks on April 21 in Athens with EU and IMF officials to set the conditions on funds before the loans are disbursed.
Those talks may last for at least two weeks. With Greece facing 8.5 billion euros of bonds maturing May 19 and little chance of tapping financial markets, Papandreou's request today could help speed distribution of the rescue funds.
"We are prepared to move expeditiously on this Request," IMF Managing Director Dominique Strauss-Kahn said today in a statement.
Under EU rules, governments must keep their budget deficits below 3 percent of gross domestic product. While the EU can penalize countries for breaching the limit, no nation has been sanctioned since the euro was introduced in 1999. Of the 16 euro region members, only Luxembourg and Finland had deficits within the limit last year.
Deficit Revisions
The government's deficit-cutting goal became questionable yesterday after Eurostat, the EU's statistics agency, revised up the 2009 shortfall to 13.6 percent of gross domestic product, and said it was considering a further revision to as much as 14.1 percent. The government in Athens had pledged to reduce the budget deficit by at least 4 percentage points of gross domestic product this year to 8.7 percent. When Greece first made that pledge, its starting point was a 2009 deficit of 12.7 percent. forced it now.
"The aid package will buy Greece time this year," said Colin Ellis, European economist at Daiwa Capital in London. "That's all that it has done. Greece still faces a herculean task to show that it can get its public finances in order and reduce its deficit."
Strikes, Protests
Greece's economy may contract 4 percent this year, twice as much as in 2009 and double the government's forecast, according to Deutsche Bank AG. After a wave of domestic protests against austerity measures, the government needs to raise almost 10 billion euros by the end of May to cover maturing bonds and another 20 billion euros by the end of the year to pay debt coupons and finance the deficit.
Greece failed to qualify for the euro area initially, joining two years later and only after understating its budget gap. With the euro, ECB interest rates that never exceeded 4.75 percent and EU funds to help build roads and airports, the country had economic growth of around 4 percent on an annual average basis -- one of the fastest in Europe -- until 2008 when Lehman Brothers Holdings Inc.'s collapse sparked a global financial crisis.
German Resistance
German politicians have expressed reluctance to aid Greece, citing the country's manipulation of statistics to qualify for euro entry and an EU treaty clause that prohibits bailouts.
Allies of Chancellor Angela Merkel, a Christian Democrat, criticized her for signing up to an April 11 European deal on the terms of any aid for Greece, saying she dropped an initial demand that subsidies be ruled out.
"Germany buckled under the pressure -- we shouldn't kid ourselves that such loans are anything but subsidies," Frank Schaeffler, deputy finance spokesman for Merkel's Free Democrat junior coalition partners, said at the time.
The Greek request for help also risks provoking a European fight with the IMF over control of the process, including the conditions. The rescue package covers three years and leaves open the sums of possible funding in 2011 and 2012.
The aid facility marked a compromise between French demands for the euro area to play the lead role and German insistence on involving the Washington-based IMF. On March 30, in a sign of the potential for conflict over supervision, IMF Managing Director Dominique Strauss-Kahn said his organization "will define the conditionality" of any rescue package for Greece.