Archive for January 2011
Posted January 31, 2011on:
Two Chinese state controlled banks have lent more to developing countries than the World Bank, according to a report.
The China Development Bank and the China Export Import Bank offered loans of at least $110 bn (£69.2 bn) to governments and firms in developing countries in 2009 and 2010.
The research was undertaken by the Financial Times newspaper.
Between mid-2008 and mid-2010, the World Bank’s lending arm issued loans of just over $100bn (£63bn).
The two Chinese banks do not publish a detailed breakdown of their overseas loans, so this research is based on public announcements about specific deals from them, their borrowers or the Chinese government.
That means the figure arrived at for the amount of Chinese lending is more likely an underestimate than an overestimate because some – more sensitive – loans will not have been made public.
The Chinese lenders are so-called policy banks – they have a mandate to further whatever Beijing sees as its national interest.
One of China Development Bank’s specific tasks is to try to alleviate and, where possible, eliminate bottlenecks in supplies of raw materials or land for China’s economy.
It also tries to open up foreign markets for Chinese companies.
The period looked at by the researchers included the worst of the global financial crisis.
When borrowing money it’s always good to have a Plan B in case a big creditor pulls the plug. That should be true whether the sum is a few thousand dollars or about a trillion, the size of the United States government’s debt to China.
With Chinese President Hu Jintao due to arrive in Washington on Tuesday, it is worth asking about U.S. officials’ Plan B just in case one day relations take a surprise turn for the worse and Beijing dumps its holdings of U.S. treasuries.
China is officially the United States’ biggest foreign creditor, with roughly $900 billion in Treasury holdings — or over $1 trillion with Hong Kong’s holdings included.
That means it could do severe damage to U.S. debt markets if it suddenly started selling large amounts.
Most experts say if there were signs of this happening, the U.S. government would go for a combination of persuading Americans to buy more U.S. debt, the same way they did in World War II, and finding friendly foreign governments to make additional purchases.
Banks could be called on to increase their holdings of treasuries, and as a last resort, the Federal Reserve could also be called on to fill the gap, though this could risk turning any dollar weakness into a slump.
“The U.S. government should have and maybe still could call on the people of the U.S. to invest in U.S. debt,” said David Walker, a former U.S. comptroller general who heads an advocacy group calling on the government to curb the U.S. budget deficit and borrowings.
To be sure, the idea that China would suddenly sell its U.S. debt holdings is almost unimaginable to some.
Beijing could also justify pulling back sharply from U.S. Treasuries if the dollar were to plunge, perhaps because of Washington’s failure to curb its budget deficit and debt.
“I worry that we could be at a tipping point,” said Eswar Prasad, a Brookings Institution economist and former International Monetary Fund official with responsibility for China.
“If the Chinese say ‘We’re not buying any more Treasuries,’ this could act as a trigger around which nervous market sentiment coalesces,” he said. “People could start wondering how the U.S. is going to finance its deficit.”
Global Fund Scam: Bono and Bill Gates exposed as Corrupt and Fraudulent?! Last time Bono gave little over 1% of Anti-poverty foundation ONE funds to Charities
Posted January 31, 2011on:
A $21.7 billion development fund backed by celebrities and hailed as an alternative to the bureaucracy of the United Nations sees as much as two-thirds of some grants eaten up by corruption, The Associated Press has learned.
Much of the money is accounted for with forged documents or improper bookkeeping, indicating it was pocketed, investigators for the Global Fund to Fight AIDS, Tuberculosis and Malaria say. Donated prescription drugs wind up being sold on the black market.
The fund’s newly reinforced inspector general’s office, which uncovered the corruption, can’t give an overall accounting because it has examined only a tiny fraction of the $10 billion that the fund has spent since its creation in 2002. But the levels of corruption in the grants they have audited so far are astonishing.
A full 67 percent of money spent on an anti-AIDS program in Mauritania was misspent, the investigators told the fund’s board of directors. So did 36 percent of the money spent on a program in Mali to fight tuberculosis and malaria, and 30 percent of grants to Djibouti.
In Zambia, where $3.5 million in spending was undocumented and one accountant pilfered $104,130, the fund decided the nation’s health ministry simply couldn’t manage the grants and put the United Nations in charge of them. The fund is trying to recover $7 million in “unsupported and ineligible costs” from the ministry.
The fund is pulling or suspending grants from nations where corruption is found, and demanding recipients return millions of dollars of misspent money.
“The messenger is being shot to some extent,” fund spokesman Jon Liden said. “We would contend that we do not have any corruption problems that are significantly different in scale or nature to any other international financing institution.”
To date, the United States, the European Union and other major donors have pledged $21.7 billion to the fund, the dominant financier of efforts to fight the three diseases. The fund has been a darling of the power set that will hold the World Economic Forum in the Swiss mountain village of Davos this week.
It was on the sidelines of Davos that rock star Bono launched a new global brand, (Product) Red, which donates a large share of profits to the Global Fund. Other prominent backers include former U.N. secretary-general Kofi Annan, French first lady Carla Bruni-Sarkozy and Microsoft founder Bill Gates, whose Bill and Melinda Gates Foundation gives $150 million a year.
Posted January 31, 2011on:
For investors, it is what is known as an exogenous event — a sudden political or economic jolt that cannot be predicted or modeled but sends shockwaves rippling through global markets.
Investors have largely shrugged off several of these unexpected developments recently, including the sovereign debt crisis in Europe, but the situation in Egypt has the potential to cause more widespread uncertainty, especially if oil and other commodities keep surging or the unrest spreads to more countries in the Middle East.
While Egypt’s banks and stock market were closed because of the protests there, other Middle Eastern markets declined in trading Sunday, with shares falling by 4.3 percent in Dubai, 3.7 percent in Abu Dhabi and 2.9 percent in Qatar. The markets rebounded slightly in early Monday trading.
By Monday afternoon, Asian markets were also trending lower, with the Nikkei 225 index in Japan falling 1.2 percent, while the Kospi in Seoul slid 1.8 percent and the Hang Seng in Hong Kong dropped 0.7 percent.
Even though the Asian-Pacific region has little direct exposure to Egypt, the unrest there helped damp investors’ risk appetite, which was already low before the Lunar New Year holiday later this week, analysts at DBS in Singapore wrote in a note.
Last week, the Dow Jones industrial average nearly surpassed the closely watched 12,000 level, but fell 166 points in late trading Friday as the protests in Egypt intensified and oil prices jumped 3.7 percent to $89.34.
With the United States economy seeming to gain a foothold only recently — government data released Friday showed the economy grew (only on paper) by 3.2 percent in the fourth quarter of 2010 — a sustained increase in oil prices could choke growth, analysts said. It could also undermine the more general optimism that lifted the Standard & Poor’s 500-stock index by 1.5 percent in January, after a 12.8 percent jump in 2010.
“A one-dollar, one-day increase in a barrel of oil takes $12 million out of the U.S. economy,” said Jason S. Grumet, president of the Bipartisan Policy Center, a Washington research group. “If tensions in the Mideast cause oil prices to rise by $5 for even just three months, over $5 billion dollars will leave the U.S. economy. Obviously, this is not a strategy for creating new jobs.”
Posted January 31, 2011on:
“We’ll be looking for the occasional celestial flash,” said Joseph Lazio, a radio astronomer at JPL. “These flashes can be anything from explosions on surfaces of nearby stars, deaths of distant stars, exploding black holes, or even perhaps transmissions by other civilizations.” JPL scientists are working with multi-institutional teams to explore this new area of astronomy.
An innovative new radio telescope array under construction in central New Mexico will eventually harness the power of more than 13,000 antennas and provide a fresh eye to the sky. The antennas, which resemble droopy ceiling fans, form the Long Wavelength Array, designed to survey the sky from horizon to horizon over a wide range of frequencies.
The University of New Mexico leads the project, and NASA’s Jet Propulsion Laboratory, Pasadena, Calif., provides the advanced digital electronic systems, which represent a major component of the observatory.
The first station in the Long Wavelength Array, with 256 antennas, is scheduled to start surveying the sky by this summer. When complete, the Long Wavelength Array will consist of 53 stations, with a total of 13,000 antennas strategically placed in an area nearly 400 kilometers (248 miles) in diameter. The antennas will provide sensitive, high-resolution images of a region of the sky hundreds of times larger than the full moon.
These images could reveal radio waves coming from planets outside our solar system, and thus would turn out to be a new way to detect these worlds. In addition to planets, the telescope will pick up a host of other cosmic phenomena.
The new Long Wavelength Array will operate in the radio-frequency range of 20 to 80 megahertz, corresponding to wavelengths of 15 meters to 3.8 meters (49.2 feet to 12.5 feet). These frequencies represent one of the last and most poorly explored regions of the electromagnetic spectrum.
Posted January 31, 2011on:
Authoritarian governments across the world are aggressively stockpiling food as a buffer against soaring food costs which they fear may stoke popular discontent.
Commodities traders have warned they are seeing the first signs of panic buying from states concerned about the political implications of rising prices for staple crops.
However, the tactic risks simply further pushing up prices, analysts have warned, pushing a spiral of food inflation.
Governments in Asia, the Middle East and North Africa have recently made large food purchases on the open market in the wake of unrest in Tunisia which deposed president Zine al-Abidine Ben Ali.
Resentment at food shortages and high prices, as well as repression and corruption, drove the popular uprising which swept away his government.
Youths reportedly chanted “bring us sugar!” in the demonstrations which toppled his regime.
Algeria purchased 800,000 tonnes of milling wheat on Wednesday and Saudi Arabia has said it will purchase enough wheat for a 12 month reserve.
Egypt, which has seen several days of unrest in part provoked by high food prices, is expected to follow.
Bangladesh has tripled its rice import target and Indonesia this week bought 820,000 tonnes of Thai rice.
Jim Gerlach, of commodity brokerage A/C Trading, said: “Sovereign nations are beginning to stockpile food to prevent unrest.” “You artificially stimulate much higher demand when nations start to increase stockpiles.”
“This is only the start of the panic buying,” said Ker Chung Yang, commodities analyst at Singapore-based Phillip Futures. “I expect we’ll have more countries coming in and buying grain.”