Biggest economies try

The World Climate Change conference will take place in the Danish capital in December.
A senior Republican in the United States Senate, conservative Senator Lisa Murkowski, said she would consider voting for a "cap and trade" climate change bill Democrats are pushing if it also contains a vigorous expansion of nuclear energy and domestic oil drilling.

In an interview set to air on Sunday on the C-SPAN cable TV network, Murkowski said cap and trade legislation, which aims to mandate reductions of carbon dioxide and other greenhouse gas emissions, must protect consumers from energy price increases and contain safeguards against market manipulation of pollution permits that would be traded by companies.

Some of these elements already are included in Democratic legislation in the Senate and House of Representatives.

"Count me as one of those who will keep my mind open as we move forward," said Murkowski, the senior Republican on the Senate energy panel and a member of her party's leadership.

Murkowski's remarks came after her fellow conservative, Senator Lindsey Graham, published a column in The New York Times with liberal Senator John Kerry, in which they vowed to work together to advance legislation tackling global warming.

In signaling her willingness to work on a bill, Murkowski said Democrats must include tangible incentives for building nuclear power plants and stepping up domestic oil drilling, offshore and on land. It has got to be "more than just window dressing," she warned.........

Representatives of the world's 17 biggest and most polluting nations gather Sunday to search for a breakthrough on financing efforts to contain climate change and reduce gas emissions causing global warming.

Pressure has been mounting for the United States to finalize its position before a decisive December conference in Denmark meant to cap two years of negotiations on a global climate change treaty.

"With only 50 more days to go before the final talks at Copenhagen, we have to up our game. Britain is determined to throw everything at this because the stakes are so high," British Environment Minister Ed Miliband said in a statement released Sunday.

Earlier Miliband had said it was "important that the U.S. makes as much progress as possible" at the two-day meeting of the Major Economies Forum.

The Obama administration said the pace of its action was determined by the U.S. Congress, where climate bills were making their slow way toward legislation — an argument which cut little ice with other negotiators.

"The rich countries of the Major Economies Forum must urgently put new money on the table to ensure the developing world can grow cleanly and adapt to the effects of climate change, which are already putting millions of lives at risk," said Asad Rehman of Friends of the Earth.

Miliband said there had been some progress.

"We have seen countries moving toward each other: India, Japan, China and Indonesia have all made significant shifts in the past few weeks," Miliband said.

"As the deadline races toward us, it becomes more important to narrow the gaps between countries as fast as we can," he said.

One further negotiating session is set for November in Barcelona, Spain.

But pessimism was mounting that a deal can be struck without policy changes at the highest level.

"In recent months, the prospects that states will actually agree to anything in Copenhagen are starting to look worse and worse," Rajendra Pachauri, head of the U.N. scientific panel studying climate change, wrote on the Newsweek Web site posted Friday.

President Barack Obama initiated the Major Economies Forum earlier this year as an informal caucus to quietly deal with the toughest problems. Participants agree to keep the talks confidential.

A key issue is helping poor countries adapt to changes in the Earth's climate that threaten to flood coastal regions, make farming unpredictable and spread diseases. They also need funds and technologies to develop their economies without overly increasing pollution.

Estimates range in the hundreds of billions of dollars needed every year, but a formula for raising, administering and distributing the funds has proved elusive.

"Only bold pledges by rich countries to slash their emissions by at least 40 percent by 2020 without carbon offsetting and a commitment to provide at least $200 billion of new money will break the current logjam," Rehman said.

Biggest economies try

US retail sales fell in September by the largest amount in 2009

The Commerce Department said sales slid 1.5%, not as bad as expected, but the biggest drop since December last year.
Car sales dropped by 10.4% but when vehicles were stripped out, retail sales actually rose by 0.5%, better than the 0.2% which had been forecast.
Consumer spending makes up more than two thirds of US economic activity.
A late Labor Day holiday helped retailers last month because consumers purchased some items in September that they would normally have bought in August, analysts said.
'Expected'
The 1.5% drop in September's retail sales followed a 2.2% rise in August, which was revised down from an earlier estimate of 2.7%.
That came as demand for new cars surged in August as buyers took advantage of the final month of the government's incentives of up to $4,500 to trade in old models for more fuel-efficient cars.
The Commerce Department figures showed that sales in furniture stores jumped 1.4%, reflecting the rebound in the housing industry. Meanwhile, sales at general merchandise stores such as Wal-Mart and Target, rose 0.9%.
"Certainly the numbers were better than expected," said Scott Brown, chief economist at Raymond James Associates.
"You did see a big drop in vehicle sales as cash for clunkers expired, which was in line with expectations."

New York Late Money Rates

New York Late Money Rates ,,,,,,
Wall Street Journal ...........
Money Rates Monday, July 6, 2009 The key U. S. and foreign annual interest rates below are a guide to general levels but don't always represent actual transactions. Prime Rate: 3.25% (effective 12/16/08). The base rate on corporate loans posted by at least 75% of the nation's 30 largest banks. Discount Rate (Primary): 0.50% (effective 12/16/08). Call Money: 2.00% (effective 12/16/08). Commercial Paper: Placed directly by General Electric Capital Corp.: 0.21% 30 to 30 days; n.q.31 to 49 days; n.q.50 to 89 days; n.q.90 to 119 days; n.q.120 to 125 days; n.q.126 to 141 days; n.q.142 to 151 days; n.q.152 to 161 days; n.q.162 to 270 days. Euro Commercial Paper: Placed directly by General Electric Capital Corp.: 0.36% 30 days; 0.56% two months; 0.75% three months; 0.83% four months; 0.90% five months; 0.98% six months. Dealer Commercial Paper: High-grade unsecured notes sold through dealers by major corporations: 0.35% 30 days; 0.40% 60 days; 0.45% 90 days. Certificates of Deposit: 0.35% one month; 0.45% three months; 0.80% six months. Bankers Acceptances: 0.40% 30 days; 0.48% 60 days; 0.55% 90 days; 0.55% 120 days; 0.75% 150 days; 0.85% 180 days. Source: Tullett Prebon Information, Ltd. Eurodollars: 0.65% - 0.25% one month; 0.75% - 0.35% two months; 1.00% - 0.40% three months; 1.00% - 0.40% four months; 1.15% - 0.45% five months; 1.25% - 0.55% six months. Source: Tullett Prebon Information, Ltd. London Interbank Offered Rates (Libor): 0.30188% one month; 0.54813% three months; 1.03125% six months; 1.51375% one year. Effective rate for contracts entered into two days from date appearing at top of this column. Euro Libor: 0.66000% one month; 1.03625% three months; 1.26500% six months; 1.45375% one year. Effective rate for contracts entered into two days from date appearing at top of this column. Euro Interbank Offered Rates (Euribor): 0.684% one month; 1.048% three months; 1.268% six months; 1.456% one year. Source: Reuters. Foreign Prime Rates: Canada 2.25%; European Central Bank 1.00%; Japan 1.475%; Switzerland 0.51%; Britain 0.50%. Treasury Bills: Results of the Monday, July 6, 2009, auction of short-term U.S. government bills, sold at a discount from face value in units of $1,000 to $1 million: 0.190% 13 weeks; 0.285% 26 weeks. Tuesday, June 30, 2009 auction: 0.160% 4 weeks. Overnight Repurchase Rate: 0.23%. Source: Garban Intercapital. Freddie Mac: Posted yields on 30-year mortgage commitments. Delivery within 30 days 4.95%, 60 days 5.05%, standard conventional fixed-rate mortgages: 2.50%, 2% rate capped one-year adjustable rate mortgages. Fannie Mae: Posted yields on 30 year mortgage commitments (priced at par) for delivery within 30 days 4.932%, 60 days 5.027%, standard conventional fixed-rate mortgages. Merrill Lynch Ready Assets Trust: 0.05%. Consumer Price Index: May, 213.9, down 1.3% from a year ago. Bureau of Labor Statistics. Federal Funds: 0.313% high, 0.125% low, 0.150% near closing bid, 0.250% offered. Source: Tullett Prebon Information, Ltd. Federal-funds target rate: 0.000% (effective 12/16/08).

Microsoft Money Plus ....

As proof that a combination of a large bank account and persistence aren’t everything, Microsoft is discontinuing its Microsoft Money software. The notification has officially been released:

With banks, brokerage firms and Web sites now providing a range of options for managing personal finances, the consumer need for Microsoft Money Plus has changed. After suspending annual updates of Money Plus in 2008, Microsoft is announcing today that we will no longer offer Microsoft Money Plus for purchase after June 30, 2009.

We would like to thank the many dedicated users who have been enthusiastic supporters of Microsoft Money over the years, as well as our partner financial institutions who helped pioneer a digital vision of financial management.

Well, perhaps that would be more truthfully stated as following the pioneer in a digital vision of financial management, otherwise known as Intuit. In the 1990s, Microsoft heavily dogged the maker of Quicken, hoping to take a significant portion of what became a popular type of consumer application. But Intuit managed to out-maneuver and out-compete Microsoft time and time again.

The writing was on the wall for this move. Last August, Microsoft took Money off retail shelves and ended its commitment to annual updates. The explanation was that people were changing the ways they bought software. That might be another way of saying that selling anything at retail is an expensive business, with money going to retailers and distributors and, in the large chains, the demand for contributions for “marketing” the product. Given the cost of supporting an application, you have to wonder whether Microsoft might not have come out farther ahead by dropping the product years ago.

Money talk at conventions

Money talk at conventions
When roughly 5,000 museum professionals from across the country descend on Philadelphia this week for two conventions, they will represent institutions that exhibit everything from Old Masters to old rocks.

But despite the multiplicity of interests and the range of institutional sizes and locations, there will be one thing on everyone's mind.

Money.

"That is topic A, B, C, and D," said Dewey Blanton, spokesman for the American Association of Museums, which holds its annual meeting at the Convention Center from Thursday through next Monday.

The same could be said for members of the Association of Children's Museums, which meets at the Sheraton Philadelphia City Center tomorrow through Thursday.

While museum attendance is largely steady - or even up - and tickets have not taken a heavy hit, contributed income is down almost everywhere. Corporations are just not in a giving mood these days. Public funding from states and municipalities is down across the country. And endowment investments have been uniformly walloped.

So museums, like other nonprofit groups, are in pain. Budgets have been frozen, staffs cut, and costs reduced wherever possible. At the same time, fiscal angst has forced a relentless rethinking of operations and programming. The isolated, high, and mighty temple of culture is out; the networking community partner is in.

Nancy Kolb, head of the Please Touch Museum at Memorial Hall, host of the children's museum convention, said that despite building recessionary pressures, the number of U.S. museums for young people continues to grow. Her museum's move into Memorial Hall in West Fairmount Park, she said, has produced attendance numbers well ahead of projections.

The UK economy could decline for another year and take a further two years to recover

A National Institute of Economic and Social Research study says the current economic decline is "very similar" to the slowdown at the start of the 1980s.

The latest estimate predicts a 1.5% decline in the first quarter of 2009.

In a separate study by Nationwide, UK consumer confidence fell in March as worries continued about jobs.

The building society's consumer confidence index dropped two points to 41.

The Bank of England's Monetary Policy Committee (MPC) begins its latest interest rate-setting meeting on Wednesday, with its decision due to be announced at midday (1300 GMT) on Thursday.

The MPC is not expected to cut the Bank rate further from its current record low of 0.5% having cut the rate six times since October in attempt to boost the economy.

Jobs market

UK unemployment recently hit two million for the first time since 1997.

Nationwide said consumer confidence was "broadly stable since the start of the year, but feelings about the current labour market have weakened".

"Further reports of job losses are likely to have affected consumers' views of this," the report said.

Nationwide said consumers' confidence fell for the ninth consecutive month in March.

The building society's survey came as a report from the Recruitment and Employment Confederation/KPMG showed little sign of a strong recovery in the number of permanent jobs available in the UK.

Although its "permanent placements indicator" rose to 33.5 in March from 30.3 in February, that was still well below the 50 level, where growth begins.

"These latest figures leave no doubt that the UK jobs market is at its worst in the 11-year history of the survey and recovery might take longer and be more protracted than many hope," said Mike Stevens, partner and head of business services at KPMG.

However, the Nationwide's survey of 1,000 consumers indicated that they had became more optimistic about UK economic conditions.

"Increased optimism towards the current and future economy is encouraging," said Nationwide's Fionnuala Earley.

IBQ: Calls grow for new global currency; Euro drops again

The foreign exchange market remained highly volatile last week with the US Dollar starting weaker across the board to end the week on a stronger footing, driven by plans and announcements from the US Federal Reserve and US Treasury. The Euro dropped to 1.3255 levels after reaching a high of 1.3735. The Sterling Pound ended the week at 1.4320 after trading between the high and low of 1.4778 and 1.4266. The Japanese Yen dropped to 98.80 levels after reaching a high of 95.40. Finally, the Australian Dollar and Swiss Franc range traded between 0.6893 to 0.7093 and 1.1168 to 1.1435, respectively.

Calls for new global currency
Last week, China’s Central Bank proposed replacing the US Dollar as the international reserve currency with a new global system controlled by the International Monetary Fund (IMF), aiming to create a reserve currency that is disconnected from individual nations and is able to remain stable in the long run. China being the largest holder of foreign exchange reserves, around $2tn, of which around 80 percent is estimated to be in US Dollar, might be concerned about the potential inflationary risk of the US Federal Reserve printing money.
Despite the fact that any shift away from the dollar as a reserve currency would have a massive impact on the US markets, Tim Geithner initially said that the US is willing to explore China’s proposal to give a synthetic global currency a larger role in the international financial system. He also said that the future of the US Dollar in the world system would rest on the US government’s ability to overcome the financial crisis. However, he later mentioned that such a move could take years to implement and that dollar will keep its status as the top reserve currency for a long time. The comments had a major impact on the FX market as the US Dollar dropped substantially when the news came out.

Top Earners in New York

Top Earners in New York ........

Gov. David A. Paterson and leaders of the Legislature have reached a deal to temporarily raise taxes on New York’s highest earners in order to close the state’s yawning budget deficit, lawmakers and officials involved in the talks .

The plan would raise $4 billion a year by creating two new tax brackets, the highest one affecting those who earn $500,000 or more. If approved by rank-and-file lawmakers in the Assembly and State Senate, the tax increases would be a major victory for unions and liberal advocacy groups and a signal of the new balance of power in Albany, where Democrats won control of both houses of the Legislature and the governor’s office in last year’s election.
Although the proposed tax has been called a “millionaires’ tax,” it would affect those with incomes starting at $300,000, who would be taxed at a rate of 7.85 percent. The highest bracket would carry a tax rate of 8.97 percent — the same as New Jersey’s current highest rate.
Officials said that Mr. Paterson, who has argued for months that new income taxes should be a last resort in balancing the budget, accepted the plan after winning significant spending cuts in areas like health care and education.

Mr. Paterson’s willingness to accept the new taxes reflects, in part, how rapidly the state’s finances are deteriorating. Since proposing his budget in December, projected tax revenues for the fiscal year beginning April 1 have dropped by $3.2 billion, while rising Medicaid caseloads will cost $750 million more than originally projected for this year and next year. That shift has left Mr. Paterson and lawmakers with little choice but to employ every possible mechanism to shrink budget gaps.

But the deal also reflects the leverage held by Sheldon Silver, the powerful Assembly speaker, over both Mr. Paterson, whose public approval ratings are low, and Malcolm A. Smith, the Senate leader, whose 32-to-30 Democratic majority has proved difficult to steer.
Mr. Smith’s conference had hoped for a more radical overhaul of income taxes, one that would have created as many as nine brackets and raised as much as $5 billion, some of which could have been used to offset property taxes for homeowners — a major concern for upstate and suburban voters in swing districts. Senate Democrats said Mr. Silver balked at the idea of using any income tax increase to offset property taxes, and Assembly officials said the Senate’s plan was not workable and its financial projections were inaccurate.
However, in a concession to Senate Democrats, Mr. Silver agreed to allow the new taxes to be phased out after three years, rather than the five years he had originally advocated — a time period that would have created enormous political pressure to maintain the increase indefinitely. In a concession to Mr. Paterson, who favored a simpler structure, the three-bracket rate favored by Mr. Silver was reduced to two.
“Raising the personal income tax is going to make it harder for New York to recover economically.

The U.S. economy does not survive

Over the American economy's disappearing jobs and plummeting growth, here's mind bender for you: There is no U.S. economy. The national economy, as we traditionally think of it, is a myth. A fake. Over.
So contend Bruce Katz, Mark Muro and Jennifer Bradley in the latest issue of the journal "Democracy." The United States is not a single unified economy, they say, nor even a breakdown of 50 state economies. Instead, the country's 100 largest metropolitan regions are the real drivers of economic activity, generating two-thirds of the nation's jobs and three-quarters of its output. The sooner we reorient federal economic policies to support this "MetroNation," the quicker we can fix the mess we're in.
"America can no longer pretend that it is a single economy, nor can it imagine that it is a nation of independent, small towns, punctuated by large but isolated urban centers," the Brookings Institution scholars argue. "It must embrace its metropolitan future."
The authors criticize one-size-fits-all federal rules -- on everything from transportation infrastructure policy to workforce training programs -- that stifle the creativity of metro areas and hamper their ability to tailor growth and development efforts to local needs.

But before trying to rework the relationship between the states and Washington, step one may be rethinking what we should even call these places. The "California" economy is really the "San Francisco-Los Angeles-San Diego-San Jose" economy, with those metro areas making up 72 percent of the state's GDP. And Chicago is not Chicago, but the "Chicago-Naperville-Joliet, IL-IN-WI" region, the authors write, almost apologetically. "Unwieldy as they may be, these bureaucratic handles encode the boundary-jumping, state-spanning, increasingly complex reach of metropolitan life."

A succesful U.S. Treasury plan to rid bank balance sheets of poorly performing assets may be the key to unclogging the arteries of global credit marke

New U.S. bank diagram welcomed by funds and debt markets. U.S. Treasury Secretary Timothy Geithner provided further details of the complex program which could rid U.S. bank balance sheets of up to $1 trillion of bad assets. The highlight of the programs was the generous financing offered by the government to persuade private investors to participate.
The Treasury plans to team with investors to buy up to a half-trillion dollars of bad bank assets in hopes of opening up lending again.

An earlier smaller $80 bln plan, known as the Super SIV, failed in October 2007, and the original $700 bln Troubled Assets Relief Program (TARP) failed in late 2008 due to a lack of participation by private investors.
Early market reaction to the U.S. Treasury's latest plan appeared to be more positive on Monday.
"My own view is the plan is a sensible one," Byron Wien, chief investment officer of Pequot Capital Management, told the Reuters Private Equity and Hedge Fund Summit on Monday. "This is a PIMCO, BlackRock sort of thing, where some credit-oriented hedge funds will participate."
The plan is being launched at a time when lawmakers are furious about big bonus payments to executives at bailout recipient American International Group.
In an effort to spur investor participation, U.S. Treasury Secretary Timothy Geithner said private partners in his plan will not face the tough executive pay restrictions that apply to recipients of government bailouts.
GENEROUS INCENTIVES
The main incentive for private investors to participate in the latest U.S. Treasury plan appeared to be generous financing terms to boost the return on the investment.
As well as the initial financing from the Treasury and private investors, the Federal Deposit Insurance Corp (FDIC), a U.S. banking regulator, and the Federal Reserve will be tapped to offer further financing.
Under one part of the plan focused on bad loans, the Treasury will provide up to 80 percent of initial capital alongside investment by private funds. The FDIC would then offer debt financing for up to six times the pooled amount.
In addition, the Treasury will approve up to five investment managers and match their money one-for-one. It will then offer debt financing for 50 percent of the combined capital pool to buy securities banks want to unload.
Two major U.S. money managers, BlackRock and PIMCO, expressed interest in participating in the toxic-assets plan, which could produce big profits.
"From PIMCO's perspective, we are intrigued by the potential double-digit returns as well as the opportunity to share them with not only clients but the American taxpayer," Bill Gross, PIMCO's co-chief investment officer, told Reuters in an interview.

The Australian share market ended higher Monday amid growing expectations U.S.

Australia Shares End 2.4% Higher on US.The Australian share market ended higher Monday amid growing expectations U.S. Treasury will please investors with details of its plans to rid troubled banks of toxic assets.

The big local banks and miners led the S&P/ASX 200 up 2.4%, or 84.5 points, to 3550.3 despite the Dow Jones Industrial Average falling 1.65% Friday.

U.S. Treasury Secretary Timothy Geithner is expected to reveal a three-pronged program to deal with troubled assets on banks' books later Monday involving a series of public-private investments.

A senior trader at a large investment bank noted that DJIA futures had risen 1.7% in anticipation of Geithner's announcement.

"There are press reports circulating that it's going to be a pretty proactive plan of significant size," the trader said.

There is also mounting speculation that Japan is devising another national stimulus package, the trader said. Asian stocks rose in afternoon trading Monday, with the Nikkei up 2.5% and the Hang Seng up 3.1%.

Australian banking stocks all posted solid gains with Australia & New Zealand Banking Group up 4.8% to A$15.25 and Westpac Banking Corp. up 4.3% to A$18.95.

Market leader BHP Billiton added 3.5% to A$33.32 and rival diversified miner Rio Tinto surged 7.9% to A$50.53.

The senior trader said that in the short-term, there still seems to be momentum behind a recent two-week rebound in global equities. "But what we're finding is more clients would like to see the market consolidate for a while before continuing the recovery," he said. "But in these extraordinary markets, who knows."

Lisa Jarvis, a private client advisor at ABN AMRO Morgans in Sydney, said sentiment remains cautious, with the market still watching for signs of whether the U.S. stimulus and bailout packages are making a significant impact.

Also making news Monday, Oz Minerals requested a trading halt on its shares ahead of an announcement on regulatory approvals relating to the A$2.6 billion takeover offer for the struggling copper, gold and zinc miner by China Minmetals Nonferrous Metals Co.

factors are personal characteristics and evolutionary explanations.

American consumers are at their lowest level of confidence

According to the government report, the CPI rose 0.4% in February, the largest one-month gain since July of last year and to make matters worse, the rate of inflation came on top of a 0.3% increase the prior month.

With lawmakers focusing on the governments economic bailout plan, the price of gasoline was to blame for the largest segment of consumer inflation whereas prior to the presidential election Democrats were grandstanding loudly about manipulation of fuel prices until after their Party won the White House. Now that Dems are in control of Congress its all about spending while taxpayers are put on the line to foot the bill.

Tuesday, energy prices rose as hints of an end to the US recession took hold on the commodity exchange trading floor in New York. If the recession is showing signs of ending, energy price speculation will only inflate the cost consumers pay at the pump and could give rise to even more inflation when the government releases its next Consumer Price Index for March.

Today's CPI report showed that February core consumer prices, which exclude energy and food, rose 0.2%, the same level of inflation when compared to January.

Energy prices rose 3.3% in February, the biggest month-over-month gain since last July when prices jumped 8.3%. But the good news is, when comparing the rate of inflation for energy in February to the year-ago period, consumer prices were down 18.5%. But a year-ago, consumers were still in a spending mood, unaware that a recession was at hand.

The US Department of Labor also indicated in its February CPI report that clothing costs increased 1.3%, the biggest monthly gain in 18 years. Auto prices also rose in February, gaining 0.8%, which was the highest rate of inflation since the Fall of 2004.

In other economic news, producer prices inched up 0.1% in February compared to a 0.8% gain the prior month. The PPI, which tracks the rate of inflation on prices received by farms, factories and refineries, indicates alongside today's consumer inflation rate that economic deflation concerns have decreased.

Deflation would mean an economic downward spiral that could push the US economy into a depression. But in looking back to February of 2008, the government now admits that the US economy was already headed towards a recession. That being the case, a year from now, the Obama administration may come clean in calling the current economy depressed.

The rate of unemployment will continue to remain high and while signs of recovery are around, factory workers at the world's biggest heavy equipment maker, Caterpillar (NYSE: CAT), were told that an additional 2,400 of them were being laid off, 1,700 of those in Illinois where Caterpillar is headquartered.

Thursday, the US Department of Labor will release its weekly initial jobless claims report that is expected to show continuing high levels of unemployment.

While the rate of inflation continues to rise for consumers, job security remains the number one issue in US households.

The U.S. mantra of spend, spend, spend is starting to wear thin on the other side of the pond.

Treasury Secretary Timothy Geithner testifies on Capitol Hill Thursday before the Senate Budget Committee.

Europeans Could Balk at Geithner's Call for More Spending.the U.S. calls for more spending to jumpstart the global economy, more Eastern European countries are coming to the table hat in hand, looking for financial help from the International Monetary Fund and other groups .

European countries appear to be at odds with Treasury Secretary Timothy Geithner's fresh calls to unleash more stimulus money and free up a half-trillion dollars to lend to struggling countries.
It could lead to a tense discussion as Geithner heads to Britain to meet with finance officials from the Group of 20 nations Friday and Saturday. Those meetings come ahead of an April 2 summit of the G-20 in London.
As the U.S. calls for more spending, more Eastern European countries also are coming to the table hat in hand, looking for financial help from the International Monetary Fund and other groups -- but does the rest of the world have the money to give?
"We're just getting into the worst of the crisis in a global sense," said Ralph Bryant, a senior fellow at the Brookings Institution who specializes in international economic issues. "Many developing countries ... are just beginning to feel the really bad effects."
But European Union leaders recently rejected a request from Hungary for $241 billion in bailout money for the region.
"I think they're on a different page," Bryant said of U.S. and European financial officials. He said the calls by the U.S. for more stimulus money and international aid likely will stir controversy at the upcoming meetings.
Geithner on Wednesday called for a tenfold increase in the size of an emergency fund the IMF uses to help countries in trouble -- to as much as $500 billion. He also endorsed the IMF's call for countries to enact stimulus packages worth, on average, 2 percent of their GDP.
But in a report last week, the IMF said the U.S. was the only one of the world's seven rich industrial nations -- the Group of Seven -- on track to meet that goal.
"I think that the United States has actually taken a significant lead on a number of these steps that are required," President Obama said Wednesday, calling for "concerted action around the global to jumpstart the economy" at the G-20 meeting.
Some European nations are reticent to take on the kind of national debt the United States has been accumulating in recent months. European critics have charged that the United States' demand for increased stimulus spending was an effort to divert a European call for a major overhaul of regulations governing the financial system to curb the types of excesses in the U.S. that spawned the crisis. At a meeting this week of finance ministers of the 27-nation European Union, officials said they were doing enough already to support the world economy.
"Recent American appeals insisting that the Europeans make an additional budgetary effort to combat the effects of the crisis were not to our liking," Luxembourg Finance Minister Jean-Claude Juncker was quoted as saying after the meeting.
German Finance Minister Peer Steinbrueck recently said finance ministers from the EU's 27 nations were not pleased at U.S. suggestions that Europe has not done enough to stimulate the global economy.
Germany has been criticized for its reluctance to spend and stimulate its economy, Europe's largest. Their stimulus package was about 1.5 percent of its GDP this fiscal year, according to the IMF report. France's was about half that. (Meanwhile, countries like China and Saudi Arabia met or exceeded the United States' level of stimulus spending.)
However, European nations apparently are preparing to sign on to at least a partial version of the calls by the U.S. for more IMF funding.
The Times of London reported Thursday that the European Union was considering lending between $75 billion and $100 billion to the IMF to boost its lending ability. The Union also reportedly is calling for countries to help double IMF resources from $250 billion to $500 billion.
That $250 billion includes the $50 billion fund that the United States is talking about increasing. Calls to boost the fund have mounted as developing countries hit hard by the global downturn, particularly in Eastern Europe, have so far tapped about $50 billion from the IMF since November.
It's unclear whether European nations will go as far as Geithner is suggesting in helping the IMF, however. Bryant said a number of European countries favor raising some of the money from powerhouses like China, rather than shouldering so much of the cost.
The IMF reacted favorably to Geithner's announcement.
"We welcome the proposal from the U.S. Treasury. It's a very positive step toward assuring the global financial system that the IMF has the appropriate level of resources to meet the needs of its members," IMF spokesman William Murray said. He said the IMF is "optimistic" it can at least double its resources in the way the EU is suggesting.
Japan already has committed to lending an additional $100 billion.
Obama and Geithner kept high hopes about the upcoming meetings.
"I'm actually optimistic about the prospects," Obama said Wednesday, citing recent meetings he had with British Prime Minister Gordon Brown and Japanese Prime Minister Taro Aso.
"Everybody understands that we're in this together. I think the G-20 countries are going to be seeking a lot of cooperation."
Geithner said he would seek to build a "new consensus" in London on how to establish a "substantial and sustained program of support for recovery and growth."

Switzerland is relaxing key bank secrecy laws

UK Prime Minister Gordon Brown yesterday hailed announcement that Switzerland is relaxing key bank secrecy laws .Switzerland, Austria and Luxembourg announced a relaxation of their banking secrecy laws on Friday (13 March) following mounting pressures on both sides of the Atlantic to crack down non-cooperating tax zones.
The news comes only one day after Liechtenstein and Andorra made similar declarations, as a number of financial centres around the world attempt to pre-empt any decision coming out of the G20 leaders summit on 2 April.

As western governments feel the pinch due to expensive stimulus spending projects coupled with reduced tax receipts, the spotlight has been turned on a handful of geographic locations that profit by harbouring capital owned by companies and wealthy individuals from abroad.

The Swiss government said on Friday that it intends to adopt OECD standards on the sharing of banking information between different countries, citing its desire to avoid being placed on the organization's 'black list' of tax havens.
UK Prime Minister Gordon Brown said the changes were "the beginning of the end of tax havens." "Tax evasion, which costs the global economy billions of pounds each year, will become more difficult in future."

UBS bank plans to cut up to 5,000 senior and management jobs

Switzerland's biggest bank UBS cutting 5,000 senior and management jobs in the next few weeks.
2,500 management positions could go in UBS's dominant and profitable wealth management division, which accounts for 50,000 of the bank's total 77,000 staff.

A UBS spokesman declined to comment on the report.

Last week UBS said it was restructuring its Swiss business structure into four regions from eight, and trimming its top management. But it said the changes did not mean any more job cuts than the 600-800 positions it already plans to cut in Switzerland as part of thousands of job losses globally.

In February UBS said after announcing a record loss it would cut 2,000 jobs to take staff to about 75,000 by the middle of this year.

UBS is struggling to rebuild its once powerful brand and focus on its core Swiss business after massive investments in risky U.S. assets forced it to make more writedowns than any other European bank and accept government backing.

Private money helping US banks

The San Francisco Chronicle's largest employees' union has approved a tentative labor agreement

Chronicle union agrees to agreement concessions.SF record workers agree cost-cutting actions.Union members passed the agreement Saturday by a 10-1 margin, said Chronicle reporter Michael Cabanatuan, president of the Northern California Media Workers Guild. The union represents about 500 editorial, advertising and circulation workers.

The concessions include less vacation time and longer work weeks for the same wage.

"As I've mentioned before, this agreement is critical to ensuring the survival of The Chronicle," said Frank Vega, the paper's chairman and publisher, in an internal memo to employees. "I appreciate the willingness of our employees to work with us to make the difficult decisions that need to be made during these difficult times."

The Chronicle's owner, Hearst Corp., has warned that it would be forced to sell or close the paper if expenses were not reduced quickly. The company reported that The Chronicle lost more than $50 million in 2008 and was expected to lose even more than that this year.

The union is bracing for the paper to cut about 150 guild-covered jobs, Cabanatuan said. The newspaper's management had threatened to lay off 225.

The agreement approved Saturday also includes a better severance package for employees who are laid off or accept buyouts than was previously offered. They will receive two weeks of pay per year of service — not to exceed one year's salary — and health benefits for the length of the severance package.

Even with a tentative agreement approved, there remains another key hurdle: getting similar concessions from the International Brotherhood of Teamsters Local 853, which represents about 420 other employees.

Frank J. Vega, chairman and publisher of The Chronicle, said in a statement earlier this week that an agreement with the Teamsters is needed "to ensure the newspaper's survival."

President Barack Obama says economy is causing a lot of families "incredible pain and hardship

President Barack Obama says Economy causing many 'incredible pain' but the government is providing them help.
The president spoke to reporters in the Oval Office on Friday after getting an update from economic adviser Paul Volcker. Obama said his administration is working on both short-term help and long-term economic recovery plans. He says the capacity of American workers and industry is undiminished.


Obama Voices Optimism on the Economy
Obama said the goal is a new "post-bubble" economic model. He says the days of relying on an inflated housing market and maxed-out credit cards are over.

How will the Recovery Act work?
Very soon, the different agencies -- such as the Departments of Education; Health and Human Services; and Energy -- will decide who will receive award grants and contracts. Sometimes the money will go to a state government; other times, the funds will go directly to a school, hospital, contractor, or other organization. Agencies will then deliver that information to the Recovery.gov team. We will subsequently make the information available on Recovery.gov, and you will be able to track where the money is going. You'll be able to search by state or even by Congressional district; you'll be able to look up names of Federal contractors or other recipients of Federal dollars; and you'll be able to send in comments, thoughts, ideas, questions, and any responses you have to what you find. More from Recovery.gov.

2009 is turning into "a very dangerous year" for the economy.

2009 is turning into "a very dangerous year" for the economy, said The eleventh president of the World Bank...(Robert Zoellick).

Twenty Group

G20 was established in 1999 as a forum for industrialised and developing economies to discuss global economy issues

It groups Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States and the European Union

The International Monetary Fund (IMF) and the World Bank also participate in meetings

Together, member countries represent around 90 per cent of global gross national product, 80 per cent of world trade and two-thirds of the world's population.


Robert Zoellick also warned G20 members against protectionist policies, ahead of a G20 finance ministers' meeting in the United Kingdom on how to tackle the economic downturn.

"If the leaders feel they are running out of constructive tools, they might start to point fingers and take protectionist and isolationist actions and those are the negative spiral of events you saw in the [19]30s", Zoellick said on Friday.

He spoke to reporters a day after warning that growth in the world economy was likely to fall by up to two per cent this year - the first contraction since the second world war.

The G20 finance ministers are gathering in Horsham, outside London, on Saturday to lay the groundwork for a G20 heads of state summit on April 2.

Zoellick said that governments may have to provide fiscal stimulus into 2010, but stressed that such action should come "within a framework of fiscal sustainability".

Finance ministers and central bank leaders from the United States and Europe are divided on whether stimulus packages or tighter regulation of the finance sector should be the way forward.

Conflicting statements made in the last week suggest the meeting on Saturday could be hampered by disagreements.

While the US wants a co-ordinated international stimulus to fight the slowdown, some European leaders favour tightening regulation of markets and institutions.

Angela Merkel, the German chancellor, said on Friday that she did not favour a new package of economic stimulus measures.

Timothy Geithner, the US treasury secretary, said on Wednesday that he
would recommend the G20 nations to support "substantially increasing emergency IMF resources" and called for them to lend to countries hit hard by the financial crisis.

Tax and tax planning.

Do you understand how the tax system works?
Money Box Live, Vincent Duggleby will take your questions about personal and small business tax planning.

With the end of the financial year just weeks away you may want to consider making the most of your tax free and tax deductible allowances?
When do you need to pay capital gains tax and what happens if you make a loss?

You may have a query about tax refunds or reclaiming overpaid tax.

Or perhaps you you have a question about record keeping.

money market mutual fund assets rose by $461 million to $3.906 trillion for the week

Investment Company Institute said Money fund assets rose to $3.906T in latest week.
Assets of the U.S. retail money market mutual funds rose by $10.67 billion in the latest week to $1.365 trillion.
Assets of taxable money market funds in the retail category rose $11.04 billion to $1.075 trillion for the week ended Wednesday, the Washington-based mutual fund trade group said. Tax-exempt fund assets fell by $361 million to $289.83 billion.

Assets of institutional money market funds fell by $10.21 billion to $2.541 trillion for the same period. Among institutional funds, taxable money market fund assets fell by $12.05 billion to $2.349 trillion; assets of tax-exempt funds rose by $1.84 billion to $192.18 billion.

The seven-day average yield on money market mutual funds fell in the week ended Tuesday to 0.29 percent from 0.32 percent the previous week, said Money Fund Report, a service of iMoneyNet Inc. in Westboro, Massachusetts. The 30-day average yield fell to 0.33 percent from 0.36 percent, according to Money Fund Report.

The online service Bankrate.com said its survey of 100 leading commercial banks, savings and loan associations and savings banks in the nation's 10 largest markets showed the annual percentage yield available on money market accounts fell to 0.49 percent as of Wednesday from 0.50 percent week earlier.

South Carolina will soon get $75 million in extra money from earmarks

What is an earmark?
Earmark is a politicized term that denotes money designated within legislation for the funding of a specific project. Opponents characterize it as a back-door approach to grant political favors and fund pet projects. Supporters view it as a way to channel tax dollars back home for valuable purposes.

South Carolina will soon get $75 million in extra money from earmarks in the $410 billion spending bill that President Barack Obama signed this week. Among the extra federal spending for the state is money for educating seafood lovers about the dangers of eating raw oysters, an oaktree-planting bonanza and a robotics training center in Union.

U.S. House Majority Whip Jim Clyburn boasts of his role in bringing nearly half of that money home to the state to provide for improvements and economic development. He's responsible for $35 million of the total.

Meanwhile, another member of the state's congressional delegation, Sen. Jim DeMint, is on a crusade against the deficit spending and corruption that he argues is caused by earmarks, including ones going to other states for tattoo removal, pig stench and midnight basketball.

"Americans are suffering in this economy, but Washington appears to be recession-proof, with billions wasted on politicians' pet projects," DeMint, a Republican, said after the Senate passed the bill Tuesday. DeMint, who sponsored no earmarks, blasted Obama for signing the bill.

Fellow Republican Sen. Lindsey Graham agrees that earmarks can be abused but said they also can be for worthwhile endeavors. He sponsored seven earmarks, including several with Rep. Henry Brown, a Republican from Hanahan whose 1st District includes much of the Charleston area.

Clyburn, a Democrat who represents South Carolina's 6th District, said the earmarks are federal investments that produce real results.

The rich get of poorer quality

Microsoft founder Bill Gates regain the top spot, despite his wealth declining $18bn (£13.06bn) to $40bn.

The financial crisis is taking its toll on the world's richest people, wiping 332 names off Forbes magazine's "rich list" of world billionaires.

Just 793 people can now lay claim to a place on the list, but on average they have lost 23% of their wealth.

Don’t go looking for them in soup lines just yet, but the world’s billionaires have suffered too as the economy has tanked.

Where there were 1,125 billionaires on last year’s Forbes list, there were 793 when the new list was released Wednesday.

There was some jostling at the top. Bill Gates moved to No. 1 from No. 3, bumping investing guru Warren Buffett and Mexican telecommunications magnate Carlos Slim to No. 2 and No. 3, respectively. All of the top 10 billionaires saw their net worths fall.

Forbes reported that those on the list of billionaires had an average net worth of $3 billion, down 23 percent.

American billionaires this year accounted for 44 per-cent of the money and 45 percent of the slots. That’s up 7 percentage points and 3 percentage points, respectively.

Houston lost two of its billionaires, with money manager Fayez Sarofim and W&T Offshore founder Tracy Krohn falling off the list. But the city gained another: Bud Adams, the former Houston Oilers owner who still takes heat for moving the team to Tennessee more than 10 years later. He broke in at No. 647 with an estimated net worth of $1.1 billion.

Houston’s richest man, energy baron Dan Duncan, saw his rank rise to 81st, despite a $2 billion drop in his net worth. Rich Kinder, CEO and chairman of Kinder Morgan, and hedge fund manager John Arnold, were the only Houston billionaires on last year’s list whose values increased this year.

Oilman Jeffrey Hildebrand and lawyer Joe Jamail held steady at $1.5 billion each but moved up more than 300 spots to No. 468 on the list.

R. Allen Stanford wasn’t listed as a Houston resident when Forbes put his worth at $2 billion on last year’s list. Now the Mexia native whose company has its headquarters here has been removed from the list.

Financial Q&A..............

Q: I took my credit cards and created myself a summer job – when I am not teaching – by building a house. I am almost finished building the house with my credit cards and about to go bankrupt. The banks tell me they will not make me a loan even when I finish the house, as my credit-card debt is too high. I tried to explain to them that I wanted to pay off the credit cards, but they said it made no difference. What should I do?

A: If Joel Doelger had the power to turn back the clock, the director of counseling at Credit Counseling of Arkansas says that he would have recommended that you use a traditional builder's spec loan to cover the initial cost of building the home. That would have allowed you to purchase supplies, but with a lower interest rate than the credit cards have charged.

Unfortunately, that's not the case. And to worsen matters, given the current soft housing market, it may be difficult to sell a completed home, much less an almost completed home.

It's a bit of a long shot, but Mr. Doelger knows of one loan product that could help both you and any potential home buyer. The FHA offers a rehab loan that allows the buyer to roll the cost of home improvements into the initial loan.

If you found a buyer who would qualify for such a loan, he or she could buy the home now – as is – and roll the completion of the home into the initial loan. That would prevent the borrower from having to turn around right away to qualify for a second mortgage to complete the home.

Second mortgages typically have higher interest rates than first mortgages. If a buyer can purchase the home in its present state, you may be able to get out of this venture now, without having to sink additional money into it to make it marketable.

If you aren't able to pay the credit-card bills with the sale of the house but are hesitant about filing for bankruptcy, you might be able to use the services of a credit counseling agency, Doelger says. You'll want what is called a debt management plan (DMP). A legitimate agency will help you determine your current financial situation and assess the suitability of a DMP, as well as other options, for helping you repay the debt.

The Federal Trade Commission produces a variety of useful brochures on financial issues, including one on how to select a credit counseling agency (ftc.gov/bcp/edu/pubs/consumer/credit/cre26.shtm).

Q: Could you help me find the best and safest annuity company in Switzerland? I would rather have a fixed annuity, but they aren't available at this time in Switzerland.

A: One source of information on this might be swissannuities.com. On this website you can learn a lot about the ins and outs of Swiss annuities – who sells them, who regulates them, what the advantages are to owning one, etc.

What you won't find is direct advice on which particular annuity to buy. And when we contacted the Swiss Financial Planners Organization, in Bern, CEO Nicholas Koechlin said that, by law, financial advisers in his country cannot dispense such guidance. For general information on personal finances you can ring them at 011-41-31-326-2730, or e-mail them at info@sfpo.ch.

Back stateside, Rich Arzaga, a financial planner in San Ramon, Calif., can't vouch for a Switzerland-sold annuity (nor could we find anyone else in the United States with Euro-specific experience on annuities). Regardless of the country of sale, there are common threads to annuities that Mr. Arzaga says a buyer should consider:

•Time horizon. How long are you willing to tie up your money? How big a penalty are you willing to take if you withdrew more on an annual basis than the annuity contract allows?

•Risk tolerance. You say you can't buy a fixed annuity. That would leave you with a variable annuity in the US, and they mostly invest in the stock market.

•Fees. Annuities carry sales charges, as well as other fees for add-ons such as death or survivor benefits. The more add-ons, the more fees.

Annuity sales and marketing are regulated in the United States at either the federal or state level, depending on their type. There also are rating agencies that assess the claims-paying ability of insurance companies that market these products.

Stanford Group Co.’s court-appointed receiver fired about 1,000 workers

Stanford Receiver Fires 1,000 of Firm’s Workers
85 percent of the firm’s employees, to help conserve the value of the estate for investors.

STANFORD INVESTMENT MODEL
The objective of the Stanford Investment Model (SIM) is to provide consistent returns regardless of market volatility, and it is based on the investment philosophy that has been used successfully for all of Stanford's proprietary funds. We target a consistent yield or income stream as agreed upon with our clients, while monitoring risk and managing the overall volatility of the portfolio.

Our strategy for diversification to minimize the effects of market volatility is sophisticated and far-reaching. We pursue true global diversification with relentless intensity to meet our objective of targeted returns. We carefully consider asset classes, investment strategies, sectors, and regions of the world that most investors either don't have easy access to or rarely receive information about. SIM was developed first and foremost to minimize the downside risk of a portfolio.

We recognize taking risk is essential to achieve investor goals, but there is a difference between accepting the risk the market gives you and managing that risk.

Although we may not outperform the indices during a bull cycle, our investment strategy is one of long-term consistency through bull and bear markets. The Stanford Investment Model offers investors a truly different view of wealth management.

All of the terminations were effective today, according to a statement posted on the Web site of the receiver, Ralph Janvey. The workers’ salaries and benefits were discontinued immediately, and they won’t receive any severance pay or bonuses, according to the statement. “A small number” of employees in Houston will be retained to assist in winding down operations and settling the receivership estate.

“After a review of the circumstances, the receiver concluded that continuing employment for these employees is not in the interest of conserving and preserving the value of the estate because there are insufficient resources to continue to compensate all present employees,” according to the statement.

The U.S. Securities and Exchange Commission sued Texas financier R. Allen Stanford, two associates and three affiliated companies on Feb. 17, accusing them of orchestrating an $8 billion fraud involving the sale of high-yield certificates of deposit through Antigua-based Stanford International Bank.

Last month, U.S. District Judge David Godbey in Dallas froze all of Stanford’s corporate and personal assets and appointed Janvey, a Dallas lawyer, as receiver for the companies. Yesterday, Godbey ordered the release of accounts valued at less than $250,000 that aren’t linked to suspected fraud.

Decisions about Stanford’s employees outside the U.S. will be announced in the next few weeks, Janvey said in the statement. Janvey said most of Stanford’s businesses and operations will be wound down.

The case is SEC v. Stanford International Bank, 3:09-cv-00298-N, U.S. District Court, Northern District of Texas (Dallas).

The European Central Bank has cut its key interest rate to 1.5% from 2.0%

Jean-Claude Trichet, President, ECB
Overall inflation rates have decreased significantly and are now expected to remain well below 2% over 2009 and 2010.


Euro rates hit record low of 1.5% .The European Central Bank (ECB) has cut its key interest rate to 1.5% from 2.0%, the lowest since it started setting euro rates in January 1999.

It followed a cut in UK rates by the Bank of England. US and Japanese rates are, in effect, already at zero.

At a news conference, ECB president Jean-Claude Trichet slashed his forecasts for eurozone growth.
The ECB is now predicting GDP this year in the 16-nation bloc will shrink by between 2.2% and 3.2%.

Its last prediction, made in December, was that growth would be between no change and a fall of 1% in 2009.

For 2010 it was predicting growth of between 0.5% and 1.5%. It is now forecasting growth of between 0.7% and minus 0.7%.

Non-standard measures

The revisions reflect Mr Trichet's view that the global economy has "weakened substantially in recent months" but that it will "gradually recover" in 2010.
But there were no new measures announced to help stimulate the eurozone economy, with Mr Trichet stressing that he was already using various "non-standard measures" and saying that the ECB's rate-setters were considering various others.

Slowing growth was confirmed by revised economic growth figures issued earlier on Thursday.

GDP for the last three months of 2008 was down 1.3% from the same quarter of the previous year, worse than the initial estimate of 1.2%.

The figure for the previous quarter was left unchanged at a 1.5% fall.

Thursday's decision was the ECB's fifth rate cut since October 2008, which has brought eurozone rates down from 4.25%.

Mr Trichet said that interest rates could still fall further from their current level, although he pointed out that they are already at a very low level.

He also said that inflation would stay below the ECB's target of below, but close to, 2%.

"Overall inflation rates have decreased significantly and are now expected to remain well below 2% over 2009 and 2010,"

Supreme Court rejects limits on drug lawsuits

Justices rule 6-3 to uphold jury verdict of $6.7 million for woman who lost arm after injection. By Adam Liptak WASHINGTON — In a setback for business groups that had hoped to build a barrier against injury lawsuits seeking billions of dollars

The U.S. Supreme Court on Wednesday upheld a $6.7 million jury award won by a Vermont musician against WyethSupreme Court Upholds $6.7 Million Damage Won By Vermont Amputee Against Wyeth.
Majority of the justices ruled that Wyeth failed to prove that Diana Levine's state liability lawsuit against Wyeth obstruct federal regulation on drug labeling.

The firm had argued that the U.S. Food and Drug Administration (FDA) approved the label for Phenergan, an anti-nausea drug given intravenously on Levine in 2000 to relieve her severe migraine but led to the amputation of her right arm. Levine accused Wyeth of failing to put on the Phenergan label a warning that administering the drug through IV-push method may cause gangrene. Wyeth said it cannot change the label without consent from the FDA.

Levine, who could not longer play the guitar and piano, said she will use the award to make her car and home more adaptable, according to WCAX.com.

new sales contracts on existing homes fell a seasonally adjusted 7.7% in January amid job losses

Pending U.S. home sales sank to a new record low in January as economic woes turned buyers away from the staggering housing market.

Supply of unsold homes rises to record-high 13.3 months
Despite a record drop in prices, sales of new homes fell 10.2% in January to a record-low seasonally adjusted annual rate of 309,000, the Commerce Department estimated Thursday. Sales were down 48.2% compared with a year earlier, the government reported, an indication that the downturn in the housing market was still accelerating as the recession headed into its second year.

The index is now down 6.4% from a year earlier, the National Association of Realtors said.
"We expect similarly soft home sales in the near term, but buyers are expected to respond to much improved affordability conditions and from the $8,000 first-time buyer tax credit" in the stimulus package, said Lawrence Yun, NAR's chief economist, in a statement.
January's pending sales rose more than 2% in the West. Elsewhere, pending sales fell, declining almost 13% in the Northeast, almost 12% in the South, and more than 9% in the Midwest.
The Tuesday report points to weak upcoming sales data, wrote Ian Shepherdson, chief U.S. economist with High Frequency Economics, in a research note.
"It will be awful, the only question is the degree of awfulness," Shepherdson wrote.
In December, the pending home sales index rose 4.8%, compared with a prior estimate of a 6.3% gain.
The index is based on signed sales contracts, which usually occur a month or two before the sale is closed, when sales are reported in the NAR's existing-home sales report.
Even with many serious potential home buyers on the sidelines waiting for passage of the stimulus bill, job losses and weak consumer confidence were a natural drag on home sales," Lawrence Yun, the Realtors chief economist, said in a statement.

Billionaire Warren Buffett said the economy will be “in shambles” this year

Buffett Says Economy ‘In Shambles,’ Promises Recovery
Billionaire Warren Buffett said the economy will be “in shambles” this year, and perhaps longer, before recovering from the reckless lending that caused the worst “freefall” he ever saw in the financial system. The economy and stocks will rebound, and the best days for the U.S. are ahead, said Buffett, chairman of Berkshire Hathaway Inc., in his annual letter to shareholders Feb. 28. Buffett said he’ll spend the recession shopping for new investments for Omaha, Nebraska-based Berkshire.

“The economy will be in shambles throughout 2009 -- and, for that matter, probably well beyond,” said Buffett. “Though the path has not been smooth, our economic system has worked extraordinarily well over time. It has unleashed human potential as no other system has, and it will continue to do so.”

Buffett, an informal adviser to President Barack Obama, said the consequences of the U.S. housing bubble are now “reverberating through every corner of our economy.” Gross domestic product shrank at a 6.2 percent annual pace from October through December, the most since 1982, the Commerce Department said last week.

Late last year, “the credit crisis, coupled with tumbling home and stock prices, had produced a paralyzing fear that engulfed the country,” said Buffett, 78. “Fear led to business contraction, and that in turn led to even greater fear.”

Berkshire’s fourth-quarter net income fell 96 percent to $117 million, the firm said Feb. 28. Book value per share, a measure of assets minus liabilities, slipped 9.6 percent for all of 2008, the worst performance under Buffett’s watch, on the declining value of derivatives and the stock portfolio.

‘Socks or Stocks’

Berkshire fell $4,250, or 5.4 percent, to $74,350 at 10:16 a.m. in New York Stock Exchange composite trading. The stock has plunged 47 percent in the past 12 months.

The Standard & Poor’s 500 Index will probably gain in three-fourths of the next 44 years, just as it did in the period since Buffett took over Berkshire in 1965, he wrote. The benchmark dropped 38 percent last year, the most since 1937.

“We enjoy such price declines if we have funds available to increase our positions,” Buffett wrote. “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.” Berkshire’s cash hoard was about $25.5 billion at year-end, down from $33.4 billion on Sept. 30.

Buffett disclosed increased holdings of Posco, Asia’s third-largest steelmaker, and Sanofi-Aventis SA, France’s biggest drugmaker. Berkshire sold $4.77 billion of equities in the fourth quarter to help fund private deals for preferred shares in Goldman Sachs Group Inc. and General Electric Co. The sales included shares of Johnson & Johnson, Procter & Gamble Co. and ConocoPhillips, holdings that, Buffett wrote, “I would have preferred to keep.”

‘Major Mistake’
Buffett said he made a “major mistake” in buying shares of oil producer ConocoPhillips when oil and gas prices were near their peak last year.

Flash memory chip maker Spansion has filed for bankruptcy protection.

Worldwide chip sales fall 28.6 percent, Spansion files for bankruptcy

One week after laying off 35 percent of its workers, computer chipmaker Spansion Inc. filed for Chapter 11 bankruptcy protection.

Sunnyvale-based Spansion (NASDAQ: SPSN) listed about $3.8 billion in assets and nearly $2.4 billion in debts in its filing in U.S. Bankruptcy Court in Delaware.

The company said it plans to restructure its debt and refocus on more profitable markets. Each of Spansion’s U.S. subsidiaries also filed Chapter 11 petitions, company officials said.

In December, the company shut down plants for three weeks, citing a weak holiday season and a sluggish economy. In November, Spansion said its fourth quarter sales would be about 20 percent lower than the $631 million reported in the third quarter.

On Jan. 15, Spansion announced it was exploring strategic alternatives for a sale or merger. The company also announced plans to restructure its balance sheet.

During 2007, the company posted a $263.5 million net loss on $2.5 billion in revenue.

Spansion, formerly owned Sunnyvale-based Advanced Micro Devices Inc. (NYSE:AMD) and Fujitsu, was spun off in December 2005. AMD and Fujitsu have remained as major stockholders.


Worldwide chip sales fell 28.6 percent in January compared to a year ago, and flash memory chip maker Spansion has filed for bankruptcy protection. Those are a couple of headlines that show just how grim the economic meltdown has become for the semiconductor industry.

The Semiconductor Industry Assocation said that chip sales were $15.3 billion, down from $21.5 billion a year ago. The January figure is down 11.9 percent from December’s sales of $17.4 billion. George Scalise, president of the industry trade group, said that Januaryis historically a weak month but this year it suffered from the erosion of consumer confidence and sales declined across the board.

Demand weakened for key industry sectors such as personal computers, cell phones, automobiles and general consumer items. The bright spot is that inventory levels are very low and there are some signs that forward visibility is improving. Scalise said he was encouraged that the Economic Recovery Act recently signed by President Obama would help drive demand for chips in markets such as energy, health care, and infrastructure improvements.

Those actions aren’t going to help Spansion, which filed for bankruptcy protection on Sunday and which said last week it would lay off 3,000 people, or a third of its workers. The company named a new chief executive, John Kispert, former president of KLA-Tencor, as a replacement for Bertrand Cambou, Spansion’s longtime chief. The company is still up for sale and says it made the filing in consultation with bondholders who hold $625 million in debt coming due in 2013. Spansion is focusing on flash memory market segments where it can make money going forward, such as wireless chips and devices where flash is permanently built into the device.

UBS May Face Trial on U.S. Demand.

People walk past the UBS building on Park Avenue in New York February 19, 2009. UBS may face a mini-trial in a U.S. court in July as it fights efforts to force it to disclose the names of 52,000 U.S. clients suspected of offshore tax evasion, the New York Times reported
UBS feels the wrath of investors and the US.........
Shares in embattled Swiss bank UBS fell to an all-time low on Monday ending the day at SFr10 ($8.58) or 9.1 per cent lower than at Friday's close at the bourse.
The decline came as a federal judge decided it would take months to determine if and when the Internal Revenue Service (IRS) would gain access to accounts of 52,000 UBS clients in the US suspected of tax evasion.

District judge Alan S. Gold set a July 13 hearing on the IRS lawsuit, unless an agreement is reached first. He gave UBS until April 30 to prepare their defence.

UBS has argued that handing over the account names would violate Switzerland's banking secrecy legislation and jeopardise the bank's licence to stay in business.

"Such violations would expose these [UBS] employees to substantial prison terms, as well as fines, penalties and other sanctions," UBS lawyers said in a court filing.

The lawsuit seeking details of the 52,000 accounts containing an estimated $14.8 billion in assets was issued last week.

It came a day after Switzerland's largest financial institution came to a settlement with the Justice Department on revealing the names of up to 300 US customers and payment by the bank of $780 million.

Under the terms of the settlement, UBS admitted helping US taxpayers hide accounts from the US Internal Revenue Service, the agency responsible for tax collection and tax law enforcement.

The matter is also particularly contentious because of the number of client identities and records that the I.R.S., backed by the Justice Department, is seeking to acquire. The total of 52,000 is more than twice the 19,000 accounts under investigation in the Justice Department’s criminal investigation and suggests that UBS has had a much larger role in undeclared offshore banking services than the bank has previously suggested.


comments.....

Thomas, Switzerland
Any normal person or government would start a lawsuit in the country where the business accused of some wrong-doing is located. So why does the U.S. think they have the jurisdiction for a Swiss bank and Swiss law? Would be a good time for the U.S. government to accept international law and courts.

you can leave your comments .here.......

Europe's major economies said a global solution was needed to the current financial crisis.

Capitalism must be given new moral foundations
Nicolas Sarkozy
French President
German Chancellor Angela Merkel highlighted that leaders faced an "extraordinary international crisis".
But leaders including UK Prime Minister Gordon Brown warned against reverting to protectionism in such a difficult economic climate.

The Berlin gathering is a precursor to the next meeting of the G20 group of major developed and developing countries in London on 2 April, which aims to rewrite the rules of the global financial system.

French President Nicolas Sarkozy said participants at the London summit would bear a "historical responsibility" to reform the global system.

"We have to succeed and we cannot accept that anything or anyone gets in the way of that summit. If we fail there will be no safety net," he said.

What role can France and other European Union countries play towards encouraging the GCC and the rest of the Arab World to take an active role in finding ways to solve the crisis?
France has experience and knowledge of the constraints that apply in different parts of the region. It is time for responsibility and respect to be shown by all sides. In the past we have seen Europe taking the initiative and then the US or some of the countries from the Arab World taking the initiative. Today, we need a global approach where all these countries act together with one goal, that is taking concrete measures to show people in the region that a solution can be found. If the crisis is not dealt with seriously and collectively the consequences may touch everybody

'Supervision'

However, despite the encouraging words from key leaders, Czech Prime Minister Mirek Topolanek, whose country currently holds the EU's rotating presidency, voiced concern at what he saw as divisions between Europe's major economies.

"If I put it very tenderly, the divergence in opinions was rather big," the AFP news agency reported him saying as he headed back to Prague.
"It was obvious that the four countries representing the EU in the G20 [France, Germany, Britain, Italy] do not have the same opinion on a number of issues."

Mr Brown said there was a need to create an economy that is based on the "soundest principles", saying the world needed a "global new deal".

Leaders said there was a need for international institutions, including the International Monetary Fund, to play a greater role not just to help countries in financial trouble but to prevent countries from getting into such difficulties.

Mr Brown said leaders had agreed that the IMF needed access to at least $500bn (£348bn).

The comments in Berlin come amid ongoing volatility in world financial markets and uncertainty over the future of some of the world's key banks.

Ms Merkel said: "We are making a commitment that all financial markets, products, and participants - including hedge funds and rating agencies - are of course subject to supervision and regulation."

Details on such a plan need to be worked out before the meeting in London, she added.

Hedge funds, which typically attract wealthy private investors, have been criticised for their lack of transparency and oversight.
Bonuses

As well as greater supervision of all financial markets and instruments, leaders underlined the need to reassess the issue of pay at finance firms.

Mr Sarkozy added said people could "no longer tolerate the reward package system for traders and bankers".

There has been much criticism of bankers' bonuses, which have been high despite their bank's poor performance.

Different opinions
French, Italian, Spanish, Dutch, UK and German leaders are hoping to take a common approach at the London summit.

But analysts say reaching agreement among EU powers will not be easy.

Both Mr Topolanek and the European Commission have voiced concern at attempts by France, Italy and Spain to shelter their car industries from the effects of the downturn.

Mr Sarkozy has suggested that in order to secure government aid, French carmakers should move production out of their East European factories and back to France.

J.C. Penney and Lowe’s made headline how much the nation’s retail sector is feeling the blow of the economic downturn

J.C. Penney said its fourth-quarter profit fell 51 percent as consumers curtailed spending. Sales at stores open at least a year, fell 10.8 percent.

The department store chain saw its profit plummet more than 50% in the fourth quarter as consumers held onto their wallets in what was a markedly less cheery holiday season for retailers. The company also issued a first-quarter forecast weaker than what analysts were predicting.

For the three months ended Jan. 31, the Plano, Texas-based retailer reported a net income of $211 million, or 95 cents a share, compared with a net income of $430 million, or $1.93 a share, during the same period a year ago.

Sales for the quarter came in at $5.76 billion -- a 9.8% drop from $6.39 billion a year earlier. J.C. Penney’s same-store sales, or sales in stores opened at least a year, fell 10.8% despite moves to battle light customer traffic.

The results, although grim, beat Thomson Reuters analysts’ per-share estimates of 92 cents and matched in revenue.

"Throughout the year, we took steps to significantly reduce our inventories and operating expenses in order to withstand the impact of the economic conditions. At the same time, we stepped up the style we offer and focused on effectively communicating the newness, excitement and value in our merchandise,” said J.C. Penney Chairman and CEO Myron E. Ullman III in a statement.

The company is projecting a first-quarter loss of 20 cents to 30 cents. Analysts polled by Thomson Reuters were expecting a loss of 19 cents, on average.

The retailer also said it would hold its annual meeting in New York on April 22 as opposed to in Plano, Texas, given the fact that many firms’ travel budgets have been snipped.
The nation’s No. 2 home-improvement chain posted worse-than-expected fourth-quarter earnings results and issued a full-year forecast that also fell short of Wall Street’s estimates.

For the three months ended Jan. 30, the Mooresville, N.C.-based retailer said it earned $162 million, or 11 cents a share -- a 60% decline from the $408 million, or 28 cents a share, it earned during the same period a year earlier.

The company said sales fell 4% to $9.98 billion and same-store sales fell 9.9%. Analysts polled by Thomson Reuters were expecting a profit of 12 cents per share on sales of nearly $10.1 billion.

"The economic pressures on consumers intensified in the fourth quarter, resulting in a further decline in consumer confidence and dramatic reductions in consumer spending," said Lowe’s Chairman and CEO Robert A. Niblock in a statement. "As a result, our comparable store sales for the quarter remained weak and fell at the low end of our expectations.”

The company said the “extreme promotional environment” driven by competition and cutbacks in consumer spending led the company to take more markdowns than expected, reducing its inventory, but cutting into its bottom line. The company also said it has taken steps to adjust its staffing needs in response to the “slowing” retail environment.

Going forward, the company said it expects full-year earnings of $1.04 to $1.20 a share -- a drop from the $1.27 analysts were expecting. The company said its revenue could decline as much as 2% or increase as much as 2%, and predicts same-store sales will slide between 4% and 8% for the year.

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J.C. Penney reported a large drop in fourth-quarter earnings as customers sharply cut spending on clothing and other items. The results beat Wall Street expectations, but the chain projected a wider first-quarter loss than analysts had predicted.

J.C. Penney said profit for the three-month period ending Jan. 31 fell 51 percent from the comparable period a year ago, to $211 million. Sales fell 10 percent, to $5.76 billion. For the whole fiscal year, profit fell 49 percent, to $567 million. Sales for the year fell 7 percent, to $18.5 billion.

Department stores have been among the hardest hit retailers in the recession as shoppers have focused on necessities. But Penney hasn't yet resorted to widescale layoffs -- unlike Macy's, which announced this month that it will cut 7,000 jobs, almost 4 percent of its workforce.

Lowe's Earnings Down 60 Percent
Lowe's said its fourth-quarter profit fell 60 percent, to $162 million from $408 million in the comparable period a year earlier, as the dismal housing market continued to weigh on results at the home-improvement chain. Revenue fell 4 percent, to $9.98 billion.

To cope with the worsening recession, Lowe's said it was further cutting back the number of stores it plans to open in 2009 and offered a profit forecast for the year that was short of Wall Street's expectations.

U.S. financial regulators will soon launch a series of "stress tests"

U.S. financial regulators to determine which of the largest banks may need additional capital cushions if recession deepens.
largest U.S. banks should get bigger capital cushions in the event of a deeper recession, a person familiar with Obama administration plans said Saturday.
Banks are expected to receive additional information about the tests in the coming week from regulators.

The largest U.S. banks are "well capitalized" for current conditions, the source said, but the Obama administration wants to ensure that they can withstand a more severe economic climate and can play an important role in maintaining the flow of credit.
Initial plans for the stress tests were announced Feb. 10 as part of Treasury Secretary Timothy Geithner's bank stabilization plan, but the source Saturday for the first time linked the tests to additional government support for large banks. This person did not specify what form any extra capital cushion may take.

Little is known about the form of the stress tests, but the person described them as "consistent, forward looking and conservative."

The Obama administration on Friday tried to ease market fears that the government was poised to nationalize some large banks that are continuing to struggle with losses and a lack of confidence, notably Citigroup and Bank of America.

White House spokesman Robert Gibbs said Friday that "this administration continues to strongly believe that a privately held banking system is the correct way to go

Florida is slated to receive $12.2 billion of the $787 billion included in the American Recovery and Reinvestment Act over three years.

Crist Presents Optimistic Budget
Gov. Charlie Crist on Friday outlined his proposed $66.5 billion budget, which includes $4.7 billion in federal stimulus dollars.

His recommendations include investments in education, workforce development and career training, transportation and energy conservation.

The governor said his proposed 2009-10 budget will create or retain 314,590 jobs.

proposals:

■$31.2 billion in funding for all phases of education, including almost $1.8 billion of federal stimulus funds.
■$8.9 billion for economic development projects that create or retain 314,590 jobs. These jobs are in addition to the 206,000 Florida jobs expected to be created by the $12.2 billion pumped into Florida’s economy by the American Recovery and Reinvestment Act of 2009 over three state fiscal years.
■$5.1 billion to build and maintain the roads, bridges and public transportation facilities, which Crist said would create or retain an estimated 142,800 jobs throughout the state. An additional $1.4 billion provided by the American Recovery and Reinvestment Act of 2009 will go toward shovel-ready projects that can be initiated within 180 days, creating or retaining an additional 24,200 jobs.
■$157.1 million for the Office of Tourism, Trade and Economic Development, which he said will create or retain 43,291 jobs.
■$4.9 billion to maintain support for Florida’s increasing prison population and continue programs to reduce recidivism, prevent juvenile crime and keep violent criminals off the streets.
■An increase of $45 million for cash assistance program and food stamps, which provides temporary assistance to families and their children, to ensure funds are available for families and children critically impacted during these challenging times.
■$294 million for the Medicaid for the Aged and Disabled Program to restore 12 months of Medicaid health care coverage for 13,000 elderly and disabled individuals.
■$470 million for the Medically Needy Program to restore 12 months of Medicaid health care coverage for 21,000 individuals who have extremely high medical bills in relation to their annual income.
■$52 million for increased enrollment in the KidCare program to support an additional 46,000 children.

The agreement, signed in November 2007, would allow the tribe to install Las Vegas-style slot machines and card games in their casinos in exchange for $375 million over the first three years of the agreement, and at least $100 million a year after that.

However, in July, the Florida Supreme Court ruled that Crist did not have the authority to sign the pact.

U.S. Economy May Suffer for ‘Long Time’

The U.S. economy will suffer from the effects of the global financial crisis for “a long time” as a slowdown in demand spreads to other countries, former Federal Reserve Chairman Paul Volcker said.

“We’re in the middle of a kind of massive economic crisis,” Volcker, who heads President Barack Obama’s Economic Recovery Advisory Board, said today at a Columbia University conference in New York. “We’re going to hear the reverberations about this for a long time.”

Volcker characterized the downturn that started in December 2007 as “not like a typical recession in the U.S. or elsewhere.” He also cautioned that U.S. government and central bank efforts to revive credit markets should only be temporary to alleviate the risk of inflation.

Volcker said he is “shocked” by the international reach of the slowdown.

“The rest of the world has not held up,” making it harder for the U.S. to rely on strong export growth to emerge from its economic slump, he said.

“Industrial production in most countries is going down faster than in the United States,” Volcker said.

The U.S. economy will contract 2 percent this year, making it the deepest annual slump since 1946, according to a Bloomberg News survey of economists taken this month. Gross domestic product shrank at a 3.8 percent annual pace in the last three months of 2008, the Commerce Department said in January.

Volcker also discussed rising prices, saying even “a little inflation is bad.” The cost of living in the U.S. rose last month for the first time in six months as the consumer price index rose 0.3 percent, the Labor Department said today in Washington.

The Crisis Takes Hold
The first shoe to drop was the collapse in June 2007 of two hedge funds owned by Bear Stearns that had invested heavily in the subprime market. As the year went on, more banks found that securities they thought were safe were tainted with what came to be called toxic mortgages. At the same time, the rising number of foreclosures helped speed the fall of housing prices, and the number of prime mortgages in default began to increase.

The Federal Reserve took unprecedented steps to bolster Wall Street. But still the losses mounted, and in March 2008 the Fed staved off a Bear Stearns bankruptcy by assuming $30 billion in liabilities and engineering a sale to JPMorgan Chase for a price that was less than the worth of Bear’s Manhattan skyscraper.

Economic Concerns Send international Shares inferior

10 Global Economic Challenges report focuses on the most critical issues facing America’s 44th president. From restoring financial stability to establishing a U.S. policy on climate change and engaging the emerging economic powers, the report contains timely analysis and recommendations by Brookings leading global economic experts.

A global sell-off set in motion by losses on Wall Street came back home on Friday morning, sending markets in New York sharply lower.

The Dow burrowed even lower, a day after it recorded at its lowest close in six years. Gold prices flirted with $1,000 an ounce. And markets from Hong Kong to London fell sharply on more glum economic data and a round of disappointing corporate news, including the bankruptcy filing of the automaker Saab.

“You can look at everybody’s trading screen and see nothing but red,” said Tim Smalls, head of United States stock trading at Execution LLC in Greenwich, Conn.

At 10:45 a.m., the Dow Jones industrial average was down 65 points to 7,402, while the broader Standard & Poor’s 500-stock index was off o.8 percent. The technology-heavy Nasdaq fell essentially unchanged.

Financial stocks slid the farthest, with shares of Bank of America falling below $3.35 a share and Citigroup sinking to less than $2.10 a share — a tenth of what it cost a year ago.

Analysts said that fear and uncertainty were driving trading once again. They said investors remained skeptical about the Obama administration’s plan to shore up the banking system and were uncertain that the $787 billion economic stimulus package would be able to prop up the floundering economy.

The Dow Jones Euro Stoxx 50 index, a benchmark for the euro region, was down 3.6 percent in late-afternoon trading, to its lowest level at least five years. The DAX in Frankfurt slid 3.6 percent as investors shed financial and industrial stocks, while the CAC 40 in France was down about 3 percent and FTSE 100 in London fell 2.4 percent.

“We thought the low points of last fall were behind us, but we seem to be in for more disappointments,” said Vincent Juvyns, a strategist at ING Investment in Brussels. “The markets have lost all sense of direction, which makes it hard to take a position.”

Jean-Claude Trichet, president of the European Central Bank, said Friday that markets were experiencing an “ongoing correction,” but would not put a timetable on when the crisis might lessen.

“We have to be very cautious in qualifying the duration,” Mr. Trichet told the European American Press Club.

The Labor Department reported that consumer prices had increased 0.3 percent in January, rising for the first time since July. The increase eased fears that the American economy was heading into a deflationary spiral of lower prices and lower economic growth, but consumer prices remained flat year-over-year, a sign of continuing pressure on prices as the recession deepens.

“It’s not terrible to see a break in the disinflationary spiral we’re in even if such a break is only temporary,” Dan Greenhaus, an analyst with the equity strategy group of Miller Tabak & Company, wrote in a note.

Corporate news across the region seemed to confirm fears.

Anglo American, the mining giant, was down nearly 16 percent by midday after announcing it would cut 19,000 jobs, or a tenth of its work force, and suspend dividend payments for 2008 as its business deteriorated on weak global demand.

In France, Compagnie de Saint-Gobain, which supplies construction materials, tumbled 16 percent after announcing it would seek to sell shares to raise 1.5 billion euros, or $1.9 billion, in capital, while confirming yet more job cuts.

And UBS, the Swiss bank, is facing more problems with prosecutors in Washington. A day after the bank agreed to pay $780 million to settle claims that it defrauded the Internal Revenue Service, the federal government went to court seeking the release the names of 52,000 wealthy clients. UBS shares fell more than 16 percent at midday, after rallying almost 5 percent Thursday on news of an initial settlement.

AXA, on of the largest insurers in Europe, was down nearly 14 percent in Paris after Standard & Poor’s downgraded its credit rating, citing uncertain earnings.

The Swedish automaker Saab filed for bankruptcy to seek protection from its creditors after General Motors said it would cut ties with the company after decades of losses.

“We’re at a stage in the economic cycle where we have to prepare for the worst,” Mr. Juvyns said. “Companies are firing to cut costs, since we face a contraction in G.D.P. for the first half of the year.”

Arnaud Cayla, a fund manager at Barclays Asset Management France in Paris, said that while most companies would survive the crisis, they would have to adjust to lower demand.

“We’re flirting with deflation,” Mr. Cayla said, “but it’s still too early to say.”

Discouraging economic news for the euro zone added to the slide. The purchasing managers’ index, which estimates business activity, showed the downturn accelerating in the first weeks of February in the 16 nations that share the euro. The index is based on a survey of purchasing managers by Markit Economics.

The composite index of activity in services and manufacturing slipped to 36.2 in February, from 38.3 in January, with services hit hardest. Any number below 50 indicates an economic contraction.

In Britain, the Council of Mortgage Lenders reported Friday that 40,000 people had lost their homes in 2008, an increase of 54 percent on a year earlier, and the number is expected to nearly double in 2009 to 75,000.

“The next trap for the financial markets is state debt,” Cayla said. “We’re concerned about the health of governments, and what their signatures mean.”

Asia saw a less dramatic sell-off, led by the Kospi index in South Korea, which fell 3.72 percent dragged down by financial and industrial stocks. In Japan, the Nikkei 225 slipped 1.6 percent, with equities in banks, retail and communications falling furthest. The Hang Seng in Hong Kong dropped 2.49 percent, with financials there also seeing the heaviest losses.

The top 10 global economic issues, as identified and ranked by Brookings Global, include:1
1.Restoring Financial Stability
With U.S. financial troubles at the center of the current global vortex, the U.S. has important obligations to strengthen the global financial system, including by enhancing financial regulation and diminishing reliance on foreign credit.

2.Setting the Right Green Agenda
Adele Morris and Peter WilcoxenFor the U.S., it is time to muster the political will to act on climate change at the national level while also working to forge international agreement so that markets and regulatory policy will provide a consistent set of incentives to wean the economy from carbon foundations.

3.Exercising Smart Power
Investing in the education, health, livelihoods, and the security of the world’s poorest not only makes Americans feel good about themselves but also makes the world feel good about America. It is critical to increase not only resources but also the impact of each dollar spent.

4.Reimagining Global Trade
Americans feel most secure about global engagement when they are well equipped to compete and have insurance against economic risks. This requires vigorously enforcing the trade rules and investing in economic competitiveness.

5.Navigating China’s Rise
On issues such as climate change, enforcement of trade rules and exchange rate adjustment, where the stakes are simply too high to ignore, America should look for cooperative mechanisms to advance its goals where possible but continue to press bilaterally with China and better deploy regional and international mechanisms where necessary.

6.Deciphering “Russia, Inc
Difficult as it may be to accomplish, America nonetheless has significant interests in alternately coaxing and goading a resurgent, resource nationalist Russia toward international norms and cooperation on energy, trade, financial integration and security more broadly.

7.Engaging an Emerging India
America has enormous interests in India’s successful integration into the global economy as the world’s most populous democracy engages in the task of lifting hundreds of millions out of poverty. America must look for areas of cooperation where possible and deepen bilateral engagement broadly in order to make progress on its agenda.

8.Revitalizing Ties to Latin America
by Mauricio Cárdenas and Leonardo Martinez-Diaz
America must become a stronger partner to its neighbors and engage on issues of mutual concern, including on energy, environmental protection, economic competitiveness and social policies.

9.Supporting Africa’s Growth Turnaround
America can become a stronger and steadier partner to Africa as it navigates economic challenges by supporting global standards for natural resource management, opening markets to African products, supporting vibrant private enterprises, supporting African efforts to enhance regional security and build resilience to climate change, and both increasing and improving the quality of development assistance.

10.Pursuing a Positive Agenda for the Middle East
America can build partnerships in the Middle East based on trust and mutual respect if it aligns its agenda on economic and political reform with the aspirations of the majority of the region’s people: the young who are striving for opportunity and global integration.