March 7 (Bloomberg) -- U.S. Treasury Secretary Henry Paulson said global economic growth is solid even after a recent stock-market slump that erased $3.3 trillion in global market value.

``I feel very good about the global economy and the fundamentals,'' Paulson said to reporters after meeting South Korea's Finance Minister Kwon Okyu in Seoul today. ``We have solid growth, low inflation and high levels of liquidity.''

Paulson's four-day trip to Japan, South Korea and China, Asia's three largest economies, comes as a slump in Chinese stocks triggered a five-day sell-off in global shares.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a4iQAx1QNuLk&refer=home

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April 5 (Bloomberg) -- The global economy will probably weather a slowdown in U.S. growth as dependence on exports to America diminishes, the International Monetary Fund said.

``Most countries should be in a position to `decouple' from the U.S. economy and sustain strong growth if the U.S. slowdown remains as moderate as expected,'' the IMF said in a paper published in its semiannual World Economic Outlook.

The slump in housing has been ``U.S.-specific,'' with limited impact abroad, particularly as imports make up a small share of the industry, the Washington-based lender said late yesterday. The U.S. itself is likely to avoid a recession, as the housing weakness is contained, IMF Chief Economist Simon Johnson said in a news conference today.

Countries including China, Japan and Germany run large trade surpluses with the U.S., suggesting a pullback in American demand might hurt their growth. The IMF concluded, though, that many developing nations are becoming less dependent on the U.S. and noted that observers suggest stronger demand in other industrial nations makes the world's economy more ``resilient.'' A falling dollar would also help reduce trade imbalances, the fund said.

The U.S. economy slowed to an average growth rate of 2.4 percent in the last three quarters of 2006, from an annual pace of 3.2 percent the previous year. The housing-market recession sapped the expansion by the biggest factor in a quarter century in the final half of last year.

The U.S. economy is still ``very healthy'' Johnson said today in Washington. ``We're not seeing it spread beyond residential construction,'' he said, referring to the economy's drop in momentum.

http://www.bloomberg.com/apps/news?pid=20601086&sid=arhhIMIyFPeA&refer=latin_america

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April 9 (Bloomberg) -- The flagging U.S. economy may get by with a little help from its friends.

Demand from overseas is throwing a lifeline to an America weighed down by the housing slump and weak business investment. With exports accelerating and imports shrinking, trade this year may add to growth instead of subtracting from it for the first time in more than a decade.

``Had it not been for the rest of the world, the U.S. economy might be seriously floundering,'' says Stephen King, chief economist at HSBC Holdings Plc in London.

That's a change from the last 40 years, when the U.S. powered the world economy through financial crises elsewhere but gained little thrust from abroad when demand turned weak at home. Back then, when the U.S. sneezed, the rest of the world caught a cold; ``nowadays, when the U.S. sneezes, the rest of the world goes shopping,'' King says.

The shift gives central bankers and finance ministers of the Group of Seven, the world's biggest industrialized economies, reason for optimism as they meet in Washington this week. ``There are in Europe elements of broader and deeper sustained growth which exists independently of the other side of the Atlantic,'' European Central Bank President Jean-Claude Trichet said at a press conference March 28.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aQJU6eu9Kwqo&refer=us

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May 7 (Bloomberg) -- When the stock market's benchmark for Corporate America rallies to a record, investors can attribute the bull market to its growing dependence on the Chinese.

Companies in the Standard & Poor's 500 Index get 49 percent of their sales from outside the U.S., up from 30 percent in 2001, according to S&P, whose index includes the biggest corporations. The balance may tip this year as global growth outpaces the U.S. The world economy will expand 4.2 percent in 2007, twice the U.S. pace, according to Goldman Sachs Group Inc.

3M Co. and McDonald's Corp., which generate more than half of revenue outside the U.S., led the S&P 500's 6.4 percent gain this year with profits that exceeded analysts' expectations. The index is now 1.2 percent below its peak reached seven years ago and even investors who used to be pessimistic about stocks say demand from China and Germany will push American shares higher.

``I can't get bearish,'' said Barton Biggs, who runs the $1.84 billion Traxis Partners LLC hedge fund in New York. ``To the extent that the U.S. is slowing, other economies are accelerating.''

Biggs, the former chief global strategist at Morgan Stanley who appeared on a July 1993 cover of Forbes magazine dressed in a bear suit and correctly predicted the U.S. economy was slumping into recession in 2001, expects the S&P 500 to climb 15 percent this year. The Dow Jones Industrial Average may rally 19 percent, he said.

http://www.bloomberg.com/apps/news?pid=20601109&refer=exclusive&sid=a2Gptvdd1_88

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May 14 (Bloomberg) -- Nokia Oyj, the world's largest maker of mobile phones, said its market share will rise in the second quarter, sending the stock to the highest in more than four years.

The company's global market share will rise from 36 percent in the first quarter as some competitors have cleared excess inventory, Espoo, Finland-based Nokia said today in a stock exchange statement. The company had previously predicted its market share would be unchanged as rivals had to sell off handsets, making it harder for Nokia to win market share.

The market share gap between Nokia and closest rival Motorola Inc. widened to its largest in more than three years in the first quarter as the Schaumburg, Illinois-based company failed to unveil devices to replace its bestselling Razr model, Strategy Analytics Ltd. said last month. Motorola's market share plunged to 18 percent in the first quarter from 20.4 percent a year earlier, according to Boston-based Strategy Analytics.

http://www.bloomberg.com/apps/news?pid=20601085&sid=aqb7BjARWNuw&refer=europe

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WASHINGTON (AP) -- World Bank President Paul Wolfowitz will resign at the end of June, he and the bank said late Thursday, ending his long fight to survive pressure for his ouster over the generous compensation he arranged for his girlfriend.

His departure ends a two-year run at the development bank that was marked by controversy from the start, given his previous role as a major architect of the Iraq war when he served as the No. 2 official at the Pentagon.

"He assured us that he acted ethically and in good faith in what he believed were the best interests of the institution and we accept that," the board said in its announcement of Wolfowitz's resignation.

http://biz.yahoo.com/ap/070517/world_bank_wolfowitz.html?.v=61

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June 4 (Bloomberg) -- When it comes to world economic growth, the glass is suddenly looking a lot more than half full.

Not only is the global economy confounding concerns about a slump, it's even performing better than some of the most upbeat analysts were predicting just a few weeks ago. Worldwide growth looks set to outstrip forecasts for a sixth straight year in 2007.

``Perhaps it's time to stop looking for reasons why the global economy will crash and instead think about sources for optimism,'' says Dario Perkins, senior European economist at ABN Amro Holding NV in London and a former U.K. Treasury official.

Behind the surprising strength: something old and something new. A resurgence in old-economy manufacturing and a wave of new-style financing are combining to push down unemployment and boost corporate profits. So far, these trends aren't fanning widespread alarms about a surge in inflation.

Manufacturers worldwide are revving up production after bringing down inventories. Some, including Toyota Motor Corp., 3M Co. and Caterpillar Inc., are even adding capacity.

Meanwhile, a new crop of financiers -- including hedge funds and private-equity firms such as Chicago-based Madison Dearborn Partners LLC -- is providing fuel for still more growth by leveraging hundreds of billions of dollars in assets.

The combination sets the stage for a faster rebound in the U.S., while helping Germany and China defy forecasts of a slowdown.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aO7Oet.PL0lw&refer=exclusive

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June 7 (Bloomberg) -- Some of the best-performing shares worldwide this year belong to companies that are beating the stock market by getting smaller.

Temple-Inland Inc., whose products range from paper to loaning money, Ingersoll-Rand Co., a producer of construction equipment and trucks, and German carmaker DaimlerChrysler AG are leading gains worldwide as they spin off or sell units to concentrate on more profitable businesses.

All three stocks are among the best performers this year in the Morgan Stanley Capital International World Index, after trailing the benchmark in 2006. The value of announced spinoffs and divestments by publicly traded companies worldwide jumped 27 percent in the past 12 months, reaching $562 billion, according to data compiled by Bloomberg.

``Shareholders are telling companies: if you can't get the most value from a business, sell it,'' said Henk Grootveld, who manages about $3.4 billion in European equities at Robeco in Rotterdam. ``Getting rid of the rotten tooth can unlock value.''

His fund benefited from the decision last year by Munich- based truck maker MAN AG to sell its printing-press division and is now betting Amsterdam-based Royal Philips Electronics NV may shed units, he said.

General Electric Co., the world's second-largest company by market value, and Prudential Plc, Britain's second-biggest insurer, have jumped in the past two months amid speculation they may follow a similar path.
http://www.bloomberg.com/apps/news?pid=20601109&sid=a88Wxlaql9yI&refer=exclusive

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Macro comments from Lehman’s earnings conference call: “Global equity trading volumes rose approximately 13% in dollar value terms… High grade credit spreads widened very slightly during the quarter, while high yield and emerging market credit spreads tightened significantly to their all time narrowest levels… The volume of announced M&A transactions was a record $1.7 TN for the period, rising 69% sequentially and surpassing the prior record set in year 2000. In equity underwriting, volumes increased 23% versus the prior period, driven by an increase in IPO and convertible activity. Debt underwriting volumes grew by 8% compared to the sequential period.” “...Global liquidity remained strong with considerable corporate cash on hand, large pools of un-invested capital from financial sponsors, a growing allocation of assets to hedge funds, cash consideration from M&A, proceeds from share buybacks that need to be invested, and continued inflows from regions such as Asian and the Middle East. If anything, these trends are accelerating… This pool of liquidity continues to provide a strong underpinning for the global capital markets and for our own client-focused business model.”

http://www.prudentbear.com/creditbubblebulletin.asp

So the markets go higher.

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WASHINGTON (AP) -- Robert Zoellick, a seasoned player in international financial and diplomatic circles, won the unanimous approval of the World Bank's board on Monday to become the poverty-fighting institution's next president.

Zoellick will succeed Paul Wolfowitz, whose last day is Saturday, ending a stormy two-year tenure. The new president will take the reins Sunday, the first day of his five-year term.

"I am ready to get to work," Zoellick declared, shortly after the board's action.

Wolfowitz courted controversy from the start because of his role in the Iraq war when he was deputy defense secretary. However, it was his role in arranging a hefty pay raise for Shaha Riza, his girlfriend and bank employee, that forced his upcoming departure. That prompted a staff revolt and calls by Europeans and others for Wolfowitz to resign.

President Bush turned to Zoellick -- his former top trade envoy and No. 2 diplomat-- to the heal wounds and mend the relationships strained by the Wolfowitz episode. Welcoming the board's action Monday, Bush called Zoellick "a dynamic leader who is deeply committed to the mission of the World Bank."

http://biz.yahoo.com/ap/070625/world_bank.html?.v=26

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(Fortune Magazine) -- Just how red-hot is the current worldwide expansion? "This is far and away the strongest global economy I've seen in my business lifetime," U.S. Treasury Secretary Hank Paulson declared on a recent visit to Fortune's offices.

That may come as news to many Americans, whose boom-time memories are stuck in the 1990s, when Silicon Valley was the epicenter of our growth fantasies. But the fellow now occupying Paulson's old office at 85 Broad Street in downtown Manhattan shares that upbeat view. Just returned from a ribbon-cutting ceremony in the Middle East, Goldman Sachs (Charts, Fortune 500) CEO Lloyd Blankfein waves out toward the East River as he explains how the rise of the "BRICs" has altered his strategy and his travel schedule. (BRIC is an acronym Goldman coined in 2001 reflecting the rising economic power of Brazil, Russia, India, and China.)

Hank Paulson takes on the world

In a wide-ranging interview with Fortune, the U.S. Secretary of the Treasury explains why, despite the "strongest global economy" he has ever seen, it still "pays to be vigilant." (more)

"I helped make my career by being very disciplined about opening offices," he says. Yet in nine months Blankfein has announced or opened offices in São Paulo, Moscow, Tel Aviv, Mumbai, Qatar, and now Dubai. "We've never done anything close to that before," he marvels. "The week before Dubai, I was in Turkey, and before that, Russia and China. I'm really living the BRICs-plus-Middle East kind of life."

These days more and more CEOs are livin' la vida BRIC. GE's (Charts, Fortune 500) Jeff Immelt devotes 12 weeks a year to foreign travel and is looking for his company to grow "twice as fast outside the U.S. as inside - 12% a year, vs. 6%." Immelt expects to see even more robust growth - 20% a year - in emerging markets, which last year accounted for $30 billion of GE's nearly $170 billion in sales.

John Chambers, who last fall opened Cisco's (Charts, Fortune 500) new Globalization Center in Bangalore, seconds the notion that "this is the strongest global trend" of his career. "There is a unique balance today," he says. "More than half of GDP growth is coming from emerging countries. And yet the developed countries are also doing pretty well. It is something we have never seen before."

At Boeing (Charts, Fortune 500), Jim McNerney and his team, just back from the Paris Air Show, have booked 634 firm orders for their new 787 jet, which they will unveil in Seattle on 7/8/07 (ah, marketing!). That's more than for any launch in industry history, and thanks go "predominantly to Asian and other emerging-market buyers," says Laurette Koellner, president of Boeing International.

While the current pace isn't quite a record - according to the IMF the world grew at a 5.4% average annual rate from 1970 to 1973, vs. a projected 4.9% from 2003 through 2007- there's really no contest. When our ties were fatter and we were thinner, total world GDP was $13 trillion in constant dollars. Today it's more than $36 trillion. Not to mention, as investor Jim Rogers notes, "there are three billion people in places like Eastern Europe, Russia, India, China, and all of Asia who weren't participating last time around but who now are." Back then, Germany and Japan led the charge. Now the emerging markets are running fastest, along with Europe, which has - for the first time in years - pulled ahead of the U.S. in GDP growth.

The last global good time in the 1970s, of course, ended in a nasty bout of double-digit inflation, spawning the worst stock market crash since the Great Depression, plus other horrors, such as the rise of disco. Is that sorry past our future? Not necessarily. But with nervousness rising over everything from Bear Stearns' battered hedge funds to tightening lending standards that could clog the crowded private-equity deal pipeline, let us first explain how one can be, as we are, short-term bearish but long-run bullish on the global growth story.

http://money.cnn.com/magazines/fortune/fortune_archive/2007/07/23/100134937/index.htm?section=money_latest

http://mauberly.blogspot.com/

Sunday July 29, 10:55 pm ET
By Jim Pickard in London
FT.com

Global banks are well-placed to withstand the weakening in credit markets but could face a squeeze on revenues if the situation worsens, according to a report Monday by Standard & Poor's, the ratings agency...

S&P says an upturn in defaults "cannot be far away". Banks could - if the situation worsens - see "sizeable losses" relative to earnings and capital. In terms of revenues, they will no longer receive such substantial underwriting fees from leveraged finance activity.

Banks may also face litigation from investors, according to Richard Barnes, author of the S&P report. His comments follow a warning by Peter Wuffli, former chief executive of UBS, that the leveraged finance boom could drag banks into litigation if the cycle turned.

S&P says the leveraged finance market had been "ripe for a correction" with "frothy" underwriting criteria, and new issuance skewed towards higher-risk assets. But the jury is out on whether the correction marks a return to rational pricing or a downturn.

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Aug. 1 (Bloomberg) -- Shares of Macquarie Bank Ltd., Australia's largest securities firm, slumped the most in 5 1/2 years after two of its funds said investors may lose 25 percent of their money as a rout in the U.S. subprime market spreads.

Macquarie Fortress Investments Ltd., with $873 million in two funds, was forced to sell assets to avoid breaching its loan agreements, according to a statement.

The bank's shares fell 11 percent to A$73.70 at the close of trading in Sydney, wiping out A$2.37 billion ($2 billion) of market value. Macquarie made about half its A$7.2 billion revenue last year in fees and commissions from its funds and from advising clients. Shares of other Australian financial-services companies also tumbled.

``The contagion looks like it's spreading and some of the bigger names are now being dragged in,'' said Shane Oliver, who helps manage the equivalent of $83 billion at AMP Capital Investors in Sydney.

Shares of Babcock & Brown Ltd., Australia's second-biggest investment bank, fell 11 percent to A$25.00, the largest decline since it went public in 2004. Allco Finance Group Ltd., a Sydney- based manager of energy and property assets, fell 6.5 percent.

Christine Bowen, a spokeswoman for Allco, declined to say whether the company had any investments that may be affected by the U.S. credit markets. In a statement after the market closed today, Babcock said it has ``insignificant exposure'' to the meltdown in U.S. subprime debt.

Macquarie, the world's largest private manager of infrastructure, bundles assets into investment funds it sells to investors and manages for a fee. Its Fortress funds invest in loans to companies in the U.S. with good records of repaying debt and aims to return 10.1 percent annually.

http://www.bloomberg.com/apps/news?pid=20601080&sid=aTwBZKll5iSE&refer=asia

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Aug. 24 (Bloomberg) -- Stock markets around the world are rallying in the wake of the Federal Reserve's decision to cut its lending rate to banks to help avert a credit crisis.

``Clearly the Fed stepped up,'' said Jeffrey Kleintop, who helps oversee more than $173 billion as chief market strategist at LPL Financial Services in Boston. With the discount rate cut, the Fed ``told the markets they're not going to let this liquidity crisis become a major contagion.''

The central bank on Aug. 17 cut the interest rate it charges banks by 0.5 percentage point to 5.75 percent, acknowledging for the first time a policy shift was needed to contain the subprime- mortgage collapse that roiled financial markets and wiped out $5.56 trillion in global market value in less than a month.

The decision helped ignite a rally in global equities. The Morgan Stanley Capital International World Index of 23 developed markets has since rebounded 5.4 percent, after plummeting 11 percent from its record on July 19.

In the U.S., the Standard & Poor's 500 Index climbed 4.8 percent, while the Dow Jones Industrial Average advanced 4.2 percent. The Dow Jones Stoxx 600 Index of European companies rose 5.2 percent. The MSCI Asia-Pacific Index jumped 8.1 percent, the biggest weekly advance since March 2002.

Emerging markets rallied the most after suffering the biggest losses during the global rout. The MSCI Emerging Markets Index climbed 8.7 percent since the discount rate cut, after plummeting 18 percent from a record on July 23.
http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=akMt8E9nrgCw

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GENEVA - The U.S. economy will slow sharply this year and fall behind growth rates in most of the world, according to forecasts in a U.N. report released Wednesday.

Woes in the housing market will drag U.S. gross domestic product for 2007 to a modest 2 percent growth, compared with 3.3 percent last year, the U.N. Conference on Trade and Development said in its flagship annual report.

For the first time since 2001, both the European Union, at 2.8 percent, and Japan, 2.3 percent, are predicted to have higher GDP growth than the United States.

China, at 10.5 percent, and India, 8.5 percent, should experience economic growth rates similar to the last three years, the report said.

Global growth, meanwhile, is pegged at 3.4 percent, down from 4 percent in 2006, largely because of the U.S. slowdown, the report said.

For now, the world economy is going through a "golden period," Supachai Panitchpakdi, the former World Trade Organization chief now heading the U.N. agency, told reporters in Geneva.

High commodity prices continue to boost growth in developing countries, which accounted for a 37 percent share of global trade last year, the report said. A decade ago their share of trade was 29 percent.

Economies in Africa are predicted to grow by 6 percent, Latin America and the Caribbean by 4.7 percent, and ex-Soviet bloc states still outside the European Union by 7 percent.

"There might be some downward revision," Supachai said.

http://news.yahoo.com/s/ap/20070905/ap_on_bi_ge/un_us_economy_1

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Sept. 10 (Bloomberg) -- This time, when the U.S. sneezes, the rest of the world may well catch a cold.

Global economic growth looks likely to slow markedly in the months ahead as further weakness in the U.S. infects Asia and Europe. That would represent a shift from the last 18 months, when the world economy proved immune to a U.S. slowdown and grew at an annual clip of more than 5 percent.

What's different now is the U.S. slump is starting to spread from the domestic housing market to consumers who buy imports from companies such as Toyota Motor Corp. And the sudden increase in borrowing costs that followed the collapse of the subprime-mortgage market is now showing up overseas, raising the price tag on credit worldwide.

``It will be a much bigger deal this time,'' says Raghuram Rajan, a former chief economist for the International Monetary Fund who's now a professor at the University of Chicago. ``I don't see growth falling off a cliff, but it will slow.''

If growth in the U.S. slips below 2 percent from an average of 2.3 percent in the first half, the global economy may suffer a modest slowdown to about 4.75 percent, say forecasters at Morgan Stanley & Co., Global Insight and the Economist Intelligence Unit. The contagion from a U.S. recession would hurt more, cutting global growth to 3.5 percent or less.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aEM9on7P5400&refer=exclusive

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By Dane Hamilton

NEW YORK (Reuters) - The numbers of millionaire households globally grew by 14 percent in 2006 from 2005 and now control a third of the estimated $100 trillion in wealth, a new study by Boston Consulting Group released on Tuesday found.

These 9.6 million families, comprising 0.7 percent of world's households, now control some $33.2 trillion, the BCG study found. About half are located in the United States and Canada, a quarter in Europe and a fifth in the Asia-Pacific region, it said.

The study is the latest to quantify a continued widening of the global gap between rich and poor, with the rich getting richer by saving and investing more.

The study, seventh in a series, found that assets held by non-wealthy households - defined as those with less than $100,000 in financial assets - declined slightly from 2001 to 2006. But assets held by households with more than $100,000 climbed from $51.4 trillion to $84.5 trillion during the same period.

"Assets under management was further concentrated among the wealthiest households, with the richest 0.1 percent - those with more than $5 million in assets under management - owning 17.5 percent of global wealth," the survey said.

The study attributed wealth gains mainly to two factors: increased savings and market gains for stocks, bonds and cash, reflecting wealth managers' long-held view that market investments are a key factor in building wealth.

http://www.reuters.com/article/businessNews/idUSN0242013020071002?feedType=RSS&feedName=businessNews&rpc=23&sp=true

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CHICAGO (Reuters) - Caterpillar Inc(NYSE:CAT - News), the world's top maker of earth-moving equipment, diesel engines and gas turbines, posted disappointing quarterly earnings on Friday and cut its full-year forecast, sending its shares down 3.5 percent.

The company said third-quarter earnings rose 21 percent as strong sales overseas offset a slump in the U.S. residential construction market, but the results fell short of Wall Street expectations.

The Peoria, Illinois-based company reported a net profit of $927 million, or $1.40 a share, up from $769 million, or $1.14 a share, a year earlier.

Analysts, on average, had expected $1.43 a share, according to Reuters Estimates.

Revenue rose 9 percent to $11.44 billion, topping an average Wall Street forecast of $10.33 billion.

Caterpillar lowered its forecast for full-year earnings, saying it now expects $5.20 to $5.60 per share, down from a previous estimate of $5.30 to $5.80. Its revenue forecast was unchanged at $44 billion.

In early trading, Caterpillar shares were down 3.5 percent after closing at $77.66 on the New York Stock Exchange on Thursday.

Jim Owens, Caterpillar's chief executive, said the third-quarter results -- which came as the company grapples with the effects of the housing slump and a downturn in its on-highway diesel engine business -- demonstrated how its huge and growing overseas business stabilizes its earnings.

"Despite weakness in U.S. markets, our sales and revenues increased 9 percent," Owens said in a statement. "We continue to see remarkable growth outside of the United States, with particular strength in key industries like mining, oil and gas, electric power and marine engines."

http://biz.yahoo.com/rb/071019/caterpillar_results.html

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Oct. 20 (Bloomberg) -- Group of Seven finance ministers and central bankers said the credit-market rout will slow economic growth and strengthened calls for China to let its currency appreciate.

``Recent financial market turbulence, high oil prices and weakness in the U.S. housing sector will likely moderate'' the global expansion, officials said in a statement after meeting in Washington yesterday. ``Our overall economic fundamentals continue to be strong and emerging markets are providing critical impetus.''

Policy makers met for the first time since a collapse in demand for assets backed by U.S. subprime mortgages sparked a surge in international borrowing costs. They told investors to address ``shortcomings'' in risk management and called for rules to guide the international investments of government-run funds, seeking to head off a protectionist reaction.

The group also urged an ``accelerated appreciation'' of the Chinese yuan as Europe and Canada joined the U.S. in complaining it remains undervalued and threatens their trade balances.

``That was the biggest change,'' U.S. Treasury Secretary Henry Paulson told reporters after the meeting. French Finance Minister Christine Lagarde said she was ``happy'' the yuan was singled out.

Currency Statement

The G-7 set aside differences over the dollar's drop to a record low against the euro, sticking to past language in saying ``excess volatility'' in currencies is ``undesirable'' and that they should trade in line with fundamentals. Other than the yuan, no specific currency was mentioned.

The G-7 accounts for about two-thirds of the $53 trillion world economy and comprises the U.S., U.K., Japan, Germany, Italy, France and Canada. Officials met as U.S. stocks slid the most in two months, hurt by lower corporate earnings and the deepening American housing recession.

The Dow Jones Industrial Average fell 366.94 points, or 2.6 percent, to 13,522.02 yesterday in New York. Treasuries rallied and two-year notes posted their biggest weekly advance since the Sept. 11 terrorist attacks, with the yields dropping to 3.78 percent from 4.23 percent a week ago.

Paulson, European Central Bank President Jean-Claude Trichet and their counterparts asked an advisory panel to keep working on proposals to improve how markets work. The Basel- based Financial Stability Forum will study how risk is managed, liquidity is measured and credit rating companies operate.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aPmmeretXvM0&refer=home

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WASHINGTON (AP) -- The World Bank said Sunday the impact of recent turbulence in financial markets on developing countries has been limited and global economic growth remains strong.

The bank also called on donor governments to meet their commitments to boost aid for development and said countries with fast-growing economies and mounting currency reserves could bring new resources to this effort.

The bank's policy-setting Development Committee said its members "agreed that strengthened support for the inclusion and empowerment of the poorest in development, especially in sub-Saharan Africa, and for engagement by the bank group in fragile and conflict-afflicted states must be key elements in the strategic framework.

The Development Committee session followed a meeting of the bank's sister institution the International Monetary Fund.

In a lecture sponsored by the IMF, former Federal Reserve Chairman Alan Greenspan warned that rising protectionism could undermine the ability of the United States to deal with large deficits.

"If the pernicious drift toward fiscal instability in the United States and elsewhere is not arrested and is compounded by a protectionist reversal of globalization, the current account deficit adjustment process could be quite painful for the United States and our trading partners," he said.
http://biz.yahoo.com/ap/071021/finance_meetings.html

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Nov. 23 (Bloomberg) -- Smaller companies are grabbing a bigger share of U.S. exports, making up for some of the jobs lost as multinational firms move operations overseas.

American businesses without international subsidiaries accounted for 46 percent of sales abroad in 2005, up from 38 percent in 1999, according to a Commerce Department analysis published last week. The trend is likely to continue, helping cushion the economy from the worst housing recession in 16 years, economists said.

``We are at a six-month backlog now and we have been for over a year,'' said Leon Trammel, chairman of Tramco Inc., a Wichita, Kansas-based maker of conveyor belts. ``Our business is just great.''

After exporting his first belt to the Netherlands on an impulse 35 years ago, foreign sales will be almost half of his firm's projected $40 million in sales this year, Trammel said.

Faster global communications and fewer trade barriers have enabled businesses like Tramco, with few or no factories overseas, to take advantage of the strongest global economy in almost three decades. Private companies with less than 500 employees account for all the jobs created since 2005, according to figures from ADP Employer Services.

``It's a very important element driving the economy,'' said John Murphy, vice president of Latin American Affairs for the U.S. Chamber of Commerce, said in an interview. ``For small companies, exporting is the only way for them to tap into foreign markets.''

Export Surge

Exports have set records in each of the past seven months, the longest surge since 2000, according to the Commerce Department's monthly trade report. Trade contributed more to growth in the second and third quarters than in any similar period since 1990 and 1991.

Smaller firms may help exports double their contribution to the economy and add a full percentage point to growth in 2008, according to a forecast by Joe Carson, head of global economic research at AllianceBernstein LP in New York.

``Since it takes time to build up foreign contacts and distribution channels, these firms are probably just starting to develop their export potential and will reap benefits in the future,'' Carson said. ``There is a learning process here that everyone has to go through.''

Advances in communications, such as the Internet and cell phones, have been an important factor opening opportunities for smaller firms, said Tramco's Trammel, who employs 140 workers, most in Wichita.

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HONG KONG (Reuters) - Top manufacturer China could also become the world's main supplier of capital as it rolls out financial market reforms that could free up billions of dollars in savings for investment, a panel of experts said on Tuesday.

But while the reforms try to address long-standing barriers to capital market development in the world's fastest growing major economy, they could lack teeth if poorly implemented.

"We have so far seen China as a manufacturer of cheap goods, in future it may be seen as a major supplier of capital," Stuart Leckie, senior advisor at Britain's index provider FTSE Group, said at the launch of a report on China's capital market.

Leckie said he expects the Shanghai stock market, the largest in Asia outside Japan, to start attracting listings of foreign companies as it becomes more driven by institutional investors and less by individuals.

China's main stock index (^SSEC - News) has more than doubled so far this year in a bull run stoked by profit growth by Chinese firms in the January-September period.

As a result, the Shanghai Stock Exchange has become the world's sixth-largest bourse by capitalization.

The increased presence of institutions in stock markets was also being driven by the Qualified Foreign Institutional Investor (QFII) program, the report titled "The Rise of China's Capital Markets" said.

The report, published by accounting firm KPMG, in association

with Xinhua Finance, FTSE Group and Fitch Ratings, predicted the quota for the scheme, which allows selected foreign institutions to invest in Chinese securities, would be raised to $30 billion by the end of this year from $10 billion.

The country's regulators were also trying to reform the bond market which had taken a back seat to its stock markets in terms of activity, the panel said. But more needed to be done as there were problems of multiplicity both in supervision and trading.

The domestic bond market is split into the interbank market and the stock exchanges in Shanghai and Shenzen, and overseen by three regulatory bodies -- the China Securities Regulatory Commission, People's Bank of China and the National Development and Reform Commission.

"China needs a unified trading platform -- either banks should be allowed to trade on stock markets or the new rules have to apply to the interbank market," said James McCormack, head of Asia sovereign ratings at Fitch Ratings.

He said bond market development also depended on the implementation of the newly enacted Enterprise Bankruptcy law.

But the bond market was dominated by government debt which accounted for 72.4 percent of the issuance in the first half of 2007 and that the corporate sector lagged, the report said.

The dominance of short tenor bonds also meant the lack of a genuine yield curve as the long end remained spotty.

The small corporate bond market had also resulted in companies turning for their financing to the banking sector which was unable to provide long-term funding.

"That burdens the nation's corporations with interest rate risk as well as liquidity concerns, resulting in less competition for banks," the report said.

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CAIRO, Egypt (AP) -- The decision by the world's largest sovereign wealth fund to invest billions in struggling Citigroup has highlighted the growing economic power of Arab Gulf states, awash with money because of high oil prices.

U.S. officials have voiced concerns about such funds' secrecy in the past. But the injection of money by the Abu Dhabi Investment Authority could help stabilize Citigroup Inc., the United States' largest bank, as it struggles with billions in losses from America's mortgage crisis.

The tension illustrates the broader dilemma the U.S. faces in deciding how to deal with such sovereign funds: It relies on their capital inflows to bolster the U.S. economy, but some officials worry that foreign ownership of key U.S. companies could jeopardize national security.

"The investment emphasizes the complexity of the (sovereign fund) issue," said Edwin Truman, a senior fellow at the U.S.-based Peterson Institute for International Economics. Some people, he noted, "want to define national security more broadly, to cover banks or financial institutions."

Analysts said Abu Dhabi's minority investment appeared to be structured to produce the least possible backlash from politicians concerned about its strategic implications.

The issue is likely to grow: Merrill Lynch estimates the total assets managed by sovereign funds already may exceed $2 trillion -- more than all the world's hedge funds combined -- and could grow to $7.9 trillion by 2011.

The bank estimates the assets of the Abu Dhabi Investment Authority -- a secretive government fund that is composed of the emirate's oil revenues and ultimately controlled by the city-state's ruler -- alone could total $875 billion.

Washington has relied on the oil-rich Gulf countries, and China, to fund its growing budget deficits by purchasing vast amounts of U.S. Treasury securities, propping up the value of the ailing dollar.

Record oil prices, which have risen more than 60 percent this year, have swelled the coffers of Gulf countries like the United Arab Emirates. That has prompted them to look for other financial opportunities, like Abu Dhabi's planned $7.5 billion investment in Citigroup announced late Monday.

Morgan Stanley estimates the funds have spent $35 billion since the start of last year on stakes in financial organizations, with $26 billion coming in roughly the last six months.

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BEIJING (AP) -- Food prices are set to rise around the globe after years of decline, with climate change making it harder for the world's poorest to get adequate food, according to a report released Tuesday.

Rising global temperatures as well as growing food consumption in rapidly developing countries such as China and India are pressuring the world food system, meaning that food prices will rise for the foreseeable future, according to the International Food Policy Research Institute.

Joachim von Braun, the director of the Washington-based research group, said food prices have been in a declining trend since scientists began developing high-yield plant varieties decades ago, "but the days of falling food prices may be over."

"The last time the world experienced such food price increases was in 1973 to 1974 ... but today the situation is completely different. For one, the climate risk and climate change situation has increased, the climate vulnerability has increased," von Braun told reporters in Beijing.

The institute said in a report that hunger and malnutrition could rise as poor agricultural communities most sensitive to the environment, such as in Africa, are hurt. Dependency on food imports will also increase as cereal yields decline in those countries.

The world's agricultural production is projected to decrease by 16 percent by 2020 due to global warming, the report said, with land used for certain crops shrinking. For example, it said land to grow wheat could almost disappear in Africa.

It said growing demand in rapidly developing countries such as China and India for processed food and expensive meat and dairy products is driving up prices for those goods, as well as for staple grains used to feed cattle.
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Dec. 4 (Bloomberg) -- The U.S. dollar's record plunge is adding to the hardships of African cotton growers like Farba Boiro, separating them from home and threatening their ability to continue farming in a region where a third of the population subsists on less than $1 a day.

Boiro, a 30-year-old farmer from southern Senegal, couldn't afford to plant this year. With cotton selling for about 9 percent less than a decade ago, he already spent nine months a year working at odd jobs in Dakar, the capital, or in neighboring Gambia. This year's dollar slide made even three months at home with his son and other relatives impossible.

``The money we get isn't enough to support my family,'' Boiro says, leaning against the wall of a tin building on the outskirts of Dakar, about 340 kilometers (210 miles) northwest of his village, Sare Ndiaye. ``Some people end up with nothing at the end of the year.''

Cotton from companies like Burkina Faso's Sofitex and Cameroon's Sodecoton is bought and sold on the world market in U.S. dollars. Farmers are paid in CFA francs, the euro-pegged local currency of 14 western and central African countries. Compared with a year ago, the dollars their crops fetch in world markets buy about 9 percent fewer CFA francs for food and shelter.

While cotton prices have risen about 13 percent this year, ``the appreciation of the CFA franc has offset the benefits,'' according to Stephane Alby, an economist at BNP Paribas SA, France's biggest bank.

`Sinking Into Debt'

Most of the region's ``cotton producers are now on the verge of operating at a loss and sinking into debt,'' Alby wrote in the October issue of the Paris-based bank's Conjoncture publication. ``Meanwhile, the main ginning and marketing companies have chalked up heavy losses over the last two seasons, of which a large part has been supported by the government.''

Cotton accounts for 5 to 8 percent of gross domestic product across West Africa, according to the World Bank. Rural areas in the Sahel, the region that stretches across the continent from Senegal, Gambia and Guinea-Bissau, can be entirely dependent on it because few other crops grow there, says Terry Townsend, executive director of the International Cotton Advisory Committee, a Washington-based association of cotton-producing and consuming countries.

The countries that link themselves to the euro in what is known as the franc zone are mostly former French colonies, including Senegal, Ivory Coast and Burkina Faso, which were granted independence in 1960. Together, they are home to about 115 million people.

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Dec. 7 (Bloomberg) -- It turns out the U.S. economy matters after all.

The credit collapse and dollar decline that followed a surge in U.S. home foreclosures jeopardize expansions in the U.K., Canada and Germany, economists said. They also debunk ``decoupling,'' an argument advanced by analysts at Goldman Sachs Group Inc. and Morgan Stanley that the world wouldn't suffer as it did during U.S. slowdowns in previous decades.

The Bank of England and Bank of Canada this week followed the Federal Reserve in cutting interest rates, and the European Central Bank lowered its growth forecast for next year. British policy makers reduced their benchmark rate yesterday, even after Governor Mervyn King expressed concern about inflation just two weeks earlier.

``Two thousand and eight will be the year of `recoupling','' said Peter Berezin, an economist at Goldman in New York, explaining his firm's about-face. ``What began as a U.S.-specific shock is morphing into a global shock.''

Of the 38 countries they monitor, Goldman economists expect growth to slacken in 26 and strengthen in a dozen. That will cause global growth to slow to 4 percent next year from 4.7 percent this year, with Europe and Japan fading faster than the U.S., they say.

Market lending rates have risen worldwide in the last three weeks as $70 billion of writedowns linked to defaults on U.S. subprime mortgages fanned international concern about the strength of financial institutions.

Roach Skeptical

Decoupling is ``a good story, but it's not going to work going forward,'' Stephen Roach, chairman of Morgan Stanley in Asia, said in an interview in New Delhi on Dec. 2. His colleague, Stephen Jen, said in a report the previous week that because the possibility of a U.S. recession has increased, so has the chance that the rest of the world will falter.

Higher market rates pushed up the cost of lending everywhere, making it costlier for companies and consumers to fund new spending or investment. The cost of borrowing euros for three months, for example, this week rose to a seven-year high.

``Initially the impact of the subprime crisis was on the U.S. directly, but what we're seeing now is a more insidious paralysis of credit conditions moving across different markets and economies,'' said Brian Hilliard, director of economic research at Societe Generale SA in London.
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HONG KONG (AP) -- Asian and European markets slid Monday after signs of accelerating inflation in the U.S. dampened hopes that the U.S. Federal Reserve will cut interest rates further to shore up the struggling American economy.

Benchmark indices in five Asian markets -- Australia, Hong Kong, Singapore, India and Taiwan -- sank more than 3 percent.

Investors sold off stocks globally Monday, their first chance since Wall Street soured on a report showing U.S. consumer prices rose 0.8 percent in November, the largest increase in more than two years. That raised questions about the Fed's options for supporting the economy, which has been buffeted by a credit crisis and housing slump, by lowering interest rates.

Many more investors have come to agree that inflation, not a lack of growth, is the top threat to the U.S. economy.

Asian investors pay close attention to the U.S. economy because it is a major export market.

Hong Kong's benchmark Hang Seng index sank 967.06 points, or 3.51 percent, to 26,596.58 points, its lowest since Nov. 23. All 43 blue chips in the index fell.

"Only if (U.S.) Christmas sales data are exceptionally strong may the Hang Seng Index end the year above its current level," said Philip Chan, head of research at CAF Securities Ltd.

Japan's Nikkei 225 index declined 264.72 points, or 1.71 percent, to 15,249.79 points, bringing its four-day loss to 5 percent.

Australia's benchmark S&P/ASX 200 index plunged 3.5 percent to a three-month low, while Taiwan's key stock index dropped 3.5 percent to a nine-month low.

In India, meanwhile, the Sensex measure on the Bombay Stock Exchange dropped 3.8 percent by its close, and the S&P Nifty index on the broader National Stock Exchange fell 4.5 percent, or 270 points, to register its biggest point fall in a single day.

Markets in Europe were also down in early trading.

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Dec. 17 (Bloomberg) -- The world economy is facing the risk of both recession and faster inflation.

Global growth this quarter and next may be the slowest in four years, while inflation might be the fastest in a decade, say economists at JPMorgan Chase & Co.

The worst U.S. housing slump in 16 years, coupled with a tightening of credit by banks, has brought the world's largest economy ``close to stall speed,'' according to former Federal Reserve Chairman Alan Greenspan. At the same time, rapid growth in China and other emerging markets is driving energy and food prices higher worldwide.

``What lies ahead is a period of stagflation -- slow or no growth combined with rising inflation -- in the advanced economies,'' says Joachim Fels, co-chief global economist at Morgan Stanley in London.

Harvard University economist Martin Feldstein is among those who say it would be just a mild case of what the world endured in the 1970s and early 1980s, when a 10-fold increase in oil prices drove both unemployment and inflation above 10 percent. Still, it poses a dilemma for the Fed and other central banks as they struggle to decide which problem they should tackle first.

How they respond will go a long way in determining which danger proves to be the biggest: a slumping global economy or rising prices worldwide.

For now, traders in futures markets are betting the Fed will remain focused on supporting growth, even after the latest government inflation reading last week showed consumer prices rose in November at the fastest pace in more than two years.
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NEW YORK (AP) -- Goldman Sachs Group Inc. on Tuesday gave a cautious outlook for Wall Street in 2008 because of the ongoing credit crisis, even as the world's largest investment bank chalked up another record-breaking year.

During the fiscal fourth quarter, Goldman's $3.17 billion profit was fueled by higher investment banking fees, one-time asset sales, and surprisingly strong debt trading results. Though quarterly results easily surpassed Wall Street's projections, for some analysts they lacked the kind of power and finesse investors have come to expect.

"Relative to the Street, this is an impressive quarter," said Wachovia Capital Markets analyst Douglas Sipkin in a note to clients. "Relative to (Goldman), this is probably a touch disappointing."

There had been wide hope that Goldman's cadre of top bankers would be able to take advantage of the market dislocation by scooping up distressed securities and locking in profit. Instead, Goldman said it faced one of the worst Novembers on record, which has only somewhat loosened this month.

"We're cautious about the near-term outlook for our businesses as we see dislocation in some of the world's capital markets has continued," said Goldman Chief Financial Officer David Viniar in a conference call with reporters. "We're getting closer to the bottom."

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NEW YORK (AP) -- Art is hot. Despite turmoil in the financial markets, there are no signs that the art market is softening. The fall auction season in New York saw robust prices across most categories, with postwar and contemporary works in particular going through the roof. It seemed like a new record was being shattered every time an art auction was held.

This record haul generated billions of dollars for auction houses such as Sotheby's, contributing to solid earnings but also exposing auctioneers to volatility when sales didn't go as well as expected.

The reason for the art market's strong showing? The weak dollar, expanding world wealth and new buyers from countries not previously associated with the art collecting community, experts say. Over the last five years, wealthy buyers from Russia, China, India and the Middle East have greatly helped fuel the art market.

The boom has occurred against the backdrop of a dreadful year for the financial sector in the U.S. -- a slump that seems to have been offset by the influx of foreign buyers and big American buyers who have not been affected by the uncertain economy.

These buyers paid astronomical amounts for art. An Andy Warhol painting sold for more than $71 million in a May auction that brought in a total of nearly $385 million. A Matisse fetched more than $33.6 million in a November sale that also took in nearly $400 million. A limestone lion sculpture that measures 3 1/4 inches hauled in $57 million earlier this month.

Still, the art market hasn't been immune to turbulence.

Sotheby's suffered a lackluster modern and impressionist sale in November in which Van Gogh's "The Fields," estimated at $28 million to $35 million, failed to sell and many other works sold below their estimates. Sotheby's stock plunged 28 percent that day because of investors' fears that the company had overextended itself in guaranteeing sellers' reserve -- the price the house promises to pay if a certain item doesn't sell.

"What the market was saying was that the property being offered was very heavily estimated and the quality was not there to support this value," said Ian Peck, CEO of the art-finance firm Art Capital Group.

"If you try to sell stuff for twice what it's worth, the market's going to say no," said Peck, adding that he heard that the Van Gogh later sold privately for about $20 million.

Peck says his blanket advice to clients is to take a wait-and-see attitude for the next year, and see how the art market plays out. "Our view is that within 12 months we'll know if this thing is getting worse, meaning if a recession occurs in the U.S. market or not."

Generally, the art market trails the Dow Jones industrial average and other market indexes by about six to eight months, Peck said. And stocks have been volatile, with big swings up and down, since the summer.

But he was optimistic that the art market would ride out the crisis, and noted that his firm, which is essentially a private banker for art buyers, has seen a spike in loan applications to buy art. And people at auction houses aren't really seeing much of a downturn because of problems on Wall Street.

"If you look around, particularly in New York, it seems like everyone's a billionaire and they don't seem to be affected terribly by this credit crunch," said David Nash, of Mitchell-Innes & Nash, a private New York art consultancy and gallery specializing in impressionist, modern and contemporary masters.
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Jan. 2 (Bloomberg) -- The steepest yearend slump in global stocks since 2000 left equities with the cheapest valuations in more than 30 years as inflation accelerated and the U.S. economy showed signs of slowing.

AT&T Inc. and other telephone company stocks became the least expensive group in the MSCI World Index compared with the cash they produced. Shares of ABB Ltd., the world's largest builder of power networks, and competing engineering companies failed to keep pace with earnings growth. A majority of Japan's companies trade at less than half their net assets as profits and wages contract in the world's second-largest economy.

``Equities on a valuation basis should be worth more,'' said Robert Doll, 53, who oversees $1.3 trillion as chief investment officer of global equities at BlackRock Inc. in Plainsboro, New Jersey. ``The devil's advocate argument says, `But wait a minute, that's based on some notion of earnings and how do you know the earnings are going to be there?' That's going to make it tougher for markets.''

Stocks fell to the lowest last month relative to bonds since the 1970s according to the so-called Fed model, which was cited by former Federal Reserve Chairman Alan Greenspan a decade ago. Equities yield 4.17 percentage points more in projected earnings than 10-year government bonds paid in interest at the end of 2007, according to an analysis of 29 countries by New York-based Lehman Brothers Holdings Inc., the fourth-largest U.S. securities firm by market value.

September 1974

The gap is now the widest since September 1974, when adjusted for volatility, the data show. The last time the spread was wider, equities outperformed debt by 24 percentage points in the next 12 months, according to Lehman.

The MSCI World dropped 2.7 percent last quarter, trimming its 2007 advance to 7.1 percent. The last time the gauge of 23 developed markets posted a decline for the final three months of the year was in 2000 as the Internet bubble burst.

The Standard & Poor's 500 Index, the benchmark for American equity, rose 3.5 percent in 2007, the second-smallest annual advance of the five-year bull market. The Dow Jones Stoxx 600 Index of European companies and Japan's Nikkei 225 Stock Average snapped four-year winning streaks, losing 0.2 percent and 11 percent, respectively.

Equities may get even cheaper should financial firms' $97 billion in writedowns and credit losses related to the collapse of the subprime mortgage market cause the world's biggest economy to shrink. U.S. gross domestic product may grow by 1.5 percent this quarter and 2.1 percent in the April-to-June period after slowing to 1 percent in the last three months of 2007, the median forecast in a Bloomberg survey of economists showed.
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As troubles in the US housing market ripple across the global economy, the health of banks has become one of the biggest financial uncertainties for 2008.

The old watchword in buying real estate is "location, location, location." But troubles in the US housing market have rippled outward to become a problem without borders.

Now the health of banks has become one of the biggest financial uncertainties for 2008. The risk: that a cutback in lending will restrain an already cooling world economy.

For now, economists say that no full-scale credit crunch has arrived. But the end of the US housing boom has caused billion-dollar losses for banks in places like New York, London, and Frankfurt, Germany.

That has consequences for borrowers. After years of relatively easy lending worldwide, the general trend now is toward tighter conditions: Loans are growing more expensive and harder to get. Here's a rundown on the credit challenge, and how it may play out this year:

How big is the credit squeeze?

Many borrowers are unaffected, but the credit problem goes beyond mortgage loans and beyond the United States. The biggest concern is, it could get worse. If loan losses surge, banks would become less able to lend, even to creditworthy customers.

"Credit conditions are tightening in Europe," says Tu Packard, a global economist at Moody's Economy.com in West Chester, Pa. "It's not as bad as here yet. [But] it's a very significant concern."

In part, what's happening is a reappraisal of the risk inherent in making loans. During an era of low interest rates and solid global growth, it was the potential rewards that captivated bankers, borrowers, and investors.

Now, banks face rising loan defaults and a possible recession in the US economy – an event that would have strong global ripple effects. So they are turning more cautious and reining in access to credit. It's not just mortgage loans that are going bad. Default rates are also rising for auto and credit card loans. Also at risk are loans to corporations making leveraged buyouts, and loans for commercial real estate.

Housing markets have weakened in Britain, Ireland, and Spain. But so far, the biggest problems are with investments tied to home loans in America.
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Jan. 14 (Bloomberg) -- China is starting to gain control of its turbocharged economy, just as a U.S. slowdown raises the risks of doing so.

A narrowing trade surplus and declining money-supply growth are among the first signs that the world's fourth-largest economy is pulling back from its fastest expansion in 13 years. The government has raised interest rates six times in a year, restricted credit, frozen some prices and let the currency appreciate to damp growth and inflation.

The risk is that, with months of effort to cool off China finally taking hold when the U.S. is already flirting with recession, both main engines driving the global economy may power down at the same time.

``As foreign demand deteriorates, China may overdo its tightening of policy and cause a sharp economic slowdown,'' says Frank Gong, Hong Kong-based chief China economist at JPMorgan Chase & Co. ``If the central bank raised interest rates too much, it would damp domestic demand and increase the danger of economic downturn.''

China is still on a tear. Its economy expanded 11.5 percent last year, according to a government estimate, and it contributed 17 percent to global growth, the same as the U.S. With prices rising at the fastest pace in 11 years, the ruling Politburo and the central bank are trying to engineer a cooling of growth that doesn't also throw millions of China's 1.3 billion people out of work.
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TOKYO: Global shares fell Wednesday as burgeoning U.S. mortgage loan problems and soft economic data provoked fears that the world's largest economy may enter a recession and drag down smaller economies with it.

The Nikkei 225 stock index fell 3.4 percent in Tokyo to its lowest closing in more than two years. The Hang Seng index in Hong Kong was off 4.3 percent. The CSI 300 index in China also declined 3.4 percent. The decline gave the Nikkei a return of minus 11.8 percent so far in 2008.

"Equity markets are declining as global investors are less willing to take on risk with subprime loans still in the news," said Kazunori Takahashi, Head of Equity Market Research with Daiwa Securities SMBC in Tokyo. "This is feeding concerns the U.S. economy may go into recession, which also makes it difficult to buy risk assets such as equities."

Citigroup, the biggest U.S. bank, on Tuesday reported a fourth-quarter net loss of $9.83 billion. The biggest loss on record for the 196-year-old company reflected write-downs on subprime mortgage investments of $18 billion.
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FAIRFIELD, Conn. (AP) -- Industrial, financial and media conglomerate General Electric Co. said Friday its fourth-quarter profit rose 4 percent on strong global demand, and it reaffirmed its outlook for fiscal 2008.

For the quarter ended Dec. 31, net income rose to $6.7 billion, or 66 cents per share, from $6.44 billion, or 62 cents per share, a year ago. Earnings from continuing operations climbed to 68 cents per share in the latest period, from 58 cents in the prior-year quarter.

Revenue rose 18 percent, to $48.59 billion. The company said more than half of its revenue now comes from outside the U.S., helping to cushion GE from a possible U.S. recession.

Quarterly profit matched the average forecast of analysts surveyed by Thomson Financial, while revenue topped Wall Street's outlook of $47.28 billion. GE had forecast a quarterly profit of 67 cents to 69 cents per share.

Revenue for 2007 totaled $172.7 billion, which beat expectations of $171.4 billion, according to analysts surveyed by Thomson Financial. Revenue for the year increased 14 percent from 2006.

Meanwhile, net earnings came in below analysts' expectations for 2007, reaching $22.2 billion, up 7 percent from 2006. Analysts, however, had forecast $22.4 billion.

GE's total orders rose 18 percent to $27 billion for the quarter and climbed 18 percent to $98 billion for the year. Total backlog grew $19 billion year-over-year, an increase of 42 percent.

Chief executive Jeff Immelt told analysts at a conference call that GE met expectations.

"We said we were going to deliver a good EPS of 68 cents, up 17 percent. And that's what we've done," he said.

Immelt said global and infrastructure markets remain strong.

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PARIS: While there is increasing evidence that the euro-area economy is slowing, most of the factors that are contributing to the bleak outlook in the United States are not present on the Continent, according to the governor of the Bank of France, Christian Noyer.

During an interview, Noyer also said he did not expect any "strong shocks" from French banks as they report their 2007 earnings, despite the constant stream of major losses by banks in the United States.

Noyer was at pains to stress that consumers and financial institutions in France and the rest of the euro zone appeared relatively insulated from the effects of the meltdown of the subprime mortgage market across the Atlantic.

"Historically, there was some correlation between the U.S. and the EU economic cycles," Noyer said. "Now it seems there could be at least a partial decoupling. That's not to say that we're immune from a weakening U.S. economy, but there are a series of factors that should dampen the effect."

Specifically, he pointed to the resilience of the housing market on the Continent. In addition, the weakness of the dollar seems to have made the rise in price of imported commodities more of a shock for U.S. consumers.

And, he said, banks in the euro zone were not as exposed to suspect financial products based on risky mortgages as those in the United States and Britain.

Noyer, who sits on the Governing Council of the European Central Bank in Frankfurt, is also chairman of the French Banking Commission, which regulates the sector in France.

As such, he said he has been assessing the balance sheets of all the big French banks before they reveal their 2007 results over the next month or so.

"I don't expect strong shocks," he said during the interview on Thursday at his office in Paris. "I'm reasonably confident that French banks will weather this turmoil without major trouble even though they are clearly, like all banks, in the world still in the process of marking down assets."

Giving an assessment of the health of the euro area is a highly nuanced task for central bankers, since a change in tone can spark expectations of a shift in the monetary stance. Last week, at his regular press conference in Frankfurt, the ECB president, Jean-Claude Trichet, gave some analysts the impression that the bank might raise rates.

Since then, other council members, notably Yves Mersch and Axel Weber appear to have emphasized downside risks to growth, while still warning of inflation.
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LONDON (AP) -- European and Asian stock markets plunged Monday following declines on Wall Street last week amid investor pessimism over the U.S. government's stimulus plan to prevent a recession.
The U.K. benchmark FTSE-100 dropped 3.9 percent to 5,673.1; France's CAC-40 Index plunged 4.5 percent to 4,861.2, while Germany's slumped 5.35 percent to 6,922.7.

In Asia, India's benchmark stock index tumbled 7.4 percent, while Hong Kong's blue-chip Hang Seng index plummeted 5.5 percent to 23,818.86, its biggest percentage drop since the Sept. 11, 2001, terror attacks.

Investors dumped shares because they were skeptical that an economic stimulus plan President George W. Bush announced Friday would shore up the economy that has been battered by problems in its housing and credit markets. The plan, which requires approval by Congress, calls for about $145 billion worth of tax relief to encourage consumer spending.

"We've taken our lead from the Asian markets who have not been impressed by the U.S. There's debate if there's going to be a recession in the U.S. I don't think there's much chance of that though," said Richard Hunter an analyst at Hargreaves Lansdown Stockbrokers Ltd. in London.

Concerns about the outlook for the U.S. economy, a major export market for Asian companies, has sent the region's markets sliding in 2008. Just last Wednesday, the Hang Seng index sank 5.4 percent.
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Global equities plunged on Monday as investor concerns over the economic outlook and financial market turbulence snowballed into a sweeping sell-off.

Tumbling Asian shares – which continued to fall early on Tuesday – led European stock markets into their biggest one-day fall since 9/11 as the prospect of a US recession and further fall-out from credit market turmoil prompted near panic among investors, who rushed to the safety of government bonds.

About $490bn was wiped off the market value of Europe’s FTSE Eurofirst 300 index and $148bn from the FTSE 100 index in London, which suffered its biggest points slide since it was formed in 1983. Germany’s Xetra Dax slumped 7.2 per cent to 6,790.19 and France’s CAC-40 fell 6.8 per cent to 4,744.45, its worst one-day percentage point fall since September 11 2001.
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NEW YORK (AP) -- U.S. stock futures seesawed Tuesday after the Federal Reserve, responding to a growing financial market crisis, slashed interest rates 0.75 percentage point.

Dow Jones industrial futures, down more than 500 points before the Fed move, were fluctuating violently an hour before the start of trading.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

NEW YORK (AP) -- Wall Street was expected to plunge at the opening of trading Tuesday, extending its huge losses from last week and taking more cues from heavy selling that has spread throughout the world. Indicators showed the Dow Jones industrial average was set to fall by more than 500 points when trading begins.

Fears of a recession in the United States that could pull down the global economy as well have infected markets around the world, and those declines further unnerved U.S. investors who were unable to trade Monday, when Wall Street was closed for Martin Luther King Jr. Day. Meanwhile, U.S. bond prices soared as investors fled the stock market, and the price of oil skidded as investors dumped futures in the belief that a recession would slash demand for energy.

Dow futures fell 526, or 4.34 percent, to 11,580. Standard & Poor's 500 index futures fell 65.90, or 4.97 percent, to 1,259.40. Nasdaq 100 index futures dropped 81.75, or 4.42 percent, to 1,767.65.

Comments from Treasury Secretary Henry Paulson early Monday appeared to do little to assuage investors' unease. He said in prepared remarks that Congress and the administration need to quickly put together a plan for tax cuts and other steps aimed at boosting the economy and easing the fear in the global market. He said the stimulus package can aid the economy but that it would need to be put in place quickly.

In Asia, Japan's Nikkei stock average closed down 5.65 percent -- its biggest percentage drop in nearly a decade. Hong Kong's Hang Seng index lost 8.65 percent a day after showing its biggest losses since the Sept. 11, 2001, terrorist attacks.

In afternoon trading, Britain's FTSE 100 fell 0.69 percent, Germany's DAX index lost 2.55 percent and, France's CAC-40 fell 1.39 percent.

http://biz.yahoo.com/ap/080122/wall_street.html

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Jan. 28 (Bloomberg) -- The U.S. economy may already be in recession; other countries might not be far behind.

Japan, Britain, Spain and Singapore, which together represent about 12 percent of the world economy, are vulnerable as fallout from the U.S. worsens their economic weakness. Even emerging markets, including China, are likely to suffer as exports to the U.S. wane.

The result: Global growth may decelerate close to the 3 percent pace economists deem a worldwide recession, from a 4.7 percent rate in 2007. ``Some form'' of global recession ``is inevitable at some point,'' former Federal Reserve Chairman Alan Greenspan said in a speech in Vancouver last week.

The developing slump puts pressure on central bankers in Japan, the U.K. and the euro region to follow the lead of Fed Chairman Ben S. Bernanke, who last week accelerated interest- rate cuts in the U.S. with an emergency move to lower the benchmark rate by three-quarters of a percentage point. Policy makers may follow that with another cut of as much as half a point after a two-day meeting that starts tomorrow, futures trading indicates.

``The odds are shifting toward a more significant global monetary easing,'' says Richard Berner, co-head of global economics for Morgan Stanley in New York.

Jim O'Neill, chief economist at Goldman Sachs Group in London, says growth in the first half of 2008 may be the ``weakest since 2002 and maybe even 2001,'' during the last global downturn. ``The economy is slowing everywhere,'' he says.

Japanese Recession

It's ``highly likely'' Japan is already in a recession or will enter one this quarter, Tetsufumi Yamakawa, chief Japan economist at Goldman in Tokyo, wrote in a report published today.

A worldwide recession doesn't require a global contraction in output, which rarely happens; economists at the International Monetary Fund say it would take a slowdown in global growth to 3 percent or less. By that measure, three periods since 1985 qualify: 1990-1993, 1998 and 2001-2002.

The contagion from the U.S., which according to the IMF represents about 21 percent of the global economy, is spreading via multiple channels. Less spending by American consumers and companies reduces demand for imported goods. The meltdown of the U.S. subprime-mortgage market has pushed up credit costs worldwide and forced European and Asian banks to write down billions of dollars in holdings. Tumbling U.S. stock prices are dragging down markets elsewhere.

``We'll see more collateral damage,'' says Allen Sinai, chief economist at Decision Economics in New York. ``The risk of a global recession is rising.''
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Feb. 8 (Bloomberg) -- Finance officials from the Group of Seven industrial nations are at odds over the best remedy for a world economy rocked by the fallout from the U.S. credit crisis.

U.S. Treasury Undersecretary David McCormick this week urged the G-7 to ``take prudent steps'' to shore up growth, and U.K. Chancellor of the Exchequer Alistair Darling vowed to do so. In contrast, Germany's Peer Steinbrueck today said he has no plans for any fiscal stimulus package, Canada's Jim Flaherty has ruled out ``large'' tax cuts and Japan's Hiroki Tsuda said he's ``cautious'' about using fiscal policy.

Finance ministers and central bankers from the G-7 meet in Tokyo tomorrow as evidence mounts that the U.S. is heading toward a recession and other major economies are slowing. Failure to agree on a joint response may further undermine global growth this year, which is forecast by the International Monetary Fund to be the weakest since 2003.

``There may well be a view that this is a U.S. problem for the U.S. to sort out,'' said Julian Jessop, chief international economist at Capital Economics Ltd. in London. ``Tensions might be bigger this time.''

The G-7 will release a statement around 6 p.m. in Tokyo tomorrow. The group, which consists of the U.S., the U.K., Japan, Canada, France, Germany and Italy, is also likely to discuss the U.S. and Chinese currencies and ways to improve financial regulation.
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World equity markets lost a combined US$5.2 trillion (HK$40.56 trillion) in January in one of the worst starts ever to a new year, according to Standard & Poor's.
"If investors thought the market could only go up, January's wake-up call pulled them back to reality," S&P said over the weekend.

Emerging markets were "devastated" in January, the index provider said. In addition, the month's losses negated all previous market gains, leaving all developed markets in the red for the trailing three-month period.

"There were few safe havens in January, as 50 of the 52 global equity markets ended the month in negative territory, with 25 of them posting double- digit losses," Standard & Poor's senior index analyst Howard Silverblatt said in a statement.

Emerging markets fell 12.4 percent during the first month of 2008 while developed markets lost 7.8 percent of their value, the index provider said.

Stock markets in Asia-Pacific fell 7.5 percent during January, bringing three-month losses in the region to 14.4 percent. Growth stocks in the Asia- Pacific region were among the worst hit, dropping 16 percent during the month.

The Chinese market fell 21.4 percent during January, extending three- month losses to 34 percent.

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SOVEREIGN wealth funds are a fairly new name for something that's been around for quite a while: assets held by governments in another country's currency. All countries have foreign exchange reserves (these days, they're typically in dollars, euros, or yen). When a country, by running a current account surplus, accumulates more reserves than it feels it needs for immediate purposes, it can create a sovereign fund to manage those "extra" resources.

Sovereign funds have existed at least since the 1950s, but their total size worldwide has increased dramatically over the past 10–15 years. In 1990, sovereign funds probably held, at most, $500 billion; the current total is an estimated $2–3 trillion and, based on the likely trajectory of current accounts, could reach $10 trillion by 2012.
http://www.imf.org/external/pubs/ft/fandd/2007/09/straight.htm

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March 5 (Bloomberg) -- The Organization for Economic Cooperation and Development cut its forecast for growth this year and now expects expansion of ``less than'' 2 percent in its 30 member nations, Secretary General Angel Gurria said.

``2008 will be a difficult year of lower growth and some more unpleasant surprises,'' Gurria said in an interview in Oslo. ``We have revised downwards a number of our projections.''

The U.S. housing recession, bank write-offs and a credit- market slump are curbing consumer spending and hurting corporate investment in the developed economies of the Paris-based organization. Expansion of less than 2 percent would be the weakest since 2003 and is a reversal of the OECD's previous forecast that growth would weather the fallout from the U.S. slowdown and rebound in 2009.

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March 10 (Bloomberg) -- Asian governments are abandoning spending restraint and trying to get their consumers to do the same in their battle to overcome slowing growth.

The Philippines may discard plans to balance its budget this year as President Gloria Arroyo's government accelerates investment in public works and social services. Thailand's government is spending 1.5 trillion baht ($47 billion) to expand mass transportation and improve health care. Hong Kong is cutting taxes, and Singapore is handing out cash to its citizens.

Such policies, aimed at generating more demand at home to make up for slowing overseas sales, come with the encouragement of the International Monetary Fund, in a reversal of its long- standing push for fiscal restraint. Developing more self- sustaining domestic sources of growth may help Asia's emerging economies shift away from dependence on exports.

``There's been a long tradition of fiscal frugality in most Asian countries,'' says Hubert Neiss, the IMF's top official for the region during the 1997-98 financial crisis. ``However, at a time when global demand and exports are slowing down, it's important to boost domestic demand, consumption and investment. Asia can afford it.''

In developing Asian nations, the IMF predicts growth will decline to 8.6 percent in 2008 from an estimated 9.6 percent in each of the past two years.
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March 12 (Bloomberg) -- The outlook for the global economy deteriorated for a fourth month in March amid declining faith in Asia's ability to dodge the U.S. slump, a survey of Bloomberg users on five continents showed.

The Bloomberg Professional Global Confidence Index fell to 13.1 from 14.3 in February. Respondents in Asia were the most pessimistic about worldwide growth and a gauge of confidence in their own economy fell to 38.1 from 43.5. A reading below 50 indicates negative sentiment.

Mounting pessimism may further undermine the global economy at a time when stocks are already declining and the U.S. economy teeters on the brink of a recession. The world's biggest banks and securities firms already wrote down about $188 billion of assets linked to mortgages for people with poor credit histories.

``The problems that started in the U.S. are now affecting all regions and fear is putting economies on hold,'' said Luis Benguerel, head of equities at Interbrokers Espanola SA in Barcelona and a participant in the survey.

The Bloomberg Professional Confidence Survey collated the responses of 5,430 Bloomberg users from Auckland to New York on economic conditions in their region and the world. The survey was conducted from March 3 to March 7. The investors, traders and analysts were also asked about the outlook for their currencies, bonds, stocks and interest rates in the next six months. Participants are in cities including Hong Kong, Zurich and London.
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Globe and Mail, By Heather Schofield, April 2

OTTAWA — A “marked slowdown” in global growth will ensure that rising food and energy prices won't prompt widespread inflation around the world, the Bank of Canada says.

In a speech on Wednesday morning in London, Ont., senior deputy governor Paul Jenkins said that inflationary pressure seen in the United States, the United Kingdom, Europe and emerging markets is mainly restricted to food and energy prices.

“With global economic growth slowing, it is unlikely that the higher prices of food and energy will spill over into prices and costs more generally, but this risk is something central banks are watching closely,” he said.

Indeed, a slowdown in global growth was probably necessary to prevent the world economy from overheating, he said.

April 10 (Bloomberg) -- Cleary Gottlieb Steen & Hamilton, a 950-lawyer New York firm, got the job when bankers needed deal- savvy attorneys to help launch a $3 billion sale of shares in Reliance Power Ltd., India's third-largest utility.

As the credit crisis drove first-quarter U.S. mergers and acquisitions down 54 percent to $248.1 billion from $536.3 billion last year, deal volume in Asia, Latin America, the Middle East and Africa rose 39 percent, from $77.2 billion to $107.2 billion, according to data compiled by Bloomberg.

The rise in overseas mergers and acquisitions as U.S. volume hits a five-year low has encouraged Wall Street law firms led by Cleary Gottlieb; Skadden, Arps, Slate, Meagher & Flom and Dewey & LeBoeuf to accelerate foreign expansion programs in place for a decade or more. Some are giving partners $250,000 housing allowances and offering associates $150,000-a-year incentives to move overseas.

``The growth outside of the United States has clearly outstripped the growth inside the United States,'' said Mark Walker, managing partner of Cleary Gottlieb. The firm represented Kotak Mahindra Capital Co and UBS Securities India Pvt in Mumbai- based Reliance Power's initial public offering that was listed Feb. 11 on the Bombay Stock Exchange.

While Cadwalader, Wickersham & Taft fired 35 associates in January and Clifford Chance ousted six in November, Los Angeles- based Gibson Dunn & Crutcher is adding to its roster of 102 lawyers abroad. The firm's foreign revenue grew more than 215 percent in five years as the total reached $907.7 million in 2007, spokeswoman Pearl Piatt said. She declined to disclose the overseas share.
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WASHINGTON (AP) -- Finance officials from the world's top economic powers endorsed a plan Friday aimed at preventing another financial crisis like the credit and mortgage debacles that erupted in the United States and quickly sent tremors around the globe.

Rapid implementation" of the plan "will not only enhance the resilience of the global financial system for the longer term but should help to support confidence and improve the functioning of the markets," the G7 officials said in a joint statement.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke hosted the Group of Seven discussions, where officials embraced a plan that would seek to increase the openness, or transparency, of financial markets and to sharpen regulators' response to urgent financial problems.

Besides the United States, the other members of the G7 are Japan, Germany, Britain, France, Italy and Canada. Friday's action preceded the weekend meetings of the 185-nation International Monetary Fund and the World Bank.

Risks to the United States and the global economy have intensified since finance officials from the Group of Seven countries last gathered here in October. Many economists now believe the United States has fallen into a recession and the odds of a worldwide downturn have risen sharply -- to one in four -- according to the IMF, a global financial firefighting institution.
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