PAF capable to meet all challenges: Air Chief

PAF mindful, equipped, and capable to meet all challenges: Air Chief

Sanctions not to harm Pakistan: Ex-servicemen

 

Rawalpindi: <April 26 >

Chief of the Air Staff Air Chief Marshal Tahir Rafique Butt on Thursday said PAF is mindful, equipped, and capable to meet all the challenges.

 

Quality of equipment, quality of training and above all the caliber of our men is source of great satisfaction and reassurance for the nation; we will come up to all the expectations, he said.

 

Chief of the Air Staff said that the nature of aerial warfare continues to become complex by the passage of every day and any future conflict would mean employment of the air power in a manner that has never been witnessed before.

 

PAF Chief Tahir Rafique Butt said this while meeting a delegation of Pakistan Ex-servicemen Society (PESS) led by Lt. Gen. (Retd) Faiz Ali Chishti.

 

Commodore M. Farooq Mirza, Sqn. Leader Liaquat Ali Ansari, Lt. Col M. Tariq Kamal and others were also present on the occasion.

 

Air Chief Marshall Tahir Rafique Butt said that the current situation is a test to our resolve; therefore we are improving operational training to meet the future challenges.

 

We are fully aware of the situation while remaining committed to make PAF second to none, he said adding that PAF was in the highest state of operational readiness.

 

PAF has inducted and operationalised all the latest weapon systems of fourth generation fighter aircraft including indigenously produced JF-17 Thunder Aircraft which are source of pride in various exercises and international air shows, he informed.

 

He added that other major inductions included Saab-2000 AEW&C, ZDK-03 AWACS, IL-76 air-to-air refuellers, and Spada-2000 Lomad systems.

 

New state-of-the-art  hardware, enhanced focus on exercises, revamping training system and other steps have enabled us to respond to the national security challenges with the highest state of operational preparations, said Butt.

 

Despite limitations, PAF with its talented human resource accomplished both the tasks in the most professional manner; he said adding that we are not only focusing on the development of existing human resource but also focusing on the welfare of retired officers and airmen.

 

Lauding the exceptionally dedicated services of the PESS, the Air Chief said that we will continue to support their cause.

 

At the occasion, the PESS delegation reposed confidence in the leadership of Air Chief Marshal Tahir Rafique Butt, Chief of the Air Staff.

 

They said that we are not worried of any sanctions and such steps have not deterred us in past and have remained counterproductive.

 

Rather, sanctions have helped us in many ways, it will help us improve level of confidence take a new start, the former servicemen observed.

 

--

Lt. Gen. (Retd) Faiz Ali Chishti, President, 051-5701287/8

Sq. Ldr. (Retd) Liaquat Ansari, VP, 0333-5166636

Lt. Col (Retd) M. Tariq Kamal, Sec. Gen, 0300-8542971, 051-5700541

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Army Officer Unmasks Rs 62 billion Scam

 Lt. Col. (Retd) M Tariq Kamal. Former Director Engineering DHA Islamabad,

Cell: 0300-8542971. Res: 051-5152157. Address: 10-C, Tariq Lane, Tulsa Raod, Lalazar, Rawalpindi.

 

DHA, Bahria Town deprive masses of Rs 62 billion

Forty thousand soldiers, one hundred ten thousand civilians lost savings

Authorities playing role of silent spectator:  ex- director DHA

 

Islamabad: (April 25) Defence Housing Authority Islamabad (DHAI) and Bahria Town have deprived 150 thousand people of their hard-earned Rs 62 billion, a former military officer said.

All the concerned authorities have decided to ignore this blatant breach of public trust, he said.

Colonel (Retd) M Tariq Kamal, former Director Engineering DHAI said in a statement on Wednesday that DHAI has been receiving money in the name of allotment of plots in DHA Phase I Extension, DHA Phase II Extension and DHA Valley since a decade but what masses get in return is assurances and hollow promises.

Those who deposited money for plots considering it purely DHAI projects were deliberately kept in dark about the agreements between that DHAI and Bahria Town regarding land development.

Similarly, few would know that following the controversial agreements, DHAI silently transferred all the funds raised from public amounting to Rs 62 billion to the account of Bahria Town CEO Malik Riaz.

Those who got cheated include 110 thousand civilians, 41 thousand serving and retired military officers, jawans and families of martyrs.  Total land in question is 1,65,000 kanal, he informed.

Elaborating, he said that few years back DHAI and Bahria Town chief Malik Riaz inked controversial agreements according to which the later was entrusted to develop all the 1, 75,000 kanal land owned by DHAI.

Malik Riaz started development activity on 10,000 kanals after pursuance by DHAI authorities. As the development process kicked off, the DHAI bosses transferred Rs 62 billion into the account of Malik Riaz without any guarantee and against the advice of DHAI legal advisors Ahmer Bilal Soofi & Co.

Those DHAI employees who objected to the illegal steps were sacked immediately.

After some time, Mr. Riaz stopped development process and started using the money of DHAI members to fulfil his personal ambitions, he alleged.

He informed that according to the agreements DHAI is unable to take any decision or action while Mr. Riaz continues to delay development leaving millions of people worried and insecure.

Lt Col. (R) Tariq said that reasons for the unusual favour are still not known but it merits an investigation to ascertain as to why top officials misused authority and compromised DHAI reputation to benefit a property tycoon widely known for land grabbing.

Similarly, the applicants were deliberately kept unaware about the partnership of DHAI with Malik Riaz in the business otherwise the response of masses could have been different.

He said that Mr Riaz is not honouring agreements thus damaging GHAI reputation and causing a huge financial loss. Yet, DHAI administration’s indifference is bewildering and needs investigation.

Lt Col. Tariq who is a member of DHAI as well as an affectee said that according to Clause 23 of Gazette Notification Ordinance No LIII, 2009, all the serving or retired army officers serving in DHA would be considered public servants (civilians).

However, the Central and Provincial Governments, NAB, FIA and police etc. would not take any concrete action against all those who have violated all laws and procedures to deprive 150 thousand families of their homes.

He said that the demands of overseas Pakistanis and findings of Transparency International have also fallen upon deaf years.

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'Courage to shift gears' needed in U.S., Europe

 'Courage to shift gears' needed in U.S., Europe

Sunday, April 22, 2012

By Howard Schneider 

The United States and Europe face several years of economic pain to become competitive in a global economy where growth and financial clout are shifting to Asia and other emerging nations, Tharman Shanmugaratnam, Singapore's finance minister, said at the close of International Monetary Fund meetings that were dominated by lingering concerns over Europe.

Shanmugaratnam, who chairs the IMF's governing body, said it was only recently that he felt political leaders in the developed nations had accepted the depth of their problems - be it unsustainable levels of government debt or unrealistic public expectations about social spending, wages and other issues.

"There have been very strong expectations set for more of the same, and it is going to take political courage to shift gears," said Shanmugaratnam, who, as the principal financial official of a country that has symbolized Asia's economic rise, is considered one of the developing world's star economic managers.
That means several more years of trying to curb government spending while simultaneously overhauling economies, restructuring labor rules and benefits and taking other politically difficult steps that the IMF says are needed to revive economic growth.
Without that revival, he said, developed-world governments will never tame the debt problems that have driven three euro-zone nations to seek bailouts from the IMF in recent years, are currently pressuring Italy and Spain, and need to be addressed in the United States as well.
"It is going to be a long journey," he said. "If we don't get back to real growth, fiscal sustainability is not possible."
The spring meetings of the fund were a low-key respite to previous gatherings, which over the past few years have been dominated by the global crisis that followed the 2008 collapse of Lehman Brothers, the teetering nature of the euro currency zone and the bailouts of Greece, Ireland and Portugal.
Fund economists kicked off the week's discussion by boosting their forecast for world economic growth. The U.S. economy seemed to be gaining strength, they said, and Europe should begin exiting a mild recession.
Still, the risk of a possibly severe setback is considered large and prompted IMF Managing Director Christine Lagarde to push through a new pool of money, worth about $430 billion, that the fund could use to help countries if the world economy worsens. Though Europe is still considered the likely epicenter of any major meltdown, the new money is not dedicated for use in the euro zone and would be loaned only under the usual set of conditions established by the IMF, Lagarde said.
"It's nice to have a big umbrella," Lagarde said of the money raised through pledges from Europe, Japan, South Korea and others, though not the United States. By not contributing, the United States is in the unusual position of having the largest share of votes on the IMF board while providing the second-largest commitment of funds, behind Japan.
The Obama administration argues that the IMF has enough money to respond to any likely problems, that more could be raised quickly if necessary and that the United States has taken other steps to help Europe, such as ensuring a supply of dollars as needed to the European Central Bank.

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Frequent artificial drugs price hike benefiting corrupt, hurting needy

                                                                                Life-saving drugs out of reach of poor, deserving

Doctors, officials and multinationals killing masses for profit

Demo held against collusion among doctors, officials and pharma companies

Frequent artificial drugs price hike benefiting corrupt, hurting needy

 

Islamabad: (April 20)

Social workers, rights activists and patients of Hepatitis on Friday asked the government to take serious measures to curb the spread of killer diseases in country.

 

They also demanded concrete steps to reduce price of the medicines, especially life-saving drugs which are no more affordable for the common man.

 

Workers of different social sector organisations, human rights activists and patients of Hepatitis B and C raised these demands while holding a demonstration in front of National Press Club against expected artificial upward price revision of some costly drugs and elements gaining from sky-rocketing prices.

 

Over ten per cent population is suffering from Hepatitis just because of the re-use of disposable syringes, unscreened blood transfusion and contaminated equipment in medical facilities, they said.

 

They alleged that some Multinational companies (MNCs) are exploiting the situation by selling drugs on exorbitant prices while barring entry of affordable medicine in the market.

 

MNCs are also delaying local research aimed at finding cheap local alternatives, they added.

 

The protestors said that cost of the most widely prescribed Hepatitis medicine is not more than Rs 3000. However single dose of the pre-filled syringe is being sold at Rs 13000.

 

The health practitioner who prescribes the medicine gets Rs 6500 as commission while rest of the money is distributed among importers, health officials, distributors and retailers, they informed.

 

Rejecting the underhand payments, shady deals and artificial price hikes, they said that the pharmaceuticals would give benefit to all the stakeholders except the poor patients suffering from life-threatening diseases.

 

This is an organised crime against poor patients who cannot afford 2 to 4 doses per month for years while there is no system in place to challenge the prices of medicines fixed by Ministry of Health.

 

The situation proves that medical profession is lost to greed, while state has failed to provide affordable healthcare facilities to masses and save them from exploitation.

 

The registration of a drug takes some two years in the UK and USA while the local authorities have been registering eight drugs per day since years.

 

Why the same branded medicines are very cheap in all the neighbouring countries that include aspirin, Amoxillin, Ampicillin, Co-trimaxazole, Laxotanil, Ciprofloxine, Renitidin, Famotidine and Cemetidine, they questioned.

 

They demanded that import of cheap and quality medicine from India should be immediately allowed to save masses from the clutches of health mafia.

 

Government can import everything from India – sugar, cotton, fruit, vegetables, pulses and machinery – but it would not dare import medicine under pressure of the influential pharma mafia, they said.

 

Only few God-fearing doctors would tell patients to seek out Indian medicines which are around 8-10 times cheaper than those manufactured locally by the same MNCs.

 

Islamabad can follow the suit of Indian where firms producing generic drugs at a fraction of the cost of branded medicines which forces MNCs to lower prices.

 

The protestors asked the Chief Justice Pakistan to stop ruthless manipulation of the dispossessed and ensure that benefits of modern medicine reach poor on proper cost.

 

Companies spending billions as bribes and benefitting from regulatory gaps, loopholes and dishonest officials needs to be checked, they demanded. 

 

--

Aftab Ahmed

Patron-in-Chief,

Sawera Foundation

0300-2542394

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IFRS: Learn from mistakes made by others

Feb 07, 2012

Aug 30, 2011

“Procrastination was the biggest problem Europe faced in converting to IFRS,” warns Leah Donti, CPA, CMA, MBA, founder of Advantage Montreal Seminars, at the Columbus Accounting Show.

U.S. companies aren’t preparing for a potential transition to IFRS in 2015 right now. Instead, they are waiting until “the SEC makes a decision to require IFRS and announces a date certain for adoption of IFRS.” She added, “What you will find is the lack of planning leads to costly mistakes.”

Donti teaches seminars across North America, including Canada which is preparing to convert to IFRS in January. She shares lessons that Europe learned and what Canada is experiencing now in its conversion.

Donti suggests beginning the planning process two to three years in advance of the requirement. “The more you delay, the more work you have and the more costs you will incur,” Donti said.

She recommends having a good, tactical conversion plan:

• Identify the full scope and depth of IFRS changes throughout the organization
• Provide a plan and a structural framework for truly embedding IFRS within the organization
• Integrate the necessary people, processes, systems, data and control changes with adequate considerations for quality
• Establish a strategy for communicating IFRS impacts to key stakeholders, both internal and external
• Address the education and training needs throughout the organization

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Survey finds almost half of Americans are 'casual' about financial planning

 Survey finds almost half of Americans are 'casual' about financial planning

Wednesday, April 18, 2012

By Paul Gores, Milwaukee Journal Sentinel

April 18--Almost half of Americans take an informal approach to financial planning -- if they even have a plan -- but most say they want to improve, according to a new study from Northwestern Mutual Life Insurance Co. 

When asked what type of planner they are, 38% described themselves as "informal," meaning they have a general sense of their goals and how to meet them, but no specific plan in place. Another 7% said they have no specific goals or plans in place.

"This research reflects that most Americans see the value in setting financial goals, but a large number don't know how they'll get there," said Greg Oberland, Northwestern Mutual executive vice president. "Developing a plan to reach your goals is just as important as having a goal in the first place, whether it pertains to your health, your career or your financial security."
Milwaukee-based Northwestern Mutual released results of its Planning & Progress Study on Wednesday.
The study, conducted by Ipsos, showed finances are very likely top of mind for many Americans, and that people continue to be highly cautious about risk, Northwestern Mutual said.

"The unpredictability of the market is reflected in the fact that people continue to be risk-averse," said Oberland. "A solid financial plan can help put risk in perspective, and allows people to navigate uncertainty better by providing flexible options over time."

Other findings from the research include:

The No. 1 approach to saving and investing is "slow and steady wins the race" (36%). Yet more than one-fifth (21%) indicated, "I'd like to be more cautious but I have a lot of catching up to do."

Among priorities for improvement in 2012, finances (43%) came second only to personal health (48%). That was well ahead of spending time with family and friends (31%), career (12%) and education (5%).

Americans appear to be risk-averse: 40% of respondents show a strong preference for safer but lower returns with very low risk vs. only 25% who strongly prefer the opportunity for higher returns with higher risk.

The majority of Americans are taking steps to pay down their debt (62%), develop a budget (61%), save a portion of their paycheck regularly (58%), build up an emergency fund (58%) and organize financial documents (56%).

Northwestern Mutual sponsored the study to evaluate the state of financial planning in America, and people's progress toward reaching their long-term financial goals. Independent research firm Ipsos conducted the online survey of 1,015 Americans aged 25 or older between Feb. 2 and Feb. 13 via a systematic random sample of U.S. adults.
___
(c)2012 the Milwaukee Journal Sentinel 

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Canada bank rate 1 percent for 13th time

Canada bank rate 1 percent for 13th time

Tuesday, April 17, 2012

The Bank of Canada maintained its 1 percent central interest rate Tuesday for the 13th time in more than two years. 

Its economic forecast for Canada was mostly positive and more restrained about the United States and other countries' recovery from recession.
"Overall, economic momentum in Canada is slightly firmer than the bank had expected in January," the bank release said.

"Europe is expected to emerge slowly from recession in the second half of 2012, although the risks around this outlook remain high."
The central bank said the U.S. recovery is "more resilient and financial conditions more supportive than previously anticipated."
The persistent strength of the Canadian dollar, or loonie, was seen by the bank as problematic in dragging down exports.
A report last week by Statistics Canada noted the country's international trade surplus plummeted from $1.9 billion in January to $292 million in February.

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Warren Buffett tells investors he has cancer

Billionaire investor Warren Buffett  announced Tuesday that he has been diagnosed with stage I prostate cancer. "My energy level is 100 percent," he wrote in a letter to investors. CNBC reports.

By Allison Linn

Warren Buffett, the billionaire investor known as much for his folksy wisdom as his investing prowess, announced Tuesday that he has been diagnosed with cancer.
In a letter to shareholders, Buffett, 81, said that he had been diagnosed with stage I prostate cancer.

“The good news is that I've been told by my doctors that my condition is not remotely life-threatening or even debilitating in any meaningful way,” Buffett said in the letter.
Buffett said that he will begin a two-month treatment of daily radiation in mid-July. He said his travel will be restricted during that time but it will not otherwise change his daily routine.

In his typical conversational style, Buffett said that he feels great.

“I will let shareholders know immediately should my health situation change. Eventually, of course, it will; but I believe that day is a long way off,” he said.

Prostate cancer is common among older men, but usually isn’t life-threatening. In 2011, 240,890 men were diagnosed with prostate cancer, according to the American Cancer Society, and 33,720 men died of it.

Speculation has long swirled around who would take over for Buffett should he no longer be able to run Berkshire Hathaway. Buffett said in February that he had chosen someone to succeed him as chief executive of Berkshire Hathaway, but he did not name that person.

Buffett told CNBC Tuesday his succession plan had not changed with the diagnosis.

Buffett has been in the news lately because of his call for the rich to pay more taxes. The so-called Buffett rule, which was rejected by the Senate Monday, came after he wrote an editorial in the New York Times asking lawmakers to stop coddling the rich.

Msnbc.com correspondent Brian Alexander contributed to this story.

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Fewer risk-free financial assets available, says IMF

Fewer risk-free financial assets available, says IMF

Thursday, April 12, 2012

By DAN O'BRIEN 

The number of risk-free financial assets is in decline, according to an International Monetary Fund (IMF) study.
This could make the global financial system more unstable by threatening runs on sovereign debt and increasing herding behaviour by investors. In recent decades, bonds issued by stable, rich countries were considered risk-free.
However, the onset of the financial crisis in 2008 and the sovereign debt crisis has "reinforced the notion that no asset can be viewed as truly safe", the study states.
Some formerly highly rated governments have had their credit ratings downgraded and the supply of "safe" assets is falling meanwhile and could be cut by $9 trillion ([euro]6.87 trillion) globally in coming years, or 16 per cent of the total, according to IMF staff estimates.
The supply of safe assets by the private sector has also declined, IMF economists say.
The reasons for this include the failure of "securitisation" in the US, which involved low-quality mortgages being bundled and sold as high quality financial assets, many of which became worthless after the US property market crashed.
The contraction in the supply of safe assets has coincided with an increase in demand for such assets, driven by "heightened uncertainty, regulatory reforms and crisis-related responses by central banks".
The tightening of supply and the increase in demand could lead to greater volatility in global financial markets, the report concludes.
The study, which was made available yesterday, will be published in the fund's biannual Global Financial Stability Report. That report, among the IMF's flagship publications, will be released next week in advance of the spring meeting in Washington DC of the fund and its sister body, the World Bank.
Originally published by DAN O'BRIEN.
(c) 2012 Irish Times. Provided by ProQuest LLC. All rights Reserved.

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Bernanke says Fed working on regulatory failures

Bernanke says Fed working on regulatory failures

Tuesday, April 10, 2012

By MARTIN CRUTSINGER 

WASHINGTON - Chairman Ben Bernanke said Monday that the Federal Reserve is working to address the regulatory failures that were exposed by the 2008 financial crisis. But he cautioned that as the financial system evolves, new risks will emerge.

The Fed has overhauled its regulatory efforts to focus much more on the stability of the entire financial system, Bernanke said. It seeks to avoid mistakes of the past crisis, such as big non-bank institutions escaping the supervision.
But the Fed chief said it was not enough for regulators to just address problems exposed by the crisis. The financial system is constantly evolving and unanticipated future risks to stability will develop, he said.
Bernanke's comments came in a speech Monday night to a conference sponsored by the Federal Reserve Bank of Atlanta.
The financial crisis, which hit with force in the fall of 2008 after the collapse of Lehman Brothers, underscored the need for regulators to do a better job in policing the financial system, he said.
"About three and a half years have passed since the darkest days of the financial crisis, but our economy is still far from having fully recovered from its effects," Bernanke said in his remarks.
In terms of closer supervision, Bernanke noted that the central bank last month released the results of stringent stress tests in which all but four of 19 major U.S. financial institutions got passing grades. The Fed declared the institutions strong enough to survive an economic downturn worse than the Great Recession.
In another example of stepped up supervision, Bernanke said that the Fed has been actively monitoring U.S. banks' direct and indirect exposures to the European debt crisis. It is also tracking the way U.S. banks are managing their exposure to the risks posed by the European crisis.
Bernanke said that the Fed and other banking regulators are moving to impose tougher standards, not just on big banks but on big non-financial institutions such as insurance companies. The aim is to better regulate all financial institutions that could pose a risk to the stability of the financial system.
"But even as we make progress on known vulnerabilities, we must be mindful that our financial system is constantly evolving and that unanticipated risks will develop over time," Bernanke said.
He said that was an unavoidable consequence of the new financial regulations put into place by the sweeping Dodd-Frank Act that Congress passed in 2010 to overhaul the financial regulatory system.
"An inevitable side effect of new regulations is that the system will adapt in ways that push risk-taking from more-regulated to less-regulated areas, increasing the need for careful monitoring and supervision of the system as a whole," he said.
Bernanke said that the Fed has increased its efforts at system-wide monitoring with the creation of an Office of Financial Stability Policy and Research.

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Financial terms a puzzle? read on

Financial terms a puzzle? read on

Sunday, April 08, 2012

By Bill Freehling, The Free Lance-Star, Fredericksburg, Va.

April 8--AREADER recently approached me with a request: Start including a glossary with this column that defines financial terms that are frequently tossed around but little understood.
Among her suggestions: equities, hedge funds and derivatives. What the heck are these things, she wondered.
I figured she wasn't the only one with these questions, so I decided to devote this column to coming up with a simple-to-understand definition for each.
Derivatives: The easiest way to understand these highly complex and varied financial instruments is to look at the word itself. Derivatives are things that derive their value from some underlying asset such as a house, stock or commodity.

For example, a farmer might want to lock in the price at which he can sell his soybeans. He can enter into a futures contract that will allow him to guarantee his sales price at a certain level. If the price of soybeans goes way up, the farmer will still be locked in to the lower amount. But if the price of soybeans tanks, he will still be guaranteed the amount he locked in upfront. This is a good way to reduce his risk.
That futures contract can then be traded on the open market, and its price will go and down based on the price of soybeans. The contract itself has no inherent value. But it derives its value from an underlying asset, in this case soybeans. And hence it's called a derivative.
Many investors buy stock options for the same hedging purpose, allowing them to lock in a given price at which they can sell or buy a stock in the future. The seller of the option looks to pocket some upfront cash. Again, the option will gain and lose value based on how the underlying stock is trading. It derives its value from the stock.
These are both real-world examples of how regular people can use derivatives to hedge risk, boost their income or for some other purpose. People who trade these derivatives on Wall Street are often far removed from the underlying asset.

Hedge fund: Hedge funds generally have a bad name, but it shouldn't necessarily be that way. Essentially, managers of hedge funds are trying to do the same thing that mutual fund managers are doing: make money for their clients (and hence profit themselves).
But unlike mutual funds, which tend to invest in easily understood assets such as stocks and bonds, hedge funds use more complex strategies that often involve derivatives, short-selling and other things. The idea is to limit the fund's risk and allow it to perform well in all market conditions. For example if the portion of the hedge fund that's invested in stocks craters, the manager will have another asset that gains in value to offset the loss. In other words, risk is hedged. And hence the name.
Hedge funds get a bad name because they aren't as closely regulated as plain-vanilla mutual funds. They're typically restricted to only wealthy investors who presumably understand how the funds work (though many probably don't). A few bad apples in this category have given the overall asset class a black eye in the eyes of many people. But at the most basic level, a hedge fund is simply trying to avoid losing investors' money.
Equities: An equity is just a fancy name for a stock. People who own stock have a fractional stake in the company's financial results (as opposed to owners of bonds, or debt, who have just been promised a steady payout but no share of the earnings). Because you have some ownership in the company, you have equity in it in much the same way as when you put a down payment into a home. And hence the name. 

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Global economy faces three key risks in 2012

Global economy faces three key risks in 2012

Thursday, April 05, 2012

By Arab News, Jeddah, Saudi Arabia 

April 5--KUWAIT -- KCIC, an investment firm specializing in investments in Asia, recently hosted a closed discussion with IHS Global Insight's Director of Sovereign Risk, Jan Randolph, who delivered an outlook on global economies for the year 2012 to an audience of local analysts, bankers, fund managers and investors.

Randolph's outlook focused on the main global driving economies: The United States, the euro zone, Japan and emerging Asian markets.
Randolph is a seasoned international economist and financial markets commentator on television and radio including Bloomberg, CNBC and Reuters TV, and has written extensively in the press, including the Financial Times, Washington Post, Newsweek, Observer and Business Week.
He is also the director of Sovereign Risk with IHS Global Insight, based in London, where he has successfully adapted the risk management and internal rating modeling techniques for cross-country bank exposures to provide clients with a unique sovereign risk rating system for over 200 economies worldwide. He has both policy and hands-on experience in international risk management, especially in Emerging Markets.
"The global economy faces three key risks in 2012, first an oil price shock from supply disruptions in the Middle East, second the euro zone sovereign debt problems and lastly, China's real estate market downturn. These are interesting economic times as the impact of the 2008 financial crisis is still present and generating aftershocks such as the sovereign debt crises. However recent data suggests that global growth will pick up. Inflation worldwide has moderated, enabling more central banks to ease monetary policies," he said.
Global GDP growth expected for 2012 and years to come show that Asia-Pacific will achieve the fastest real GDP growth at levels ranging between 6 percent and 7 percent annually between 2012 and 2020. Western Europe is expected to grow at the lowest global levels ranging between a negative growth in 2012 and less than 2 percent till 2020. Overall global economies are expected to grow between 2 percent and less than 6 percent.
Brent crude oil prices on the other hand are expected to sustain above $110 levels between 2012 and 2017. Prices are driven by sustained growth in EM, concerns over Iran's nuclear program and sanctions over the country, security challenges in Iraq and Nigeria, limited growth in non-OPEC supplies between 2012 and 2013, and the moderate influence of increased production from US tight oil fields and Canadian oil sands.
Randolph shared the following outlook on global economies:
The US expansion will continue at a modest pace, restrained by inevitable fiscal tightening. The private sector will continue its deleveraging, and strengthening job growth will support consumer income and spending.
The euro zone is in a mild recession and growth is expected to resume by mid-2012. The risks of a disruptive sovereign debt crisis have diminished.
Japan is suffering a loss of export competitiveness, and the reconstruction post the March 2011 earthquake and tsunami is proceeding slowly.
Asia will lead global growth and Emerging Markets (EM) will continue to offer the best prospects, but not without risks.
EM will also enjoy robust growth despite an export deceleration. As for China, its economy will achieve a soft landing, provided that the housing market downturn does not turn into a crash.
Latin America and Africa will do relatively well by historical standards.
On the US, Randolph said: "The corporate sector is rich in liquidity but lacks opportunities to invest, therefore guiding investors to place their money in safe-havens where risk aversion is very high. The US economy recovery continues to be pressured by the unresolved real estate."
The US growth will exceed growth in the euro zone and Japan, reaching an expected 2 percent in 2012 and increasing year on year until 2016. Recent employment figures show encouragement -- consumers and businesses are cautiously increasing their spending, the outlook on exports is favorable after 2012, and the dollar real exchange value will depreciate against EM's currencies. A rebound in the housing markets remains key to a more robust economic growth.
The threat of the euro zone sovereign debt problems has eased. Fiscal policies will tighten, however timing and scope are uncertain. Oil prices risks have risen. The probability of a return to recession is today at 20 percent.
In Europe, the current mild recession is expected to end starting the third quarter. The euro zone fiscal deficits are decreasing, the fiscal balance is expected to register a negative 3 percent of the GDP in 2012 and continue to ease to a negative 2 percent approximately of the GDP on 2013.
Randolph said: "The European Central Bank's massive lending to banks has helped ease credit conditions and reduce government bonds yields. To survive, the euro zone will move towards closer fiscal integration, and Germany is key in achieving this step. The euro is expected to depreciate to a low $1.25 in the autumn of 2013."

He added: "Italy and Spain are making progress on structural reforms under their respective new leadership and the contagion risks from Greece have diminished. Greece however remains in a dire situation and the probability of it exiting the euro zone in the next three years is 40 percent and that could trigger a financial crisis and deep recession, dragging down the US. Contagion will be contained if Greece remains in the euro zone and the European Central Bank supplies ample liquidity."
"EM have led the global growth since 2009, and even though we might not see double digit growth rates in China anymore, the growth rate of 6 percent or 7 percent is still very high. And it is interesting to see that China and Germany are slowing down together. China's performance is parallel to Europe," said Randolph.
EM will lead the global expansion. China and India will lead growth in EM with the highest real GDP growth between 2012 and 2016. And by 2021, Asia will be the world's top producer, grabbing 34.6 percent of world GDP. China alone will grab 19.6 percent, in comparison to a low of 6.1 percent for the Middle East and Africa.

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Double-dip fears recede as services firms power ahead

Double-dip fears recede as services firms power ahead

Wednesday, April 04, 2012

By Russell Lynch, London Evening Standard 

April 4--Lingering worries of a double-dip recession looked finally banished today as the UK's dominant services firms roared ahead at the fastest pace for nearly two years in the opening three months of 2012.
A buoyant March performance capped a strong quarter for a sector that accounts for 76 percent of the economy, according to the Chartered Institute of Purchasing & Supply. It follows similar upbeat signs this week from manufacturers and construction firms.
Financial information firm Markit, which compiles the closely watched activity surveys, declared the UK was on course for growth of 0.5 percent during the first quarter, in a bounceback from the disappointing 0.3 percent slide in the final three months of last year.
This leaves Chancellor George Osborne avoiding the huge political and economic blow of a renewed technical recession with two successive quarters of contraction, despite headline-grabbing warnings last week of a double-dip from the OECD think-tank.
The strength of the surveys will also sharpen the debate among Bank of England rate-setters, who began their latest meeting today. The Bank is expected to hold fire on any changes this month but the apparent recovery signs could swell the ranks of the hawks on the monetary policy committee opposed to pumping an extra pounds sterling 25 billion into the economy in May.
The services survey -- where a score over 50 signals growth -- strengthened to 55.3 in March, signalling a faster pace of expansion than economists were expecting. Cips chief executive David Noble said double-dip fears were "unfounded" but warned: "Market conditions remain difficult and we are not out of the woods by any stretch."
The Bank predicts a "zigzag" path for the economy this year although one-offs such as the Olympics and the extra holidays for the Queen's Diamond Jubilee could hit the performance of the April-June quarter. Markit chief economist Chris Williamson said: "The Diamond Jubilee is likely to dampen GDP growth, and there remains a strong risk that, unless business activity picks up further, the economy could contract again in the second quarter."
Services firms said a 15th successive month of growth was largely supported by a rise in volumes of incoming new business, encouraging firms to take on more staff. But Markit warned that the upturn was far from a "runaway" recovery with hiring and growth in workloads still far below the pace seen before the financial crisis. ING Bank's UK economist James Knightley said that the economy faced "major risks" from the continuing Eurozone debt woes as well as soaring oil prices.
He added: "The underlying trend of the UK will be difficult to read. In this environment the BoE will remain cautious in its interpretation of the data and suggests stable policy for quite some time until things become clearer."
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(c)2012 the London Evening Standard

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Rules on risk for non-bank firms set

Wednesday, April 04, 2012

By Ian Duncan 

Trying to ward off a financial crisis like the one that shook the world in 2008, a powerful panel of federal regulators approved criteria for classifying which non-banking firms pose a risk to the entire financial system and are subject to tougher rules. 

The new financial regulations are aimed at large, previously unregulated insurance companies, such as bailed-out American International Group Inc., as well as hedge funds, private equity funds and other firms whose complicated securities and bad bets on mortgages created a credit crisis and helped deepen the recession. 

The financial woes and key failures of those firms put "enormous pressure on the banking system as a whole, significantly intensifying the magnitude of the crisis in the United States," said Treasury Secretary Timothy F. Geithner, who chairs the Financial Stability Oversight Council. 

The council, created by the 2010 law that overhauled financial regulations, is charged with devising and implementing rules for major corporations whose possible failures would put the nation's economy at significant risk. 

The rules adopted Tuesday apply to financial companies with more than $50 billion in total assets and with significant holdings of risky securities, such as derivatives and credit default swaps, that are similar to those blamed for the credit crisis. 

The council also reserved the ability to consider the risk posed by any company, even if it does not meet those numbers. 

Under the new rules, those judged by the panel to pose a risk to the economy would be regulated by the Federal Reserve and required to meet a set of stability standards. 

Those standards are still being determined but are likely to include rules about how much debt a company can take on and how risky its investments can be. The companies also are expected to have to produce details on how they are to be wound down in a crisis, in the hope of avoiding government bailouts. 

The first companies to be designated as "systemically important financial institutions" are expected to be named by the end of the year. 

Donald Lamson, a lawyer and former regulator who helped draft reforms after the financial crisis, said the government will have to be careful about how it implements the rules. 

"In applying these criteria, the federal agencies are going to have to ensure that they both get an adequate sample of institutions and that they do not miss any large fish," Lamson said. "At the same time, they don't want to cast their net so far that they catch too many and lack the resources to adequately supervise those entities." 

The council, which comprises Fed Chairman Ben S. Bernanke, other top federal regulators and non-voting state officials, is charged with guarding the stability of America's financial markets. 

J. Stephen Zielezienski, senior vice president and general counsel for the American Insurance Assn., said that if the council sticks to the numbers in the rule, the property casualty members the association represents probably won't fall under the council's gaze. 

"I suspect that it will continue to be the case that none of our member companies will be in the target zone," Zielezienski said. But even with the council's ability to investigate any company, he said, it should apply all the rules "sparingly." 

-- 

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Dutch boy comes up with pizza-based euro solution

Tuesday, April 03, 2012

By MIKE CORDER and ROBERT BARR 

LONDON - An 11-year-old Dutch boy has gone where many of the best economic minds in Europe have feared to tread and proposed a radical solution to the European single currency's problems - using a pizza as his inspiration. 

Jurre Hermans' entry in the 250,000 pounds ($401,000) Wolfson Economics Prize, an international economics competition to find the "best contingency plan for a break-up of the euro" won special mention Tuesday from the judging panel. 

Hermans, of Breedenbroek in the Netherlands, was 10 at the time he entered. He has been given a (EURO)100 ($133) gift voucher for his efforts but failed to make the final short list of five proposals - which included reversing the process in which the euro was created and exiting the system over a weekend. 

The 17-country single currency union has been placed under considerable strain by the crippling debt problems of some of its members. Greece recently managed to avoid a chaotic default on its debt - an event that could have destabilized the 17-country eurozone and the global economy - by negotiating a (EURO)170 billion ($226 billion) bailout. If Greece had been forced into a disorderly default, one course of action would have been for it leave the euro and go back to its old currency, the drachma. 

Some Europe-watchers have warned that any country's exit from the eurozone would destabilize the rest of Europe and plunge the region into a deep recession. On the other side, "euroskeptics" argue that the currency union's problems are so great that an orderly break-up with countries going back to their old currencies, such as the Italian lira, is the best answer. 

The prize has been sponsored by a family charity trust of Lord Simon Wolfson - a member of the Conservative Party in the U.K.'s second parliamentary chamber, the House of Lords - and is being run by the think tank Policy Exchange. The competition attracted 425 entries. 

"Sadly, the risk of a country leaving the eurozone has not gone away," Lord Wolfson said at the announcement of the shortlist. "The ideas contained in these entries are an invaluable contribution to tackling this important issue." 

In a telephone interview after school, Hermans said he came up with the idea after watching Dutch TV news. 

He explained his idea in brief, saying Greeks would "hand in all their euros and get drachma in return. The euros go to the government and it pays the debts." 

"I saw it on television and said, `why don't they do that?'" 

In his written entry to the competition, translated into English by his father Julius, Jurre goes into greater detail, suggesting that on top of Greek people exchanging euros for drachma, anyone trying to move euros out of Greece should be penalized. 

"All Greek people should bring their euro to the bank," he wrote, including a diagram of his plan. "They put it in an exchange machine .... You see, the Greek guy does not look happy!! 

"The Greek man gets back Greek drachme from the bank, their old currency. The bank gives all these euros to the Greek government. 

"All these euros together form a pancake or a pizza. Now the Greek government can start to pay back all their debts, everyone who has a debt gets a slice of the pizza." 

Julius Herman said his son's career ambitions lie outside the field of advanced economics. "He wants to do something with animals," he said. 

"He's not particularly interested in politics or economics. He started thinking about it because it is getting so much attention in the media." 

The prize's five shortlisted finalists, who will each receive 10,000 pounds to continue their work ahead of the prize's award on July 5, and their proposals are: 

- Robert Bootle and his team of Capital Economics in London: 

A country leaving the euro would convert its government and consumer debt into its own currency. The country would then deliberately default to bring its debt levels down to 60 percent of its economic output. 

- Catherine Dobbs, a British private investor: The process which created the euro would basically be reversed. All claims in the exiting country would be replaced by claims in the new currency. 

- Jens Nordvig and Nick Firoozy of Nomura Securities in London: 

If a country quits the euro, British law would not recognize debt contracts in the country's new currency. A new way of handling and dealing in these debt contracts would have to be introduced. 

- Neil Record of Record Currency Management: 

Record contends that if one country leaves the euro, the currency has to be dissolved. He thus argues for maintaining secrecy for as long as possible before announcing a breakup plan, to prevent markets from attacking structural weaknesses in other countries. 

- Jonathan Tepper of North Carolina-based Variant Perception: 

Many currency unions have failed in the past and a euro break-up is not especially challenging. Using past examples as a guide, countries should exit by surprise over a weekend, declare an extra bank holiday or two around the date of the exit and stamp the existing currency until new notes are circulated. 

-- 

Corder contributed from Amsterdam

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Regulators to banks: Tighten standards on leveraged loans

Regulators to banks: Tighten standards on leveraged loans

Monday, April 02, 2012

By Danielle Douglas

Regulators want banks to tighten the underwriting of leveraged loans - a type of high-risk, high-yield financing offered to debt-laden companies that is experiencing a resurgence.
The funding is often used by private-equity firms, such as District-based Carlyle Group, for buyout transactions or corporate acquisitions. Other firms use the debt for recapitalizations or refinancing. Big banks, including Wells Fargo and Bank of America, are the dominant lenders in the market, and the focus of new guidance.
"While there was a pull-back in leveraged lending during the crisis, volumes have since increased while prudent underwriting practices have deteriorated," the Office of the Comptroller of the Currency, Federal Reserve and Federal Deposit Insurance Corp. said last week when announcing a joint proposal urging banks to be more cautious in making loans.

The proposal, an update of guidance issued in 2001, focuses attention on five areas: establishing a sound risk-management framework; underwriting standards; valuation standards; pipeline management; and reporting and analytics.
One of the biggest changes would urge that banks establish a plan to address failed transactions and general market disruption, said Bram Smith, executive director of the Loan Syndications & Trading Association, an industry group.
"Regulators are looking at the diversification of deals, the size of transactions or the variation of credit quality to manage the pipeline of transactions," he said.
Smith said regulators are trying to avoid a repeat of 2006 to 2007, when banks agreed to so-called "covenant lite" loans that provided limited protection when companies defaulted.
Much of the new guidance is the same as in the previous iteration, but the regulatory agencies are now asking banks to be more judicious in vetting borrowers. Transactions, they say, should be structured to reflect "a sound business premise, an appropriate capital structure, and reasonable cash flow and balance sheet leverage."
While the guidance is not enforceable, it gives examiners a basis for tougher oversight of leveraged loan portfolios.
Leveraged loan volumes soared 59 percent over 2010 to $373 billion last year, the highest level since 2007, according to Standard & Poor's Capital IQ Leveraged Commentary and Data.
The agencies are accepting public comments on the proposal until June 8.

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