Bankex Surges in India with Chetia Assurances as Global Economy is Still dangerously Off Course! Biggest Fundraising Exercise in History Gets Momentu

Bankex Surges in India with Chetia Assurances as Global Economy is Still dangerously Off Course! Biggest Fundraising Exercise in History Gets Momentum to Bail Out the Zionist Global Economy!Indian banks are eating Mutual Funds as survival Strategy!Turmoil Tsunami Breaks Geography! Sainthood with Pope`s appeal to End Violence. In Recession Obama Overrides and Mc Cain flounders. Dalit Queen Mayawati Pulls Land Rag from Under Italian Sonia`s Feet. Global Power Equations Volatile!


Troubled Galaxy Destroyed Dreams: Chapter 85

Palash Biswas
Banks take money out of mutual funds
VIVEK NAIR

http://www.telegraphindia.com/1081013/jsp/frontpage/story_9960924.jsp


Mumbai, Oct. 12: Banks are scooping their money out of mutual funds.

As the global financial turmoil exacerbates, stock markets flounder and their cash crunch intensifies, banks have started to press the redemption button on their mutual fund investments.

The scheduled commercial banks’ overall exposure in mutual funds have dropped to Rs 10,759 crore for the fortnight ended September 26 from a high of Rs 78,717 crore in early August last year — when the credit crisis first erupted in the US. That is a fall of 86.3 per cent in roughly 14 months.

Retail investors — who have helplessly watched the sensex collapse by 45 per cent since January — have seen equity mutual fund returns plummet this year. But they haven’t been able to cut their losses and run, hoping and praying that the crisis will blow over sometime soon.

Industry circles confirmed that several mutual funds were facing redemption pressure, particularly from companies and banks.

“It is nothing but mindless panic,” said Dhirendra Kumar, CEO of Value Research online, which tracks the mutual fund industry. “The pressure for redemptions is only accelerating. Moreover, there are only sellers and no buyers.”

Kumar indicated that fixed income mutual funds were one of the worst sufferers and here, investor confidence in liquid and liquid-plus funds had eroded significantly. He, however, added that unlike companies, retail investors had not pulled their money out.

Retail investors, Kumar said, have been largely investing in equity funds. Though they have not panicked, equity-linked funds have been the worst hit by the stock market crash.

Even as returns of some funds have plummeted by over 30 per cent over the past few months, the corpus of the mutual funds has also shrunk.

Bankers said the severe cash shortage they had been facing had forced them to pull out their money from the mutual funds.

Last Friday, banks were forced to pay as much as 23 per cent for overnight loans on the call money market. “They have been pulling their surplus money parked in the liquid funds,” a source said.

The figures put out by the RBI in its weekly bulletins indicate that the trend has gathered pace since June.

A senior official with a private sector bank said companies had been pulling their money out of mutual funds and parking them with banks in the form of short-term deposits.

“There is a renewed interest in bank deposits. The high interest rates offered by banks are luring investors,” he added.

Sources in the mutual fund industry said the withdrawals had taken place though they have been trying hard to assuage fears of investors. “We have said that the quality (of the portfolio) is not at all a problem. Yet, some categories of investors have panicked.”


Hilary Osborne
guardian.co.uk,
Monday October 13 2008 14.44 BST
Article history
Millions of small shareholders in UK banks will not earn dividends on their holdings for years to come under the terms of the government's banking bail-out plan outlined today.

Around 2 million people have shares in HBOS, many of who are customers that received their shares when Halifax demutualised in 1987. Lloyds TSB and Royal Bank of Scotland had also been favourites with investors who saw the banks as a safe option and a good source of income.

In recent years, payouts from banks have made up around 20% of total dividends from the markets. Last year, small shareholders in HBOS received dividends worth 48.9p for each share they held, a yield of 6.8% on their holding. Lloyds TSB paid out 35.9p a share, a 7.6% yield, while Royal Bank of Scotland paid out 33.2p a share, a yield of 8.9%.

Some of the banks had been on target to offer similar returns to shareholders this year.

However, those payments are set to end as the terms of the government's bail-out package mean any profits made by the banks must go towards repaying the taxpayer before they are directed to shareholders.

It could be many years before private shareholders receive any income on their investments.

"It is an enormous blow for shareholders," said Mark Dampier, research director at investment firm Hargreaves Lansdown. "Most older people thought banks were a pretty safe investment, and three to four months ago some of them were actually increasing their dividends."

The pressure on banks to increase their capital stretches beyond those involved in the rescue plan, Dampier said, and was likely to result in others stopping their dividends.

He said HSBC was unlikely to be affected "but they are all under pressure", while Barclays announced today it is axing its annual dividend, a saving of £2bn.

Dampier added that for long-term investors a cut in dividends was a price worth paying to safeguard the security of the banks in which they held shares.

Nick Raynor, an investment adviser at online stockbroker the Share Centre, said: "We have a lot of people in bank shares and the whole reason is income.

"A lot of them are retired and still want the income so we are suggesting that if we do get a little bit of a bounce in bank shares they consider selling them and moving into something with a better yield."

The loss of dividends will also have an impact on investors in those income funds exposed to bank shares. Some fund managers had already moved out of banks, including Neil Woodford at Invesco Perpetual and Adrian Frost at Artemis, but others still hold their shares, including New Star, which Dampier said "had far too much in banks".
http://www.guardian.co.uk/money/2008/oct/13/banks-shares


What if Bankex in India Surges with Chetia Assurances!

After suffering a bloodbath last week, Indian equity markets staged a smart recovery on Monday on strong global cues from both European and Asia-Pacific, as well as a pep talk from Finance Minister P Chidambaram. The key index, Sensex closed 800 points up to cross the physiological 11,000 mark. The benchmark Bombay Stock Exchange index closed at 11,336.66, a gain of 808.81 points or 7.68 percent. The intra-day high was 11,361.32 and low 10,817.68. Capital goods, banks, and IT were among the ones in demand.
Sensex once again replicates Dow as The Dow Jones industrial average rebounded more than 500 points today as Wall Street snapped back from last week's devastating losses after Traders on the floor of the New York Stock exchange. Major governments announced further steps to support the global banking system, including plans by the U.S. Treasury to buy stocks of some banks. All the major indexes rose well over 6 percent.

The hope on the Street was that the market was finding a bottom after eight sessions of devastating losses that sent the Dow down nearly 2,400 points. But while a rebound had been expected at some point, Wall Street can expect to see volatile, back-and-forth trading in the coming days and weeks as investors work through their concerns about the banking sector, the stagnant credit markets and the overall economy.

It is RED ALERT continued with temporary Short Covering Relief on Sunday!still a long way to go! I am not an Economists. you have not to be an economist to study the troubled Galaxy Time!

Meanwhile, the Biggest Fundraising Exercise in History gets Momentum to Bail Out the Zionist Global Economy!Europe rescue Plan underway and markets respond positively!

In India,the Bankex of Bombay Stock Exchange rose over 12.30 per cent on the hopes that the efforts being made by the government and RBI would help the banks to sail out of the financial crisis.

But Indian banks are eating Mutual Funds as survival Strategy!

Turmoil Tsunami breaks Geography!

The Great Depression, initially a limited Recession in sub prime crisis hit US Economy inflicted the Global Order of Phoenix! World bank IMF Washington Initiative to save the Greedy, Excessive Risk Taking Rich Billionaires of the world herald worldwide famine, starvation, food insecurity, global warming, environmental disaster, wars, civil wars, nuclear biological chemical Holocausts and every possible impossible man made calamities!

The Reserve Bank on Monday asked banks not to stop disbursing loans to clients under the pretext of tight liquidity situation in the banking system.

"It has come to our notice that in view of some tight liquidity conditions in the domestic market in the recent past, some of the banks have been averse to disbursing working capital limits and term loans (including short-term loans) to their clients against the sanctioned limits," RBI said in a notification.

The central banks said some banks are resorting to such tendencies even when drawing power is available in the clients account and all the terms and conditions of the sanction of the loans stand complied with.

"In view of the improved liquidity in the markets, the banks concerned are advised to review all such cases and permit drawal of sanctioned limits, guided by their usual commercial judgement," the Reserve Bank said.

Earlier in the day, Finance Minister P Chidambaram had said that "our banks are ready and willing to provide credit. Suitable advisories are being issued to the banks."

RBI is already infusing Rs 60,000 crore by reducing mandatory cash requirement for banks (cash reserve ratio) by 1.50 per cent.


Let the FDI fed Toilet Media and Chetia Chidambaram Gang of US Slaves cheer up, we have to assess the developments objectively!

Who pays for the bail Out ultimately?

It is only us, the Common Masses of this Globe, the tax payers in each and every country including the Super Power United state of America and the European community! The Black Untouchables, indigenous and aboriginal people of the world, the persecuted minorities and so on!

The Hindu Zionist White Manusmriti Apartheid World Order plans Bail Out for the Ruling Class at our cost, sucking our Blood!

Who permitted Chetia Chidambaram to pump 85 thousand corores to save the corporates, MNCs, Builders, Brokers, Promoters? has not he bypassed the parliament of India. Is the FINMIN entitled to cahannelise non budgetary National revenue into corporate Economy.

What do we gain with this Bankex resurgence while banks eat the Mutula funds!

Deposits plunge! You never know when and how the Greed works in the notorious Corporate Mind! You never know when they sell out the assets! You never guess their liabilities!

PF, EPF, Pension, Retiring Scheme, Social Security, Child Nutrition, Food security, Medical Care, Homes and Tourism, Fooding, Jobs, Education, Generation Next, Women, Salary, Domestic Budget, higher Education and Research, Science and Technology, and even the Dreams, Imaginations and Creativity Hit all round!

Glamorising Bullfighting is quite in vogue as Bears and Bulls celebrate naked carnival of Disaster!

Reserve Bank of India Governor D Subbarao has mooted a debate on whether insurance cover provided to bank deposits should be extended to money markets and mutual funds in a crisis situation.

"A relevant issue in this context (global crisis and large scale bail-out) is the efficacy and coverage of deposit insurance. What should be deposit insurance cover? How are small deposits to be defined?" he said at the meeting of the International Monetary and Finance Committee here.

At present, deposits in banks of India are insured up to Rs one lakh by an arm of the RBI -- Deposit Insurance and Credit Guarantee Corporation.

Subbarao said the present turmoil urges the world to think if money market and mutual funds also be guaranteed by insurance cover.

In recent times, Finance Minister P Chidambaram has assured the nation on many occasions of the safety of deposits in banks.

"...Savings in banks are completely safe. Our banks are well regulated and well capitalised. Depending on your risk threshold you can save in some other instruments. Someone with a low risk threshold should save in a bank," Chidambaram had said on one of such occasions.

Subbarao said that the large scale bailout packages will have implications for the regulatory architecture of the financial system and the fiscal situation of countries.

Also, the "rescue packages offered by one country could have ramifications for other countries, even when they are far from the epicentre of the crisis," the RBI Governor said.

He said that the full resolution of the crisis will inevitably take time.

However, he said that the markets and institutions succumb occasionally to "excesses" and therefore regulators have to be vigilant.
Relaxing the norms for exchange- traded interest derivatives, the Reserve Bank today allowed banks to take trading positions in the Interest
Rate Futures (IRFs).

"It has now been decided to allow banks to take trading positions... in the IRFs", the central bank said in a communication to banks and financial institutions.

RBI had earlier in June 2003, permitted the banks to transact in IRFs for the purpose of hedging the risk in their underlying investment portfolio.

The apex bank had introduced the exchange-traded interest rate derivatives to enable banks to manage their risks in a better way.

Sebi had introduced trading of these derivatives instruments on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

However, while introducing the instruments in June 2003, the RBI had prohibited the banks from taking trading positions in futures.

Strong buying and take over by the governments is the Trend and it continues!

Now the passionate and tragic affair between the Matador and his unconventional Left wing paramour hits the silver screen!

Capitalism collapses in the West. The East plays HARAKIRI embracing Neo capitalism, Neo Globalisation, neo Liberalism and open market! copulation continues under survillience!

While the comrador Third World leaders do channelise national revenue into corporate Black hole, developed nations like USA, UK and Japan simply descale Production supported by HIRE and FIRE! The World Bank, IMF, WTO, GATT, NSG,EC,FIIs and MNCs make this unfortunate Planet an Infinite Hunting Ground. World Opinion and Global Resistance loiter like Headless Chicken!

Black Untouchables, indigenous communities, aboriginal tribes and minorities made easiest scape goats in Rituals for prosperity Royal, Feudal and Corporate! Fascism and Imperialism merge!

The Marxist Atheists have lost faith in their Gods Marx, Mao and Che! Lost national as well as international vision. Have proved themselves as the best of gestapo Heads the world never had before!

Thus, Pope Benedict XVI gave India her First Saint with canonisation of Sister Alphonsa, a Franciscan Clarist from Indian Marxist ruled state of Kerala who died sixty years ago aged thirty six, and appealed for an end to anti Christian Violence in some parts of India. Ethnic Cleansing of Minorities is a constant affair in South Asian geopolitics since partition holocaust. Until recently, unless the Christians in India have been targeted , Vatican never cared to react as the Victims were either Hindu or Muslim! Vatican never intervened to ensure peace either in Palestine or Middle East!

Normal life was on Monday affected during a dawn-to-dusk bandh in five south Orissa districts called by some Left parties and others in protest against the recent violence in Kandhamal, official sources said here.

Vehicles went off the road and shops remained closed in Ganjam, Gajapati, Kandhamal, Rayagada and Koraput districts during the bandh called by left outfits like CPI-ML (New Democracy), CPI-ML (Liberation), CPI-ML (Red Flag) and Samajwadi Jana Parishad .

Their demands including action against organisations instigating violence in Kandhamal in the aftermath of killing of Laxamananda Saraswati and security to the riot victims.

The shut-down also had its echo in state capital Bhubaneswar where Left activists blocked railway tracks and roads for a brief period, Khitish Biswal of CPI-ML(liberation) said.

Meanwhile, Global Power equations are as much as volatile as had been during Soviet Fall. Fall Street captured all fields of Hegemony strongholds and In fights within Global ruling class see Icons fail as the Bank giants do! Obama emerges leading in recession struck Presidential Elections. Mc Cain flounders as flounders Sara Paulin Inquiry!

In kabul, President Hamid karzai has offered Taliban leaders the possibility of positions in his government if they agree to a Peace Deal.The offer was conveyed trough karzai brother Qayun at a secret meeting in Saudi Arabia of which UK was aware!

Nuclear Strategic Equations also changed violently as soon as Indo US Nuke deal was signed coincidentally the Credit cash crunch breaking in!

India plans to produce Indigenous Nuclear Reactors for export!

Nuclear Race with long defence shopping list is the latest rhythmical Heartthrob in INDO PAK SINO triangle Bermuda!

North Korea dismantles Nuclear facilities as soon as US removed the Communist country form the list of sponsoring terror.

But Iranian Nuclear position as well as Israel stance remain Mysteries unsolved!

Amid reports that Pakistan will seek a nuclear deal with China, President Asif Ali Zardari will embark on his maiden state visit to the Communist nation, during which the two sides are expected to ink several agreements, including in the fields of energy and space. Zardari's four-day visit to Beijing will be a milestone in the bilateral relationship "which have matured into comprehensive strategic partnership" between the two sides.

Zardari, during his first bilateral visit to any foreign country after taking over as President last month, will meet his Chinese counterpart Hu Jintao and the two leaders are expected to discuss ways to further strengthen the relationship between the two countries in various fields. The two countries are expected to sign MoUs, agreements and protocols in the fields of economy, energy, space-technology, environment, mass communication and sports.

Earlier, soon after the US Senate overwhelmingly approved the Indo-US nuclear deal on October 1, Pakistan Prime Minister Yousuf Raza Gilani had indicated that Islamabad may seek a similar arrangement with China after the US repeatedly said no to Islamabad's plea for a bilateral atomic pact. On the eve of Zardari's visit to Beijing, Pakistan's Ambassador to China Masood Khan said the two countries had "exemplary friendly relations" and the top leadership is committed to further deepen the "time-tested" ties.


At Home in India, it is intense Loksabha campaign! Marxist in India may not see beyond defeat Mamata agenda! NDA UPA compete to stall dalit Queen Mayawati while she pulls rags from under Sonia`s feet. Telegu Desham turns best supporter of Separate Telengana state. Karunanidhi flexes Dravid Muscles. Jats in North India find friends in RSS.

Meanwhile,in a breather to the Railways, the Allahabad High Court today ordered status quo regarding possession of land allotted to the Centre by the Mayawati government to set up a rail coach factory in Sonia Gandhi's constituency Raebareli and later cancelled by the state government.

"Both parties shall maintain status quo over the land in question regarding possession," Justices Pradeep Kant and Subeeh-ul-Hasnain of the Court's Lucknow Bench observed while hearing a petition filed by the Centre challenging the UP government's decision to cancel the land allotment.

The court also directed the state government to file a counter-affidavit in a week's time. The petition was moved by the Union of India through Secretary, Railway Board, Ministry of Railways and two others.

The petitioners had challenged the UP government order issued yesterday cancelling the land allotment on the basis of an October 10 report of the Raebareli district magistrate apprehending law and

The Congress, BJP and Samajwadi Party in this district of Uttar Pradesh on Monday made a common cause in opposing Mayawati government's decision to cancel allotment of land for a rail coach factory ahead of AICC President Sonia Gandhi's public rally in her Lok Sabha constituency on Tuesday.

Putting more meat on the bones, the U.S. Treasury Department early Monday outlined its strategy for halting a widening financial crisis as markets in Asia and Europe rebound amid aggressive overseas government action.
Treasury's new point man for the bank rescue program, Neel Kashkari, gave his first address on Monday, laying out just how the agency will carry out a $700 billion rescue plan passed by Congress last month. He confirmed taking equity positions in struggling banks is near the top of the list.
"We are designing a standardized program to purchase equity in a broad array of financial institutions," said Kashkari, said in remarks prepared for delivery. "As with other programs, the equity purchase program will be voluntary and designed with attractive terms to encourage participation from healthy institutions. It will also encourage firms to raise new private capital to complement public capital."
The idea behind an equity purchase program is to help banks rebuild capital in a period where banks are not lending to each other or corporate America. The Federal Reserve has made massive amounts of short-term emergency loans available to help banks keep cash on hand as investors lose confidence in the banking system.
What about China? How the global crisis hit China?
China shrugged off worries about the global slowdown to post a record trade surplus in September, potentially tempering the need for the fi
scal stimulus policies that officials have been considering.
Export growth topped market expectations, but the main reason for the wider surplus, which hit $29.3 bn in the month, was the steep fall in oil and commodity prices that reduced China's import bill, analysts said.
They cautioned, however, that the figures could be somewhat misleading because they only offered a picture of trade flows before the credit crisis rocked financial markets and confidence around the world over the past two weeks.
"We still need to wait and see before we can say that an economic slowdown in the United States and other countries will cause a plunge in China's exports," said Zhou Xi, analyst with Bohai Securities in Tianjin.
In washington, US President George W Bush, welcoming Italian Prime Minister Silvio Berlusconi to the White House, vowed on Monday to pursue efforts with
US partners to calm global markets in upheaval.
Bush, who attended weekend meetings with finance ministers of major economies, promised: "All of us will continue taking responsible, decisive action to restore credit and stability and return to vigorous growth."
In Kolkata, Two anonymous telephone calls were received at Mamata Banerjee's residence today threatening to kill her, though the Trinamool Congress leader was at Delhi at that time.


Police Commissioner Gautam Mohan Chakraborty told reporters that two anonymous telephone calls, one at 1.43 pm and the next one shortly afterwards, were received on her landline number at her Kalighat residence.
The anonymous caller threatened to kill her, he said, adding an investigation is on.
The Trinamool supremo had earlier received SMS threats on her mobile phone on August seven, party sources said.
Trinamool Congress leader and Leader of the Opposition Partha Chatterjee said a complaint has been lodged with the local police station.
"We have lodged a formal complaint with the Thana police, but we don't have any trust on the city police. We can't expect any outcome of its investigations in the case," he said.

The finance ministry has decided that financial firms in the US and the UK which have recently seen changes in ownership thanks to the bai
lout package from their respective governments, will not be required to take fresh approvals from the Foreign Investment Promotion Board (FIPB) for their existing Indian joint ventures or other investments.
The finance ministry has taken a generous stand on the issue as government ownership in these firms — because of the bailout package — does not make any material difference to the management of these firms and is only “temporary” in nature. The US and the UK are bailing out bankrupt financial companies by providing them debt or equity.
This is the first time India has to confront a scenario where the US government may hold stake in Indian companies such as insurer Tata AIG by pumping capital into its troubled joint venture partner — American International Group Inc (AIG).
While industry experts say having a foreign government as equity partner would make the Indian promoter uncomfortable, the finance ministry feels no additional regulatory intervention is required to deal with ownership change abroad.
“Change in the ownership of the Indian partner also is a possibility much like a change in the US partner. The terms of the joint venture agreement which foresees such possibilities would prevail in such circumstances,” a government source said. Industry experts fear the approach and philosophy of a government nominee on the board may be different from that of a corporate entity. The finance ministry, however, views it differently.
America’s capital infusion in the US enterprise with Indian exposure does not mean its corporate character is lost unless it is 100% long-term state ownership. In the case of AIG, the prospect is only of taking 80% stake by conversion of loan into equity. AIG does not assume the colour of a sovereign wealth fund.
Secondly, these measures by the US are only temporary to sustain its troubled financial institutions through the crisis. The nature of these investments are also different from that of sovereign wealth funds, which are 100% owned by a government and are created from its surplus, a top finance ministry source said.
Sovereign wealth funds, which are allowed in India as a foreign institutional investor (FII) under capital market regulator Sebi’s oversight, cannot be trusted to work purely on commercial principles. Their investments are different from capital infusion in a financial institution at the time of a crisis. The Indian government’s views assume significance as the US and the UK authorities have announced plans to buy equity in a large number of financial firms to bail them out of the current crisis.
British government pumped sixty Billion Dollars into three failing bank Giants RBS, HBOS and Liod bailout! Gordon Brown justifies his action saying ,`It is an extra ordinary time while stock Markets tend to cease work!’
French President Nicolas Sarkozy says his government will provide up to euro360 billion (US$491 billion) to help banks stay afloat through the financial crisis.
The measure is part of a raft of proposals agreed with other governments sharing the euro currency on Sunday to unblock frozen credit markets. Germany, Italy and others plan or have announced similar measures.
Sarkozy says the money includes euro320 billion ($436 billion) to guarantee bank refinancing and another euro40 billion ($54 billion) for a government-backed financing vehicle to provide banks with the capital they need.
Sarkozy said the figure he announced on Monday is a maximum, which may not be reached if the market starts functioning normally again.

The credit crisis has hammered that point home in the past three weeks as no region has escaped the panic-driven stock market slides which have become a near-daily occurrence.
Many analysts were bracing for another rocky trading day on Monday after a weekend full of meetings in Washington and Paris failed to fully allay concerns the global economy is still dangerously off course.
The credit crisis has left the Group of Seven club of rich nations looking like a 20th century relic unable to tackle a modern financial disaster, and its larger siblings may be no better suited for the task. Over the past 48 hours, world finance leaders have gathered under the umbrellas of the exclusive G7, the broader G20 that includes both emerging and developed economies, and the 185-nation International Monetary Fund. None of them managed to plot a course out of the credit morass wide enough to address the full range of financial problems yet focused enough to calm investors who are desperately looking for answers to the 14-month crisis.
"If you look at the global financial architecture, I don't think it reflects the global economy today," US Treasury Secretary Henry Paulson said when asked whether the G7 -- the United States, Britain, Canada, France, Germany, Italy and Japan -- should be expanded to include developing powers such as China, India, Russia and Mexico.
"It's a big world, and it's a lot bigger than the G7."
The Bush administration said on Monday it is moving quickly to implement a $700 billion rescue program, including consulting with private law firms on how to buy ownership shares in banks to help thaw frozen lending and get the economy moving again.
The announcement came as Europe's central banks began to take unified actions Monday aimed at easing the credit crisis.
The coordinated efforts by European and U.S. authorities to prop up the banking system brought a measure of relief to markets. European markets opened strongly Monday following Asia's lead in response to the widespread government initiatives.
U.S. stock markets also appeared headed for a higher opening after eight sessions of devastating losses.
The administration on Monday announced the selection of a team of interim managers, picked an outside firm to help run the program and tapped Federal Reserve Chairman Ben Bernanke to head up the oversight board guarding against conflicts of interest.
Neel Kashkari, the assistant Treasury secretary who is interim head of the program, said officials were developing the guidelines that will govern the purchase of bad assets and had consulted with six specialist law firms on how the government will take partial ownership of banks.
After those consultations, Kashkari said Treasury had chosen Simpson Thatcher & Bartlett LLP to move forward to help the government structure the stock purchase program.
``We are moving quickly _ but methodically _ and I am confident we are building the foundation for a strong, decisive and effective program,'' Kashkari said in a speech Monday to the Institute of International Bankers.
Kashkari, however, provided few details about how the program will actually buy bad assets and ownership shares in banks. He focused mainly on the nuts and bolts of getting the program running.
He said five veteran government officials had been chosen as interim heads of key components of the program including Tom Bloom, currently the chief financial officer at the Office of the Comptroller of the Currency, to serve as the chief financial officer for the rescue program.
Kashkari said seven policy teams at Treasury had been created to focus on the different aspects of the program including buying bad assets such as mortgage-backed securities. Another team would work on buying residential mortgages, which he said were currently clogging the books of regional banks, and another would focus on the program to buy equity stakes in private banks as a way to boost their capital.
Kashkari announced that investment consultancy Ennis Knupp & Associates had been chosen as the private firm that will help Treasury review proposals from asset management companies. He said that 70 companies had made bids to become the master custodian firm and that a final selection of the winning firm would be announced by Tuesday.
He said more than 100 companies had submitted bids to become one of the five to 10 firms that will operate the program to buy and manage the bad assets from financial firms.
Kashkari's speech Monday marked his first public appearance since being selected a week ago to run the program.
His comments came as The Bank of England, the European Central Bank and the Swiss National Bank jointly announced they would work together to provide unlimited short-term funds to make money available to ease the credit freeze. The Bank of Japan said it was considering a similar move.
``The government cannot just leave people on their own to be buffeted about,'' said British Prime Minister Gordon Brown.
To assist the European banks, the Fed said it was taking actions to assure enough U.S. dollar funds were available to meet demand.
The British central bank was making available $63 billion to the three largest British banks to bolster their balance sheets.
The government move will leave British taxpayers owning as much 47 percent of the Royal Bank of Scotland Group PLC, and 43 percent of Lloyds TSB Group PLC and HBOS PLC, two British banks in the process of merging. A third bank, Barclays PLC said it would not seek government help as it boosts its capital by $11.4 billion.
``The hope is that today will mark a watershed, with vast measures of government reassurance finally rekindling some confidence in the shattered banking sector,'' said Keith Bowman, an analysts at Hargreaves Landsdown Stockbrokers in London.
Treasury Secretary Henry Paulson said during weekend meetings with global financial powers that his department was working around the clock to carry out the plan. His comments were meant to convince investors that the world's largest economy is moving quickly to get lending restarted and avert what could be a deep and painful global recession.
Those dire concerns sent markets around the world reeling last week, giving the Dow Jones industrial average it worst week on record. Since peaking a year ago, the Dow is now down 40.3 percent. U.S. stocks have lost $8.4 trillion in value over the past year.
Throughout the weekend, the administration worked to restore confidence, using the annual meetings of the 185-nation International Monetary Fund and World Bank to send a message that global finance officials will do what it takes to resolve the crisis.
The Group of Seven major industrial countries issued a five-point action plan that pledged to do everything from preventing major banks from failing to unfreezing credit markets.
President George W. Bush met with G-7 finance officials at the White House on Saturday morning and later traveled to the IMF to meet with the Group of 20, which includes rich countries as well as major developing nations such as China, Brazil, India and Mexico. He stressed the need for cooperation.
In Paris, the 15 nations in Europe's single-currency zone agreed Sunday to steps including temporarily guaranteeing bank refinancings.
The Bush administration over the past six weeks has taken over the nation's two biggest mortgage finance firms, Fannie Mae and Freddie Mac, rescued American International Group, the world's biggest insurance company, and won congressional approval of a $700 billion rescue package for the entire financial system.
As the bailout bill rushed through Congress, Paulson stressed that the major aim was to buy bad assets, primarily mortgage-backed securities, from financial institutions. The hope was that taking those bad loans off the books would encourage banks to return to more normal lending operations and unclog credit flows _ the economy's lifeblood.
Paulson said Friday that the government also would use some of the money to buy stakes in banks. The goal is to give banks the resources to resume lending at more normal levels.
That about-face has left the administration trying to decide how much to devote to buying bad assets and how much to use for stock purchases.
Lawmakers who pushed to include the stock purchase program in the rescue bill over initial administration objections say the stock purchases can start much faster than the effort to buy bad assets and help restore market confidence sooner.
India now consumes two Indias: report
13 Oct, 2008, 1804 hrs IST, IANS
NEW DELHI: India's consumption of natural resources is now almost double of what the country's land, air and water can provide, an overshoot equival
ent to what has led to the current global economic meltdown, says a report released here on Monday.
Prepared by the Confederation of Indian Industry (CII) and the California-based Global Footprint Network (GFN), the report says: "With a per person footprint of 0.75 global hectares and per person biocapacity of 0.4 global hectares, India is running an ecological deficit of approximately 100 percent".
Ecological footprint, global hectare and biocapacity are among measures developed by the GFN to calculate the difference between what the natural resources of a country can provide and what is being consumed. "The ecological footprint measures human demand on the biosphere in terms of the land and sea area required to provide the resources we use and to absorb the waste we generate," says the report.
While India's ecological footprint is now behind only that of the US and China, its per capita footprint is low: 0.75 global hectares per person is far lower than the global average of 2.2, which puts India 125th among 152 countries.
The report says: "India represents approximately six percent of the world's ecological footprint, four percent of the world's biocapacity and 17 per cent of the world's population."
Releasing the report, Jamshyd N Godrej, chairman of the CII-Godrej Green Business Centre, said: "It is important to impress upon policymakers and businesses that no country can continue being unsustainable".
Godrej said green businesses were now making money, and that had to be impressed upon all businesses. "The business case for sustainability must be made clear." He gave the example of the Green Building Movement started by the CII six years back, which was now spreading quickly as users found the extra cost of these buildings was paid back within 3-4 years and they saved a lot of money after that in energy and water bills."
Susan Burns, managing director of GFN, said: "Like in the money markets, there is a credit crisis with regard to ecological capital too.
"We're not going to get to a sustainble situation through small incremental steps. But the good news is that we know the new green technologies can work, can make money and India can become an exporter of these technologies."
No case for cut in RBI lending rate now:PM adviser
13 Oct, 2008, 1258 hrs IST, REUTERS
NEW DELHI: There is no case for cutting the Reserve Bank of India (RBI) main lending rate now but cuts in banks' cash reserve and bond reserve requir
ements could be used to ease a cash crunch in its money markets.
"At the moment, now, it is a no," Suresh Tendulkar, chairman of Prime Minister Manmohan Singh's economic advisory council told Reuters when asked whether there was a case for cutting the repo rate now.
"But that is something which should not be ruled out," he said.
When Krugman spoke of closing weak banks in India
The 2008 Nobel Economics Prize winner Paul Krugman, who on Monday compared the current global economic meltdown with the East Asian Financial crisis in 1997, once said that weak banks in India should be closed.
The US economist and a celebrated New York Times Op-Ed columnist during his visit to India when the Asian crisis was at its peak was of the view that unsound financial institutions cannot be kept operating in the country simply because they provide jobs. He had also advocated that serious capital requirements should be imposed on the strong banks.
He had also underscored the need for prudent capital controls for emerging economies as a measure of abundant caution. "With great hesitation I have arrived at this conclusion that there is no other plausible answer other than temporary capital controls. Otherwise, staying the course looks impossible," said the fierce critic of Washington's economic policies,
"I would much want to maintain, for the long term, prudential inward capital controls. Outward controls are all right, but inward controls are useful for the long term," he had said.

His lessons for India during the Asian crisis suggested during his visit to the country was adequately capitalising banks, closing down weak ones and leaving the convertibility programme where it is.
"It(closing weak banks) may sound hard-hearted, but you cannot keep unsound financial institutions operating simply because they provide jobs. There can be a huge amount of damage a bad bank can create. There is a cruelty to our market system, but that cruelty cannot be eliminated. The alternative is fraught with danger, that of carrying on with the weak banks," he said.
On the impact of the Asian crisis on India, Krugman had said India had avoided the worst partly in the fact that the restrictions discouraged both inflows and outflows of short-term capital.
"No developing country with large-scale mobility in short-term capital is immune to these crises. India, fortunately, did not make the same mistakes. Had the crisis come, there would have been economic devastation, and the crisis would have fed on itself," according to Krugman.
About prospects of currency convertibility in India, Krugman's advice was "leave currency convertibility where it is. It's an extremely dangerous world out there. The risks of getting caught in the pinball game are too high.
CPI-M criticises Mamata for anti-police comments
2008-10-13 [19:26:47 hrs]

Criticising Trinamool Congress chief Mamata Banerjee for threatening to lay siege to the Kolkata police headquarters, senior Communist Party of India-Marxist (CPI-M) leader Shyamal Chakraborty Monday said her comments were tantamount to defaming the city police.


”Mamata Banerjee has already cut her own nose and it’s ridiculous that now she wants to defame the city police for its action,” Chakraborty told reporters here.
Incensed over the arrest of a party worker, Banerjee Sunday threatened to lay siege to the city police headquarters Oct 20.
She said the agitation was against the “alliance” between the CPI-M-led ruling Left Front (LF) government in West Bengal and the police.
Her statement came in the wake of party legislator Swarup Biswas’ arrest for his alleged involvement in the mob attack on the Charu Market police station in the southern part of the city Oct 5.
She also announced a march to the state secretariat Writer’s Buildings after Oct 28, the day of the Kali Puja.
Talking about Banerjee’s decision to meet Governor Gopalkrishna Gandhi, Chakraborty said Gandhi is her “friend, philosopher and guide”.
Singur land to be used for other industrial units: CPI-M
2008-10-13 [19:26:09 hrs]

The West Bengal government will use the land that was acquired for Tata Motors Nano plant at Singur for other industrial units, said Shyamal Chakraborty, a Communist Party of India-Marxist (CPI-M) central committee member.


”The state government is trying its best so that the Singur land can be re-utilised for other industries,” Chakraborty told reporters after emerging out of the party’s central committee meeting Monday.
CPI-M leads the Left front government in West Bengal.
He said that Tatas took the land from the state government on lease for the small car project and now the government was mulling how it can be given to other industrial units.
The auto major’s Nano plant was relocated to Gujarat following relentless protests by West Bengal Opposition Leader Mamata Banerjee. Tata Motors Oct 3 announced it was pulling out its Nano project from the troubled Singur region and blamed Banerjee for the “regretful” decision.
The three-day session of the CPI-M central committee entered the second day Monday at party’s state headquarters on Alimuddin Street to discuss the political strategy for the forthcoming Lok Sabha polls due next year.
“I hope the state government will discuss the land issue with the automobile major. The farmers cannot buy back the land from the state government,” Chakraborty said, adding: “So far there has been no dialogue between both the parties - state government and Tatas.”
“The land, once acquired for the industry, can be given to others through an open-bidding system,” he said.
Senior state CPI-M leader and West Bengal Transport Minister Subhash Ckhakraborty Sunday signalled the Singur site would soon be handed over to another car-manufacturing company within next few months.
“Just wait for six months. You will find that another car-manufacturing factory is coming up there for which we have already started preparation,” he told a private television channel here.
Modi's 'open letter' to Buddhadev, Mamata on Nano
2008-10-13 [15:54:30 hrs]

Barely a week after Tata's Nano found its new home at Sanand, Gujarat Chief Minister Narendra Modi has asked his West Bengal counterpart Buddhadeb Bhattacharjee and Opposition leader Mamata Banerjee to work unitedly for development.


"We can't forget that the Marxists were once opposed to industrialisation. Continuity in the industrialisation policy will only help retain the people's confidence," Modi said in an open letter to both Bhattacharjee and Mamata which was published in a leading Bengali daily today.

In the letter to Bhattacharjee, Modi said, "The condition for the growth of Nano has not yet developed in West Bengal in view of its present work culture despite your serious efforts... Please don't get surprised at my letter which I wrote after serious thought... People of West Bengal may think I have snatched Nano to Gujarat. But it is not so. There is no scope of misunderstanding." "The land (at Sanand) given to the Tata for the Nano plant, was acquired for an agriculture university which was allotted another piece of land. The Tatas purchased the land and it is free of any dispute over agricultural or non-agricultural in nature."
Modi in his open letter suggested Mamata to "shun ultra-leftism in opposing the Leftists and show West Bengal the rightist way to usher in development." "You may raise demands for more industry, more roads, more jobs in your state. Go the rightist way to development," Modi said.

Sensex on Monday bounced back 808 points to close well above 11K following positive sentiments in the global market as world governments have pulled up their socks to fight the liquidity crisis that has hammered their economy and caused fear of recession. However, Marketmen were of the view that today's strong rally was due to short covering from the lower levels and market is likely react on global sentiments.
Shares of Axis Bank on Monday surged 20 per cent on strong Q2 net profit growth coupled with assurances from Finance Minister P Chidambaram on likely measures to ease the liquidity in the banking system. Most of the stocks, which were battered Friday, bounced back as the market cheered the consolidated efforts made by the government to boost market sentiment where were weighed down by weak global cues for last one week.
Equities rose 7.6 per cent on Monday, snapping a five-day losing run with their biggest rise in more than four years as the government sought to reassure investors it was working to shield India from the global crisis. The gains were led by a surge in ICICI Bank and helped by rallies in overseas markets after policy makers around the world took new and drastic steps to rescue banks and prevent the global economy from sinking into recession.
However, doubts remained about the strength of the rise.
In Washington, the US Treasury Department expects to name asset managers for its $700 bn financial rescue plan within days and is working "around the clock" to speed relief to frozen credit markets, the program's new chief said on Monday.
The Treasury has sought proposals from asset management firms that have at least $100 bn under management, said Neel Kashkari, the Treasury's interim assistant secretary for financial stability.
The US Treasury Department expects to name asset managers for its $700 bn financial rescue plan within days and is working "around the clock" to speed relief to frozen credit markets, the program's new chief said on Monday.
The Treasury has sought proposals from asset management firms that have at least $100 bn under management, said Neel Kashkari, the Treasury's interim assistant secretary for financial stability.
“It was a good day for the banks, especially Axis and ICICI, as it was reiterated from all sides that Indian banks have good financial positions and are less exposed to the present financial turmoil,” said a senior dealer with leading broking firm.
Axis Bank shares gained 20 per cent to end at Rs 662.90 on strong net profit growth of 77 per cent to Rs 403 crore for the second quarter of FY-09 compared to Rs 228 crore in the corresponding quarter of previous year. It was the top gainer among banks. ICICI Bank followed with a gain of 16.75 per cent to close at Rs 425.10 on repeated assurances by the bank as well as finance minister and RBI about its good financial health.
Strong rumours that some of the private banks are likely to go bust due to their excess exposure to foreign market had battered ICICI Bank last week, pulling it down to more than three-year low at Rs 326. However, the bank made repeated efforts to assure investors about its strong fundamentals and on Sunday the bank even filed FIR against some brokers and sub-brokers responsible for spreading rumours in the market.

Meanwhile,Finance Minister P Chidambaram on Monday promised more measures to infuse liquidity and advised investors not to act in haste or panic, a statement he made minutes before the market opened up by 495 points breaking a five-day streak of fall.
"Our banks are ready and willing to provide credit. Suitable advisories are being issued to the banks. We will respond swiftly according to the needs of the situation.
"We are working on measures that will infuse liquidity, make credit intermediation smoother and increase the confidence of depositors and investors. We hope to be able to announce them shortly," he said.
He explained:Over the weekend, the US, UK, Euro zone and Australian authorities have announced a number of measures to stabilize the financial system. The Australian capital market and three of the East Asian capital markets have opened on a bright note this morning. I expect that our capital market will also take its cue from these positive developments.
After the week-end mayhem in which the market tanked 800 points, Chidambaram went live on television channels expecting the stock market to take its cue from the "positive developments" of the Australian market and three of the East Asian capital markets opening on a 'bright note' this morning.
"We must remain confident and respond to the situation in a cool and mature manner. We must banish fear. Especially depositors have nothing to fear because their deposits in banks are safe.
"Investors must take informed decisions. Before you sell, you must remember that for every seller there is a buyer. You must ask yourself why the buyer is buying in these times of perceived uncertainty and, therefore, ask yourself the further question whether there is a need to act in haste or in panic. In my view, there is no reason at all to act in haste or to give room for panic," he said.
Mentioning that already Rs 60,000 crore liquidity has been infused into the financial system by RBI's measures and that Rs 91,500 crore liquidity adjustment facility exists, Chidambaram said the government, RBI and SEBI were watching the situation carefully and coordinating their actions.
TEXT OF FINANCE MINISTER P CHIDAMBARAM'S STATEMENT
This is a time of uncertainty. Yet, even in a time of uncertainty there are some facts that cannot be and ought not to be ignored.
The Indian economy continues to grow at a satisfactory rate. As recently as last week, the IMFs research department (Oliver Blanchard) noted that "the Indian economy would continue to do well despite the impact of the global liquidity crunch." As per projections made by the IMF, India is expected to post a GDP growth of 7.9 per cent during the current fiscal year.
The stock market indices are important indicators, but they are not the only indicators of the health of the Indian economy. The ratio of investment to GDP remains high at over 35 per cent at the end of the first quarter of 2008-09. The monsoon has been normal; the Kharif crop (especially rice and cotton) has been good; farmers are sowing their fields; and the prospects for the Rabi crop are bright. Factories continue to produce goods and the services sector is growing at a brisk rate.
Crude oil and commodity prices have declined sharply. This is expected to have a beneficial effect on inflation.
The root cause of the present uncertainty is liquidity and not any dramatic change in the fundamentals of the economy.
According to RBI figures, as on 26th September, 2008, non-food credit increased, year-on-year, by 24.8 per cent. Between April and 26th September, non-food credit grew by 7.8 per cent.
Time and demand deposits with banks grew, year-on-year, by 18.8 per cent and, between April and 26th September by 7.2 per cent. I am happy that depositors continue to repose their confidence in the health of our banking system.
Nevertheless, liquidity was found to be inadequate and, consequently, lenders were unwilling to take risks. Some lenders and investors faced redemption pressures leading to a sale of assets, especially stocks.
The markets that are bearing the brunt of the problem are the capital market and the money market and, to an extent, the foreign exchange market. These problems can be overcome if adequate liquidity is infused into the system.
Accordingly, RBI has taken measures that have infused an additional Rs.60,000 crore into the financial system. The LAF also provides liquidity and, as on 10th October, 2008, Rs 91,500 crore had been accessed by banks through the LAF window. We believe that these steps should ease the liquidity situation and the flow of credit should become smoother, relieving the pressures that had built up in the last two weeks.
Government, RBI and SEBI have been in close consultation with each other during the weekend. I have spoken to the Governor, RBI and Chairman, SEBI several times in the last two days. We are coordinating our actions. We are watching the situation carefully and we will respond swiftly according to the needs of the situation. We are working on more measures that will infuse liquidity, make credit intermediation smoother, and increase the confidence of depositors and investors. We hope to be able to announce them shortly.
Our banks are ready and willing to provide credit. Suitable advisories are being issued to the banks.


No. 2 lender ICICI Bank rose 16.8 per cent to 425.30 rupees, having risen nearly 25 per cent earlier, helped by the finance minister's comments the government was working to improve liquidity in the banking system and after its chief executive said on Monday deposits with the bank were safe and it had a cushion to take domestic and overseas shocks.
ICICI has been hammered by investor concerns about its exposure to the global crisis. Before Monday's surge, its shares had fallen more than 70 per cent in 2008.
The 30-share BSE index ended up 7.64 per cent, or 804.38 points, at 11,332.23, its biggest per centage rise since May 18, 2004, as it pared some of the previous week's fall of nearly 16 per cent. All but two of its components gained ground.
"It's a temporary pullback rally, triggered by the positive international markets and the reassurance from the finance minister about the liquidity situation in the country," said Gajendra Nagpal, chief executive of Unicon Financial.
Finance Minister Palaniappan Chidambaram said on Monday the government, the central bank and the stock market regulator were coordinating on an hourly basis regarding the fallout of the global financial crisis on the Indian market.
Traders said the statement led to speculation the regulator would take measures such as banning short-selling, the selling of borrowed shares in the hope the price will fall and then buying them back more cheaply to make a profit, to stem the slide.
Mumbai brokerage India Infoline said it was not convinced the correction in India's markets had ended and advised investors to stay on the sidelines till global markets stabilised.

"The turmoil in the global credit markets is still far from over, and it's possible that FIIs would continue to stay away from emerging markets for some time to come," it said, referring to foreign institutional investors.
"One should not get carried away if there is any kind of a bounce back, as further selling is expected."
Foreign funds have sold a net $10.3 billion in Indian stocks in 2008, and the index is down more than 44 per cent this year. In comparison, they bought a record net $17.4 billion in 2007, helping lift the benchmark 47 per cent.
Shares in Tata Consultancy Services ended up 12.6 per cent at 589 rupees after India's largest software services exporter said it had signed an outsourcing deal worth 10 billion rupees with the Indian government.
Reliance Industries, India's most valuable listed firm, rose 3.1 per cent to 1,574.20 rupees and second-largest outsourcer Infosys Technologies closed up 7.2 per cent at 1,315 rupees on short covering, traders said. The two stocks account for more than 23 per cent of main index.
In the broader market, 1,689 gainers outpaced 948 losers on volume of 271 million shares.
The 50-share NSE index rose 6.43 per cent to 3,490.70. Elsewhere in Asia, Karachi's 100-share index edged up 0.03 per cent to 9,184.24 points, while Colombo's All-share index rose 3.06 per cent, its biggest rise in six months, to 1,983.58 points.

Disadvantage, McCain: Independents' support split
WASHINGTON (AP): In a bad omen for Republican presidential nominee John McCain, a recent Associated Press-GfK Poll shows Independent voters divided about evenly.
Independents are a quarter of U.S. voters right now, and the poll showed them leaning 44 percent for Obama and 41 percent for McCain.
Some years, that wouldn't be so bad for the Republican presidential nominee. But because Democrats decisively outnumber Republicans this year, McCain needs an edge among independents to help close that gap.
``He's got to win a majority of independents in order to win the presidency, obviously,'' said Whit Ayres, a Republican pollster not working for McCain. With minority voters heavily favoring Obama, McCain has to win white independents in particular, Ayres said. That group comprised three-quarters of independents and leaned slightly toward the Republican in the AP-GfK Poll.
Earlier this year, independents were a strength for both contenders. Obama, the Illinois senator, and his mantra of change won independents in Democratic primaries while McCain, the Arizona senator, was the choice of independents in the Republican contests.
As Election Day approaches, though, independents are sounding more like Democrats than Republicans on the campaign's overarching issue, the reeling economy.
Eighty-two percent of independents said they worry the economic crisis will inflict a long-term toll on them, compared with 89 percent of Democrats and 65 percent of Republicans, according to the AP-GfK poll.
Like Democrats and unlike Republicans, most independents said they'd prefer a candidate they trust to handle the economy to one they trust on national security. They said Obama would better deal with the financial crisis and better understands its impact on them.
``Obama has more distrust in the system that has gotten us into this mess,'' said Monica Arce, 37, an independent from Portland, Oregon. ``Deregulation is the wrong way to handle things, and McCain wants deregulation.''
McCain, a longtime champion of deregulation, recently proposed a stepped-up federal role in righting the economy by having the government buy hundreds of billions of dollars worth of failed mortgages and restructure them to make them more affordable.
To win over these independents, ``it's going to be, do they believe you have the solutions to solve the problems they're facing,'' said David Winston, a Republican pollster not employed by McCain.
Mike DuHaime, McCain's political director, said he believes independents will move toward the Arizona senator as they realize he's ``spent his entire career being independent, a maverick, and bucked his party when he thought it was the right thing to do.''
Indeed, independents questioned in the AP-GfK survey who like McCain tend to focus on his background.
Like Republicans, overwhelming numbers of them say McCain has the right experience for the White House. Some say his military service, including his five years as a prisoner of war in Vietnam, is important because of the Iraq war and the current U.S. economic agonies.
``The country needs more than the eloquent speaker,'' Jennifer Schroeder, 32, a bartender from Leipsic, Ohio, said of Obama. ``It needs someone with a past that proves they do what they set out to do. We need someone who's been in a fight.''
``He's been in Washington and he's served his country before and can relate better to the problems we're facing,'' said Chris Rodier, 41, a technical writer from Chillicothe, Illinois.
Yet McCain has flopped with independents by another measure _ his selection of Sarah Palin as his running mate.
In the AP-GfK poll, independents gave the Alaska governor lower marks than McCain, Obama and Democratic vice presidential nominee Joe Biden for caring about people like them, understanding the country's problems and having enough experience to be president. Just 22 percent of independents said she had the right background to be successful.
``She's got quite a bit to learn, but she's not running for president,'' said Robert Reynolds, 60, an independent and retired mechanic from Rochester, New York, who's backing McCain.
The AP-GfK poll gave Democrats a huge 40 percent to 29 percent advantage over Republicans, with another 23 percent calling themselves independents.
Republicans say that advantage will close by the Nov. 4 election. History suggests it may. Exit polls in presidential races since 1992 show the biggest edge in party identification by voters was a 4-percentage-point advantage Democrats had in 1996 and 2000.
Even so, independents have been closely divided in recent elections. President George W. Bush and Democrat John Kerry split them about evenly in 2004, while Bush won them by 2 percentage points in 2000.
The AP-GfK poll was conducted Sept. 27-30 and included cell and landline telephone interviews with 161 likely independent voters, for whom the margin of sampling error is plus or minus 7.7 percentage points.
Emerging nations did not cause crisis but will suffer consequences: India
Washington (IANS): India has demanded concerted global effort to deal with the great financial turmoil across the world and a greater say for the developing and emerging economies in international financial institutions.
"Emerging markets have so far shown resilience. However, they may be vulnerable to both first order and second order effects," Indian Finance Minister P. Chidambaram told an annual meeting of world financial leaders here on Sunday.
The unfolding "crisis will necessarily impact upon the global availability of financial resources for development," he warned in a statement to the Development Committee of the World Bank and the International Monetary Fund (IMF).
Chidambaram, who represents Bangladesh, Bhutan, India and, Sri Lanka on the Bank-Fund Board of Governors, himself is not attending the meetings to deal with the impact of the global meltdown on the Indian economy.
"We need a global effort, particularly in countries with developed capital markets, to review financial oversight and regulatory mechanisms," he said noting, "The developing countries will suffer for no fault of theirs."
"They did not cause the contagion. Many are not equipped to face the consequences," the Chidambaram stated cautioning, "Accessing financial resources may become more difficult and expensive. Flows of foreign capital may shrink."
"A global recession will sharply contract the demand for exports of many developing countries, adversely affecting their growth prospects," he said noting, "Some early signs of recession in the three major economic regions of the world - the USA, Japan and the European Union - are discernible."
He said "changing dynamism of the global economy, the evolving weights of developing and emerging market economies in the global scenario and their stake in the development process needs to be reflected in the governance structure of the World Bank.
"These countries need to see in the Bank an institution which is relevant to the developing world's economic development agenda," he said. "They also need to see a greater role for themselves in the strategic agenda setting processes of this important global institution."
There is a danger of multilateral institutions "losing relevance, legitimacy and interest of their clientele" in the absence of a realignment of their structures, functions and procedures to meet current requirements, Chidambaram stated.
The ongoing Voice and Participation reform process at the Bank "is an opportunity to make the Bank a more responsive, credible and relevant organization so that it continues to play a vital role in global economic affairs," he added.
"This is an opportunity that must not be lost," Chidambaram stated cautioning against any attempt to rush through elements, which would not meet the long term purposes of reforms to realign the Bank's role in pursuit of the vision of a "more inclusive and sustainable globalisation".
Expressing disappointment at "proposals on the most important dimension of Voice, namely 'Voice as voting power and shareholding'," he said it "falls much short of expectations by moving away from being a comprehensive one," a commitment made at the Spring Fund-Bank meeting here.
"What we have is a miniscule increase of 1.4 percent in the voting share of developing countries, that too through a mechanical exercise of doubling Basic Votes," Chidambaram stated.
An "ambitious voice reform outcome", he said, will not only meet the expectation of the Developing and transition countries (DTCs) but also make the Bank a dynamic international organization, which "can help in transforming this world into a more prosperous and equitable one."


Soros backs US' rescue plan, says recession on the way
New York (PTI): Billionaire investor and entrepreneur George Soros backed America's plan to buy equity in banks but forecast a 'quite serious recession' on the way.
The real economy, he said, is now going to enter into quite serious recession, "But if you do the right things, then you could see how you could come out of that recession.
In an interview with ABC News, he agreed that the United States would have less power in the world and perhaps American citizens would have less money in the pocket as a result of the crisis.
In the last 25 years, Soros said Americans have basically consumed six to seven per cent a year more than they have produced.
As a result, he said, "Other people, the Chinese, the oil producing countries have built up a dollar reserve which they are now going to covert in real assets. So they become wealthier and we will have more debt," he added.
The US consumer, would cease to be the motor for world economy.
"So we will need another motor. And I think that problems that confront with regard to energy, global warming, energy dependence will require very large investments. Those will replace the consumer as the driving force for the economy in the next few years," he told the interviewer.
If these problems are not confronted, there would be large unemployment, he said, adding that human resources can be put to good use if the country now confronts these pressing problems.
The country, would have to pay for excesses of the last 25 years because the current crisis has been generated inside the financial system, he said.
Analysts fear global financial crisis may hit Bangladesh
Dhaka (PTI): Economists and financial analysts have asked Bangladesh's interim government to prepare itself to face the fallout of global financial crisis as the South Asian country's stock market suffered its worst decline with panic gripping small retail investors.
"We cannot escape the meltdown. What will happen to us is very clear. We cannot live in isolation," Nobel Laureate Muhammad Yunus told a conference fearing a heavy setback on the exports of the readymade garments and remittances as well as job losses of Bangla deshi citizens at home and abroad.
Yunus suggested that the South Asian nations including Bangladesh should prepare themselves by pulling out resources to evade the crisis in the global financial system.
His comments came as Dhaka stocks suffered a heavy decline yesterday triggered by panic selling by the small investors out of the fear that the stock market might take a hit from the ongoing global financial crisis paving the way for institutional investors to buy heavy on the market.
The Dhaka Stock Exchange (DSE) General Index, the benchmark index of the premier bourse, slipped 80.63 points, or 2.74 per cent, to 2855.93 points. The DSE All Share Price Index dropped 68.99 points, or 2.83 per cent, to 2366.46 points.
The situation prompted the Securities and Exchange Commission (SEC) and Dhaka Stock Exchange (DSE) to hurriedly convene a joint press conference to dispel investors' fears saying the fallout was unlikely to hurt Bangladesh capital market as the volume of foreign portfolio investment in the country's stock market was still very insignificant.
Merkel urges coordinated financial rescue
BERLIN (AP): Coordinated national rescue efforts for the financial markets are needed to restore confidence in the world economy, German Chancellor Angela Merkel said in comments published on Sunday.
``Only an act of the state can bring back the needed trust,'' Merkel told Bild am Sonntag newspaper in an interview Saturday after meeting with French President Nicholas Sarkozy.
``In doing that it is important that instead of every country acting alone we coordinate in Europe and internationally, and then implement the measures according to national needs,'' she said. ``We are doing this not in the interest of the banks, but in the interest of the people.''
Merkel and Sarkozy on Saturday rejected the notion of creating a common financial rescue fund for Europe.
Euro-zone leaders were to come together Sunday in Paris to discuss the financial-sector crisis.
Merkel's Cabinet is expected on Monday to pass a rescue package for Germany, which will then have to go to parliament for approval.
The chancellor has refused to comment on reports that the government is considering a British-style rescue plan that would see it partially take over some banks. German media have reported the package could cost as much as euro400 billion (US$543 billion), but Merkel has refused to confirm any details.
Germany has helped rescue one lender and has pledged to guarantee private bank accounts, but has offered no wide-ranging financial bailout.
Consensus at NIC on containing communalism
New Delhi (PTI): A broad consensus to contain communal discord and violence and to protect minority rights was reached today at the meeting of the National Integration Council (NIC) which was dominated by the anti-Christian violence and terrorism.
After day-long deliberations, NIC, chaired by Prime Minister Manmohan Singh, adopted a resolution condemning all acts of violence and terrorism and resolving to deal with such challenges firmly.
The meeting, attended by Union Ministers and Chief Ministers, including Naveen Patnaik and B S Yeddyurappa of Orissa and Karnataka where anti-Christian violence is continuing, decided to act unitedly to defeat "all forms of extremism and any attempt at division of our society on social, religious and communal lines."
The meeting witnessed a sharp criticism of the UPA government by Gujarat Chief Minister Narendra Modi and other BJP chief ministers for its handling of terrorism. They demanded tough anti-terror laws, which was turned down by Home Minister Shivraj Patil.
At the other end of the political spectrum, Samajwadi Party, CPI and CPI(M) warned against isolation of Muslims and branding the community as terrorists, a view echoed by the Prime Minister who said in his opening remarks that targeting of any community would lead to major polarisation in society.
"I have noted with great satisfaction that there is across-the-board consensus on the need to contain communal discord and violence, protect minorities' rights and uphold our cherished ideals of nationalism, secularism, inclusiveness and non-violence," the Prime Minister said in his concluding remarks.
Denouncing all kinds of extremism and communal acts, he said such "mindless violence" would be met with "requisite amount of force" tempered by justice.
"What we are confronting today is a problem of dangerous proportions and we need to act together, now and in future... Let us all work together, shoulder-to-shoulder to decisively defeat the nefarious designs of divisive forces and take our nation forward," Singh told the meeting.
Emphasising the need for approaching these issues with "vigour and unity of purpose", he said it was "incumbent on the central and state governments to act decisively and firmly when communal strife, ethnic violence and terror disturb our peace and harmony".
"...Violence seems to be permeating society today, across the length and breadth of our country -- whether it be terrorist violence, whether it is violence with an ideological veneer such as that adopted by the Left-wing extremists, or communal violence," Singh said.
Meeting after a gap of three years, the 146-member NIC comprising Union Ministers, all the Chief Ministers, leaders of national and regional political parties and eminent personalities, saw many participants demanding stringent action against outfits like Bajrang Dal and VHP which have been blamed for anti-Christian violence.
Petition by NGOs against Singur land acquisition irks SC
New Delhi (PTI): The Supreme Court today took exception to legal battle fought by NGOs on behalf of farmers whose lands were acquired by the West Bengal Government for Tata Motors' small car 'Nano' project at Singur.
"We don't allow somebody else to file petitions on behalf of others," a Bench headed by Chief Justice K G Balakrishnan said during the hearing of a petition on the issue filed by Association for Protection of Democratic Rights (APDR).
The Bench questioned the locus standi of APDR, which claimed itself to be an old human rights organisation of West Bengal, for taking up the cause of farmers whose land were acquired by the state government for Tata Motors' Nano project. The project last week moved to Gujarat due to political protests led by Trinamool Congress.
The court's remarks came after Advocate Prashant Bhushan, appearing for APDR, stated that though Tatas have moved out of Singur, the land still remained with the government.
However, the Bench, also comprising Justices P Sathasivam and Aftab Alam, wondered how can somebody else challenge the acquisition of land which was acquired for public purpose.
It said the petitioner had to disclose who these landowners were. "They (landowners) can say they have not authorised you to file the PIL," the Bench said.
After brief hearing when Bhushan said that rules were not followed during the Singur land acquisition, the Bench tagged the matter with other batch of petitions pending before it.
The Association had challenged the Calcutta High Court's decision that upheld as legal the acquisition of fertile multi-crop agricultural land by the state government for Tata's Nano project.
IBSA can push global financial reforms: India
13 Oct, 2008, 1710 hrs IST, IANS
NEW DELHI: Ahead of the third tri-nation IBSA summit, External Affairs Minister Pranab Mukherjee Monday called for greater cooperation among India,
Brazil and South Africa to reform the international financial architecture that will better serve the interests of developing countries.
"We should also exploit the strategic potential of IBSA partnership in building a more inclusive and equitable global economic order," Mukherjee said at the launch of discussions by the Academic Forum at Vigyan Bhavan to promote greater intra-IBSA cooperation.
Underlining the need for a "development-friendly world trading system", the minister stressed in his inaugural address on "cooperation along with other co-developing countries" to achieve this objective.
"IBSA cooperation can also expedite the long-pending reform of the international financial architecture to serve our requirements," he said while underscoring the need for critical reforms in view of the US financial meltdown that is having rippling effects the world over.
"Such turmoil in the global markets further enhances the imperative of South-South cooperation," he said while highlighting the IBSA cooperation as "a new role model for the South-South Cooperation in the new millennium".
"In these times, we can serve as growth poles for each other. India-Brazil and South Africa, being amongst the leading economies of the three continents are also conscious of their responsibility to other developing countries," he added.
With the world's leading powers trying to enlist emerging economies in dealing with the global financial crisis, India, Brazil and South Africa are set to focus on their role in evolving a global financial architecture at the third IBSA summit Wednesday.
The IBSA, which brings together economic powerhouses from Asia, Africa and Latin America together, will focus on firming up trilateral cooperation on a slew of pressing global issues like terrorism, multilateral trade negotiations, inclusive development, food and energy security.
With India and the US sealing their 123 pact and the NSG granting a waiver to India, civil nuclear cooperation will also be high on the agenda.
Prime Minister Manmohan Singh, South African President Kgalema Motlanthe and Brazilian President Luiz Inácio Lula da Silva are expected to discuss the fallout of the financial crisis and what the three major emerging economies can do to help the G8 countries deal with the crisis, official sources said.

Tension in Orissa as POSCO protest leader held
13 Oct, 2008, 1347 hrs IST, REUTERS
BHUBANESWAR: More than 500 policemen have been deployed in Orissa after the arrest of a senior leader who had been spearheading protests against Sou
th Korean steel maker POSCO.
The Supreme Court in August allowed POSCO use of large tracts of forest land to build a $12 billion plant -- the country's largest foreign investment -- which villagers say will force them off farmland and displace about 20,000 people.
POSCO and the state say the plant, in Jagatsinghpur district, will create jobs in an impoverished part of the country.
Police arrested Abhay Sahu, chairman of the anti-POSCO group PPSS, on Sunday in connection with attacks on the house of a POSCO supporter two years ago, a police official said.
At least 24 criminal cases related to Sahu's group were pending, he said, adding police feared Sahu's supporters may step up protests after his arrest.
"We have deployed adequate police personnel to avoid any untoward incidents," senior police officer Kumarmani Meher said.
The region has witnessed numerous clashes since POSCO inked a deal in June 2005.
A POSCO official on Monday said they were still awaiting mining approvals from the government.
A spokesman for PPSS said their protests would continue.
"If he is not released immediately the government will be held responsible for consequences," Prasant Paikray said, adding PPSS would "carry on the struggle against the company".
Earlier this month, Tata Motors Ltd quit West Bengal after violent protests by farmers who lost land forced it to stop production.
Also in Orissa, miner Vedanta Resources Plc has run into opposition to its plans to mine bauxite in hills considered sacred by tribal people.
The Supreme Court in August greenlighted Vedanta's plan, part of an $800 million project in the resource-rich state.
The protests reflect a larger standoff between industry and farmers unwilling to give up land in a country where two-thirds of the population depends on agriculture for a living.
SC puts brakes on trial in Rizwanur Rehman case
13 Oct, 2008, 1244 hrs IST, PTI
NEW DELHI: The Supreme Court on Monday said that the trial in the Rizwanur Rehman case would not commence till the Calcutta High Court decides the p
etition filed by industrialist Ashok Todi challenging CBI's decision to chargesheet him in the case.
A bench headed by Chief Justice K G Balakrishnan asked the High Court to dispose of the petition filed by Todi, Rizwanur's father-in-law, at the earliest.
Todi, along with six others, was chargesheeted by the CBI on September 22 for alleged abetment of Rizwanur's suicide.A Metropolitan Magistrate in Kolkata has asked the accused to appear before it on October 27.
In his petition, Todi sought a stay on the proceedings in the trial court alleging that the CBI was only allowed to find out the nature of the death of Rizwanur but it had filed a charghesheet.
Besides Todi, the chargesheet named his brother Pradeep, brother in-law Anil Saraogi, IPS officer and former Deputy Commissioner of Kolkata Police Ajoy Kumar, former Assistant Commissioner of Police Sukanti Chakraborty, sub-inspector Krishnendu Das and Rizwanur's neighbour S M Moinuddin alias Pappu.
According to the CBI probe, the Todis had allegedly used pressure tactics to drive Rizwanur to suicide and the CBI has sought to prosecute the seven persons on charges of abetting it, criminal intimidation and conspiracy.
Congress' RTI plea on Nano incentives
13 Oct, 2008, 0317 hrs IST, PTI
AHMEDABAD: Congress has asked for details of the deal signed between the Gujarat government and Tata Motors for the company's Nano car project under
the Right To Information (RTI) Act.
In an application to the Industries Commissioner, the party has also asked for details of incentives given to Tata Motors. “We have made an application under the RTI Act to get details of the deal signed between the government and the Tatas. We have asked for details of the incentives being given to the company for setting up the Nano Car plant,” Congress spokesperson Arjun Modhvadia said.
“As an opposition party, we should have got the details of agreement, but this government has not given us any information on the deal. So we had to resort to RTI. At least, we are assured to get some answer within 30 days,” he said. On Saturday, the Congress had come out in support of the farmers demanding compensation to landowners for their land given to Tata for Nano Car Project and had said that the state government should compensate the farmers adequately.
The party has said that the land belonged to forefathers of the farmers, so they need to be compensated by the government. Gujarat government had last week announced that they have allotted 1,100 acres of land in Sanand to Tata Motors for relocation of Nano Car Project.

Europe Unified On Proposal to Protect Banks
World Governments Respond to Crisis
SLIDESHOW Previous Next
German Chancellor Angela Merkel, left and French President, Nicolas Sarkozy, right, attend a press conference after a France Germany summit at the Charles de Gaulle's museum and memorial on Saturday, Oct. 11, 2008 in Colombey Les Deux Eglises, eastern France.Sarkozy and Merkel are meeting for a France-Germany summit a day before the Paris Eurogroup Summit on the financial crisis. (AP Photo/Jeff Pachoud, Pool) (Jeff Pachoud - AP)

German Chancellor Angela Merkel, left listens as French President, Nicolas Sarkozy, right, talks during a press conference after a France Germany summit at the Charles de Gaulle museum and memorial on Saturday, Oct. 11, 2008 in Colombey Les Deux Eglises, eastern France. Sarkozy and Merkel are meeting for a France-Germany summit a day before the Paris Eurogroup Summit on the financial crisis. (AP Photo/Jeff Pachoud, Pool) (Jeff Pachoud - AP)

French President, Nicolas Sarkozy, attends a press conference with German Chancellor Angela Merkel, unseen, after a France Germany summit at the Charles de Gaulle museum and memorial on Saturday, Oct. 11, 2008 in Colombey Les Deux Eglises, eastern France. Sarkozy and Merkel are meeting for a France-Germany summit a day before the Paris Eurogroup Summit on the financial crisis. (AP Photo/Jeff Pachoud, Pool) (Jeff Pachoud - AP)

British Prime Minister Gordon Brown, right, speaks to French President Nicolas Sarkozy, left, during the financial crisis summit gathering Eurogroup heads of state and government at the Elysee Palace in Paris Sunday, Oct. 12, 2008. Countries that use the euro will temporarily guarantee future bank debt to encourage lending and ease the credit crunch, according to a draft statement under discussion by European leaders Sunday. (AP Photo/Charles Platiau, Pool) (Charles Platiau - AP)

European Commission President Jose Manuel Barroso, left, European Central Bank President Jean-Claude Trichet, center, and Eurogroup President Jean-Claude Juncker, right, arrive at the financial crisis summit gathering Eurogroup heads of state and government at the Elysee Palace in Paris, Sunday, Oct. 12, 2008. Countries that use the euro will temporarily guarantee future bank debt to encourage lending and ease the credit crunch, according to a draft statement under discussion by European leaders Sunday. (AP Photo/Charles Platiau, Pool) (Charles Platiau - AP)

Italian Prime Minister Silvio Berlusconi, right, gestures as he arrives at the financial crisis summit gathering Eurogroup heads of state and government at the Elysee Palace in Paris, Sunday, Oct. 12, 2008. Countries that use the euro will temporarily guarantee future bank debt to encourage lending and ease the credit crunch, according to a draft statement under discussion by European leaders Sunday. (AP Photo/Charles Platiau, Pool) (Charles Platiau - AP)

Italian Prime Minister Silvio Berlusconi, center, gestures as he arrives at the financial crisis summit gathering Eurogroup heads of state and government at the Elysee Palace in Paris, Sunday, Oct. 12, 2008. Countries that use the euro will temporarily guarantee future bank debt to encourage lending and ease the credit crunch, according to a draft statement under discussion by European leaders Sunday. (AP Photo/Charles Platiau, Pool) (Charles Platiau - AP)

French President Nicolas Sarkozy, center, welcomes Ireland's Prime Minister Brian Cowen, left, prior to the start of a crisis summit at the Elysee palace in Paris, Sunday, Oct. 12, 2008. Euro nations agreed Sunday to temporarily guarantee bank refinancing as part of a raft of emergency measures to ease the credit crunch. (AP Photo/Remy de la Mauviniere) (Remy De La Mauviniere - AP)

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By Edward Cody and Anthony Faiola
Washington Post Foreign Service
Monday, October 13, 2008; Page A01
PARIS, Oct. 12 -- Governments around the world took unprecedented steps Sunday to rescue the global financial system, with major European powers unveiling a united plan to prevent further bank failures while Australia and New Zealand moved to calm panicked investors by guaranteeing deposits before stock markets opened in Asia.
With the newly decisive moves, other major nations are catching up to or surpassing the United States in sculpting a response to the crisis, which crashed stock markets last week and is threatening a broader collapse of the world's interconnected banking system. Although Congress has given the Treasury Department wide authority to intervene in financial markets with a $700 billion bailout plan, officials are still trying to figure out how best to execute it.
This morning, Assistant Treasury Secretary Neel Kashkari, who has been tapped to orchestrate the bailout, is scheduled to give a speech in Washington on the giant rescue package.
In addition to Australia and New Zealand, the United Arab Emirates guaranteed all deposits with local banks yesterday, including the country's two largest lenders, Emirates NBD and National Bank of Abu Dhabi, to ensure that credit continues to flow. This follows moves by some European countries, including Ireland and Germany, to remove or raise the limit on deposit insurance. The United States also increased guarantees for banking deposits from $100,000 to $250,000.
In Europe, where dissent over how to handle the crisis has added fuel to investor panic in recent weeks, leaders presented a unified response for the first time. At an emergency summit of the 15 countries that use the euro, the continent's major economic powers agreed Sunday to offer government guarantees for troubled banks trying to raise funds and pledged that public money would be used aggressively to make sure no European bank is allowed to fail.

Europe's vow to temporarily guarantee bank debt -- a measure aimed at restoring flows of credit between financial institutions afraid to lend to one another in the current climate -- goes beyond what U.S. officials have promised. The euro jumped 1.1 percent against the dollar in Asian trading late Sunday.

In a show of unity, British Prime Minister Gordon Brown joined leaders here for part of their meeting even though his country has not adopted the euro as its national currency. Brown planned to announce Monday an $86 billion package of credit guarantees and bank-recapitalization plans that many are calling a partial nationalization of the British financial system. In recent days, the U.S. Treasury has also shifted toward a plan to have the government infuse capital in exchange for part-ownership.
The Sunday Times reported that Brown's package would include the government taking a majority share in the Royal Bank of Scotland and the Halifax Bank of Scotland, two of Britain's largest banks.
Officials in Paris said the Europe-wide plan adopted by the 15 countries in the euro group was inspired by British measures, suggesting that Europeans were also ready to buy into troubled banks heavily to prevent them from failing.
"This is indeed a common action that we are taking," French President Nicolas Sarkozy, who holds the European Union's rotating presidency, said in announcing the accord at the Elysee Palace.
The agreement was only a framework -- "principles and orientations," according to Jean-Claude Trichet, head of the European Central Bank -- and each government planned to take specific steps on a national level, according to its own interpretation of what should be done to bolster its banks, Sarkozy said. In that regard, the outcome was similar to an agreement reached Saturday in Washington by finance ministers of the Group of Seven industrial nations.
Sarkozy also called a special meeting of his government for Monday morning to outline his country's plans.
http://www.washingtonpost.com/wp-dyn/content/story/2008/10/13/ST2008101300446.html
RBS, HBOS, Lloyds Get 37 Billion-Pound U.K. Bailout (Update5)
By Jon Menon
Oct. 13 (Bloomberg) -- Royal Bank of Scotland Group Plc, HBOS Plc, and Lloyds TSB Group Plc will get an unprecedented 37 billion-pound ($64 billion) bailout from the U.K. government as Germany, France and Spain prepare similar rescues.
In exchange, Royal Bank of Scotland and HBOS will cede majority control to the government, give Prime Minister Gordon Brown seats on their boards, halt dividends and stop paying cash bonuses to directors. Germany, France and Spain will separately provide their banks with as much as 960 billion euros ($1.3 trillion) in loan guarantees and capital.
The U.S. Federal Reserve, European Central Bank and the Bank of England will offer banks unlimited dollar funds for the first time in an attempt to ease the money market tensions that have toppled seven European lenders in as many weeks. The region's benchmark stock indexes tumbled 22 percent last week, helping to erase more than $25 trillion from global equities in 2008. European leaders agreed this weekend to guarantee new bank refinancing, and use state cash to stop lenders collapsing.
``They have no choice,'' said Dirk Hoffmann-Becking, an analyst at Sanford C. Bernstein & Co. in London. ``Paulson, Bernanke, Darling, Merkel, Sarkozy, Trichet & Co. will throw whatever they can at the problem until something sticks.''
Stocks rallied in Europe, with the benchmark Dow Jones Stoxx 600 Index jumping 9.1 percent to 223.79, the biggest gain on record. The U.K. pound surged the most in 12 years against the dollar, strengthening as much as 2.4 percent to $1.7443.
Libor Falls
The cost of borrowing in dollars for three months fell from the highest level this year. The London interbank offered rate that banks charge each other for such loans slipped 7 basis points to 4.75 percent today. It was at 2.82 percent a month ago.
RBS will get 20 billion pounds, while HBOS and Lloyds will raise 17 billion pounds between them, the companies said in separate statements today. RBS Chief Executive Officer Fred Goodwin and HBOS CEO Andy Hornby will also step down.
The government is set to take a 60 percent stake in RBS, and will own 43.5 percent of Lloyds and HBOS, which plan to combine in a government-brokered deal. The government's stake will drop if the banks can raise the money from institutional investors. Barclays Plc, based in London, said it will try to raise more than 6.5 billion pounds without the government's help.
Shares Drop
RBS slumped 8.4 percent to 65.7 pence in London trading, below the 65.5 pence price at which the government will buy the shares. The bank said it would be difficult to forecast results for the second half of the year ``with precision.'' HBOS sank 28 percent to 90 pence, less than the government's 113.6 pence a share offer. The bank said full year earnings would be hurt by writedowns and increased funding costs.
``The government will end up with a big share of the banks,'' said Colin Morton, who helps manage $3 billion at Rensburg Fund Management in Leeds, England. ``You are getting heavily diluted as a shareholder. It's a long haul for shareholders as profits will be diluted away substantially.''
In return for the money, the banks pledged to continue lending to small businesses and selling mortgages ``at 2007 levels'' for the next three years, and devise plans to allow people who fall behind on mortgage payments to remain in their homes. The banks won't pay dividends until the government's preference shares are paid back.
Bradford & Bingley
The takeovers mark the implementation of a 50 billion- pound rescue package announced by Brown last week for British banks struggling after credit markets seized up and home prices dropped. In the past year, the government nationalized lenders Northern Rock Plc and Bradford & Bingley Plc.
``We are going through quite extraordinary circumstances the world over,'' Chancellor of the Exchequer Alistair Darling said on GMTV today. ``It's very, very important to the future not just of British banks, but working our way through with other governments what is a truly international problem.''
In the U.S., Treasury Secretary Henry Paulson will tap some of the $700 billion financial-rescue package approved by Congress this month to buy equity in financial companies.
Governments in Germany, France, Belgium and the Netherlands have also stepped in to rescue real estate lender Hypo Real Estate Holding AG, Dexia SA and Fortis. Iceland's three largest banks collapsed in the past month.
Germany, France
In Germany, Chancellor Angela Merkel's government pledged 400 billion euros in loan guarantees, provided as much as 80 billion euros to recapitalize banks in distress and set aside 20 billion euros in its budget to cover potential losses from loans.
French President Nicolas Sarkozy said the government will set up a 360 billion euro package of financing to shore up the country's banks. The measures include 320 billion euros of loan guarantees and 40 billion euros to buy stakes in capital-starved French banks.
Spain's cabinet today approved measures to guarantee up to 100 billion euros of bank debt this year and authorized the government to buy shares in banks in need of capital. Prime Minister Jose Luis Rodriguez Zapatero told a news conference in Madrid that the measure was ``preventative and precautionary.''
The British funding will allow the banks to boost their so- called Tier One capital ratio to more than 9 percent, the government said. RBS's Goodwin and Chairman Tom McKillop will step down, as will HBOS's Hornby and Chairman Dennis Stevenson.
``The government is not a permanent investor in U.K. banks,'' the Treasury said. ``Its intention, over time, is to dispose of all the investments it is making as part of this scheme in an orderly way.''
To contact the reporter on this story: Jon Menon in London at jmenon1@bloomberg.net
Last Updated: October 13, 2008 11:49 EDT
http://www.bloomberg.com/apps/news?pid=20601102&sid=al4uj_uEoTeU&refer=uk
World stocks rally strongly
13 Oct, 2008, 1812 hrs IST, AGENCIES
LONDON: European markets rallied strongly on Monday following Asia's lead in response to the widespread government efforts over the weekend to shore
up the world's battered financial system.
Germany's DAX was 309.28 points, or 6.8 per cent, higher at 4,853.59, while France's CAC-40 was up 185.07 points, or 5.8 per cent, at 3,361.56.
Britain's FTSE 100 was 181.11 points, or 4.6 per cent, higher at 4,113.17, despite some hefty falls in the banks that have accepted government help. Wall Street was also projected to open up substantially higher.
A rally late Friday on Wall Street, overnight gains in Asia and coordinated attempts by European and US authorities to prop up the banking system brought a measure of relief after last week's stock market drubbing.
The latest coordinated move emerged earlier when top central banks - including the US Federal Reserve and the European Central Bank - unveiled new measures to thaw frozen credit markets and bolster funding to banks.
They joined the Bank of England and the Swiss National Bank in saying they would provide unlimited US dollar funds to financial institutions. The Bank of Japan said it was considering similar measures.
The banks' action came after leaders of the 15 countries using the euro said Sunday they would guarantee new bank debt until the end of 2009, allow governments to help banks by buying preferred shares, and vowed to rescue important failing banks through emergency recapitalizion.
"Fortunately for the markets, the euro zone leaders, inspired by the British government's action, fashioned a more positive set of proposals at their emergency meeting," said Stephen Lewis, an analyst at Monument Securities in London.
The rescue measures agreed in Europe echo those announced last week by the British government. The British government confirmed Monday that it is injecting a total of 37 bn pounds ($63 bn) into three leading banks - Royal Bank of Scotland PLC, Lloyds TSB PLC and HBOS PLC - in return for equity stakes.
Taxpayers will own about 60 per cent of RBS and 40 per cent of the merged Lloyds TSB and HBOS. The merger has been renegotiated Monday too, so the amount of Lloyds TSB shares that HBOS shareholders will receive is lower.
French President Nicolas Sarkozy was to present the cost and other details of France's part of the package later Monday, while Chancellor Angela Merkel planned a special Cabinet meeting to hammer out the terms of Germany's package.
The key is whether the flurry of activity can actually break the logjam in credit markets. Despite the coordinated interest rate reductions announced last Wednesday, and massive liquidity boosts, the rates at which banks lend to each other continue to rise. That means banks are afraid to lend to each other, and raises the chance that they and other businesses won't get the credit they need to operate.
``The set of measures announced by the euro group this week end represents in our view a significant step forward in the management of the banking crisis and towards restoring some confidence in the inter bank market,'' said Jacques Cailloux, analyst at the Royal Bank of Scotland.
Early indications suggest that there may be some thawing in the credit markets. The British Bankers' Association said Monday that the London interbank offered rate, or Libor, for three-month dollar loans fell 0.07 per cent to 4.75 per cent. There are no overnight dollar rates because US bond markets are closed for Columbus Day.
Earlier, Hong Kong's Hang Seng Index, which tumbled more than 7 per cent Friday, soared 1,515.29 points, or 10.24 per cent, to finish at 16,312.16
Australian and Singapore indices jumped more than 5 per cent, while South Korean and Chinese benchmarks added around 3.7 per cent.
In Japan, where the Nikkei 225 tanked nearly 10 per cent Friday to close out its worst week in history, trading was closed for a public holiday.
Earlier in the day, Australia said it would guarantee bank and other lender deposits for three years.
In the US, investors were waiting to see if the Treasury Department's newly announced plan to buy equity in troubled banks would help stabilize the volatility on Wall Street. Lawmakers have urged quick action by President George W Bush on the effort, to be funded by the $700 bill

Wall Street stock futures suggested a rebound was in store for the major indexes ahead of the opening bell on Monday. Dow Jones industrial average futures rose 398, or 4.76 per cent, to 8,768. Standard & Poor's 500 index futures rose 51.30, or 5.76 per cent, to 942.30. Nasdaq 100 index futures rose 62.00, or 4.83 per cent, to 1,344.50.
In a volatile session Friday in New York, the Dow Jones industrial average fell 128, or 1.49 per cent, to 8,451.49, gyrating within a 1,000 point range. The average had its worst week on record in both point and percentage terms.
Elsewhere in Asia, Indonesia's key index, down sharply in early trade, gained 0.9 per cent after the lifting of a trading suspension, imposed last Wednesday amid a freefall in share prices. The upswing followed government measures to free up liquidity, including easing regulations for share buybacks and corporate financial reserve limits.
Oil prices rose, with light, sweet crude for November delivery up US$3.33 at US$81.03. The contract fell Friday US$8.89 to US$77.70, the lowest price since Sept 10, 2007.
The euro was steady above US$1.36, while the US dollar recovered back above 100 yen.
Mitsubishi buys 21% stake in Morgan Stanley for $9 bn
13 Oct, 2008, 2115 hrs IST, AGENCIES
NEW YORK: Mitsubishi UFJ Financial Group Inc (MUFG) said on Monday it bought a stake in beaten-down Morgan Stanley, though at more favorable terms, aMorgan Stanley headquarters is shown in New York. (AP)
More Pictures
s the U.S. government reportedly offered to support the Japanese bank's investment.
Mitsubishi UFJ, Japan's largest bank, purchased a 21 percent stake in Morgan Stanley for $9 billion in cash, but amended the terms of a September 29 agreement so that the entire stake is in preferred stock.
Previously $3 billion of the stake was to be in common stock purchased for $31.25 a share, but Mitsubishi pushed for new terms after Morgan's stock plunged 58 percent last week and eroded its total market value to just $10.3 billion.
In early electronic trading, Morgan's stock rose more than 28 percent to $12.42 a share.
About $7.8 billion of the Mitsubishi investment is in perpetual noncumulative preferred shares with a conversion price of $25.25 per common share. The other $1.2 billion is in perpetual noncumulative preferred stock that is not convertible.
MUFG said it retains the right to maintain a 20 percent stake in Morgan Stanley and, providing that its stake remains above 10 percent, the right to one seat on Morgan Stanley's board of directors.
The Wall Street Journal earlier reported that the U.S. government would express its support for the deal and work to structure any potential future investment in Morgan Stanley in a way that wouldn't wipe out MUFG's investment.
Separately, the New York Times reported that federal officials assured MUFG late Sunday that its planned investment in the embattled Wall Street giant would be protected.
After two days of tense negotiations, Treasury officials urged a hesitant MUFG to proceed with its investment, the paper said on its website, citing people involved in the talks.
AIG knew of potential problems in valuing swaps: report
13 Oct, 2008, 1630 hrs IST, REUTERS
NEW YORK: Top executives at American International Group Inc (AIG.N) knew of potential problems in valuing derivatives contracts, known as credit de
fault swaps, long before questions about the risky transactions caused its stock to plummet, the Wall Street Journal said, citing documents released by congressional investigators.
The problems with these swaps would have driven AIG into bankruptcy -- if not for a $123 bn federal rescue, the Wall Street Journal said Sunday in a story on its website.
A federal criminal probe is investigating how candid AIG executives were with investors at a December 2007 investor conference and whether executives at AIG's financial-products unit, which sold derivatives contracts, misled AIG's outside auditor last fall, the Journal said.
At congressional hearings on Tuesday, a former internal AIG auditor wrote that he had expressed concerns early on about being excluded from conversations about the swaps valuation, the Journal said.
"The auditor, Joseph St. Denis, wrote in a letter to the House Committee on Oversight and Government Reform that in early September 2007, he learned that AIG's financial-products unit had been asked for billions of dollars in collateral related to derivatives it had sold," the newspaper said.
Credit-default swaps protect buyers against default risk on other investments. AIG believed the likelihood of making payouts was remote, the Journal said.
St. Denis wrote he wasn't personally involved in the AIG unit's swaps valuation. In late September 2007, according to St. Denis's letter, the AIG unit's head, Joseph Cassano, said he had "deliberately excluded" St. Denis "because I was concerned that you would pollute the process," the WSJ said. St. Denis said in his letter he resigned on October 1, 2007.
AIG's chief auditor, Michael Roemer, asked him later that month why he quit. St. Denis said he told Roemer about Cassano's comment.
"That would indicate that a key AIG executive last fall was aware of Mr. St. Denis's concerns," the Journal said.
AIG declined to comment on the documents or make Roemer available for comment, the WSJ said. An AIG spokesman did not return Reuters' phone calls on Sunday.
Japanese government to stop selling bank stakes: report
13 Oct, 2008, 1025 hrs IST, AGENCIES
TOKYO: The Japanese government and central bank are to stop selling their two-trillion-yen (20-billion-dollar) stake in domestic banks to avoid putt
ing further pressure on finance stocks, a report said on Monday.
The government and the Bank of Japan bought 3.6 trillion yen worth of stock in major domestic banks between 2002 and 2006, when the world's second-largest economy was struggling with the effects of the 1990s asset bubble.
They started selling their stakes in 2006, but faced with recent market turbulence, are to stop offloading the stock to avoid further downward pressure on banking prices, the business daily Nikkei reported, without citing sources.
As of March 31, their positions were down to around 500 billion yen for the government and roughly 1.4 trillion yen for the central bank, it said.
Japan's Nikkei stock index last week experienced the worst week in its 50-year history, plunging 24.33 per cent to 8,276.43. The market was closed Monday for a public holiday.

Governments should consider stimulus plans if possible: IMF
WASHINGTON: IMF head Dominique Strauss-Kahn said on Monday that in the current global financial crisis, those governments that could afford it should
consider stimulus plans for their economies.
Strauss-Kahn told the annual meeting of the International Monetary Fund and World Bank in Washington that "action in the financial markets is essential, but it is not sufficient.
"We also need to deploy all of the instruments of modern macroeconomic policy to limit the damage to the real economy," he said.
"For the advanced economies, this means using fiscal policy when they can. The most obvious use of fiscal policy is precisely to ease pressures where they are greatest: in the financial and housing sectors."
"But governments that can afford it should also be ready to undertake a broader fiscal stimulus."
Fiscal policy stimulus would either be tax cuts or increased government spending.
Strauss-Kahn was speaking after a weekend of high-level meetings of world economic powers in Washington which led to pledges to protect systemically important financial institutions and use all tools to fight the crisis.
The Group of Seven leading democracies - the United States, Britain, Canada, France, Germany, Italy and Japan - agreed Friday to take all necessary measures to tackle the crisis.
That stance was backed by the main committee of the IMF and endorsed by the enlarged G20 group of rich and emerging nations that includes Brazil, China, India and Russia.
It was also picked up at the eurozone meeting on Sunday when the 15-nation group unveiled plans to recapitalise their banks and guarantee inter-bank lending, the key source of short-term funding for the finance system.
Strauss-Kahn warned that action had to be taken quickly to avoid the mistakes that led to the Great Depression of the 1930s but there was also no reason to despair.
"I am confident that we can emerge from this crisis with our economies and societies intact," he said, calling for steps to prevent more bank failures as part of a comprehensive plan of action.
"In the (1930s) countries acted in a piecemeal way, and were hamstrung by old-fashioned orthodoxies. Instead, we are acting imaginatively," he said, citing efforts to tackle problems of "liquidity, bad assets, shortages of capital, and especially confidence."
He said that with the latest government efforts, "things are beginning to turn around" but cautioned that "we still have a very long way to go ... This weekend is just the beginning of a long effort."
Robert Zoellick, head of the World Bank which focuses on development issues, told the meeting that some poorer countries would have to prepare for more difficult times as the crisis bites deeper.
He said October could be tipping point, as developing country exports, capital inflows, investment all come under pressure, leading to business failures and "increase the risk of banking emergencies.
"As is always the case, the most poor are the most defenceless," he said.
This year's meetings were taking place "at an extraordinarily difficult time - a time of uncertainty and insecurity, with a danger that those fears push us away from - not towards - a more inclusive and sustainable globalisation," Zoellick said.
Obama proposes new economic recovery measures
13 Oct, 2008, 2237 hrs IST, PTI
TOLEDO: US Democratic presidential candidate Barack Obama on Monday proposed a series of new economic rescue measures, including temporary tax credi
ts and penalty-free withdrawal from retirement accounts.
Obama's campaign released a fact sheet and excerpts from a speech he will give later in the day outlining the new economic proposals.
They include a temporary tax credit for companies that create new jobs in the United States over the next two years; penalty-free withdrawals from some retirement accounts and a 90-day foreclosure moratorium for homeowners who are living in their homes and making good-faith efforts to pay their mortgages.

Govt may relax foreign investment norms in banking, telecom
13 Oct, 2008, 1823 hrs IST, PTI
NEW DELHI: Government is considering relaxing norms for foreign investment in sectors like banking and telecom by treating portfolio FII investment
outside the sectoral cap.
At present, foreign direct investment (FDI) and foreign institutional investments (FII) are added to determine sectoral foreign investment cap in banking, credit information companies, broadcasting, commodity exchanges and telecom.
But, with RBI allowing FIIs to acquire shares in companies under the Portfolio Investment Scheme (PIS), the government is now likely to mandate that sectoral caps would henceforth be for FDI investment only, official sources said.
In sectors with caps, the balance equity would specifically be beneficially owned by/held with/in the hands of resident Indian citizens and Indian companies, owned and controlled by resident Indian citizens.
FIIs investing under PIS shall not seek a representation on the board of directors and they will have to give a self- declaration whenever they act in concert with any of the companies that they have invested in.
Sources said investments by registered FIIs under PIS are made under Schedule 2 of the Foreign Exchange Management Regulations and are distinct from FDIs which are made under Schedule 1. FIIs are also permitted to make investments under FDI Scheme under Schedule-1.
PIS cannot cross 24 per cent in any company. At present, banking and telecom have 74 per cent foreign investment cap (FDI plus FII), which would, after the policy is accepted by the Cabinet, be changed to 74 per cent FDI.
Similarly, 20 per cent FDI plus FII limit in FM radio would now be 20 per cent FDI cap, while 49 per cent FDI plus FII in cable network, direct-to-home commodity exchange and CIC would be changed accordingly.
India to ensure financial sector stability:Official
13 Oct, 2008, 1707 hrs IST, REUTERS
NEW DELHI: The key issue for India now is to ensure efficient functioning of the financial system and stability of the banking sector, and steps alr
eady taken have had a good effect, a top policy adviser said on Monday.
"Indian banks are sound, their balance sheets are sound, their exposure to problem assets is almost negligible and they are extremely well capitalised," Montek Singh Ahluwalia, deputy chairman of India's Planning Commission, which charts five-year growth plans, told Reuters in an interview.
"And that is true of both public sector banks and private sector banks."
India's finance minister moved to reassure markets on Monday the government was trying to shield the economy from the global financial crisis, saying policy makers were working on more measures to improve liquidity.
Ahluwalia, who is considered close to Prime Minister Manmohan Singh, said stability in the financial sector was vital.
"In my view the most important thing for us at the moment is to ensure efficient functioning of the financial markets and stability of the banking system," he said.
He said the economy was inherently in a strong position and while the global financial crisis would impact growth, India should still grow 7.5 percent in the fiscal year to end-March.
A small moderation in the repo rate, the central bank's short-term lending rate, as a signal to markets may not be a "bad thing", but changing the repo rate without providing liquidity would have no effect, he said.
Ease overseas borrowing norms further
13 Oct, 2008, 0348 hrs IST, ET Bureau
NEW DELHI: Further relaxation of the External Commercial Borrowing (ECB) policy is one thing that the government can do immediately to address the li
quidity problem plaguing corporate India and also arrest the fall of rupee.
Recently, the ECB window has been widened for infrastructure companies by allowing them to bring in $500 million to meet rupee expenditure as against $100 million previously. Also, mining, exploration and refining sectors were added to the definition of infrastructure for the purpose of ECB policy, which means that companies engaged in these activities would also now be able to raise $500 million via ECB. It would, however, be appropriate for the government to relax the ECB restrictions with regard to other companies also.
ECB norms should be relaxed generally rather than selectively. Not only that the ECB limits need to be raised, companies need to be allowed to pay slightly higher interest rates than what they are now allowed, to their overseas lenders, keeping in view the current turmoil in global financial markets. Liquidity crunch is already hitting corporate India and it is also threatening to adversely affect the behaviour of many banks towards scores of potential lenders.
RBI has already used policy instruments at its disposal like cash reserve ratio and SLR. Through these measures, the central bank is aiming that funds to the tune of Rs 1,00,000 crore would be released to the real economy. However, there is the lingering fear that these measures could turn out to be insufficient to infuse necessary liquidity in the manufacturing, construction and mining sectors. These sectors have shown signs of an output contraction, which could turn out to be severer than most believed. In fact, the cost of waiting for money has long been a constraint even for infrastructure financing companies in India.
For raising funds from overseas, even PSUs are required to obtain government guarantee on a case-by-case basis, besides being subjected to ECB restrictions. These hurdles must be removed to enable companies to raise money abroad. Even for accessing (low cost) loans from the multilateral agencies like ADB, World Bank KfW and JBIC, the disconcerting procedure for obtaining the government guarantee has been an impediment. As for private companies, the situation is far too worse. There is an urgent need to remove these bureaucratic hassles.
It is a fact that on the fiscal front, India is actually hiding many things and is rather self-deceptively presenting a picture that is batter than reality. But the country’s external debt position as of now is somewhat comfortable. (The external debt to GDP is around 15%). So, there’s sufficient room for the policymakers to let an increase in ECBs of Indian companies in the current eventuality.
Companies in sectors like reality, textiles, metals and chemicals are already hit by a crunch of working capital. In turn, their businesses are getting affected and if the situation continues for a few more weeks, they will start defaulting on borrowings, bucking the trend of the progressive reduction in Indian banks’ non-performing assets and the drying up of proposals for corporate debt restructuring (CDR).
Already, there are reports that RBI is witnessing an increase in the number of CDR requests being filed with its special CDR cell. It is therefore imperative that the working capital requirements of the companies are promptly addressed to avert creation of NPAs.
Of course, the ECB policy relaxation should be accompanied by robust mechanism to monitor the end use of funds.
Oil above $81, Goldman cuts price forecasts
13 Oct, 2008, 2114 hrs IST, REUTERS
LONDON: Oil held above $81 a barrel on Monday after governments around the world acted to shore up confidence in the global banking system, spurring
a rally across commodities and stock markets.
But investment bank Goldman Sachs said the financial crisis had already done more damage than it expected to commodity demand and warned that a slide to $50 a barrel for oil could be possible.
US crude for November delivery was up $3.42 at $81 12 a barrel by 1502 GMT, below a session high of $82.52. Prices had plunged on Friday to their lowest since Sept 10, 2007.
London Brent crude was up $2.87 at $76.96 a barrel. "The announcements from over the weekend would have some positive effects on the markets, even though it's still in very early days at this stage to say if they would put an end to the financial crisis," said David Moore, a commodities analyst at the Commonwealth Bank of Australia.
Goldman Sachs, a longstanding commodity bull, turned a near-term bear on Monday after conceding that global financial turmoil would take a far bigger toll on demand. It warned that $50 oil was possible if the crisis deepened.
"We have underestimated the depth and duration of the global financial crisis and its implications on economic growth and commodity demand," its commodity markets research team said.
The bank cut its year-end US crude oil target to $70 a barrel, down from a previous forecast of $115 a barrel, and slashed its average 2009 forecast by a third to $86 a barrel.
A fall in demand in the United States and other developed economies has helped drive oil down nearly 50 per cent from its July peak above $147 a barrel.
A boom in consumption from emerging markets such as China had contributed to a six-year rally in commodity prices.
Oil's fall has caused some members of the Organization of the Petroleum Exporting Countries to call for a cut in production levels.
"We expect the organisation to be more vigilant in keeping to quotas now that prices have slipped below $90 a barrel and to vigorously defend $80," Standard Chartered Bank said in a research note.
The producer group has agreed to hold an emergency meeting in Vienna on Nov 18 to discuss the impact of the global financial crisis on the oil market.
"Poor demand and low refining margins should already translate into a lower call on OPEC crude oil," said Olivier Jakob of consultancy Petromatrix.
Jakob said the market was starting to price in an OPEC cut, with the only uncertainty being on the size of the cut.
Iran is set to push for a cut in oil output at the meeting, its oil minister said in comments published on Sunday, adding that investment conditions in the oil industry would be severely hit unless OPEC acted decisively to arrest the fall in prices.
Saudi Arabia, the world's biggest exporter and OPEC's most influential member, has cut November supplies to one major European refiner, according to a trade source. But the kingdom told major Asian refiners that it would maintain crude oil shipments unchanged.
Germany and France lead €1 trillion European bailout
(Yoan Valat/EPA)
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4937516.ece
Like Gordon Brown, Nicolas Sarkozy has has been praised at home and abroad for his handling of the crisis.
Charles Bremner in Paris and David Charter in Luxembourg
Germany and France put mountains of cash on the table today as they led continental Europe in an offensive to rebuild trust in banks with state guarantees worth over €1trillion (£780 million).
Chancellor Angela Merkel and President Sarkozy, chiefs of the two big euro-zone economies, also joined Gordon Brown in calling for a deep reform of the global financial system after the dust settles from the autumn earthquake.
“When calm returns, those who have sinned will be punished,” Mr Sarkozy said.
In Washington, Silvio Berlusconi, the Italian Prime Minister, said that President Bush had agreed on the need for an emergency summit of the G8 group of big industrialised nations plus Russia within weeks.
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World markets initially soared as European governments pumped billions into crippled banks. Central banks in Europe also mounted a new offensive to restart lending by supplying unlimited amounts of dollars to commercial banks in a joint operation.
Dominique Strauss-Kahn, the French chief of the International Monetary Fund, voiced optimism for the first time since the financial turmoil intensified with the collapse of Lehman brothers last month. “Thanks to the decisions that have just been taken, the peak of the crisis is perhaps behind us,” he said.
Mrs Merkel presented a rescue package that will provide €400 billion in bank guarantees and a further €100 billion in state funds to recapitalise banks. Mr Sarkozy detailed a plan that includes up to €320 billion to guarantee inter-bank lending up to December next year and €40 billion to inject capital into needy banks. In Spain, José Luis Rodríguez Zapatero, the Prime Minister, said that the Government would set aside a maximum of €100 billion to cover bank lending.
Italy said that it would spend “as much as necessary” to safeguard the country’s banking sector. Austria announced up to €85 billion in guarantees and up to €15 billion in equity to prop up the banking sector. Other members of the 15-nation euro-zone were announcing similar measures to shore up their financial systems.
Under pressure from the European Commission, Ireland also agreed to include major foreign-based banks in the blanket guarantee for deposits that it announced two weeks ago.
Ireland’s unilateral guarantee started a free-for-all in the eurozone which came under control on Sunday when Mr Sarkozy organised the co-ordinated bail-out with advice from Mr Brown. The French President said yesterday that extreme times demanded bold remedies. “The biggest risk at the moment would have been to lack audacity,” he said.
Like Mr Brown, Mr Sarkozy has been praised at home and abroad for his handling of the crisis. “Super-Sarko”, a politician who thrives as a crisis-manager, landed the role of chief European fixer because France holds the rotating six-month Union presidency until next January.
He is to seek a co-ordinated approach among all 27 members at the Union’s autumn summit which opens in Brussels on Wednesday. If the rescue appears to be holding up, Mr Sarkozy wants the EU leaders to focus on the economic fall-out and on ways of limiting what appears to be a looming recession in Europe.
Mr Sarkozy insisted that there would be little long-term cost to the French tax-payer because the bail-out would be financed by state-guaranteed borrowing and banks would pay for the protection that they were given. State-owned shares would later be sold, probably for a profit, he said.
Mr Sarkozy was gratified, he said, that “United Europe has done more than the United States in terms of the sums committed” to tackling the crisis. Europe must now convince the United States of the need to “rebuild the foundations of capitalism”. France wanted to support entrepreneurs and not speculators, he said.
Mrs Merkel, who had been reluctant until last weekend to join in a pan-European rescue plan, said that Germany’s 500 billion euro package was dramatic.
“We are taking drastic action, no question about it... so that what we have experienced is not repeated,” she said.
“Our citizens will be protected by today’s package against even stronger effects... If the state had not intervened, the consequences would have been incalculable - above all for our citizens, for savers and for the economy.”
Both Mrs Merkel and Mr Sarkozy said that banks receiving capital would have to comply with conditions, including limits on management pay and requirements to keep credit moving to small and medium-sized business.
“We have today laid the first foundation stone for a new financial market constitution,” Mrs Merkel said after her Cabinet settled the plan, which should be passed by both houses of Parliament by Friday.


Wall Street's Wild Week: Investors Live With It
Two-Thirds Worried About Their Own Finances
ANALYSIS by PEYTON M. CRAIGHILL
Oct. 13, 2008

Stockholders are living with Wall Street's crash, their broad economic concern tempered by the fact that most by far are buy-and-hold investors.

In this ABC News/Washington Post poll, one in five investors say they've suffered a great deal from the market crash.
(Richard Drew/AP Photo)After one of the market's worst weeks in history, just half of stock and stock-fund owners say they've been hurt financially, and less, 20 percent say they've suffered a great deal. The pain is a bit lower still among all Americans because many don't own stocks.

Click here for PDF with charts and full questionnaire.

That doesn't meant the global financial crisis isn't affecting public attitudes; indeed it's sent them into a tailspin. A record 90 percent in this ABC News/Washington Post poll say the country's on the wrong track, 88 percent are worried about the economy's direction and 44 percent are confident they'll have enough money on which to retire. (See separate analysis.) But when it comes to the stock market in particular, Americans tend to respond with fortitude, and so far that's the case again.

Related
Economic Woes Drive Obama to Double Digit Lead Over McCainSee How They Run!Confidence: An Icy WindOn the one hand, in interviews the two nights after the Dow Jones industrial average finished down 18 percent in one week, 78 percent said they're worried about the performance of the stock market. Two-thirds (67 percent) are worried about their own family's financial situation. Less, but still 44 percent, are worried about their ability to get a loan if necessary.


In each case, though, considerably fewer are "very" worried about each of these, especially their family finances and the availability of credit. And fewer still are making panicked sell orders -- leaving those, it seems, to the professionals.

STOCKHOLDERS – Fifty-eight percent of Americans own stocks or stock funds; that's grown steadily from a third in a 1987 ABC/Post poll. But most of them by far are in funds; 22 percent of Americans report that they own individual stocks. And 42 percent report no market investments at all.

Among those who do hold stocks or funds, moreover, nearly all -- 95 percent -- describe themselves as long-term, buy-and-hold investors. And indeed they're holding tight: While 68 percent have checked their portfolios in the last few weeks, 87 percent of them have not changed their investments. And among the 13 percent who have made adjustments, most have bought as well as sold.

http://www.abcnews.go.com/PollingUnit/Politics/story?id=6017904&page=1




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