Asian governments must cut reliance on export-driven growth and spend more to cut poverty, Asian Development Bank (ADB) finance officials have said.
Countries must restructure to focus on domestic demand as they grapple with economic chaos, the banks' annual meeting in Indonesia was told.
Asian economies are slumping as demand for their products falls during the worst global slump since World War II.
The downturn is set to keep tens of millions of people trapped in poverty.
Also at the meeting, Japan, said it would make 6 trillion yen ($40.1bn; $60.5bn) available for currency swaps - giving nations with weaker currencies access to yen in a funding crisis.
And finance ministers from south east Asia along with Japan, China and South Korea, agreed to set up a $120bn (£80.5bn) pool of emergency funds.
'Greater resilience'
Asia's main export markets had experienced a "massive contraction in demand" since the implosion of the US mortgage market triggered the global banking crisis last year, ADB President Haruhiko Kuroda told a seminar at the meeting.
He said the knock-on effects had been interest rates on bonds rising and Asian currencies depreciating as foreign capital was taken out of emerging markets.
Economic stimulus packages produced by the likes of China and Japan to boost their economies would not be sufficient in the long-term he added.
"Over the longer term, developing Asia is starting the process of rebalancing growth from excessive dependence on external demand to greater resilience on both consumption and investment," he said.
"Already there are signs that domestic consumption is remaining strong in Asia and may well lead the way out of this downturn."
The ADB is predicting growth of 3.4% in Asia for 2009 compared with more than 9% in 2007.
Poverty warning
Chinese and Indian finance officials were among those backing Mr Kuroda's calls for efforts to stimulate domestic consumption.
Greater spending on infrastructure and education were needed, they said, as well as social safety nets to give Asian consumers, especially the poor, the confidence to spend.
The ADB's main role is lending to alleviate poverty in developing Asian nations.
But it estimates that the economic crisis has kept about 60 million Asian people in severe poverty, who, in less uncertain global economic times, would have been able to improve their standards of living.
Thursday, May 7, 2009
Ten US banks fail 'stress tests'
Ten of America's largest 19 banks need a combined $74.6bn (£50bn) of extra funds to boost their cash reserves.
That is the main finding of the so-called "stress tests" to see if the banks have sufficient capital to cope should the recession worsen.
Bank of America is the most at risk, needing an additional $33.9bn.
"Our hope with today's actions is that banks are going to be able to get back to the business of banking," said US Treasury Secretary Timothy Geithner.
Geithner: 'Back to business of banking'
Other banks that need more money include Wells Fargo, which is said to require $13.7bn, and GMAC, the financial arm of General Motors, which needs $11.5bn.
Citigroup requires an additional $5.5bn of funds, and Morgan Stanley has been told to find $1.8bn.
Some of the banks have already indicated how they intend to raise the money they need by private means such as asset sales, rather than having to secure any additional government loans.
'No surprises'
The 19 banks that were tested by Treasury Department and Federal Reserve officials account for two-thirds of the total assets of the US banking system, and more than half of the total amount of credit in the US economy.
THE 10 THAT NEED MORE CAPITAL
Bank of America - $33.9bn
Wells Fargo - $13.7bn
GMAC - $11.5bn
Citigroup - $5.5bn
Morgan Stanley - $1.8bn
Regions Financial - $2.5bn
SunTrust Banks - $2.2bn
KeyCorp - $1.8bn
Fifth Third Bancorp - $1.1bn
PNC Financial Services - $600m
The banks that require extra capital have been given until 8 June to finalise their plans to do so, and get them approved by regulators.
Mr Geithner said earlier on Thursday that no US bank being screened by regulators was at risk of insolvency, comments echoed by Federal Reserve Chairman Ben Bernanke.
The treasury secretary said he believed that while the majority of the banks would be able to raise any additional money they need from private sources, if they were unable to do so the government may have to provide them with more taxpayer money.
Analysts broadly welcomed the results of the stress tests.
"It seems to be that the leaks were very accurate, so there doesn't seem to be any major surprises," said Eric Kuby of North Star Investment Management.
"The fears of nationalisation or of failure have more or less disappeared."
Asset sale
The other five banks that have been told they require additional capital are Regions Financial ($2.5bn), SunTrust Banks ($2.2bn), KeyCorp ($1.8bn), Fifth Third Bancorp ($1.1bn), and PNC Financial Services ($600m).
Have the tests passed the test?
Those that do not require extra funds are Goldman Sachs, JPMorgan Chase, Bank of New York Mellon, MetLife, American Express, State Street, BB&T, US Bancorp and Capital One Financial.
Some of the banks that need extra funds have been quick to announce how they intend to do so.
Bank of America said it would raise the $33.9bn it needs through the sale of assets and other measures, while Citigroup, Morgan Stanley and Wells Fargo are to issue or exchange shares.
Citigroup chief executive Vikram Pandit said his bank's actions would "give it the financial strength to weather an adverse stress scenario".
Criticism
Some commentators have questioned whether the tests have been strict enough.
WHAT WERE THE STRESS TESTS?
They measured the health of the 19 banks in question
The aim was to find out which might require more cash reserves in the event of the economic outlook worsening
Professor Nouriel Roubini and Professor Matthew Richardson of New York University said that the doomsday scenario that the banks' books have been subjected to is actually no worse than the current economic situation.
And as such, they said "the stress test results will not be credibly interpreted as a sign of of bank health".
Others say that the tests do not take account of the banks' varying business models.
That is the main finding of the so-called "stress tests" to see if the banks have sufficient capital to cope should the recession worsen.
Bank of America is the most at risk, needing an additional $33.9bn.
"Our hope with today's actions is that banks are going to be able to get back to the business of banking," said US Treasury Secretary Timothy Geithner.
Geithner: 'Back to business of banking'
Other banks that need more money include Wells Fargo, which is said to require $13.7bn, and GMAC, the financial arm of General Motors, which needs $11.5bn.
Citigroup requires an additional $5.5bn of funds, and Morgan Stanley has been told to find $1.8bn.
Some of the banks have already indicated how they intend to raise the money they need by private means such as asset sales, rather than having to secure any additional government loans.
'No surprises'
The 19 banks that were tested by Treasury Department and Federal Reserve officials account for two-thirds of the total assets of the US banking system, and more than half of the total amount of credit in the US economy.
THE 10 THAT NEED MORE CAPITAL
Bank of America - $33.9bn
Wells Fargo - $13.7bn
GMAC - $11.5bn
Citigroup - $5.5bn
Morgan Stanley - $1.8bn
Regions Financial - $2.5bn
SunTrust Banks - $2.2bn
KeyCorp - $1.8bn
Fifth Third Bancorp - $1.1bn
PNC Financial Services - $600m
The banks that require extra capital have been given until 8 June to finalise their plans to do so, and get them approved by regulators.
Mr Geithner said earlier on Thursday that no US bank being screened by regulators was at risk of insolvency, comments echoed by Federal Reserve Chairman Ben Bernanke.
The treasury secretary said he believed that while the majority of the banks would be able to raise any additional money they need from private sources, if they were unable to do so the government may have to provide them with more taxpayer money.
Analysts broadly welcomed the results of the stress tests.
"It seems to be that the leaks were very accurate, so there doesn't seem to be any major surprises," said Eric Kuby of North Star Investment Management.
"The fears of nationalisation or of failure have more or less disappeared."
Asset sale
The other five banks that have been told they require additional capital are Regions Financial ($2.5bn), SunTrust Banks ($2.2bn), KeyCorp ($1.8bn), Fifth Third Bancorp ($1.1bn), and PNC Financial Services ($600m).
Have the tests passed the test?
Those that do not require extra funds are Goldman Sachs, JPMorgan Chase, Bank of New York Mellon, MetLife, American Express, State Street, BB&T, US Bancorp and Capital One Financial.
Some of the banks that need extra funds have been quick to announce how they intend to do so.
Bank of America said it would raise the $33.9bn it needs through the sale of assets and other measures, while Citigroup, Morgan Stanley and Wells Fargo are to issue or exchange shares.
Citigroup chief executive Vikram Pandit said his bank's actions would "give it the financial strength to weather an adverse stress scenario".
Criticism
Some commentators have questioned whether the tests have been strict enough.
WHAT WERE THE STRESS TESTS?
They measured the health of the 19 banks in question
The aim was to find out which might require more cash reserves in the event of the economic outlook worsening
Professor Nouriel Roubini and Professor Matthew Richardson of New York University said that the doomsday scenario that the banks' books have been subjected to is actually no worse than the current economic situation.
And as such, they said "the stress test results will not be credibly interpreted as a sign of of bank health".
Others say that the tests do not take account of the banks' varying business models.
Wednesday, May 6, 2009
Bank of China managers jailed in US for $485m fraud
Two former Bank of China managers and their wives were handed lengthy jail terms on Wednesday for their roles in a 485-million-dollar fraud ,us justice authorities said.
The two men, Xu Chaofan and Xu Guojun, were convicted by a federal jury in Las Vegas last August of masterminding an elaborate plot that saw them attempt to embezzle hundreds of millions of dollars.
Xu Chaofan was sentenced to 25 years in prison while Xu Guojun was handed a 22-year jail term. Both wives of the men received eight years in prison each and all four were ordered to pay 482 million dollars in restitution.
A third bank manager, Yu Zhendong, had pleaded guilty and cooperated with US government prosecutors trying the case.
During last year's trial, jurors heard how the managers laundered stolen millions through a network of accounts in Hong Kong, Canada and the United States, where they had planned to immigrate.
All five defendants were charged with a criminal conspiracy that began in 1991 and continued until October 2004 when the former bank managers and their wives were arrested.
The court heard how the former bank managers created a series of shell corporations in Hong Kong which were used to funnel the cash into personal bank and investment accounts.
Some of the money ended up on gaming tables at Las Vegas casinos, where the accused would frequently lay lavish bets of up to 80,000 dollars
The two men, Xu Chaofan and Xu Guojun, were convicted by a federal jury in Las Vegas last August of masterminding an elaborate plot that saw them attempt to embezzle hundreds of millions of dollars.
Xu Chaofan was sentenced to 25 years in prison while Xu Guojun was handed a 22-year jail term. Both wives of the men received eight years in prison each and all four were ordered to pay 482 million dollars in restitution.
A third bank manager, Yu Zhendong, had pleaded guilty and cooperated with US government prosecutors trying the case.
During last year's trial, jurors heard how the managers laundered stolen millions through a network of accounts in Hong Kong, Canada and the United States, where they had planned to immigrate.
All five defendants were charged with a criminal conspiracy that began in 1991 and continued until October 2004 when the former bank managers and their wives were arrested.
The court heard how the former bank managers created a series of shell corporations in Hong Kong which were used to funnel the cash into personal bank and investment accounts.
Some of the money ended up on gaming tables at Las Vegas casinos, where the accused would frequently lay lavish bets of up to 80,000 dollars
Airlines told to cite total payable fare
The asterisk on airline fare ads that could translate into many thousands payable over and above the low-sounding basic fares is set to
go.
Director general of civil aviation Nasim Zaidi has given all airlines, domestic and international, 30 days to correct their websites, systems and travel agent database so that passengers get a single all-inclusive figure of the total amount payable.
"Where the director-general is satisfied that any air transport undertaking has established excessive or predatory tariff or has indulged in oligopolistic practice, he may, by order, issue directions to such air transport undertaking," the circular says.
The new directive also states that the DGCA will keep a watch on fare levels to check overcharging and to see if certain airlines have ganged up to influence fares.
While the warning to domestic airlines for a single all-inclusive fare was issued some months back, Nasim Zaidi has now brought foreign carriers into the ambit. The timeframe of 30 days has also been communicated to all airlines.
"This rule applies to both Indian and foreign carriers. They have been given 30 days to change their systems, websites. Once this time period expires, we'll be asking them for a compliance report. Passengers must get the correct information and not be misled," Zaidi said.
The DGCA circular says airlines must clearly state the all-inclusive fares on their websites, newspapers, office and with the travel agents.
go.
Director general of civil aviation Nasim Zaidi has given all airlines, domestic and international, 30 days to correct their websites, systems and travel agent database so that passengers get a single all-inclusive figure of the total amount payable.
"Where the director-general is satisfied that any air transport undertaking has established excessive or predatory tariff or has indulged in oligopolistic practice, he may, by order, issue directions to such air transport undertaking," the circular says.
The new directive also states that the DGCA will keep a watch on fare levels to check overcharging and to see if certain airlines have ganged up to influence fares.
While the warning to domestic airlines for a single all-inclusive fare was issued some months back, Nasim Zaidi has now brought foreign carriers into the ambit. The timeframe of 30 days has also been communicated to all airlines.
"This rule applies to both Indian and foreign carriers. They have been given 30 days to change their systems, websites. Once this time period expires, we'll be asking them for a compliance report. Passengers must get the correct information and not be misled," Zaidi said.
The DGCA circular says airlines must clearly state the all-inclusive fares on their websites, newspapers, office and with the travel agents.
It's change vs change in West Bengal
and the Trinamool are both seeking change. But there's a twist. The Left wants Bengal to be the catalyst for a regime change at the Centre. And for that, the Left needs to repeat 2004 in Bengal -35 out of the 42 seats in Bengal.
"We have to bring about a change - a change in government policies," Politburo Member, CPI(M), Brinda Karat is heard saying in a public meeting.
"The slogan of the people is parivartan," says Dinesh Trivedi, Trinamool Candidate, in Barrackpore.
But the Opposition is viewing these elections as an opportunity to end the three decade-old dominance of the Left. The alliance between Trinamool and Congress is confident of securing 16 to 18 seats in these elections.
"The change is happening from the grass roots - from the Panchayat levels we have won the Nandigram bypolls, we have won Bishnupur bypolls, where they have won for 32 years," says Dinesh Trivedi.
Post-Nandigram and Singur, the Trinamool has done well at the Panchayat polls and assembly bypolls. Now, the Opposition is pitching these elections as a vote on the performance of the Buddhadeb Bhattacharjee government.
"The battle for Bengal will be in 2011 but the Trinamool and the Congress is bringing it in 2009," puts forth Brinda Karat.
But one thing is clear. Results of these elections will certainly redefine Left's role - both in national politics as well in the state
"We have to bring about a change - a change in government policies," Politburo Member, CPI(M), Brinda Karat is heard saying in a public meeting.
"The slogan of the people is parivartan," says Dinesh Trivedi, Trinamool Candidate, in Barrackpore.
But the Opposition is viewing these elections as an opportunity to end the three decade-old dominance of the Left. The alliance between Trinamool and Congress is confident of securing 16 to 18 seats in these elections.
"The change is happening from the grass roots - from the Panchayat levels we have won the Nandigram bypolls, we have won Bishnupur bypolls, where they have won for 32 years," says Dinesh Trivedi.
Post-Nandigram and Singur, the Trinamool has done well at the Panchayat polls and assembly bypolls. Now, the Opposition is pitching these elections as a vote on the performance of the Buddhadeb Bhattacharjee government.
"The battle for Bengal will be in 2011 but the Trinamool and the Congress is bringing it in 2009," puts forth Brinda Karat.
But one thing is clear. Results of these elections will certainly redefine Left's role - both in national politics as well in the state
Labourer’s daughter scripts tale of grit
Priti Maithil, 23, is living out the Indian dream. The daughter of a laid-off casual labourer at a local sugar mill in Sehore, a sleepy little town 35 km away from Bhopal, she has secured the 92nd rank in the Union Public Service Commission examinations this year and is all set to join the elite Indian Administrative Service (IAS).
It wasn’t easy. Her father, Santosh Kumar, had lost his job in 2002 when the mill shut down. He then took to farming and ekes out a living growing wheat on seven acres he ws given by the mill management.
“We faced tough times, but my parents never let me feel deprived,” said Maithil, who likes reading, painting, debating and cooking. Relatives also chipped in — a paternal uncle supported her financially when she decided to join a coaching institute in Delhi.
A graduate in agriculture from Rafi Ahmed Kidwai College of Agriculture, Sehore, Maithil, who speaks fluent English — she studied in a local English medium school — does not subscribe to the view that the UPSC examinations are loaded in favour of those from English medium schools.
“More people from non-urban backgrounds are getting selected. That’s good, because they have a first-hand feel of the problems faced by the common man,” she said.
It wasn’t easy. Her father, Santosh Kumar, had lost his job in 2002 when the mill shut down. He then took to farming and ekes out a living growing wheat on seven acres he ws given by the mill management.
“We faced tough times, but my parents never let me feel deprived,” said Maithil, who likes reading, painting, debating and cooking. Relatives also chipped in — a paternal uncle supported her financially when she decided to join a coaching institute in Delhi.
A graduate in agriculture from Rafi Ahmed Kidwai College of Agriculture, Sehore, Maithil, who speaks fluent English — she studied in a local English medium school — does not subscribe to the view that the UPSC examinations are loaded in favour of those from English medium schools.
“More people from non-urban backgrounds are getting selected. That’s good, because they have a first-hand feel of the problems faced by the common man,” she said.
It’s a way of life
In Kadachha village like in many others in Madhya Pradesh, social discrimination has become a way of life, with Dalits and Other Backward Classes (OBCs) accepting it as a tradition to be followed.
A visit to this village in Ujjain district (adjoining Indore) — that shot into the limelight following an HT report based on the findings of NGO Jan Sahas and Unicef on caste discrimination in serving of mid-day meals and care of pregnant and postpartum Dalit women — showed how deep-rooted the malaise is.
A schoolteacher belonging to the Dalit community said on condition of anonymity fearing further victimisation, “I have experienced it all my life. We can’t mount a horse at marriage processions. We can’t celebrate in upper caste localities with drums and the like. We have to get off a cycle if an elderly person from the upper caste is close by. The list is endless.”
“But what can an individual do when the practice is accepted even by members of the reserved class. If I make a hue and cry over the issue, the elders in my own community will gag me,” he said.
Ignorant of the stigma attached to the practice, Lekha (only name mentioned), a standard V student said, “We have always been sitting in separate rows for mid-day meals. Is it bad?” When informed that it was a violation of his rights, the schoolboy said, “My father never told me this.”
The sarpanch (headman) of the village, Balaram Jaat, went to the extent of defending the discrimination. “No one tells Dalits to refrain from eating at public functions with the upper caste people or remain outside the houses of Brahmins or Rajputs. They do it on their own. They feel it is a tradition that has to be kept alive.”
Among the 900-odd people living in the village, nearly 90 per cent belong to the Scheduled Caste and Other Backward Classes. Some Brahmins and Rajputs also live in the village.
The localities of the upper caste and the Dalits are clearly defined.
The headman claimed that the upper caste people have been living here for generations. “How can they (upper castes) be asked to leave their traditional homes and construct houses in other localities?” He implied that as long as the upper castes live in locality, the tradition of subservience should be followed.
A visit to this village in Ujjain district (adjoining Indore) — that shot into the limelight following an HT report based on the findings of NGO Jan Sahas and Unicef on caste discrimination in serving of mid-day meals and care of pregnant and postpartum Dalit women — showed how deep-rooted the malaise is.
A schoolteacher belonging to the Dalit community said on condition of anonymity fearing further victimisation, “I have experienced it all my life. We can’t mount a horse at marriage processions. We can’t celebrate in upper caste localities with drums and the like. We have to get off a cycle if an elderly person from the upper caste is close by. The list is endless.”
“But what can an individual do when the practice is accepted even by members of the reserved class. If I make a hue and cry over the issue, the elders in my own community will gag me,” he said.
Ignorant of the stigma attached to the practice, Lekha (only name mentioned), a standard V student said, “We have always been sitting in separate rows for mid-day meals. Is it bad?” When informed that it was a violation of his rights, the schoolboy said, “My father never told me this.”
The sarpanch (headman) of the village, Balaram Jaat, went to the extent of defending the discrimination. “No one tells Dalits to refrain from eating at public functions with the upper caste people or remain outside the houses of Brahmins or Rajputs. They do it on their own. They feel it is a tradition that has to be kept alive.”
Among the 900-odd people living in the village, nearly 90 per cent belong to the Scheduled Caste and Other Backward Classes. Some Brahmins and Rajputs also live in the village.
The localities of the upper caste and the Dalits are clearly defined.
The headman claimed that the upper caste people have been living here for generations. “How can they (upper castes) be asked to leave their traditional homes and construct houses in other localities?” He implied that as long as the upper castes live in locality, the tradition of subservience should be followed.
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