Bank cuts UK rates to 57-year low

The Bank of England has cut interest rates by one percentage point, from 3% to 2% - the lowest level since 1951.

The move, which followed a dramatic cut in November, has been welcomed by many commentators who said the cut should help the slowing economy.

Prime Minister Gordon Brown has urged lenders to pass on the cut to homeowners and business.

So far, only a handful of lenders have said they will pass on the cut in full to standard variable rate mortgages.

There has been no news yet for savers, with banks and building societies saying their savings rates are "under review".

"If the banks pass the interest rate reduction on, and I hope and believe that they should do so, then it's of benefit to homeowners and businesses right across the country," Gordon Brown told BBC Radio 5 Live.

HSBC , Bristol & West, and Lloyds TSB, which also owns Cheltenham and Gloucester, have said their standard variable rate mortgages would be cut by the full one percentage point cut.

You could almost hear the sigh of relief up and down the country Hetal Mehta, Ernst & Young Item club What the cut means for you Which lenders have passed on cut? How low will rates go?

While Skipton building society said they would pass on a cut of at least 0.95 of a percentage point.

Royal Bank of Scotland and Lloyds TSB/Cheltenham & Gloucester will also pass on the rate cut to their small business customers, they said.

Before the interest rates decision, Halifax said its customers with existing tracker mortgages, that follow moves in the Bank of England's Base Rate, would benefit in full from any cuts.

This was despite a clause in the Halifax's paperwork which would have allowed it to put a limit on the cuts it passed on to mortgage customers.

Economic turmoil

Rate of interest slashed again

Commenting on the reaction to the Bank's latest interest rates cut, BBC economics editor Hugh Pym said: "There wasn't quite the shock value of the dramatic one-and-a-half point reduction in November.

"But we shouldn't forget the scale of the Bank of England's action. The cost of borrowing has been more than halved since early October, as the Bank got to grips with the rapid decline in confidence and spending."

Earlier, there was further evidence of the rapidly slowing economy in the UK:

• House prices fell 2.6% between October and November - their sharpest monthly drop since the housing market crash of the 1990s - according to the Halifax.

• New car sales in November fell 36.8% on the year before - the steepest decline in nearly three decades according to the Society of Motor Manufacturers and Traders

• Homewares retail chain The Pier - which has 31 stores and 17 concessions across the UK - was placed in administration. It employs about 400 workers.

Central banks across Europe also cut rates in an effort to stem the economic decline.

The European Central Bank cut its key interest rate to 2.5% from 3.25%, the biggest reduction in its history.

Denmark's central bank also lowered its main interest rate by three-quarters of a percentage point, to 4.25%.

Earlier on Thursday, Sweden's central bank cut interest rates from 3.75% to 2% - a bigger-than-expected reduction.

'Bold but necessary'

This latest dramatic move by the Bank of England means that its Bank Rate is now at its lowest since November 1951- a year which saw the Festival of Britain and Winston Churchill become Prime Minister again.

ALSO IN 1951... January-June, Korean War saw heaving fighting across the 38th parallel May, King George VI opened the Festival of Britain October, the Conservatives won the general election The average house cost £2,100 A loaf of bread cost 6d (2.5 pence)

Hetal Mehta of the Ernst & Young Item Club said: "You could almost hear the sigh of relief up and down the country."

"Anything less would have been a missed opportunity. The Bank has given the economy the right medicine at the right time."

"Manufacturing and services surveys this week have confirmed that the recession is gathering momentum. At the same time, commodity prices have collapsed and inflation is set to fall dramatically, the dire prospect of deflation is becoming more likely."

Graeme Leach of the Institute of Directors welcomed the Bank's decision, calling it "bold but necessary".

The British Chambers of Commerce (BCC) said that because of worrying signs that UK activity was falling sharply, it was "critically important" the the Bank to persevere with "aggressive" rate cuts.

"There is a clear danger that unemployment will increase even more dramatically without urgent counter-measures," said David Kern, of the BCC.

HAVE YOUR SAY

Brilliant, once again the sensible savers get kicked in the teeth

Jason Jones, Birmingham

Send us your comments

And he strongly urged the Bank of England's monetary policy committee to cut interest rates by at least a further half a percentage point at its January meeting.

Stephen Robertson of the British Retail Consortium said: "This is exactly the type of decisive action we need during these uncertain times. With the threat of inflation fading, the Bank of England is right to concentrate on jump-starting the economy."

source: bbc

link to the original post:
http://news.bbc.co.uk/2/hi/business/7764741.stm


Fort Lauderdale Blog and Real Estate News
Rory Vanucchi
RoryVanucchi@gmail.com

http://waterfrontlife.blogspot.com
www.FortLauderdaleLiving.net

Irish economy faces into a bleak 2009 and further contraction in 2010 - Davy

Irish economy faces into a bleak 2009 and further contraction in 2010 - Davy By Finfacts Team Dec 4, 2008 - 8:22:15 AM

Email this article Printer friendly page

The Irish economy faces into a bleak 2009. Output is set to fall by the most on record. Consumers will save a greater share of their income and shun spending, and the unemployment rate is likely to breach 10% by the end of the year. Davy Research predicts that the Irish economy will shrink again in 2010 (albeit only slightly) following a sharp dip in 2008 and 2009. It projects real GNP to slip 0.5% in 2010. That compounds the likely 6%+ drop in real national income cumulatively in 2008 and 2009.

Davy Chief Economist Rossa White says in its latest report on the economy: "To cross-check, we looked at similar instances of economies faced with the bursting of a property bubble and a corresponding banking crisis. It has been rare for an economy to suffer only two years of declining incomes; at least three has been the norm.

That was the case in the experience of Finland and Sweden (the latter is a better example in the Irish context because it did not endure a currency crisis: membership of the euro insulates Ireland from such an event)."

Rossa White summarises the Davy outlook on the Irish economy:

GNP to shrink marginally in 2010 after sharp drop in 2009

• We expect real GNP to shrink for a third straight year in 2010, albeit marginally. We forecast a decline of 0.5% in 2010, whereas the economy will contract by 4.1% in 2009 and 2% in 2008.
• The economy may end up more than 7% smaller in cash terms in 2010 than it was in 2007.
• Consumer spending and building investment will fall further in 2010, albeit not as markedly as in 2009.
• Exports are an important variable. As global reflationary efforts finally succeed, a moderate rebound in export growth may prevent another sharp contraction in the Irish economy in 2010.

Unemployment rate will hit 10% by the fourth quarter of 2009 and may peak below 12% by the final quarter of 2010

• The rapid deterioration in the labour market will continue throughout 2009. It is a lagging variable, so unemployment will keep rising in 2010 even if economic activity has reached a floor. We project that the unemployment rate will reach 10% by Q4 2009 and may peak at almost 12% at the end of 2010.
• The economy will get a fiscal stimulus in 2009, despite suggestions in some quarters. The cyclically adjusted budget deficit will widen significantly due to lower-than-expected tax revenue.

Adequately capitalised banking system is a necessary condition for economic recovery

High private debt levels are a burden for the economy. Adequate recapitalisation of the banking system is necessary to liberate new credit provision and will ultimately hasten recovery in the Irish economy

source: irish finance news

link to the original post:
http://www.finfacts.ie/irishfinancenews/article_1015445.shtml


Fort Lauderdale Blog and Real Estate News
Rory Vanucchi
RoryVanucchi@gmail.com

http://waterfrontlife.blogspot.com
www.FortLauderdaleLiving.net

Yen Advances Fourth Month Against Euro as Carry Trades Unwind

Nov. 29 (Bloomberg) -- The yen gained for a fourth straight month against the euro, the longest wining streak since 1999, as the deepening global economic slump prompted investors to sell high-yielding assets and pay back loans made in Japan.

The euro weakened against the dollar for a fifth month as investors added to bets the European Central Bank will cut interest rates next week after inflation in the region slowed by the most since at least 1991. Russia’s ruble declined against the dollar to the weakest level since March 2006 as the central bank let the currency depreciate and raised interest rates to halt an exodus of foreign capital.

“The yen is still our favorite currency,” said Derek Halpenny, head of global currency research at Bank of Tokyo- Mitsubishi Ltd. in London in an interview on Bloomberg Television. “The interest-rate differential argument is still very, very powerful for the Japanese yen as yields around the world continue to plunge. Past performance tells you that the Japanese yen is going to be the currency that outperforms.”

The yen gained 3.4 percent to 121.22 per euro, from 125.30 at the end of October. The currency advanced 3.1 percent this month to 95.52 per dollar, from 98.46. The euro dropped 0.3 percent to $1.2691, from $1.2726 on Oct. 31.

The ruble slumped as low as 27.99 per dollar yesterday, the weakest since March 2006, as the 63 percent drop in crude oil prices from a July peak erodes the country’s export revenue. The currency declined 3 percent against the dollar and the euro this month.

Russia, India

Bank Rossii widened the ruble’s trading band yesterday for the second time this week by about 30 kopeks (1 U.S. cent), or 1 percent, on each side, according to Mikhail Galkin, head of fixed income and credit research at MDM Bank in Moscow. The central bank said yesterday it will raise its benchmark refinancing rate to 13 percent from 12 percent to help stem currency losses.

India’s rupee fell yesterday the most in two weeks, losing 1.4 percent to 50.1075 per dollar, after terrorist attacks across Mumbai left at least 124 people dead. The rupee lost 1.3 percent this month.

The Thai baht dropped to 35.56 per dollar yesterday, the lowest level since February 2007, after the government declared a state of emergency at airports in Bangkok, which were seized and shut by anti-government protesters this week. It lost 1.2 percent this month on concern political unrest will slow growth in Southeast Asia’s second-largest economy.

Banks Rate Cuts

Japan’s currency strengthened 9.4 percent against the New Zealand dollar this month, 7.8 percent versus the British pound, and 5 percent against the Australian dollar as investors pared carry trades in which they buy higher-yielding assets with funds borrowed in low-interest-rate countries. The Bank of Japan’s 0.3 percent benchmark rate is the lowest among developed nations.

The Reserve Bank of Australia will lower its main interest rate three quarters of a percentage point to 4.5 percent on Dec. 1, and the New Zealand central bank will cut its key borrowing costs to 5 percent from 6.5 percent two days later, according to the median forecast of economists surveyed by Bloomberg News. The Bank of England will reduce its benchmark lending rate one- percentage point to 2 percent on Dec. 4, according to a separate forecast.

The euro fell 1.5 percent to 82.52 pence yesterday, the biggest drop since June 3, 2001, after the European Union statistics office in Luxembourg said inflation in the region slowed to 2.1 percent in November from 3.2 percent in October. A separate report showed unemployment in the region rose to 7.7 percent in October from 7.6 percent in September, the highest level since January 2007.

‘Least Resistance’

Investors added to bets the ECB will cut its main refinancing rate about 75 basis points by March from 3.25 percent. The implied yield on three-month Euribor futures contracts expiring in March fell to 2.67 percent yesterday, from 3.15 percent at the end of October. The yield averaged 16 basis points above the ECB’s benchmark over the past year.

The ECB will cut its benchmark lending rate by half a percentage point to 2.75 percent on Dec. 4, according to the median of 56 economist forecasts in a Bloomberg News survey.

“The ECB has to come to the party, and they have to be aggressive cutting rates,” said Lane Newman, a director of currency trading at ING Financial Markets LLC in New York. “To buy the dollar is the path of least resistance. You’d better be prepared for a worse-than-expected time ahead.”

‘Addition Downside’

The ICE’s Dollar Index, which tracks the greenback against the euro, the yen, the pound, the Canadian dollar, the Swiss franc and Sweden’s krona, climbed to 88.463 on Nov. 21, the highest since April 2006. Investors sought refuge in Treasuries from a global recession, sending the yield on two-year notes below 1 percent on Nov. 20, the lowest since regular sales began in 1975.

The Federal Reserve said on Nov. 25 it will assign $800 billion in new funding to bolster credit flows to homebuyers, consumers and small businesses and will take on credit risk by buying debt.

Investors should buy the euro versus the greenback because repatriation of U.S. investments abroad and demand for dollar funding is waning, according to Bank of America Corp.

The Fed’s support of financial markets will flood the economy with excessive dollars, creating “additional downside risks” for the U.S. currency, strategists David Powell and Robert Sinche wrote in a research note yesterday.

“The recent advance of the dollar rests on a weak foundation,” Powell and Sinche wrote. “The rapid expansion of a country’s monetary base should prove to be inconsistent with a strengthening of its currency.”

The dollar may weaken to $1.4180 per euro, a 50 percent retracement of its rally from a record low of $1.6038 in July to a 2 1/2-year high of $1.233 in October, they wrote.

source: bloomberg.com

link to the original post:
http://www.bloomberg.com/apps/news?pid=20601085&sid=a9JVPUiibGq0&refer=europe


Fort Lauderdale Blog and Real Estate News
Rory Vanucchi
RoryVanucchi@gmail.com

http://waterfrontlife.blogspot.com
www.FortLauderdaleLiving.net

First-time buyers paying the price as banks demand bigger deposits

Photo: Graham Turner

What's the price of entry into the housing market for a first-time buyer? The answer: a deposit of at least £20,000 - which is why so few people are now buying. If you want one of the best mortgage deals on offer, you are probably looking at having to rustle up a £50,000 deposit, or even more in London and the south-east.

While Alistair Darling this week claimed his pre-budget package of support for housing would "help the homeowners of tomorrow buy their first home", there was nothing in his speech to assist first-time buyers to overcome the substantial obstacle of stumping up a hefty deposit.

Latest Council of Mortgage Lenders figures show that the average first-time buyer is putting down a deposit of 16% of the value of the property - which equates to a whisker under £20,000 in the case of a typical £124,400 property being bought by a first-timer.

However, a review of the home loans on offer this week reveals that banks and building societies are reserving their best rates for customers with a 40% deposit. Based on the above example, that translates into £50,000: not a problem for some homeowners looking to hop on to a new mortgage deal but impossible for all but a minority of first-time buyers. That £50,000 figure is for the UK as a whole; it would be much higher in most of London and the south-east.

However, there are many who say that now is not the time for first-time buyers to be wading into the property market because house prices probably have some way further to fall. Sitting on the sidelines may be the best course of action. But some will feel they have waited long enough.

At first glance, the mortgage rates on offer at the moment do not look too bad. HSBC is offering a base-rate tracker deal - which follows the ups and downs of the Bank of England base rate - at 3.99%, while Abbey and Alliance & Leicester have two-year fixed rate deals at 4.49%. But in both cases, the maximum loan is 60% of the property's value - which means the buyer must put down the other 40%.

"If the borrower has a 20% deposit, rates rise to 5.99% for trackers and to 6.45% for fixed rates. If the borrower only has a 10% deposit, then there are no trackers and the lowest rate for a fixed deal is 6.45%," said Francis Ghiloni at the home loans website mform.co.uk.

The mortgage landscape has changed dramatically in recent months, and among those affected the most are those who can only manage a very small deposit, or none at all. All the remaining 100% mortgages were axed earlier this year, and there is little, if anything, available for those who have a deposit smaller than 5%.

Another problem facing first-time buyers is the greater caution of banks hit by the credit crunch about whom they take on as customers.

Meanwhile, some lenders are clamping down on low-cost "interest-only" mortgages, which many people have turned to in the past as a way of affording high property prices. With these, customers pay interest on the loan but do not pay off any of the capital debt - which means much lower monthly payments.

Earlier this year, Abbey said interest-only borrowers with "a proven repayment vehicle in place" would be able to borrow up to 75% of a property's value, while those without evidence of a repayment vehicle would be limited to 50%.

source: the guardian

link to the original post:
http://www.guardian.co.uk/money/2008/nov/26/first-time-buyers-homes-mortgages


Fort Lauderdale Blog and Real Estate News
Rory Vanucchi
RoryVanucchi@gmail.com

http://waterfrontlife.blogspot.com
www.FortLauderdaleLiving.net

London’s West End and Moscow remain world’s two most expensive office markets; Dublin rents at 14th rank are almost double Brussels'

London’s West End and Moscow remain world’s two most expensive office markets; Dublin rents at 14th rank are almost double Brussels' By Finfacts Team Nov 26, 2008 - 4:34:34 AM

Top 50 Most Expensive Office Markets as of November 2008 (converted to US dollars)

London’s West End and Moscow remain the world’s two most expensive office markets, respectively, while Hong Kong’s CBD (Central Business district), Tokyo’s Inner Central District and Mumbai’s Nariman Point round out the top five, according to CB Richard Ellis Group (CBRE) Research’s semi-annual Global MarketView/Office Occupancy Costs survey. Dublin has 14th rank and is fifth highest in Europe. Dublin rents are almost double the level in Brussels, the capital of the European Union.

The report tracks world markets with the highest as well as fastest-growing occupancy costs for the 12 months ended September 30, 2008.

The average rate of growth for office occupancy costs among the 172 markets monitored in the survey was 8%, almost double last year’s world inflation rate. Up 94.6%, Abu Dhabi, United Arab Emirates (UAE) had by far the fastest growing occupancy costs, with three of the top five fastest growing countries situated in the Middle East. The rise in occupancy costs in the UAE over the past twelve months has reflected market fundamentals—limited supply of quality office space and high demand from international firms, primarily law firms, financial institutions and real estate and construction companies planting a footprint in the UAE.

"Our current perceptions are greatly affected by the current economic malaise and we tend to forget how fast rents and occupancy costs were rising over the last 12 months," said Dr. Raymond Torto, CBRE’s Global Chief Economist. "Clearly the rate of change is generally slowing, and in some markets the pricing direction is down. The turn in rent trajectory will provide some relief to occupiers and angst to owners. However, unlike previous downturns, which have occurred simultaneously with extensive overbuilding, the real estate market globally today is in a stronger position to weather the difficulties than in the past."

Asia Pacific was the fastest growing region among markets in the top 50, at an average rate of 26.2%. Among the region’s ten entries into the top 50 fastest growing and second overall, Ho Chi Minh City, Vietnam, was up 51.4%. Multi-national corporation tenants have driven demand for the limited supply of prestige prime office buildings in that city; however Ho Chi Minh City’s rents largely surged in the fourth quarter of 2007 and the first half of 2008. Perth, Australia, was second in the region and fourth overall, up 45.2%, while Hong Kong’s CBD had the third largest increase in the region and 12th overall, up 29.1%.

Occupancy costs in the six Latin American markets that made the top 50 fastest growing rankings grew an average of 21.5%, with two new cities—Santo Domingo, Dominican Republic, and Lima, Peru—making the list. São Paulo, Brazil, led the region and was the seventh fastest growing market overall, up 34%. São Paulo’s occupancy cost increase reflects a shortage of prime office space combined with a relatively strong local economy supported by global demand for commodities and a growing middle class. Meanwhile, of the nine North American markets in the top 50 fastest growing rankings (down from the last report’s15 markets), occupancy cost growth rates averaged 14.5%, the slowest of all the regions covered.

Asia-Pacific

Hong Kong jumped into the top three most expensive cities globally, with occupancy costs rising to $231.59. Ho Chi Minh City dropped from the top spot to number two among the top 50 fastest growing cities, while Perth, Australia, jumped up 10 spots in the most expensive rankings, coming in at number 31.

Europe

London’s West End remained the world’s most expensive office market at $248.66, and Moscow retained its number two spot at $234.73. The City of London was next among the European markets and eighth most expensive overall, at $146.61. In Europe, occupancy costs grew fastest in Moscow and Rome, with increases of 29.8% and 29.5%, respectively.

Americas

Five North American cities are among the world’s Top 50 most expensive office markets: Midtown Manhattan (15th at $98.08); Calgary CBD (38th at $66.58); suburban Los Angeles (41st at $63.58); Toronto CBD (43rd at $61.54); and Downtown New York City (48th at $59.16). In Latin America, São Paulo increased nine spots to 26th, at $75.13.

source: irish finance news

link to the original post:
http://www.finfacts.ie/irishfinancenews/article_1015360.shtml



Fort Lauderdale Blog and Real Estate News
Rory Vanucchi
RoryVanucchi@gmail.com

http://waterfrontlife.blogspot.com
www.FortLauderdaleLiving.net

Darling to slash VAT and spark Xmas spree

Alistair Darling will make a high-risk bid to lead Britain out of recession tomorrow, when he is expected to cut VAT and entice the British people to go on a pre-Christmas spending spree.

The move by the Chancellor and Gordon Brown won the support last night of Charles Clarke, one of the Prime Minister's most high-profile critics, a sign that the economic crisis is at last uniting Labour and focusing minds on the battle against the Tories. With high-street stores slashing prices to attract customers, Darling will offer help with his pre-Christmas price cut in an attempt to limit the collateral damage from the global financial crisis.

The cut is expected to see the rate drop from its current level of 17.5 per cent for at least a year - and possibly for as long as two years.

Last night, as Darling put the finishing touches to the most important financial statement of Labour's 11 years in government, there was speculation that he might slash the rate to 15 per cent, a move that would cost the government about £12.5bn a year.

Such a move, certain to be interpreted as evidence that Brown is preparing for a possible election next year, is seen by the Prime Minister as essential to help the economy ride out the severest economic downturn for generations.

Darling is also expected to announce an extension of the £2.7bn giveaway announced in the summer to buy off Labour rebels opposed to the abolition of the 10p income tax rate. The original rebate, worth £120 a year to basic rate taxpayers, was due to come to an end next April, but the Chancellor is likely to carry it over for at least another year. There could also be wider changes in personal tax allowances to take many low earners out of paying tax at all, as well as plans to speed up infrastructure projects to help salvage jobs in construction. In an interview with the Sunday Mirror, Darling today promises help for 'every household' so people can 'get through the difficult period'. He also promises support for householders with mortgages and those facing redundancy. 'Worried mortgage holders will get help and I shall do what I can to help those who lose their jobs.'

The public sector, he says, will be asked to spend less. 'In these difficult times the public sector will, like the rest of the country, be tightening its belt.'

There was also speculation that Darling could help motorists by postponing plans to increase vehicle excise duty on the most polluting cars.

With the financial markets nervously waiting to see how Brown and Darling intend to pay for the measures, the Prime Minister received a significant boost last night when Clarke, a former Home Secretary, finally buried the hatchet and lavished praise on his former political enemy over his handling of the economic crisis.

Ending one of the bitterest feuds at the top of the Labour party, and in a sign of how it is now united behind its leader, Clarke, who only in September called for Brown to shape up or quit, told The Observer that the Prime Minister had shown 'genuine economic and political leadership at a time when it was both desperately needed and difficult to do'. He said: 'It's been a real surprise to me but Gordon's economic self-confidence has made him more decisive on the political front.' The PM had listened to his critics and had 'earned the right to support'.

'I think that, since the Labour party conference, he has done really well in meeting the challenges of the world financial and economic crisis,' said Clarke. As a result, he said he felt Brown could lead Labour to a fourth consecutive general election victory.

'Winning the election, particularly in the marginal seats in the south east, remains a really tough call, but Labour is obviously back in the race and can do it.'

City economists said a VAT cut was 'psychologically attractive', as it would encourage people to spend when times were hard and could easily be withdrawn later.

The government's deficit will balloon to way above £100bn next year, but the Treasury hopes to reassure the City about the long-term health of the government's finances by announcing detailed plans to increase taxes and squeeze public spending, once the recession is over.

Britain's approach of plunging deeper into the red to pay for a short-term economic support package was echoed in the United States, when President-elect Barack Obama promised to save 2.5 million jobs with a two-year stimulus plan.

'There are no quick nor easy fixes for this crisis, which has been many years in the making, and it's likely to get worse before it gets better,' said Obama. 'But 20 January is our chance to begin anew, with a new direction, new ideas and new reforms that will create jobs and fuel long-term economic growth.'

In a speech to the CBI annual conference tomorrow, Brown will defend his own 'fiscal stimulus' plan, insisting that a 'new approach is now needed if we are to get through this unprecedented global financial recession with the least damage to Britain's long-term economic prospects'.

This weekend, the Conservative party launches a nationwide campaign aimed at highlighting its view that Brown's '£100bn borrowing binge' will mean higher taxes in the long run. Poster vans warning of a 'tax bombshell' - the same phrase the Tories successfully deployed against Labour in the 1992 general election campaign - are being used in London and in busy shopping areas across the country.

George Osborne, the shadow Chancellor, last night accused the Prime Minister of conning the electorate with tax cuts that would have to be paid back. 'Only the Tories will deliver lower taxes that last,' he said.

source: guardian.co.uk

link to the post:
http://www.guardian.co.uk/politics/2008/nov/23/pre-budget-report-vat-tax-cuts

Fort Lauderdale Blog and Real Estate News
Rory Vanucchi
RoryVanucchi@gmail.com

http://waterfrontlife.blogspot.com
www.FortLauderdaleLiving.net

Dubai's building boom ends as economic crisis hits the Middle East

Thomas Atkins, Reuters

Published: Sunday, November 23, 2008

DUBAI (Reuters) - The seaside emirate of Dubai shifted into crisis mode this week as its breakneck building boom stalled, its lending bonanza evaporated and the government pondered wider steps to rescue banks.

Dubai -- self-styled bling capital of the Middle East, nightclub hotspot for the teetotalling Gulf and home to the world's tallest building and biggest mall -- has gone pear-shaped.

"It's gotten pretty ugly out there," analysts at Nomura Investment Banking wrote in a note this week, describing Dubai's property market as "a full-scale frenzy in which speculation went largely unchecked until it was very late."

View Larger Image

An early evening view of the Burj Dubai (top right) and Burj Al Arab (back left) with construction work in the foreground, late November 15, 2008. Dubai property shares plunged, last week, and its biggest private developer slashed jobs as the global financial crisis tightened its grip on the tiny emirate, until now synonymous with the Gulf Arab real estate boom.

REUTERS/Steve Crisp

The result may be a new business model for the emirate, one based less on debt and speculation.

Dubai's response is now being hammered out by a committee of business and government leaders charged with steering the emirate through the crisis and perhaps throwing its high-debt business model out the window.

Big developers have started firing staff and paring projects, banks like Emirates NBD ENBD.DU have blocked consumer credit to employees of companies at risk, and at least one major mortgage company has stopped lending altogether.

"Lenders blinded by rising oil prices and borrowers spellbound by easy returns have helped build a mountain of private sector debt in parts of the region that has generated an illusion of excess and abundance," Nomura said.

Now, investors fear that individuals and corporations alike will have trouble paying back Dubai's non-bank foreign currency debt estimated at just under $70 billion, according to estimates by ratings agency Fitch.

Shares in the region have lost around $1 trillion since the beginning of the year as investors fled. The UAE finance ministry said last month it would inject 70 billion dirhams ($19 billion) into the banking system, and is already looking at doing more to keep interbank liquidity flowing.

Many had hoped that the six countries of the Gulf Cooperation Council (GCC) would escape the crisis due to their massive current account surpluses from energy exports.

"Dubai is the most vulnerable, as it has little oil and has been booming on the oil surpluses from the GCC, Iran and Russia," said analysts at Citibank this week.

DUBAI INC.

Dubai Inc. -- the name applied to the emirate because it is run more as a business than a state -- now faces a major overhaul and has taken on teams of consultants to advise on how it might reshape itself in an era of weaker credit, rising competition, falling speculation and narrower profit margins.

With barely any oil to call its own within the loose UAE confederation, Dubai made its bid for fame by housing banks, retail, media, shipping and logistics enterprises and by billing itself as a safe haven in a volatile region for investors.

Post-crisis, banks and property firms are likely to merge, developers retrench, and the wild culture of speculation grow tame.

"The solution is a comprehensive effort to consolidate the myriad of companies that make up Dubai Inc.," Citibank said.

In addition, some suggest that the monetary regimes in the Gulf -- all, except Kuwait, which peg their currencies to the dollar -- may need to restructure as floating regimes instead, a move likely to spur decades-old goals of monetary union.

Few anticipate default given the widespread view that Dubai is too big to fail and the implicit support provided by its neighbor Abu Dhabi -- home to the largest sovereign wealth fund in the world, ADIA.

"We believe Dubai will pull through with some help," Citibank said.

But with the cost of credit for the Gulf's top 22 financial firms rising from 30 basis points over LIBOR in early 2007 to around 200 now, many expect Dubai's spree to halt, plans to be swept from the drawing board, and existing projects to struggle.

The result, in the end, may be the sustainable growth model that Dubai has sought all along.

source: vancouver sun

link to the original post:
Dubai's building boom ends as economic crisis hits the Middle East

Fort Lauderdale Blog and Real Estate News
Rory Vanucchi
RoryVanucchi@gmail.com

http://waterfrontlife.blogspot.com
www.FortLauderdaleLiving.net

Housing Slump Hits Canada as Seller Offers C$100,000 Deal Bonus

By Christopher Donville

Nov. 19 (Bloomberg) -- West Vancouver builder Sean Hanley thought Canada's real estate market would be immune to the housing recession that sent values tumbling in the U.S. Then the economy slowed and oil prices fell.

The price of a detached house in this upscale community fell 22 percent in October from a year earlier, helping to drag the average residential price in Canada down by 9.9 percent, the biggest decline in 26 years, according to the Real Estate Board of Greater Vancouver and the Canadian Real Estate Association. For Hanley, that's meant nary a buyer for his five-bedroom home.

``It's been a little bit surprising the consequences of the subprime crisis have been so far-reaching,'' said Hanley, 48, who has cut his asking price to C$3.99 million ($3.26 million) and is now offering a C$100,000 bonus, on top of regular fees, to the agent who delivers a buyer.

The speed and magnitude of the price declines in parts of metropolitan Vancouver and across the country are startling some Canadians, who haven't seen a recession since 1992, said Ken Peacock, director of economic research at the Business Council of British Columbia.

Many homeowners felt Canada, the world's eighth-largest economy, would escape the U.S. credit crisis, aided by surging commodity prices and a scarcity of loans made to people with limited or bad credit records, Peacock said.

Housing `Shock'

``It's been a shock for some people,'' Peacock, 42, said in an interview. ``They sort of embraced the idea that we had a strong domestic economy and we would be insulated.''

Real estate in greater Vancouver, Canada's third-most- populous urban area, has historically been more expensive than the rest of the country because of the mild winters and Pacific Ocean setting against a backdrop of rainforest-covered mountains, real estate agent Charles Bilash said.

The port city's economy has also benefited from population growth, reductions in taxes and construction of highways, a subway line and venues for the February 2010 Winter Olympics Games.

Since early June, Canada's benchmark Standard & Poor's/TSX Composite Index has tumbled 42 percent, as crude oil and other commodity prices have slumped and the U.S. and Canadian economies slowed. Canada's currency has sagged 17 percent against the U.S. dollar since midyear.

Bank of Canada policy makers last month forecast the economy to contract at a 0.4 percent annualized pace this quarter, compared with a prediction in July of 1.8 percent growth. Canada relies on the U.S. for more than 80 percent of exports.

Sitting on Sidelines

That's bad news for Hanley, who put his 6,000 square-foot home on the market almost a year ago for C$4.3 million. The house boasts an unobstructed Pacific Ocean view, sun-filled patios and an infinity swimming pool.

``People aren't making major acquisitions while their net worth is declining,'' Hanley said.

Prices in Canada's leading cities also have fallen from their peaks, though Vancouver may have the most to lose. In October, greater Vancouver prices were almost double the national average of C$281,133.

The average home price in Toronto, Canada's financial capital, plunged 11 percent in October to C$353,018, according to figures released Nov. 14 by the Canadian Real Estate Association.

Declines in Canada are beginning to mirror those in western U.S. cities, including Seattle and San Francisco.

Pending sales of single-family homes and condominiums in Seattle fell 26 percent in October to 578 units from the same month a year earlier, according to the Northwest Multiple Listing Service. The median home price fell 5.4 percent to $375,000.

Tracking the U.S.

While home sales rose 45 percent in September in the San Francisco Bay Area, the gain was largely due to foreclosures. The median price slid 36 percent to $400,000, according to MDA Dataquick.

``Canada's housing market seems to be tracking the U.S. with a two-year lag,'' said David Wolf, a Toronto-based economist with Merrill Lynch & Co.

In Hanley's West Vancouver, 565 detached homes were on the market last month, 88 percent more than a year earlier, according to the Real Estate Board of Greater Vancouver.

Sales fell to 19 from 51 a year earlier. The price of a benchmark, or typical, detached house in West Vancouver declined to C$1.14 million from C$1.46 million a year earlier, said Craig Munn, a spokesman for the board.

Though Hanley says his offer of a C$100,000 bonus has increased awareness of his home, he's starting to think it may be easier to rent the place.

``The only other option is to reduce my asking price by C$600,000 to C$700,000 to where I'd be virtually giving the place away,'' Hanley said. ``I'm not about to do that.''

To contact the reporter on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net.

source: bloomberg.com

link to the original post:
Housing Slump Hits Canada as Seller Offers C$100,000 Deal Bonus


Fort Lauderdale Blog and Real Estate News
Rory Vanucchi
RoryVanucchi@gmail.com

http://waterfrontlife.blogspot.com
www.FortLauderdaleLiving.net

Visitors to Ireland from Great Britain down 17% in September

Source: CSO

Overseas trips to Ireland from Great Britain fell by just over 17% in September 2008 to 318,600 compared to September 2007, according to the CSO.

Trips from Other Europe and North America also fell but to a lesser extent. Overall, overseas trips to Ireland fell by 10.8% and the fall in visitor numbers from Great Britain accounted for much of this decrease.

Irish residents made 726,300 overseas trips in September 2008 which was down very slightly from September 2007. This was in contrast to an increase of 14.5% in September 2007 compared to the same month in 2006.

In the first nine months of 2008, the number of overseas trips by Irish residents grew by 4.4% to 6,241,600 compared to the same period in 2007. This was slightly more than the number of trips taken to Ireland which fell by just over 1% to 6,174,000.

The CSO “Airport Pairings” database contains information of every direct flight in and out of the nine Irish airports on a monthly basis. Data is available from January 2006 to April 2008. For details click here.

source: finfacts ireland

link to the original post:
http://www.finfacts.ie/irishfinancenews/article_1015301.shtml

Fort Lauderdale Blog and Real Estate News
Rory Vanucchi
RoryVanucchi@gmail.com

http://waterfrontlife.blogspot.com/
http://www.fortlauderdaleliving.net/

Glut of unsold homes hits rents

Life is now getting harder for landlords as rents start to fall A glut of unsold homes has flooded the rental market, driving down rents at the fastest rate on record. The Royal Institution of Chartered Surveyors (Rics) said new instructions to sell flats and houses had been at record levels in the past few months. However, Rics said many people who cannot sell their homes have decided to let their properties, and this increase in supply has pushed rents down. The proportion of surveyors reporting lower rents was its highest since 2003. Quick change The past year has seen a dramatic turnaround in the UK property market because of the international banking crisis and the credit crunch. Frustrated vendors are placing their property on the market to let Royal Institution of Chartered Surveyors The latest quarterly Rics survey - for August, September and October - shows that the difficulties people have had in buying and selling homes have spilled over decisively into the rental market. With the supply of mortgages, sales and house prices all falling fast, many would-be vendors have decided to let their homes instead of selling them. "Frustrated vendors are placing their property on the market to let as they have been unable to agree sales due to a lack of demand in the housing market," said Rics. The turnaround for potential landlords and tenants has been swift and the number of homes available to rent has boomed. The proportion of Rics members who, looking back over the previous three months, reported more instructions to sell properties then fewer instructions, was 68% for houses and 50% for flats. As a result, the number of surveyors who said rents were now falling outstripped by 12% those who said they were still rising, the first fall in rents since 2003. This was a big change from the previous Rics report in August which had shown that 31% more surveyors were reporting that rents were still rising. London and South East The region most affected by the sudden change in the rental market has been London and the South East. That part of the country is heavily dependent on the financial services industry and has seen a swift rise in unemployment. Unlike the rest of the country it has also seen a slump in demand from potential tenants. "Tenant demand growth in the South East came to a virtual halt, while in London, demand actually contracted outright," said Rics. The effect was to drive down rental levels, with 53% more Rics members in London reporting a fall in rents for houses than a rise, and 33% more reporting a drop in rents for flats. source: bbc link to the original post: Glut of unsold homes hits rents Fort Lauderdale Blog and Real Estate News Rory Vanucchi RoryVanucchi@gmail.com http://waterfrontlife.blogspot.com www.FortLauderdaleLiving.net

London 'worst hit in recession'

London could suffer the most in a recession while many northern cities will fare better, a report has said.

About two in five jobs that could be at risk over the next two years are in London and the South East, the Local Government Association (LGA) said.

And it said the recent renaissance of the big northern cities had put them in a relatively well-placed position to cope with the effects of the recession.

The LGA has warned a national, blanket policy will not help all areas.

The LGA's 'From Recession To Recovery: The Local Dimension' report projects how each area of the country could be affected differently by the economic downturn if no action is taken.

PROJECTED JOB LOSSES The report says 370,000 jobs could be lost in London (7.9% of all jobs in London) by December 2012 170,000 in Yorkshire & Humberside (6.8%) 230,000 in the North West (6.7%) 180,000 in the West Midlands (6.6%) 280,000 in the South East (6.3%) 130,000 in the East Midlands (6.0%) 170,000 in the East (6.0%) 70,000 in the North East (5.7%) 130,000 in the South West (5.1%)

The report said the construction and manufacturing industries will be hardest hit by the economic slump.

However, high skilled industries look set to remain relatively unscathed.

The LGA, which represents councils in England, is calling for as many economic decisions as possible to be taken at a local level to ensure that local solutions can be found to local problems.

Councillor Margaret Eaton, chairman of the LGA, said the recession was going to hit different parts of the country in very different ways.

"It is clear that a national, one-size-fits-all approach to dealing with the recession simply isn't going to work," she said.

"The research shows that the fastest way to get out of recession is for more decisions about the economy to be taken at the local level, which means councils continuing to work with local people and businesses.

"With greater freedoms over transport, infrastructure, planning, economic development and skills, councils would be able to do even more for local people."

The report analysed the structure of each English region's economy, its performance over the past two years and its performance during the last two recessions.

This is was it said of the regions:

• South East
The South East of England has the highest concentration of the industries which are likely to perform best - 38% of its jobs are to be found in these sectors. The South East performed slightly above average in the last recessions but below average in the past two years

• London
London has relatively few of the industries which are likely to perform the best but equally few of those that are likely to perform the worst. London performed poorly in the last two recessions and slightly below average in the last two years

• East Midlands
The East Midlands has a high proportion of industries which are likely to be affected by the recession (22%). The region performed relatively well in the last two recessions and above average in the past two years

• West Midlands
The West Midlands has a high proportion of industries which are likely to be affected by the recession (20%). The region performed averagely in the last two recessions but slightly above average in the past two years

• North East
The North East has a relatively high proportion of industries that are likely to perform the best. The North East fared averagely in the last two recessions and also performed better than any other region in the past two years

• South West
The South West has an average numbers of industries that are likely to perform well and perform badly. The region performed well in the last two recessions but slightly below average in the past two years

• Yorkshire & Humberside
Yorkshire & Humberside has a high proportion of jobs which are likely to be affected by the recession (20%). The region performed averagely in the last two recessions and slightly below average in the past two years

• North West
The North West has an average numbers of industries that are likely to perform well and perform badly during the recession. The region performed relatively badly in the last two recessions and relatively badly in the past two years

• East
The East of England has a relatively high proportion of industries most likely to be affected by the recession. The region performed well in the last two recessions and well in the past two years

source: bbc


link to the original post:
London 'worst hit in recession'



Fort Lauderdale Blog and Real Estate News
Rory Vanucchi
RoryVanucchi@gmail.com

www.LasOlasLifestyles.com
www.FortLauderdaleLiving.net

Abu Dhabi Primed to Take Off with Louvre, Guggenheim in Tow

ABU DHABI, United Arab Emirates) - Even to the unintiated, Dubai has become a household name and single-handedly put the United Arab Emirates on the world map. Credit iconic projects such as the towering Burj Al Arab hotel shaped like a billowing sail, the Palm Jumeirah, Tiger Woods' first golf course design and Donald Trump's celebrated real estate development for helping shape Dubai's sudden mass appeal.

Now it's time for Abu Dhabi, Dubai's huge oil-rich neighbor to the south, to burst onto the world scene. And make no mistake that Abu Dhabi's emergence will be every bit as big, elegant and high-profile as its fellow emirate.

In fact, with 87 percent of the UAE's land mass (32,000 square miles) and 90 percent of the federation's oil and natural gas resources, Abu Dhabi is positioned to consume this part of the world in unprecedented fashion.

The Louvre Abu Dhabi

Case in point is the recent announcement that the Tourism Development & Investment Company (TDIC), the development arm of the Abu Dhabi Tourism Authority, has lined up the renowned Louvre and Guggenheim Museums to anchor Saadiyat Island Cultural District. The Jean Nouvel-designed Louvre Abu Dhabi, and the Frank Gehry-designed Guggenheim Abu Dhabi Museum are just two of the high-profile developments being built on the 10.4 square-mile natural island that lies less than 1/3 of a mile off the Abu Dhabi mainland.

Other featured projects on Saadiyat Island, projected to be the Arabian Gulf's largest single mixed-use real estate development: the Sheikh Zayed National Museum, a Lord Norman Foster-designed tribute to the late president and founding father of the seven-state United Arab Emirates; Saadiyat Beach Golf Course, which features the UAE's only Gary Player-designed course set to open next March and a soon-to-be named second layout; and the Arabian Gulf's first St. Regis Resort, a $600-million, 380-room resort with 292 additional St. Regis residences scheduled to open May 2010.

In all, Saadiyat Island, located 15 minutes from the Abu Dhabi International Airport, will comprise 150,000 residents and 9,000 rooms in 29 mostly 5-star hotels when the project is completed around 2018. In one of its first U.S. interviews, TDIC marketing and public relations director Alan Gordon told the Real Estate Channel that Saadiyat Island's mix of palace homes, smaller single-family homes, and townhomes start at around $1.5 million.

Guggenheim Abu Dhabi

"Our goal and objective is we are a master developer who is charged with creating major destinations in Abu Dhabi only - to support the tourism growth with a strong focus on culture, leisure and the environment," added Gordon, whose emirate is more than four times the size of Dubai in gross domestic product at approximately $163 billion. "Saadiyat Island is thought thru holistically so it comes together as a complete destination. It's very much tied to who Abu Dhabi is. That is a strong point about Abu Dhabi and its identity.

"We're looking back to look forward; Respectful of the past from a cultural perspective. Not so much heritage, but more from a cultural perspective. That then, allows an identity to move forward."

In some respect, while Dubai is the glitzy Las Vegas of the Eastern Hemisphere, Abu Dhabi is becoming the cultured New York City.

The world is taking notice with the Wall Street Journal recently naming Saadiyat Island one of the top 10 future destinations in the world.

"Where else can you walk from the Louvre to a Guggenheim to the Sheik Zayed Museum, go and play golf on a Gary Player ocean-facing golf course, then go and stay a night in the St. Regis that sits here overlooking the ocean," says Gordon, whose TDIC has some 100 real estate projects in the works. "Saadiyat island will be home to an incredible array of offerings that will create this cultural center if you like - one that will support the cultural exchange of culture and the mutual understanding of culture both ways. This is very much a case of the cultures being shared. Sort of a gateway if you like for cultures."

In some respect, Abu Dhabi's signature Saadiyat Island is also the gateway to a whole new Arab World, one that has all the makings of even more marvelous Arab destination than Dubai.


source: real estate channel


link to the original post:
http://www.realestatechannel.com/international-markets/residential-real-estate/abu-dhabi-primed-to-take-off-with-louvre-guggenheim-in-tow-64.php



Fort Lauderdale Blog and Real Estate News
Rory Vanucchi
RoryVanucchi@gmail.com

http://www.lasolaslifestyles.com/
http://www.fortlauderdaleliving.net/

Sterling takes a pounding

By Katie Hunt
Business reporter, BBC News

Britons are likely to be making fewer trips to the US.

This time last year, bargain-hungry shoppers headed across the Atlantic to New York's swanky department stores in droves.

With the pound worth more than $2, they sought out cheap iPods, designer clothes and gourmet restaurants.

But few will be flying to New York to do their Christmas shopping this year.

Sterling has been one of the biggest victims of the global financial meltdown - losing more than a quarter of its value since July.

It has now fallen below $1.50 for the first time since 2002. The pound is also at its weakest level against the euro since the currency was created in 1999.

See the pound's performance against the dollar

"People really aren't going to want to make international holidays," says Simon Derrick, chief currency strategist at Bank of New York Mellon.

'Worst recession'

Sterling's problems are linked to the wider economic picture.

The UK is expected to have the worst recession of all the G7 rich nations and this means investors think UK assets will perform poorly.

"Like everywhere, the UK economy is slowing down," says Daragh Maher, senior currency strategist at French investment firm Calyon.

Sterling has been like an elastic band that had been stretched too far and when it gave, it was vicious Daragh Maher, Calyon

"But the perception is that we have over-borrowed more than countries, so the payback will be greater."

Falling interest rates put further pressure on sterling.

Last week, the Bank of England delivered a shock one-and-a-half percentage point cut in UK interest rates to 3%, the lowest level since 1955.

Economists expect rates to fall further.

It means that investors get a lower yield on pound deposits and sterling-denominated debt, making them less attractive.

This could pose a problem for the government, as it is expected to issue debt to pay for the banking bail-out.

Falling fast

It is unusual for a currency to fall so far, so fast.

Only twice in recent history has sterling fallen by such a degree.

On 16 September 1992, the pound was withdrawn from the European Exchange Rate Mechanism, triggering a fall from around $2 to $1.40.

Iceland's financial crisis has made it more affordable for travellers.

Sterling fell by a similar degree in 1980 as a commodity bubble burst.

Mr Maher says that the pound at $2 was significantly overvalued and puts the currency's long-term intrinsic value at around $1.60.

"It's been like an elastic band that had been stretched too far and when it gave, it was vicious," he says.

Mr Derrick at Bank of New York Mellon says it is feasible that the pound could hit $1.40 in the near future and one euro could be worth more than 85 pence.

Winners

The fall in sterling could benefit manufacturers as the weak pound makes UK-made goods more competitive on international markets.

Similarly, overseas visitors may view the weak pound as reason to visit the UK.

"The recent fall in sterling and the approaching Olympics in 2012 give us a tremendous opportunity to promote Britain's attractions as a destination to the world, " says Tom Wright, chief executive of Visit Britain.

But, with the world entering an economic downturn, demand for UK exports and holidays may dwindle, as hard-up consumers opt to conserve their cash.

Comfort

For those planning to take summer holidays abroad, there is some comfort.

While the pound has weakened against most major currencies, particularly the dollar, euro and yen, it has held up against others.

Sterling has risen 10% against the Australian dollar since the end of June, as falling commodity prices have undermined the Australian economy.

And if you really want to maximise your hard-earned pounds, Iceland's financial crisis has made the notoriously expensive country more affordable.

The pound has gained about 25% against the Icelandic crown since the end of June, when Iceland's economy began to hit the rocks.

source: bbc


link to the original post:
http://news.bbc.co.uk/2/hi/business/7727399.stm


Fort Lauderdale Blog and Real Estate News
Rory Vanucchi
RoryVanucchi@gmail.com

www.LasOlasLifestyles.com
www.FortLauderdaleLiving.net

Bretton Woods II - five key points on the road to a new global financial deal

• guardian.co.uk, Friday November 14 2008 00.01 GMT
• The Guardian, Friday November 14 2008

John Maynard Keynes in 1944 at the UN International Monetary Conference in Bretton Woods, New Hampshire. The summit's agreement shaped with postwar economic effort. Photograph: Hulton Archive

International institutions

While the summit is almost certain not to create a new "Bretton Woods" system overnight, countries led by Britain and France want an enhanced role for the International Monetary Fund, to improve surveillance of complex financial markets and help prevent such excesses building up in future. They also favour increased funding for the IMF.

Gordon Brown made well-publicised efforts to persuade Gulf states to make large contributions to its coffers, while there is also pressure on China, and Japan has pledged $100bn of reserves.

The additional money would enable the IMF to finance more bail-outs to countries suffering runs on their currencies and banks.

The US is less keen on this because new streams of funding would dilute its voting rights within the Washington-based institution.

Similarly, the keenness of oil-rich Gulf states to contribute will be tested now that oil prices have more than halved from their summer peaks.

Global regulation

There is a widespread recognition that regulation of financial markets has been far too weak in recent years. Authorities have been increasingly aware of the excesses building up in such markets, like those for mortgage-backed securities, but have failed to increase regulation.

There is also, though, a recognition that too hasty regulation in response to a crisis, like that of the Sarbanes-Oxley Act brought in by the US Congress in 2002 in response to the Enron scandal (and designed to improve corporate responsibility and combat corporate and accounting fraud), could be counter-productive.

So, there will be discussion of a new global regulator that can force banks and hedge funds to be more transparent about their borrowings and their investment positions.

Such an organisation would force banks to hold greater capital cushions or make them pay bonuses in shares that would have to be held in a company for, say, five years, to make sure it was the longer-term interests of the shareholders that was the focus rather than the bankers' own short-term interests.

There is also discussion of a temporary suspension of "mark to market" accounting rules under which banks are required to report the current value of their assets at times when pricing those assets - such as sub-prime mortgages - is virtually impossible.

Recapitalisation of banks

This is already happening around the world, with most countries following the British model. The US government announced changes to its $700bn bail-out for its banking system on Wednesday, under which it will buy fewer toxic mortgage-backed securities from banks and instead recapitalise banks by buying shares.

This weekend's G20 meeting will discuss a possible response to the problem of banks running out of capital - which probably would be based on a Spanish-style system whereby banks have to hold a bigger capital cushion in good times, which they can draw upon in bad times.

Building such a system will not happen overnight but G20 leaders will probably commit themselves to such action. There is also likely to be discussion of new rules to simplify derivatives products and improve the transparency of the markets in which they are traded.

Fiscal/monetary policy

One aim of the G20 summit is to coordinate global action on interest rates in an effort to pump some life back into the world economy and avoid deflation, or falling prices.

Most governments have already begun to cut and many are also either embarking on, or considering, tax cuts or spending increases to help reflate countries' economies - especially as the impact of interest rate cuts in many economies is being hampered now by the poor availability of credit.

Brown is trying to lead globally coordinated tax cuts. But public deficits in Britain have grown so large in recent years that the country is one of the worst-placed of the main economies to afford a big fiscal giveaway.

New world order

Recent decades have been dominated by western industrialised nations grouped together under the banner of the Group of Seven, but the summit, this weekend, billed as G20, marks a significant shift.

Large-scale economies such as China, India and Brazil now have a place at the table and are demanding a much greater say in global economic oversight because they consider the old "Anglo-Saxon" free-market dogma to be dead.

Reflecting this shift, Brown has indicated that it could be possible to get an agreement on the Doha round of trade talks, which collapsed in Geneva earlier this year amid bitter recriminations between the US and India.

The French president, Nicolas Sarkozy, for his part, will use the summit to suggest that the days of the dollar as the world's reserve currency are over.

source: guardian uk


link to the original post:
http://www.guardian.co.uk/politics/2008/nov/14/g20-summit-key-aims-imf


Fort Lauderdale Blog and Real Estate News
Rory Vanucchi
RoryVanucchi@gmail.com

www.LasOlasLifestyles.com
www.FortLauderdaleLiving.net