Asia pulling world out of crisis: Fed chief

Asia pulling world out of crisis: Fed chief

But US needs to reduce its deficit, while Asia needs to rely less on exports

(SANTA BARBARA, California) Ben Bernanke, the chairman of the Federal Reserve, said on Monday that Asian nations were pulling the global economy out of its downturn.

Mr Bernanke: ‘Admittedly, just as increasing private saving in the US is challenging, promoting consumption in a high-saving country is not necessarily straightforward.’
Speaking at a conference on Asia hosted by the Federal Reserve Bank of San Francisco, Mr Bernanke said that Asian countries had bounced back from the global recession faster than the rest of the world and had reported ‘impressive’ growth.

‘Asia appears to be leading the global economic recovery,’ the Fed chairman said, noting that the region as a whole expanded at an annual rate of 9 per cent during the second quarter and that some countries, including China, grew at rates of more than 10 per cent.

But Mr Bernanke also warned that huge trade imbalances between the US and the rest of the world had played a central role in the global economic crisis and that they could do so again.

‘We were smug,’ Mr Bernanke said of the US in a question-and-answer session, referring to the attitude of US policy makers towards the large inflows of cheap money from countries such as China that were running huge trade surpluses. The flood of foreign money might not have been a major problem, he said, but the US financial regulatory system was ‘inadequate’ in preventing a surge of reckless lending that aggravated the bubble in housing prices.

Mr Bernanke’s comments represented a sobering contrast to his assertions before the housing collapse that the main reason for the US’s soaring foreign debt had less to do with American tendencies to spend too much than with a ‘global savings glut’ in the rest of the world.

Echoing the declarations last month by leaders from the Group of 20 industrialised and large emerging nations, Mr Bernanke said that the US needed to get its fiscal house in order while Asian countries needed to rely less on exports for their growth.

‘The United States must increase its national saving rate,’ he said. ‘The most effective way to accomplish this goal is by establishing a sustainable fiscal trajectory, anchored by a clear commitment to substantially reduce federal deficits over time.’

The federal deficit for the 2009 fiscal year soared to US$1.4 trillion, almost triple the deficit in 2008, and budget analysts predict that budget deficits will average almost US$1 trillion a year over the next decade.

By the same token, he said, Asian countries needed to rely less on exports and more on their consumption at home for their economic growth. One way to increase Asian household consumption, he said, would be for countries such as China to increase their social safety net programmes and reduce the uncertainty that currently hangs over many consumers.

Mr Bernanke noted that global trade and financial imbalances had narrowed considerably since the crisis began, largely because the volume of international trade contracted by 20 per cent from its peak before the crisis.

But he cautioned that the imbalances could widen again as economic growth revived.

‘Admittedly, just as increasing private saving in the US is challenging, promoting consumption in a high-saving country is not necessarily straightforward,’ Mr Bernanke conceded.

Indeed, analysts and investors in Asia have become increasingly worried about the danger of new bubbles in Asian asset prices, fostered by aggressive stimulus policies in China and by renewed attempts by policy makers in Asia to prop up the value of the dollar.

Mr Bernanke avoided what was in many ways the elephant in the room: The value of the US dollar. The dollar has dropped sharply in recent weeks against the euro and the Japanese yen, a move that has helped increase US exports by making them cheaper in some foreign markets.

But the US dollar has not budged in more than a year against China’s renminbi, which the Chinese continue to tightly manage and which many economists say remains greatly undervalued. — NYT

Source : Business Times - 21 October 2009

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Insider trading: More people may be charged

Insider trading: More people may be charged

US investigators prepare to take institutional investors to court: Sources

NEW YORK: US federal investigators are gearing up to file charges against a wider array of insider-trading networks, some linked to the criminal case against billionaire hedge fund manager Raj Rajaratnam that shook Wall Street last week, people familiar with the matter said.

The pending crackdown, based on at least two years of investigation, targets securities professionals - including hedge fund managers, lawyers and other Wall Street players - they said yesterday.

Some investigations, like the one that focused on Rajaratnam, rely on wiretaps. Others stem from a secret Securities and Exchange Commission (SEC) data-mining project set up to pinpoint clusters of people who make similar well-timed stock investments.

Investigators have struggled for years to build cases against large institutional investors like hedge fund managers - who often deflect regulatory queries about suspiciously timed bets by arguing the bets are statistical flukes amid their millions of trades.

Rajaratnam, who founded the Galleon Group hedge fund in 1997, was arrested with five alleged conspirators last Friday - in what prosecutors called the biggest insider-trading ring targeting a hedge fund.

Prosecutors said he and his firm reaped as much as US$18 million (S$25 million) by investing on tips from a hedge fund, a credit-rating firm and employees within various companies, including Intel Capital, McKinsey and IBM.

Many cases are established when stock exchanges send the SEC reports on traders who place profitable bets shortly before corporate announcements. Someone who rarely trades may have difficulty explaining later what prompted an uncharacteristic investment. Hedge funds, on the other hand, can more plausibly attribute their windfalls to skill or chance.

To overcome that hurdle, the SEC began using computer software about two years ago to sift hundreds of millions of electronic trading records, known as blue sheets, attached to the stock exchange reports on suspicious incidents, according to people familiar with the project.

By looking for patterns in the library of data, they identify groups of traders who repeatedly make similar well-timed bets. Once investigators find a cluster of correlated trades, they tap other sources of information to unravel how its members obtain and share tips, the people familiar with the project said.

BLOOMBERG

Source : Straits Times - 20 October 2009

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Will Windows 7 exorcise Vista’s ghost?

Will Windows 7 exorcise Vista’s ghost?

XP users, particularly businesses, will be the hardest to convince

By Oo Gin Lee

THURSDAY will mark a new dawn for Microsoft’s cash cow, the Windows operating system (OS), with the worldwide launch of its seventh edition.

Simply called Windows 7, it is a huge step forward for the software giant trying to exorcise the ghost of Vista - the sixth Windows version.

An OS is the master software in a computer, on top of which other applications like word processing and games can run. So for Macintosh computers it is Mac OS X while for PCs it is mainly Microsoft’s Windows.

Every computer needs an OS, and since about nine out of 10 personal computers are running on Windows, Microsoft’s business strategy for the last 20 years has been the same: release a new version of Windows every two to three years and get users to pay for the upgrade.

But Vista failed to garner the industry support that Microsoft had hoped for. It was launched in January 2007 with an aesthetically superior interface and arguably better security than Windows XP - the fifth Windows OS released six years earlier, in 2001.

The problem was this: Microsoft was trying to fix what was essentially not broken. Windows XP was, and is - unless Windows 7 upstages it - the most successful Windows of all time. It was fast, stable and worked well with applications.

Microsoft clearly needed to turn up the heat to get XP-loving consumers and businesses to take up the upgrade. It sold Vista on looks. It sold Vista on features. It threw millions of dollars in marketing campaigns. But Vista was slower than XP, less stable and had compatibility problems with hardware like printers and scanners at the time of the launch, for many vendors had not yet written the software drivers for Vista. Consumers experienced a mess-up.

In one pre-launch campaign, they were told that computers with the Windows Vista Capable logo meant that these models could be upgraded to the new OS when it was released.

But they later found that not all the PCs had enough processing power to run Vista’s high-end graphical features, and a class action lawsuit ensued in the United States.

That lawsuit lost its ‘class’ status earlier this year but the judge did not dismiss the case. That means the individual consumer can still sue in his or her own name.

A report by web metrics firm Net Applications earlier this month stated that Windows XP account for three-quarters of all existing Windows PCs. Vista has clearly failed, and Microsoft is hoping Windows 7 is the remedy.

It clearly needs the financial boost. Its revenue for the fourth quarter of the 2009 fiscal year - which ended June 30 - was down by 17 per cent year-on-year.

But what of Windows 7? Well, it is based on the same core foundation as the Vista and even looks a lot like it, but it is a lot more stable and faster.

Plus, the drivers which worked on Vista are very likely to work on the new OS as well, alleviating the problem of incompatible hardware when users upgrade to the new Windows.

In short, Windows 7 is what Vista should have been.

Early tech reviews around the world for Windows 7 have been positive and there is a good chance many individual consumers will feel the same. But Microsoft will find it more challenging with businesses, which favour stability and convenience over cool looks and features.

Microsoft has stopped selling Windows XP since January this year, with the exception of netbooks where you can still find it pre-installed.

For new PC purchases, however, where the choice is between Vista and Windows 7, the question is moot as to which consumers will go for: obviously, the latter.

It is the in-between camp - existing customers of XP - who would probably need the most convincing. That is because Microsoft will continue to support XP with free security patches until April 2014. So satisfied Windows XP users can stick to this OS for another four years or until their machines break down.

Microsoft had tried to persuade PC users to switch to Vista when it launched it by aggressively pushing Vista-only games like Halo 2 and Shadowrun. This failed to gain any significant traction and the strategy was soon abandoned.

Microsoft is also unlikely to attempt to make another ‘works on my new OS only’ push in the near future, not with rival Google snapping at its heels with its promise of a new rich array of Web-based applications, which will work on browsers, and therefore on any OS the computer runs on. This means that new applications over the next few years will, in all likelihood, be able to run on XP as well as the Vista/Windows 7 platforms.

In other words, Windows XP still ain’t broken.

Source : Straits Times - 20 October 2009

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HK flat sale sets new record at $12,900 psf

HK flat sale sets new record at $12,900 psf

Govt may free up land for sale to prevent property bubble

The duplex unit on the 68th floor of 39, Conduit Road is located in the posh Mid-Levels district. —

HONG KONG: Henderson Land Development said yesterday it sold a Hong Kong apartment for a record price hours after the island’s Chief Executive Donald Tsang said the government may release more land to deflate a property bubble.

Henderson sold a duplex unit on the 68th floor of 39, Conduit Road in the posh Mid-Levels district for HK$71,280 (S$12,900) per square foot (psf) - setting a world record psf for an apartment and surpassing prices in London.

The five-bedroom duplex suite was sold to an unidentified buyer from mainland China.

The developer said it may ask for HK$100,000 psf for two penthouses on the 88th floor of the project.

Property prices in Hong Kong have surged 26 per cent this year despite the economic downturn as there was strong demand for luxury property from wealthy Chinese and little supply of new homes.

Hong Kong’s government, which controls land supply, has not sold residential land for 1-1/2 years.

‘The relatively small number of residential units completed and the record prices attained in certain transactions this year have caused concern about the supply of flats, difficulty in purchasing a home and the possibility of a property bubble,’ Mr Tsang said in his annual policy address.

He said his administration will monitor ‘market changes’ closely in coming months, and may direct the Urban Renewal Authority and subway operator MTR Corp, both government-controlled, to bring readily available building sites to market.

Hong Kong’s currency peg to a weak US dollar makes property attractive to foreign investors.

The peg forces Hong Kong to track US interest rates - which are expected to stay very low for some time - unlike South Korea, which has threatened to raise rates soon to stave off a property bubble.

Developers have been wooing millionaires from China with a slew of all-expenses paid property-viewing tours.

‘People are paying what I describe as trophy prices which don’t bear any reality with what is happening within the economy,’ said Mr Nicholas Brooke, chairman of real estate consultancy Professional Property Services in Hong Kong.

Money from new stock market listings and easy bank lending also allow Chinese to snap up luxury property, he said.

Mr Thomas Lam, Henderson’s general manager for sales, said the company sold the 39, Conduit Road unit for HK$439 million, or HK$88,000 psf of space inside the apartment, equal to £7,102 (S$15,670) at yesterday’s exchange rate. This breaks the previous record of £6,000 psf set by an apartment in One Hyde Park in London last year, Mr Lam said.

Sun Hung Kai Properties last month raised the asking price of two penthouses in Hong Kong by 50 per cent to a record HK$75,000 psf, including a share of common areas in the building. On that basis, Henderson sold its apartment for HK$71,280 psf.

REUTERS, BLOOMBERG, ASSOCIATED PRESS

Source : Straits Times - 15 October 2009

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Central banks shunning dollar in favour of euro, yen

Central banks shunning dollar in favour of euro, yen

Statistics point to growing diversification among nations

(LONDON) Central banks flush with record reserves are increasingly snubbing US dollars in favour of euros and yen. The greenback has already suffered its biggest two-quarter rout in almost two decades.

Policymakers boosted foreign currency holdings by US$413 billion last quarter, the most since at least 2003, to US$7.3 trillion, according to Bloomberg data.

Nations reporting currency breakdowns put 63 per cent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That is the highest percentage in any quarter with more than an US$80 billion increase.

World leaders are acting on threats to dump the US dollar while the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy as long as it does not drive away the nation’s creditors.

The diversification signals that the currency will not rebound anytime soon after losing 10.3 per cent on a trade-weighted basis the past six months, the biggest drop since 1991.

‘Global central banks are getting more serious about diversification, whereas in the past they used to just talk about it,’ said Steven Englander, a former Federal Reserve researcher and now the chief US currency strategist at Barclays in New York. ‘It looks like they are really backing away from the dollar.’

The US dollar’s 37 per cent share of new reserves fell from about a 63 per cent average since 1999. Mr Englander concluded in a report that the trend ‘accelerated’ in the third quarter. He said in an interview that ‘for the next couple of months, the forces are still in place’ for continued diversification.

America’s currency has been under siege as the Treasury sells a record amount of debt to finance a budget deficit that totalled US$1.4 trillion in fiscal 2009 ended Sept 30.

Intercontinental Exchange’s Dollar Index, which tracks the currency’s performance against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, fell to 75.77 last week, the lowest level since August 2008 and down from the high this year of 89.624 on March 4. The index, at 76.104 on Monday, is within six points of its record low reached in March 2008.

Foreign companies and officials are starting to say that their economies are getting hurt because of the US dollar’s weakness.

Yukitoshi Funo, executive vice-president of Toyota Motor, called the yen’s strength ‘painful’. Fabrice Bregier, chief operating officer of Airbus said last week that the euro’s 11 per cent rise since April was ‘challenging’.

The economies of both Japan and Europe depend on exports that get more expensive whenever the greenback slumps. European Central Bank president Jean-Claude Trichet said in Venice last week that US policymakers’ preference for a strong US dollar is ‘extremely important in the present circumstances’.

‘Major reserve-currency issuing countries should take into account and balance the implications of their monetary policies for both their own economies and the world economy with a view to upholding stability of international financial markets,’ China President Hu Jintao told the Group of 20 leaders in Pittsburgh on Sept 25. China is America’s largest creditor.

Developing countries have likely sold about US$30 billion of euros, yen and other currencies each month since March, according to strategists at Bank of America-Merrill Lynch.

That helped reduce the US dollar’s weight at central banks that report currency holdings to 62.8 per cent as at June 30, the lowest on record, the latest International Monetary Fund data show.

The quarter’s 2.2 percentage point decline was the biggest since falling 2.5 percentage points to 69.1 per cent in the period ended June 30, 2002. — Bloomberg

Source : Business Times - 14 October 2009

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Gold rises to record levels for third day

Gold rises to record levels for third day

Demand up due to weakening US dollar and concern of rising inflation

(LONDON) Gold gained to a record for a third day in London and New York as demand increased on a weakening US dollar and concern that inflation will accelerate.

All that glitters: The printing of money and abandonment of the US dollar have taken the smart people over to precious metals, says an analyst
Bullion will probably top US$2,000 an ounce in the next decade, according to investor Jim Rogers. The US Dollar Index, a six- currency gauge of the greenback’s value, slipped to a two-week low as signs of a global economic recovery boosted demand for higher-yielding assets. The measure has shed 6.5 per cent this year as bullion heads for a ninth annual gain. Silver and palladium rose to the highest prices in more than a year.

‘More and more people are concerned that there’s more risk of inflation, rather than deflation,’ Jesper Dannesboe, a senior commodity strategist at Societe Generale SA here, said. ‘That’s one of the main drivers. Of course, there’s the risk that the dollar will keep falling.’

Immediate-delivery bullion advanced as much as US$14.28, or 1.4 per cent, to US$1,058.48 an ounce, and was at US$1,054.45 by 9.35 am in London. December gold futures were one per cent higher at US$1,055.10 an ounce on the New York Mercantile Exchange’s Comex division after climbing as high as US$1,059.60.

‘People are printing money, gold is going up,’ Mr Rogers said in an interview on Bloomberg Television, adding that he may increase his holdings. ‘There are plenty of reasons to buy gold when the time is right.’

President Barack Obama has increased US marketable debt to a record as he borrows to reignite growth in the world’s biggest economy. That has boosted speculation that the increased money supply may debase the currency and spur inflation. The printing of money and ‘abandonment of the dollar have taken the smart people over to precious metals’, according to Philip Gotthelf, president of Equidex Brokerage Group Inc.

Spot gold’s 14-day relative strength index, a gauge of whether a commodity or security is overbought or oversold, has increased to 74.41. That is above the level of 70 viewed by some investors as an indication of an impending decline.

‘Gold may be temporarily overbought,’ Peter Richardson, Morgan Stanley’s chief metals economist in Melbourne, said yesterday in a report.

Holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, increased 8.8 tonnes to 1,109.31 tonnes as at Oct 7, according to figures on the company’s website. The fund’s holdings reached an all-time high of 1,134 tonnes on June 1.

The metal ‘has moved higher on safe-haven buying’, said Ben Westmore, an energy and minerals economist at National Australia Bank Ltd. ‘A lot seems to do with fund activity, but there is definitely downside possibility to gold ahead.’

Surging gold prices are a signal that investors are buying metals to hedge against declining currencies, according to former Federal Reserve chairman Alan Greenspan. Gains for commodities demonstrate a ‘move away from paper currencies’, he said last month.

To be sure, gold’s allure may decline as investors’ appetite for risk rises, said Mr Westmore. The metal may also drop because the US dollar might not have ‘too much more downside’ and inflation may not be a ‘big issue’, he said.

Among other precious metals, silver climbed as much as 1.9 per cent to a 14-month high of US$17.905 an ounce, and was last at US$17.77. Palladium, the best-performing precious metal this year, added 0.4 per cent to US$314 an ounce after earlier reaching US$317.75, the highest in almost 14 months. Platinum rose one per cent to US$1,340 an ounce. Silver held in ETF Securities Ltd’s exchange- traded products fell 2.4 per cent to 20.467 million ounces on Wednesday, according to the company’s website. Platinum holdings added 0.6 per cent to 370,573 ounces, while gold and palladium assets were little changed. — Bloomberg

Source : Business Times - 09 October 2009

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Global economy finds a new champion

Global economy finds a new champion

Pittsburgh Summit bows to the inevitable, endorses G-20 as premier world forum

(Pittsburgh)

IN A CHANGED WORLD
Mr Obama, followed by British Prime Minister Gordon Brown and French President Nicolas Sarkozy, at a press conference in Pittsburgh yesterday
THE Group of 20 will become the forum for global economic management, giving rising powers such as China more clout, a draft communique said yesterday.

‘We designated the G-20 to be the premier forum for our international economic cooperation,’ the draft communique said, marking a historic shift that recognises the rising influence of both Asia and Latin America.

The move means that the G-20 supplants the G-7 and G-8, institutions dominated by rich Western economies, which will now be forums for discussing geopolitical issues, diplomats said.

The G-8 will, however, continue to meet on matters of common importance such as national security. US President Barack Obama initiated the move, the White House said.

The measure underscores how the world’s balance of power has shifted since a small group of wealthy, industrial countries began meeting in the mid-1970s in an effort to respond to oil shocks, stagflation and other economic crises of that period.

The communique said that the group would also roll out tougher rules on bank capital by the end of 2012.

But how to ensure and sustain economic recovery remained the main topic at the summit, which includes the world’s richest nations and emerging powers such as China, India and Brazil.

The global economy appears to be recovering faster than many economists had predicted, largely thanks to furious interest rate cuts, emergency central bank lending, and roughly US$5 trillion in government stimulus money.

But with unemployment high and banks still struggling to absorb heavy losses primarily from failing US mortgage loans, the pressure is on the big nations to sustain economic assistance and coordinate how and when the emergency stimulus is phased out.

The G-20 leaders vowed to keep emergency economic support in place until a recovery was secured. ‘We will avoid any premature withdrawal of stimulus,’ said the communique.

‘At the same time, we will prepare our exit strategies and, when the time is right, withdraw . . . extraordinary policy support in a cooperative and coordinated way, maintaining our commitment to fiscal responsibility,’ the draft said.

The G-20 countries, which account for 90 per cent of the world’s output, would try to secure next year a deal in long- running world trade talks.

Similar pledges have been made at a number of international gatherings, so far without result.

A final communique was due to be issued when the leaders wound up their meeting late yesterday and was subject to change.

In another boost for countries such as China and India, the G-20 unexpectedly moved close to a deal shifting more voting power at the International Monetary Fund (IMF) to some developing countries, recognising their growing clout.

In return, the draft communique suggested, the G-20 won those countries’ commitment to do their part in rebalancing the world economy.

That rebalancing act involves the debt-laden United States saving more and export powerhouse China consuming more.

The draft said that G-20 countries with either ’sustained, significant’ surpluses - a description that fits China - pledged to ’strengthen domestic sources of growth’.

By the same token, countries with big deficits - such as the US - pledged to support private savings.

It was, however, unlikely that any countries would consent to rules imposed by G-20 on how to run their domestic economy.

Some of that is already happening due to the recession.

US consumers - long viewed as the world’s ’shoppers of last resort’ - have cut spending as household wealth has shrunk, while China is spending about US$600 billion to stimulate its economy and make it less dependent on exports.

The draft showed that leaders endorsed an agreement on phasing out subsidies for fossil fuels to help combat global warming, but with no fixed date for the change.

Many G-20 governments, including countries such as China, India and Russia, give tax breaks and direct payments to companies that help them produce coal, oil and other fossil fuels.

US President Barack Obama made the case for a worldwide cut in subsidies to fuels such as oil, natural gas and coal as a way to reduce emissions of greenhouse gases tied to global warming.

India’s special envoy on climate change said on Thursday that his country supported the approach as long as it was ’sensitive’ to the needs of his country and other developing nations.

‘We, of course, look upon subsidies as something that, over a period of time, should be retired,’ Shyam Saran told reporters in Pittsburgh. Removing any distortions in energy prices ‘is in our own interest’, he said.

The document failed to lift global stocks. They weakened after central banks said on Thursday that they were scaling back massive injections of dollars into their banking systems as financial markets stabilised.

Western powers’ standoff with Iran also broke into leaders’ attempts to ensure better safeguards against another crisis. Earlier yesterday, it was disclosed that Iran has a second uranium enrichment plant under construction.

In a dramatic joint statement that opened the G-20 economic summit, Mr Obama and the leaders of France and Britain demanded that Teheran fully disclose its nuclear ambitions ‘or be held accountable’ to an impatient world community. — Reuters, Bloomberg, AP

Source : Business Times - 26 September 2009

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2012 deadline for new bank rules

2012 deadline for new bank rules

(Pittsburgh)

GROUP of 20 leaders said that banks must set aside more and higher quality capital by the end of 2012, a draft summit communique showed yesterday as governments sought to minimise the need for bailouts in future. The new capital rules would be phased in as financial conditions improve and economic recovery is assured, the communique said.

Work on rules had already begun but the G-20 leaders have also set an end of 2010 deadline for thrashing out the exact figures for higher capital levels, the text said. The summit will also adopt a deadline for converging accounting rules by mid 2011 to cut costs for multinational companies. It will crack down on off-exchange traded derivatives by the end of 2012, and has reached a compromise over a new leverage cap for banks, the text added.

Banks welcomed the details on capital. ‘Clarity on the timetable is good and what we are now looking for is clarity on the numbers. It’s a good start,’ a spokeswoman for the British Bankers’ Association said.

Some banks have expressed concern that quick implementation of tighter, new rules could prevent them from lending even as governments press them to support economic recovery. ‘We call on banks to retain a greater proportion of current profits to build capital, where needed, to support lending,’ the draft communique said.

The statement said that cooperation among the world’s largest economies would ensure regulatory reform. ‘If we all act together, financial institutions will have stricter rules for risk taking, governance that aligns compensation with long-term performance, and greater transparency in their operations,’ the statement said.

The leaders’ statement showed agreement on the importance of reforming pay practices at banks. ‘Reforming compensation policies and practices is an essential part of our effort to increase financial stability,’ it said. — Reuters

Source : Business Times - 26 September 2009

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Protests erupt at two sites in Thailand

Protests erupt at two sites in Thailand

Nationalists clash with villagers near Cambodian border, while ‘red shirts’ stage rally in Bangkok

By Nirmal Ghosh, Thailand Correspondent

Bangkok: Tensions soared from the Cambodian border to the Thai capital yesterday as protesters from rival political groups rallied at separate locations.

On the border, Thai nationalists bent on stopping Cambodians from building on alleged Thai territory overwhelmed police and clashed with local villagers near the Preah Vihear temple. The violence left dozens injured, including one local shot in the neck.

In Bangkok, a rally by the red-shirted United Front for Democracy against Dictatorship (UDD) to mark the third anniversary of the September 2006 coup d’etat attracted up to 20,000 people, despite a prolonged downpour in the afternoon.

The UDD wants Prime Minister Abhisit Vejjajiva to step down, claiming he came to power illegitimately with the help of the military and the judiciary, two pillars of the Thai ruling class.

Several thousand police officers and soldiers were deployed to keep order at the red-shirt rally.

As of late yesterday, no incident has been reported at the protest near the house of Privy Council president Prem Tinsulanonda. He is the King’s chief adviser and is accused by the red shirts of having engineered the coup that ousted former premier Thaksin Shinawatra .

Thaksin, who has been trotting the globe in self-imposed exile, addressed the crowd by video.

‘I want to ask people who hate me and those who love me to review the past three years and answer if we’ve seen anything get better,’ he said. ‘Have the past three years hurt the country enough?’

The government is finding itself increasingly caught between the two powerful groups.

The red shirts, most of whom are pro-Thaksin, want an end to interference in politics by the military acting as a proxy for the traditional aristocratic elite.

The royalist People’s Alliance for Democracy (PAD), whose members don yellow shirts, were initially supportive of the government, but have been targeting some of its figures of late.

Indeed, more than 800km to the north-east of the capital in Si Saket province, between 3,000 and 5,000 activists from the People’s Rights and Liberty Protection Group, led by Mr Veera Somkwamkid, who is part of the PAD, marched on Preah Vihear temple yesterday afternoon on foot and in vehicles.

Security arrangements in the sensitive border area, which has seen sporadic clashes between Thai and Cambodian troops over the past year, proved inadequate.

Villagers tried to block the path of the marchers. But about 200 PAD ‘guards’ clashed with the locals.

Television footage showed chaotic melees with people, including police officers being hit by rocks, and some small explosions and smoke.

Late last night, the activists reportedly stood down but are due to make a statement today.

‘The PAD is negotiating with the commander of the local task force now at the foot of Preah Vihear,’ Colonel Prawit Hookaew, a spokesman for the army’s north-eastern region, told Agence France-Presse yesterday evening.

The PAD’s main five leaders had earlier distanced themselves from Mr Veera, but the group was the first to raise the Preah Vihear temple issue last year. It used it to whip up nationalist fervour and attack the pro-Thaksin government in power at the time, for allegedly making concessions to Cambodia in the disputed area.

The 11th century temple belongs to Cambodia through a quirk in a boundary map that Thailand contested and lost in a judgment in The Hague. But substantial land around it remains disputed.

The issue stokes intense emotions on both sides. Locals said inflammatory protests could lead to border skirmishes and ruin the local economy.

Mr Veera has filed legal petitions against the current and previous governments, claiming they have failed to protect Thai territory by allowing Cambodian forces and civilians into a disputed area of about 485ha.

But Lieutenant-General Vissanu Sriyaphan, spokesman for the armed forces, said: ‘Thailand has not lost territory as understood by some people. The pending problem is being solved through negotiations, not violence. The ownership of the overlapping area has yet to be decided.’

Source : Straits Times - 20 September 2009

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US households start to regain wealth

US households start to regain wealth

Home mortgages down; stocks rally, effects of govt stimulus being felt

A newly built house in Colorado put up for sale last month. The housing market remains weak but appears to be bottoming out. — PHOTO: REUTERS

WASHINGTON: The net worth of American households grew between April and July, the first quarterly gain in nearly two years, boosted largely by rising stock and home prices, the United States Federal Reserve said.

The increase suggests that households may have begun to recover from record losses of wealth since the recession began in December 2007.

A Fed report in March showed that since the start of last year, falling housing and stock values wiped out US$11 trillion (S$15.5 trillion) in Americans’ net worth. The losses erased four years of gains, decimated retirement savings and college funds, and upended life plans for millions of people.

Many leading economists, including US Federal Reserve chairman Ben Bernanke, now think the economic downturn, one of the worst since the Great Depression, is probably over.

Forecasters say the economy has probably begun growing again as public works projects funded by the US$787 billion stimulus package get under way. And businesses, after months of cutting back, are being forced to place new orders to replenish inventories.

The biggest boon to household wealth has been an extended rally on Wall Street. US stock markets pounced on early signs that the economy’s slide was slowing, and they have rebounded by as much as 50 per cent since March. The value of stock holdings jumped 21.7 per cent during the second quarter, the Fed report showed.

A smaller boost to household wealth has come from an improving, albeit still weak, housing market, which appears to be closer to bottoming out.

A Commerce Department report released on Thursday showed that housing starts rose 1.5 per cent last month, to a seasonally adjusted annual rate of 598,000. Sales of previously owned homes also increased in August for the fourth consecutive month.

The Fed report showed, however, that prices have not increased enough to substantially lift home-owner equity. Home owners had only slightly more equity in their homes in the second quarter compared with the first quarter.

Meanwhile, household debt shrank at an annual rate of 1.7 per cent, the fourth straight quarterly contraction. Home mortgage debt decreased at an annual rate of 1.4 per cent. Consumer credit decreased at an annual rate of 6.5 per cent. The declines were also because of tighter credit conditions and banks writing off credit-card debt, analysts said.

The recovery in household wealth will probably continue into the current quarter, which ends on Sept 30, because stock prices have kept rising, home prices for existing homes have firmed up and consumers have not taken huge amounts of new debt, said Mr Bernard Baumohl, chief global economist for The Economic Outlook Group.

Analysts have blamed the loss of wealth for the sharp pull-back by American consumers, which in turn has hurt economies around the globe.

NEW YORK TIMES

Source : Straits Times - 19 September 2009

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