Global finance blog - news, jokes, life…

Australia will force its 500 worst polluters to pay 23 Australian dollars ($25) for every ton of carbon dioxide they emit, with the government promising to compensate households hit with higher power bills under a plan to reduce greenhouse gas emissions unveiled Sunday.

Prime Minister Julia Gillard sought to reassure wary Australians that the deeply unpopular carbon tax will only cause a minority of households to pay more and insisted it is critical to helping the country lower its massive carbon dioxide emissions. Australia is one of the world’s worst greenhouse gas polluters, due to its heavy reliance on coal for electricity.

“We generate more carbon pollution per head than any other country in the developed world,” Gillard told reporters in Canberra as she released details of the tax, which will go into effect on July 1, 2012. “We’ve got a lot of work to do to hold our place in the race that the world is running.”

The government hopes businesses affected by the tax will seek out clean energy alternatives to reduce their bills. The affected companies will have to pay AU$23 per metric ton of carbon, with the price rising 2.5 percent a year until 2015, when the plan will move to a market-based emissions trading scheme.

The carbon tax is the government’s main tool in meeting its pledge to reduce Australia’s greenhouse gas emissions by the year 2020 to at least 5 percent below 2000 levels. By then, the tax will have helped reduce carbon pollution by 160 million metric tons _ the equivalent of taking 45 million cars off the road, Gillard said.

Critics of the plan say Australian households will be unfairly burdened by higher costs passed onto them by the big polluters. To help compensate for the higher bills, nine out of 10 households will receive some kind of assistance in the form of income tax cuts and payments. Two-thirds of all households will receive enough assistance to cover the entire financial impact of the tax, Gillard said.

Under the plan, the average household will see its costs increase by AU$9.90 a week, which includes an additional AU$3.30 per week for electricity and another AU$1.50 a week for gas. But the government says on average, households will receive AU$10.10 a week in assistance.

Industries affected by the change will get AU$9.2 billion in compensation over the next three years, with the worst-hit businesses expected to be steel and aluminum manufacturers.

Conservative opposition leader Tony Abbott, an outspoken critic of the plan, insisted it will drive up the cost of living for millions of Australians and will do nothing to help the environment.

“It’s socialism masquerading as environmentalism,” Abbott told reporters. “It’s a package which is all economic pain for no environmental gain.”

Environmental groups were cautiously optimistic about the scheme.

“This package is not perfect, but it is absolutely essential Australia gets started,” Australian Conservation Foundation executive director Don Henry said in a statement.

Greenpeace said the package was a good start, but believes the price per ton of carbon should be higher.

“The fact that we have any price at all is testament to all Australians who demanded the government take action on climate change,” Greenpeace Australia Pacific CEO Linda Selvey said in a statement. “But equally, the fact it is such a low price, with such limited coverage is testament to the power of the big polluters to dominate Australia’s political leadership.”

Source

ask the expert

Robert Guller, owner

BEB Management

314-542-4000

rguller@bebmanagement.com

How can commercial real estate investors identify and reposition distressed real estate in today’s troubled market?

There is no shortage of bargain-priced buildings these days. And it’s tempting to buy when the price seems too good to pass up. But it takes more than a low entry point to make an investment profitable.

An investor’s first task is to assess the property’s problems, then determine how his skills can address them. Does the investor have the experience to deal with an environmental cleanup, the knowledge to unwind a messy title or the cash and tax credit know-how to tackle a major renovation? To make a profit, the investor needs to improve a building faster, cheaper and smarter than other investors.

Next, the investor needs to consider target tenants. How can a building be repositioned to attract them? A good strategy is to reach out to professionals who understand the investor’s vision and allow them to suggest ways to get there No teletrak payday loan. Will the distressed building need a few more conference rooms or will it need a whole new building façade?

Finally, the investor needs financial resources. A strategic and tactical repositioning can be expensive. In today’s tight debt markets, the investor will need a deep and flexible source of equity. The investor must be prepared to put a good amount of capital on the line. In addition, the investor must also be sure she can withstand little, or even negative, cash flow.

As with all investment adventures, nothing risked is nothing gained. But if an investor finds a building with a low purchase price that allows the new owner to leverage unique skills, the investor might be able to risk a little less and gain a lot more.

Source

LONDON

Even as talks continue about turning St. Louis’ under-used airport into a “Gateway to the East,” the people who run it are looking to the south as well.

Lambert-St. Louis International Airport last week signed an agreement with a fledgling Texas-based airline to explore the prospect of freight routes to Latin America. The deal between Lambert and Brownsville-based Pan American Airways Inc. is very preliminary. But it’s the clearest sign yet that the region’s long-discussed China Hub project

For the fourth time in six months, China’s central bank is hiking interest rates to combat rising inflation in the country.

The People’s Bank of China said Tuesday that it will raise its one-year lending rate to 6.31% from 6.06%, effective Wednesday.

China has raised interest rates incrementally over the last six months in an ongoing effort to tame rapidly rising prices there. Consumer prices surged 4.9% over the 12 months ending in February — a rate far outpacing price increases in the United States and Europe.

As rising prices have barreled ahead, China’s Premier Wen Jiabao has even likened inflation to a tiger. "Once it gets free, it is difficult to put it back in the cage," he told reporters last month.

The central bank has used several tools to ease rapid growth in China. Interest rate hikes are one tool — but they may have topped out now at 6.35%, Mark Williams, senior China economist with Capital Economics, said in a research note.

China has also raised banks’ reserve requirements several times as a way to pull money out of the economy, but still shies away from allowing its currency, the yuan to exchange completely freely against other currencies.

Over the last year, China’s tightening has sparked fears that the Beijing government could squelch growth too much, causing the economy to crash land.

But inflation and the overall economy have continued to grow at a rapid clip, and now critics say the government’s approach may actually be too slow.

"If anything, they’re tightening a bit too slow. We have to be a little concerned about overheating, said Paul Ballew, a chief economist at Nationwide.

Either way, China’s actions to rein in inflation stand in stark contrast to the Federal Reserve’s stance on inflation in the United States. Federal Reserve Chairman Ben Bernanke still shrugs off fears of longterm inflation in the United States, stating that rising food and energy prices are merely a temporary phenomenon.

"In the last six months, we’ve seen a fairly substantial split between the Fed and other central banks around the world. The Fed takes a far more dovish approach, and we’ll see whether or not that’s a wise choice down the road," said Paul Ballew, chief economist at Nationwide.

Next, all eyes are on the European Central Bank, which plans to announce its latest monetary policy decision Thursday. Outside economists are expecting the bank to raise interest rates by a quarter of a percentage point, which would be the ECB’s first rate hike since mid-2008.  

Source

Ireland’s credit rating was cut one level by Standard & Poor’s and put on watch for a possible downgrade by Fitch Ratings after the cost of rescuing Irish banks reached as much as 100 billion euros ($141.5 billion).

S&P today lowered the rating to BBB+ from A-, putting the country on the same level as Thailand and the Bahamas. The outlook is stable, S&P said in a statement. Fitch placed its long-term foreign and local-currency issuer default ratings of BBB+ on negative, “indicating a heightened probability of a downgrade in the near term,” it said in a statement.

The stable outlook from S&P “is a very good thing for a credit that has been under intense pressure,” said Padhraic Garvey, head of developed-market debt at ING Groep NV (INGA) in Amsterdam. “It’s good for holders of Irish paper.”

Irish gross domestic product “figures for the fourth quarter of 2010, released last week, were unexpectedly weak, showing GDP growth contracted by 1 payday loan lenders in states.6 percent quarter-on-quarter and 0.7 percent year-on-year,” Fitch said in the statement. The ratings firm, which downgraded Ireland’s long-term rating to BBB+ on Dec. 9, will “incorporate the new information” from the banking stress tests into its review, it said.

The government, struggling to draw a line under the country’s bank crisis, said it will probably end up with a majority stake in Irish Life, which needs to raise 4 billion euros. Allied Irish Banks Plc (ALBK), which was ordered to raise 13.3 billion euros, is to be merged with EBS Building Society.

Source

Pfizer Inc. said Tuesday its fourth-quarter profit nearly quadrupled from a year ago when it was weighed down by restructuring charges, as revenue rose 6 percent, thanks to the addition of products from fellow drugmaker Wyeth, acquired late in 2009.

The results narrowly beat Wall Street expectations. Pfizer also approved a $5 billion stock buyback plan and said it was cutting spending on research and development.

Pfizer, the world’s biggest drugmaker by revenue, said its net income was $2.89 billion, or 36 cents per share, compared with $767 million, or 10 cents per share, a year earlier.

Adjusted net income was $3.77 billion, or 47 cents per share, down 1 percent from $3.83 billion a year earlier.

Numerous one-time items brought a total gain of 11 cents per share. Those include $910 million in restructuring and other costs related to integrating Wyeth, $1.18 billion in write-offs of intangible assets acquired from Wyeth, $860 million in legal costs, and a gain of about $2 billion from an IRS tax settlement related to audits covering the years 2002 through 2005.

Revenue totaled $17.56 billion, up from $16.54 billion in 2009’s fourth quarter.

Analysts surveyed by FactSet expected earnings per share of 46 cents and revenue of $16.99 billion.

The maker of cholesterol blockbuster Lipitor and impotence pill Viagra reported a 3 percent increase in sales of its prescription drugs, to $15.05 billion. Sales of veterinary medicines rose 8 percent, to $976 million, while the smaller consumer healthcare and nutrition businesses posted larger jumps, due to the addition of those Wyeth businesses.

Pfizer bought Wyeth for $68 billion in October 2009, but only recorded its revenue for part of that quarter.

Pfizer gave its first 2011 financial forecast, saying it expects earnings per share of $2.16 to $2.26, excluding just over $1 in one-time items. It expects revenue of $66 billion to $68 billion.

Analysts forecast earnings per share of $2.30 and revenue of $66.55 billion, on average.

Pfizer reduced its prior revenue forecast for 2012 _ key Lipitor, the world’s top-selling drug at $12.5 billion a year, loses patent protection at the end of November _ to $63 billion to $65.5 billion. That’s down from $65.2 billion to $67.7 billion. But because it expects to reduce 2012 research spending by $1.5 billion, to about $8.25 billion, it still expects earnings per share of $2.25 to $2.35, excluding about 65 cents worth of one-time items.

For 2012, analysts forecast a profit of $2.22 per share and revenue of $62.72 billion.

“I am pleased with our solid financial performance again this quarter and this year despite continued challenging market conditions,” new CEO Ian Read said in a statement.

Read took over after Pfizer’s board unexpectedly pushed out CEO Jeffrey Kindler on Dec. 6, apparently due to the poor performance of Pfizer’s stock and other issues during his 4 1/2-year tenure.

Pfizer has been stung by a series of promising experimental drugs failing in late-stage testing over the last couple years.

U.S. revenue fell 3 percent, to $7.24 billion, while international revenue jumped 13 percent, to $10.32 billion. The international revenue was reduced by 1 percent due to unfavorable currency exchange rates.

The company said it is still on track to cut annual spending by $4 billion to $5 billion by the end of 2012, compared with 2008 levels, as it continues to shed thousands of jobs and close numerous factories and research sites since buying Wyeth. Pfizer said it met its target of more than $2 billion of those cuts in 2010.

For all of 2010, Pfizer reported a 4 percent decline in net income, to $8.26 billion, or $1.02 per share. Revenue totaled $67.81 billion, up 36 percent, thanks to $18.1 billion from sales of Wyeth products.

In morning trading, Pfizer shares rallied by 2.5 percent, or 46 cents, to $18.68, making them the top gainer on the Dow Jones industrial average.

Source

The International Monetary Fund cut its forecast for Ireland’s economic growth today in a report that called for the country to reduce its budget deficit and overhaul its banking sector to recover from financial crisis.

The Washington-based fund said it expects Ireland’s economy to grow 0.9 percent in 2011, down from 2.3 percent estimated by the fund in October. The IMF also forecast 1.9 percent growth in 2012, in a staff report accompanying its agreement to contribute 22.5 billion euros ($30 billion) to an 85 billion-euro rescue effort with European authorities.

“Even this modest recovery is subject to downside risks,” the IMF said, predicting that unemployment would stay above 10 percent through 2015. “The large fiscal adjustment will remain a drag on consumption, as will the unwinding of home-grown imbalances from the boom years — leading to weak credit growth, continued weakness in property prices and wages, and high real debt burdens.”

Ireland’s financial woes pose “significant” spillover risks that could affect Greece, Portugal, Spain and other euro- area economies, the Washington-based fund said. Financial contagion also could affect banks from countries including the U.K., Germany, France and the U.S. that have large portfolio investments in Ireland, the IMF said.

Bond Yield

The yield on Irish 10-year bond rose to 8.59 percent, the highest since Dec. 2, while credit-default swaps insuring Irish debt climbed for a third day, their longest run of gains this month. Ireland’s credit rating was cut five levels by Moody’s Investors Service earlier today and further downgrades are possible as the government struggles to contain losses in the country’s banking system.

European Union leaders grappled this week with how to fix the current crisis and prevent future debt shocks in Brussels talks. German officials, driven by public outcry against propping up fiscally reckless countries, have resisted enlarging a 750 billion euro emergency fund or developing joint bond sales.

There are “significant risks” that could affect Ireland’s ability to pay back the loan, meaning the IMF is taking on “substantial risk,” according to a Dec. 8 document included in today’s release says. The IMF’s board approved the rescue funds yesterday after Ireland’s parliament approved the bailout, and IMF spokeswoman Caroline Atkinson said the fund retained enough liquidity “to meet any needs” that may arise bad credit payday advance.

General Election

The IMF said today that Ireland’s upcoming general election is a risk to the rescue program, along with economic uncertainty and the “unprecedented” budget cuts needed. The fund said the main opposition parties have indicated “broad support” for the rescue program’s objectives of cutting the budget and stabilizing the banks while also wanting to revisit some of the specific policies.

Ireland has pledged to shrink its financial sector and increase banks’ ability to withstand economic stresses as a condition of receiving aid. Irish banks are slated to undergo new stress testing in the first half of 2011, starting with the six biggest banks followed by credit unions and subsidiaries of foreign banks.

The Irish banking sector remains vulnerable to “constant funding concerns” and loans to the Irish property market, the IMF said in today’s report. Another factor is the government’s costs in managing Anglo-Irish Bank, which was nationalized two years ago and has “sucked in ever-increasing public funds,” the IMF said.

Subordinated Debt

Ireland plans to require holders of subordinated debt to share in the banking system’s losses. At this time there are no plans to require losses from senior bondholders, and the IMF concurs with that decision, said Ajai Chopra, deputy director of the IMF’s European Department, on a conference call with reporters today.

Exports will continue to lead Ireland’s recovery, the fund said. Government budget cuts will hamper growth, and “subdued” inflation will help competitiveness and also act as a “short- term drag” on the recovery, the IMF said.

Ireland’s ratio of debt to gross domestic product is expected to reach 99 percent by the end of 2010, up from 25 percent in 2007 at the onset of the financial crisis, the IMF said. Debt is expected to peak at 125 percent of GDP in 2013, and it could go higher if the shocks to Ireland’s economy become permanent, the fund said.

Source

The Swiss central bank may keep borrowing costs near zero tomorrow in a bid to keep a lid on the franc after Europe’s debt crisis pushed the currency to a record, threatening the country’s recovery.

The Swiss National Bank, led by Philipp Hildebrand, will leave the three-month Libor target rate at 0.25 percent, according to all 19 economists in a Bloomberg News survey. The Zurich-based central bank will announce its decision at 9:30 a.m. tomorrow followed by a press conference 30 minutes later.

The Swiss franc has appreciated 16 percent against the euro this year as investors became more concerned about the ability of European governments to contain the fiscal crisis and prevent a breakup of the 16-member region. While the SNB in June stopped intervening in currency markets, a stronger franc may undermine the country’s export-led recovery and increase deflation risks.

“The Swiss central bank is definitely mindful of the euro- area crisis,” said David Kohl, deputy chief economist at Julius Baer Group in Frankfurt, who expects the SNB to keep borrowing costs on hold until June 2011. “They will refrain from anything which could push up the franc. It will be a quiet meeting.”

The Swiss currency climbed to a record 1.2759 against the euro today and traded at 1.2778 at 10:25 a.m. in Zurich.

‘Resilient’ Exports

The Swiss government yesterday forecast economic growth to weaken to 1.5 percent next year from an estimated 2.7 percent in 2010, citing Europe’s debt crisis and a strengthening franc among the risks. The SNB, which in September projected the economy to grow about 2.5 percent this year, tomorrow will also release its 2011 economic estimate.

While the SNB in June phased out its 15-month policy of countering franc gains through purchases of foreign currencies, Hildebrand said on Nov. 23 that the central bank is ready “to take exceptionally far-reaching measures” if needed payday loans no faxing.

With governments from Ireland to Spain struggling to reduce their budget deficits, the euro has plunged 5.2 percent against the franc this year. That’s making Swiss exports from Swatch Group AG watches to ABB Ltd. turbochargers less competitive in the region buying two thirds of all goods.

“Swiss exports have so far been surprisingly resilient to the strength of the currency,” said Eoin O’Callaghan, an economist at BNP Paribas SA in London. Still, “it’s too early to sound the all-clear. The sector remains vulnerable to additional appreciation.”

‘Dominant Issue’

Switzerland’s recovery is already cooling. Growth weakened in the third quarter, leading economic indicators fell to the lowest level in seven months in November, and investor confidence declined. Consumer prices rose 0.2 percent in November from a year earlier partly as a stronger franc lowered costs of imports such as heating oil.

The SNB in September forecast inflation to average 0.7 percent this year and 0.3 percent in 2011 before accelerating to 1.2 percent in 2012. The central bank, which aims to keep annual gains in consumer prices below 2 percent, has said that inflation may “temporarily” turn negative in early 2011.

Dirk Schumacher, an economist at Goldman Sachs Group Inc. in Frankfurt, says that while he considers the SNB’s inflation forecasts too low, he doesn’t expect the central bank to raise projections as policy makers keep the benchmark rate on hold.

“The euro-region crisis remains the dominant issue at the moment,” Schumacher said. “The SNB is well aware that the consequences for the Swiss economy, through the exchange rate, could be quite dramatic if the situation got a lot worse.”

Source

The 24-hour global news and current affairs channel Al-Jazeera English has been given a downlinking license to broadcast in India.

Al-Jazeera English’s Managing Director Al Anstey says this means cable and satellite companies in India will be able to add the Qatar-based channel to their lineup.

Anstey said in a statement that the channel, which applied for a license four years ago, already has a bureau in New Delhi.

Source