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Greek central bank Governor George Provopoulos said he’s confident the government will meet its “very ambitious” deficit-reduction goals and ward off any further credit-rating downgrades.

Rating agencies “want evidence that the plan is implemented on target” and “some time will need to elapse before they can form a better judgment,” Provopoulos, also a European Central Bank council member, said in an interview in Athens on Feb. 19. “I have full confidence” in the government meeting its goals, he said. “They have to succeed. And they will, I’m sure of that.”

Greece’s financial distress could be exacerbated at the end of this year when the ECB is due to revert to old collateral rules that were loosened during the global recession. If Moody’s Investors Service cuts its Greek credit rating to the same level as the other major ratings companies, Greek government bonds would no longer be eligible as collateral at the ECB, making it more difficult for the nation to borrow.

“The government has said already on several occasions that it will take any additional measures required in order to achieve its goal,” Provopoulos said. “This gives me comfort. Even if some risks materialize — like growth — the government is prepared to take immediate corrective action.”

Skeptical Investors

Investors are skeptical that Greece can cut its budget deficit from 12.7 percent of gross domestic product to under 3 percent by 2012. The government’s plan assumes the economy will contract 0.3 percent this year before growing 1.5 percent in 2011. It shrank 2 percent last year, compared with the government’s forecast for a 1.2 percent contraction.

The premium investors charge to hold Greek 10-year bonds instead of the German benchmark soared to 396 basis points on Jan. 28, the most since 1998. The cost of insuring Greek bonds against default jumped to a record high, exceeding the rates in emerging Asian economies such as Vietnam, Indonesia and the Philippines.

Markets are overreacting, Provopoulos said.

“They take advantage of the weak link to make profits,” he said. “It’s clear that there is a certain degree of overshooting. Given the high degree of uncertainty in the markets, one should not expect that the situation will normalize overnight.”

If Greek debt were no longer eligible as ECB collateral, the government would find it harder to find buyers for its bonds and yields would probably rise.

‘Exactly As Promised’

The ECB currently accepts bonds rated BBB- by at least one rating agency as collateral for loans. Under the old rules, due to be reinstated on Jan. 1 next year, A- is the minimum rating required. Standard & Poor’s and Fitch Ratings cut Greece’s credit grade to BBB+ in December.

Moody’s has said it may lower its A2 rating two steps to Baa1 if Greece only partially implements its deficit-cutting plans. That would render Greek bonds ineligible at the ECB.

ECB President Jean-Claude Trichet said on Jan. 14 that the Frankfurt-based central bank won’t make allowances “for the sake of any particular country” and Greece won’t win “any special treatment.”

The ECB will continue its enhanced credit support to the banking system, Provopoulos said, suggesting it may continue lending banks as much cash as they want at its benchmark rate, at least in weekly refinancing operations.

“The ECB never said ‘we have reached the end of the road’,” he said. “Of course there are signs of normalization of the situation, of an improvement. This will be taken into account” when policy makers decide in March on the next steps in the exit from emergency lending measures, Provopoulos said.

Under Pressure

European finance ministers turned up the pressure on Greece last week to rein in the region’s largest budget gap. The country might be asked to raise its value-added tax, introduce a levy on luxury goods and cut capital spending if it fails to show sufficient progress by mid-March, when the European Commission is due to review the government’s progress.

While European leaders on Feb. 11 pledged to take “determined and coordinated” action to support Greece if the need arose, they left open how they would respond to a fresh wave of speculative attacks against Greece or other countries such as Spain and Portugal, which are also struggling to cut their budget deficits.

Provopoulos said he takes the commitment of European governments to stand by Greece “at face value.” The lack of a detailed rescue plan isn’t disappointing, he said.

“Everybody knows how critical the situation is. Of course, an expression of willingness and readiness from the European family, the euro zone, to help in case it’s needed is quite reassuring and understandable.”

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fast cash loan is fast becoming a viable financial option for consumers who need a few extra dollars.

The German government may offer an aid package to Greece and other debt-ridden European nations in an effort to stave off the default concerns that have stunted global markets, according to reports.

The Wall Street Journal, citing unnamed sources, said a loan guarantee plan would be led by Germany but completed along with European Union partners.

The threat of a default in Greece has given investors pause, as the effect would likely ripple to other members of 16-nation euro zone. Other debt-choked nations in the bloc include Portugal, Spain, Ireland and Italy.

European Union officials are set to meet Thursday to discuss the economy, and Greece is expected to be a major topic on the docket.

In December, Greece’s credit rating was downgraded. S&P’s move came after health care companies complained that the country was behind on payments related to its public health system.

Investors across the globe have been trying to digest what impact such a crisis would have on the nascent signs of recovery, and ripple-effect fears have sent worldwide markets lower payday loans.

The WSJ article said Germany’s finance minister, Wolfgang Schaeuble, has discussed the aid idea in with European Central Bank President Jean-Claude Trichet.

But earlier Tuesday, Reuters reported that German government spokesman Ulrich Wilhelm called reports that a decision was already in effect "unfounded."

A bailout of Greece would mark the first time any EU country rescued a euro zone member.

The U.S. stock market was cheered by the reports of possible Greek aid, as the blue-chip Dow index (INDU) added almost 2% with less than 2 hours left in the session. The euro also rose in late trading. 

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Fairfax-based SRA International has completed its acquisition of Perrin Quarrels Associates Inc. for an undisclosed sum.

Charlottesville, Va.-based PQA specializes is environmental programs like air quality and climate change. The Environmental Protection Agency is among its biggest customers.

The acquisition adds $6 million to the balance of SRA’s current fiscal year. The company will report fiscal second quarter results this month.

SRA International’s (NYSE: SRX) first quarter revenue was $417.5 million, up from $392.4 million in the same quarter a year earlier.

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Houston Public Radio and the Bauer College of Business at the University of Houston have joined together to launch a weekly business radio feature.

KUHF business reporter Ed Mayberry will host Bauer Business Focus each Friday morning at 8:35 a.m., starting Jan. 29.

"There's a lot of change taking placing in business today, and we're pleased to be able to provide a forum on public radio to discuss those changes and what's happening in the local business community," said Debra Fraser, station manager. "I think Bauer Business Focus will appeal even to people who wouldn't normally think of listening to a business program, because it's really about issues that impact all of us fast cash online."

Topics of the program will range from big-picture issues, job growth, economic diversification and entrepreneurship and innovation in emerging industries.

"We can't wait to explore trends and issues weighing on the minds of the business community," said Arthur Warga, dean of the Bauer College, and the first scheduled interview.

The program is available on 88.7 FM, HD Digital Channel 1 and streaming online at www.kuhf.org.

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The U.K.’s inflation rate probably jumped the most in at least 12 years in December as the economy shook off the recession and oil prices rose, economists say.

Consumer prices climbed 2.6 percent from a year earlier, compared with a 1.9 percent gain the previous month, according to the median forecast of 30 economists in a Bloomberg News survey. The 0.7 percentage-point jump would be the most since comparable records began in 1997. The Office for National Statistics will publish the data at 9.30 a.m. today in London.

The data would be the first since May showing inflation above the Bank of England’s 2 percent target, presenting a challenge to officials as they assess when to start raising interest rates from a record low. Gordon Brown’s spokesman said last week that the prime minister, who faces an election by June, is confident the economy has returned to growth.

“While the economy has been in recession the Bank of England hasn’t been focusing on inflation but it will become more of a concern,” Michael Saunders, chief economist for western Europe at Citigroup Inc, said in an interview. “I think they’ll hike rates in the second or third quarter.”

Saunders predicts the Bank of England will raise the benchmark interest rate to 1.5 percent by the end of the year. Officials makers have kept the rate at 0.5 percent since March. He says January data for inflation due next month will breach the government’s 3 percent upper limit, and it will reach 4 percent by the middle of the year.

Inflation, which troughed at 1.1 percent in September, has accelerated since then as energy costs increased and the economy recovered from the slump.

Producer Prices

Crude oil has doubled in the past 12 months, raising consumer gasoline costs. Producer prices jumped 0.5 percent in December, more than twice as much as the median forecast of economists in a survey by Bloomberg News.

The factory-gate data in part reflect the weakness of sterling. The pound has dropped by about a quarter in the past two years against a trade-weighted basket of currencies, raising the cost of imports for manufacturers.

Finance Minister Alistair Darling’s temporary 2.5 percentage-point reduction in sales tax in December 2008 to stimulate the economy will drop out of the annual comparison in the data for December 2009 and also raise the inflation rate, Saunders said.

For now, Bank of England officials say inflation will accelerate before dipping below the target later this year because of slack in the economy after the recession. Policy makers are showing few signs of unwinding emergency measures designed to fight deflation after they pledged to buy 200 billion pounds ($327 billion) of bonds. The bank will release new forecasts on Feb. 10.

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As Porter Airlines breezes into its fourth year of operations, president Robert Deluce says the upstart airline will unveil a new, five-year business plan in 2010.

"(The new plan) is likely to see some significant growth attached to it," Deluce told the Star. "I think we’ve got lots of growth potential in the next several years."

Deluce was coy about details for his updated business plan, but conceded the original blueprint for his company has evolved somewhat since the airline set up shop in 2006. Originally, Deluce’s business plan outlined a vision of 17 flight destinations for Porter in Canada and the United States.

"A couple of the destinations that we’re already serving, Halifax and (Mont) Tremblant, weren’t even on our original business plan," Deluce said.

"I think at some point in time we’ll be serving at least 17 destinations, and maybe more."

The airline has already announced a number of changes for the first quarter of 2010. Its fleet will grow from 17 turboprop airplanes to 20 and flights will increase from an average of 110 per day to 120. The airline will also begin operations at its new $45 million terminal, where the first phase of construction should be completed by the spring.

Porter plans to expand domestic and transborder service early next year, Deluce said. He won’t say what Porter destinations are on the horizon, only that Washington and Philadelphia "continue to be of interest," as well as "other places in eastern Canada within roughly an hour and a half of Toronto."

Because Porter is privately held, it does not report financial results. But Deluce said the airline turned a profit this year.

"By any account, (Porter had) at least 300-per-cent growth during a year that arguably was one of the worst aviation years on record," Deluce said.

Porter has also been good business for the Toronto Island airport, which has been humming with activity since the airline moved in.

On Christmas Eve, the Toronto Port Authority announced it received preliminary results from a new capacity assessment study, and now anticipates an increase of between 42 and 92 daily flights at the airport by the second half of next year. The TPA also said it will begin accepting proposals in early 2010 from other commercial carriers that hope to begin using the island airport.

Before Porter came along, the island airport – recently renamed the Billy Bishop Toronto City Airport – handled 25,000 passengers annually. By the end of 2009, that number was forecast to hit 750,000, and Deluce estimates that 2010 will see more than a million passengers passing through the airport.

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There’s an old saying that people with too much money on their hands soon find themselves with the opposite problem, and Dubai has just handed the world a prime example.

Global financial markets were rocked late last week by the startling news that the Persian Gulf emirate’s sovereign wealth fund (SWF), Dubai World, is effectively insolvent and has arbitrarily declared a six-month moratorium on debt payments it’s unable to make.

Global currencies from Colombia to Singapore took a tumble, and stock markets worldwide had a panic attack, fretting that some of the world’s other 30 or so SWFs might soon also be in dire straits. Many SWFs have extensive debts outstanding with the world’s largest banks.

For all the worldwide efforts to bail out the global banking system, it has only returned to stability, not good health. Having endured the spectacular collapse of the U.S. housing market, the system is now girding for a string of defaults in commercial real estate. Additional failures among SWFs, unforeseen until last week, would not cause a second global credit freeze. But they would further delay a complete recovery of the banks and a sputtering world economy.

What’s the origin of this latest shock to world finance?

As global trade and commodity prices – particularly oil – spiralled upward earlier this decade, a Niagara of money poured into the coffers of export powerhouses like China, Korea and Singapore. And into the state treasuries of commodity producers including Saudi Arabia, Kuwait, Russia and Dubai.

Those states created so-called sovereign wealth funds to hold all that money. By mid-decade, the SWFs’ rapidly growing assets were expected to reach as much as $12 trillion (U.S.) by 2015, just shy of the size of the U.S. economy. With oil heading for a $147.50 per barrel peak, that estimate didn’t seem far-fetched.

The opportunity to tap these new and massive pools of cash was seized upon by capital-hungry real estate developers, private equity shops and hedge funds worldwide.

And in some quarters, the SWFs were seen as a threat to national security. That worry came to a head, ironically enough, in the ultimately failed attempt in 2006 by Dubai Ports World to acquire some of America’s biggest East Coast seaports. DP World is the principal arm of the now crippled Dubai World. The deal was thwarted by objections in the U.S. Senate.

"Should we be outsourcing our own security?" U.S. Democratic Senator Charles Schumer said of the spectre of state-controlled Arab investors in charge of inspecting cargo coming into New York and New Jersey ports.

Stephen Harper got into the act. While sanguine about the loss of Alcan, Dofasco, Inco and other iconic firms to foreign private-sector buyers, Harper vowed to block takeovers by government-controlled SWFs on national security grounds.

That paranoia was immediately reminiscent of the much-feared Japanese accumulation of Western assets in the 1980s. Japan was then the world’s top creditor nation and seemed poised to take over America’s industrial crown jewels. Japanese purchases of Columbia Pictures and the Rockefeller Center were seen as a mere appetizer.

You know the rest.

Japan’s overheated economy was peaking as it began its short-lived U.S. foray, which was soon followed by the implosion of the Japanese property and stock-market bubbles. For good measure, the Rockefeller Center and Hollywood purchases were dumb. They were made at the top of the market – a beginner investor’s folly – and lost a tonne of money for their Japanese buyers. The Japanese economy was to endure 10 years of stagnation in the 1990s – Japan’s so-called "lost decade" – and the Land of the Rising Sun has not fully recovered to this day.

Despite that object lesson, no thought was given to a similar fate for the more recent SWF bubble. After peaking at about $3 trillion in 2007, total SWF assets had plummeted in value by May of this year to a mere $1.8 trillion.

The obvious culprits are the global recession and resulting 11 per cent drop in global trade that sharply reduced Western cash inflows to goods exporter China and oil producer Dubai.

Less obvious is that the wet-behind-the-ears SWFs made lousy investments, as the Japanese had done in their moment of exuberance.

Abu Dhabi’s Investment Authority snapped up $7.5 billion worth of stock in Citigroup Inc. at prices in the mid-$30s. The stock in that U.S.-government controlled basket case now trades in the $4 range.

The Beijing-controlled China Investment Corp. was taken to the cleaners when the principals of Blackstone Group LP, America’s biggest private equity firm, decided to cash in through an initial stock offering. The Chinese paid $3 billion for a slab of Blackstone equity, or about $38 a share. That stock now changes hands at about $14 a share. Dubai World’s piece de resistance of poor investing judgment was the billions of dollars in loans it made to property giant Nakheel, developer of the much-photographed, palm-tree-shaped resort a few hundred metres off the Dubai coast. That landmark is a sort of Sydney Opera House run amok that always struck me as an overblown symbol of national coming-of-age rather than a viable financial proposition.

Not everyone has been crying in their beer since the Thursday shocker, despite the extensive collateral damage Dubai World has wreaked on global capital markets. The managers of the much older sovereign wealth funds of Alberta, Alaska and Norway, mocked for their conservative investment practices when the newbie SWFs were spending with reckless abandon, have been vindicated.

And in contrast to the prolonged Japanese decline, China, Korea, Kuwait and almost all of the other SWF-owning states will be on the mend relatively soon as the global economy recovers, enabling them to backstop losses on their SWFs.

Just as the fear of Japan was misplaced, so too the SWFs of communist and Arab nations. The concern should have focused on the SWF’s ineptitude.

The crack-up of Dubai’s once stupendously endowed SWF is also a powerful reminder that it’s wrong to associate investing smarts with those in possession of large sums of money. The world’s biggest banks not long ago were awash in more money they could intelligently handle. And tens of millions of workers are unemployed today as a result of the ill-advised bets they made. The everyday analogy is the lottery winner uncertain of what to do with his windfall who finds himself broke within a year. But at least his folly is not the cause of widespread misery for others.

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Joanna Lohman, a real estate specialist and professional soccer player, can add another job to her plate: general manager of the Washington Freedom.

The team is expected to announce the appointment in coming days. Her first agenda item as GM of the professional soccer team is changing the team’s name.

“We created the name over here in Tokyo,” said Lohman, who is currently practicing the sport overseas. “One idea was the Freedom Reserves, but as athletes we don’t aspire to be a reserved player.”

The new name of the team will be Freedom Futures. An official announcement is expected soon from the team.

Lohman said the name draws attention to future soccer players in the U.S. and to “the future of America for business.” She said her primary goal is to help players in the league secure long-term careers in the corporate world.

Future Minded

Lohman, also a vice president with Tenant Consulting LLC, holds a business and mathematics degree from Penn State.

“Being the GM of a sports team is the marriage of my skill sets,” she said, who also has a long-term goal to be GM of the Washington Redskins. “I truly believe the [Women’s United Soccer Association] has untapped resources in these amazing, talented players, who don’t realize their potential and power that can be [used] in corporate America.”

She admits it’s a struggle for some female players to realize that potential.

“When you are so passionate about soccer it’s hard to view yourself in a non-sports world position,” she said.

Her first plan of action as general manager is to put a good product out on the field by recruiting the best players to play.

“We have one of strongest teams in the country and will continue that,” she said.

In terms of business, she said this year will be a growing period for the team. The 2010 season starts in early spring.

“I want players to feel they can come here and learn on and off the field. I want to get our players incorporated in local businesses and charities and learn to walk and talk and be a valuable resource to the company.”

She said those skills will come with resume building and interviews, or “anything to build a platform for a career.”

Player update

The 27-year-old is currently in Japan with her Washington Freedom teammate Rebecca Moros, practicing with the NTV Beleza.

She has been training overseas since early September and was expected to leave Oct. 22, but is opting to stay another month because of the “incredible” experience she has been having with the team. She’s hoping to get better at the sport in order to return to the U.S. National Team, where she helped the U.S. women’s team win the Peace Cup in China, and the Penn State player was named Pennsylvania’s NCAA Woman of the Year in 2004.

“The training environment is so unique and different. In [the U.S.] we are strong athletes and run fast and jump high. Here they train in small, tight spaces and are so good with their feet and the ball.”

While she was invited to practice with NTV Beleza in Japan, she cannot play in the games because she does not have a work Visa.

It’s hard to get one in Japan, she said, because their work Visas require a minimum payment of $25,000 a year. “But often that’s too much for a company to pay when they can pay someone a bit less in Japan.”

Plus, she admits, “five hours of working on top of [practicing] would be a bit much. It’s been physically demanding and when I’m not playing I like down time.”

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The Walt Disney Co’s breakthrough deal to build one of its signature theme parks in Shanghai marks a major advance for Western media and entertainment firms trying to crack a tough China market.

Wednesday’s government approval for the theme park caps years of on-off talks between Disney and Chinese authorities, who are wary of too much foreign influence in the highly sensitive sectors of media and popular culture.

The new park planned for the Pudong new district of China’s financial capital will take years to contribute to a company that rakes in more than $30 billion in annual revenue.

But analysts see the move as an important step forward for Disney and other Western media firms to make inroads into the vast and untapped Chinese media and entertainment market.

“They’ve been laying the groundwork for a park for many years by exposing the population to Disney properties, film, TV and merchandising,” said Christopher Marangi, senior analyst with Gabelli and Co in New York.

“Adding a physical presence in the form of a park would really complete and add to the value chain in China.”

The breakthrough comes just two weeks ahead of a scheduled trip to China by U.S. President Barack Obama, a visit analysts had expected to help spur a decision on the park.

The deal has been seen by some as a feel-good bilateral story, highlighting U.S. cultural influence and an investment that does not entail U.S. manufacturing job losses, while China gets a boost to its leisure sector and to domestic demand as it tries to trim its dependence on exports.

For Shanghai, China’s financial hub, Disneyland could keep tourists coming after the curtain falls on the 2010 World Expo.

And Disney will hope the park, with an estimated price tag of $3.6 billion, will fare better than its Hong Kong property, which has struggled with lower-than-expected attendance and financial losses since it opened in 2005.

SMALL STEP FORWARD

Disney, Time Warner and News Corp have surprisingly little to show for their years of effort and extensive investments in China.

“I wouldn’t say this is a one-off gain,” said Vivek Couto, executive director of Media Partners Asia, on the deal’s broader significance for foreign media’s drive for a foothold in China.

“But it’s in a non-sensitive space. It’s a theme park. It’s got nothing to do with television content that can be politically sensitive or competitive with other major Chinese companies in the space.”

Even privately held domestic media can find the going tough, as leading Internet portal Sina found recently when it scrapped a merger with Focus Media due to government stonewalling over a deal that would have created a major new domestic media player. 

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The U.S. government’s auto trade- in program probably lifted retail sales in August to their biggest gain in more than three years and boosted factory output, economists said before reports this week.

Total purchases climbed 1.9 percent, the most since January 2006, according to the median of 60 estimates in a Bloomberg News survey ahead of Commerce Department figures due Sept. 15. The Obama administration’s “cash for clunkers” plan also helped industrial production in August to its first back- to-back monthly increase since 2007, economists said.

Americans flocked to auto showrooms last month to take advantage of the incentive program while purchases of other items were subdued even as evidence mounts that the worst recession since the Great Depression is ending. With unemployment forecast to reach 10 percent by the end of the year, consumer spending likely won’t lead the recovery.

“When you get to the fourth quarter, the blip from cash- for-clunkers falls out,” said Brian Bethune, chief financial economist at IHS Global Insight in Lexington, Massachusetts. “The production recession is over and the housing recession is over. When you combine those two, they add up to a fair amount of traction in the overall economy.”

Excluding automobiles, retail sales probably rose 0.4 percent, economists said.

The recession “has brought on a new focus on frugality,” Mike Duke, chief executive officer for Wal-Mart Stores Inc., said last week at a conference in New York. “Clearly customers are watching every penny.” The world’s largest retailer is offering discounts to attract shoppers, Duke said.

Beige Book

In the Federal Reserve’s Beige Book business survey, published two weeks before officials meet to set monetary policy, the central bank reported “flat” retail sales in July and August and cited some auto-industry contacts as saying the cash-for-clunkers effect may be temporary. Factories, meanwhile, showed “modest improvements” in most regions, the Fed said.

The auto plan, which ended Aug. 24, offered buyers discounts of as much as $4,500 to trade in older cars and trucks for new, more fuel-efficient vehicles. The program produced almost 700,000 purchases, the Transportation Department said.

Cars and light trucks sold at a 14.1 million annual pace last month, up 25 percent from July, according to industry figures instant credit report. It was the biggest gain since October 2001.

Industrial Production

Last month General Motors Co. called back 1,350 union workers, its biggest one-time increase in jobs since 2006, as it ramped up second-half production in part to meet demand linked to the government trade-in program.

The Fed’s measure of production, due Sept. 16, probably rose 0.6 percent, the most since October, according to the survey. The report may also show the proportion of plant capacity in use in the U.S. climbed to 69.1 percent, the highest in five months.

Manufacturing in the New York region posted its first back-to-back monthly expansion since January 2008, economists said before a report due Sept. 15. The New York Fed’s general economic index likely climbed to 15 this month from 12.1 in August, according to the survey.

The housing market also is showing early signs of a rebound. A Commerce Department report due Sept. 17 will show builders broke ground on 600,000 new homes last month at an annual rate, a 3.3 percent gain and the fastest pace since November, according to the survey median.

The Standard & Poor’s homebuilder supercomposite index has gained 35 percent since the beginning of the year, compared with 15 percent for the broader S&P 500 index.

‘Ups and Downs’

With the jobless rate at a 26-year high and 6.9 million job losses since the recession began in December 2007, policy makers are trying to temper expectations for a robust economic turnaround. Treasury Secretary Timothy Geithner last week said the government is moving to withdraw some of its support for financial markets, while cautioning that the recovery will have “more than the usual ups and downs.”

The economy will expand at a 2.9 percent annual rate in the July-through-September period, according to the median of 61 estimates in a monthly Bloomberg News survey. Growth is projected to slow to a 2.2 percent pace during the last three months of the year.

The world’s largest economy contracted 1 percent in the second quarter, the Commerce Department said last month, the fourth straight quarterly drop. That made the downturn the longest contraction since such records began in 1947.

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