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Huge stress, says Bernanke
Ben S Bernanke
Pipeline Project
Oil may cross $115 by Dec
One-time charge likely for spectrum beyond 5MHz
Inflation to ease by March, says Montek
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‘Global flower export market shrinking’
Views sought on cross media ownership curbs
Talks underway with MoD over spectrum release, says Raja
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Washington, September 24 "Despite the efforts of the Federal Reserve, the Treasury, and other agencies, global financial markets remain under extraordinary stress," Fed chairman Bernanke said in a testimony to the US Senate committee on banking, housing and urban affairs. Supporting the US Treasury's proposal to buy illiquid assets of financial institutions, he said such a move would create liquidity and also reduce investor uncertainty about the current value and prospects of financial institutions. "Certainly, the shortcomings and weaknesses of our financial markets and regulatory system must be addressed if we are to avoid a repetition of what has transpired in our financial markets over the past year," he pointed out. On buying illiquid assets, Bernanke said removal of the same from the balance sheets of financial institutions would help to restore confidence in the financial markets. Further, the action would enable banks and other institutions to raise capital and to expand credit to support economic growth, he added. According to him, the downturn in the housing market has been a key factor for the strained condition of financial markets and the economic slowdown. "In the financial sphere, falling home prices and rising mortgage delinquencies have led to major losses at many financial institutions, losses only partially replaced by the raising of new capital," he noted. The firms which have been battered by the financial crisis include, Fannie Mae and Freddie Mac, Lehman Brothers and American International Group (AIG). With investors losing confidence, these companies saw their access to liquidity and capital markets increasingly impaired and their stock prices dropped sharply. — PTI
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$30-bn currency swap facility
The Federal Reserve, in coordinated action with foreign central banks, today plowed $30 billion into money markets overseas, part of an ongoing effort to fight a global credit crisis.
The Fed's action taken at 1030 IST sets up temporary "swap" arrangements to supply dollars to the central banks of Australia, Denmark, Norway and Sweden in exchange for their currencies. "These facilities, like those already in place with other central banks, are designed to improve liquidity conditions in global financial markets," the Fed said. "Central banks continue to work together during this period of market stress and are prepared to take further steps as the need arises," the Fed added. The new swap arrangements will provide up to $10 billion each to the central banks of Australia and Sweden and $5 billion apiece to the central banks of Denmark and Norway.— AP |
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Buffett to invest $5 bn in Goldman
New York: Billionaire investor Warren Buffett-led Berkshire Hathway will invest $5 billion (Rs 22,500 crore) in Goldman Sachs, the troubled investment bank that has transformed into a commercial bank to ride out the US financial storm.
Goldman Sachs has also announced plans to raise $2.5 billion through a public offering that would help the financial giant raise a total of $7.5 billion (Rs 33, 750 crore), a statement said. The group has reached an agreement to sell $5 billion of perpetual preferred stock to Berkshire Hathaway in a private offering. |
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Pak, Iran inch closer
Afzal Khan writes from Islamabad Pakistan and Iran have made "significant progress" on the much-delayed Iran-Pakistan gas pipeline and the foreign ministers of the two countries will meet in early October to flesh things out. According a report received from New York, information minister Sherry Rehman told reporters after President Asif Zardari's meeting with Iranian counterpart Mahmoud Ahmedinejad that both countries set up a joint company with Iran providing the required 'sovereign guarantee'. Five 'deputy ministers' from each side will meet to co-ordinate their efforts towards the establishment of the pipeline project. Sherry described the meeting between President Zardari and Iranian President Mahmoud Ahmedinejad as 'very good'. The pipeline is supposed to be a tripartite project extending to India as well but has met stiff opposition from the United States that has delayed its finalisation. India is also insisting on iron-clad security guarantees for the project, voicing particular concern that it would pass through the troubled Balochistan province. Sherry said Zardari has another important meeting with French President Nicolas Sarkozy and invited him to visit Pakistan which he accepted. She said foreign minister Shah Mahmood Qureshi would be staying back for a meeting on the US-Pakistan strategic relationship to be held on September 28 in Washington. The Friends of Pakistan conference, which comprises G-8 countries, China and Saudi Arabia, will take place this week and 'more people' are expected to join in, she said. The minister gave the media a glowing account of the Bush-Zardari meeting, saying that the 'chemistry' between the two leaders was 'strong'. The US president had expressed praise for the courage of President Zardari and the forbearance with which he had handled personal tragedy. Bush also condemned the terrorist attack in Islamabad and expressed sympathy for the families of those who had lost their lives. Sherry said Zardari had briefed Bush on Pakistan's priorities, which were economic development and the fight against terrorism. The minister said Bush was appreciative of the role Pakistan was playing in the war against terrorism.
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Oil may cross $115 by Dec
New Delhi, September 24 Consequently, the crude oil prices, which are currently hovering around $100 a barrel are expected to cross $115 by the end of current fiscal, says the study. In later part of the year, a high degree of speculation on uncertain events like tensions between oil-rich economies or supply outages would keep the market volatile in near term, Assocham president Sajjan Jindal said. The chamber expects the average crude oil prices for the year between $115 and $118 per barrel. The current average price for 2008 (until September 20) is $115 per barrel, it said. The global crude oil prices had reached an all-time high of $147.27 per barrel on July 11. While demand from developing countries like China and India for crude would remain robust, the supply was expected to remain constricted due to rising cost of production and exploration, ageing of existing oil fields and depletion of conventional sources, Assocham said. |
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One-time charge likely for spectrum beyond 5MHz
New Delhi, September 24 Talking to reporters on the sidelines of a Department of Post function here, communication minister A. Raja said, "We are discussing the issue with ministry of finance. A one-time charge could be there over and above the adjusted gross revenue of the telecom companies for spectrum above 6.2 Mhz. We expect to take a decision by the end of October". The move will raise the cost of spectrum for operators. At present, GSM operators like Airtel, Vodafone, Idea, BPL hold more than 6.2 Mhz of spectrum. Earlier, telecom regulator TRAI had also recommended a one-time spectrum charge for 2G spectrum beyond 10 MHz for GSM operators and five MHz for CDMA operators. The regulator had suggested that for every additional one MHz beyond 10 MHz in Mumbai, Delhi and category A circles, operators should be charged Rs 16 crore. But DoT's view is since GSM spectrum allotment beyond 10 MHz is rare, and there is no spectrum allotment beyond 5 MHz for CDMA operators, no substantial additional revenue would accrue to the government. Therefore, it had been suggested that the TRAI mandated one-time spectrum acquisition charge be levied for any allotment beyond 6.2 MHz for GSM operators. Interestingly, RCom chairman Anil Ambani has written several letters to DoT and the PM in support of this demand.
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Inflation to ease by March, says Montek
The government is quite confident of bringing inflation rate down to the single-digit level before the end of the financial year, according to Planning Commission deputy chairman Montek Singh Ahluwalia. Talking to reporters accompanying Prime Minister Manmohan Singh on his trip to the US and France, he said the government was concerned over the rate of inflation, which stood at around 12 per cent. However, the tendency of constant increase had started disappearing. ''We have taken a number of steps to contain inflation. However, we don't favour such harsh measures which will only affect the aam admi,'' Ahluwalia added. The land acquisition for industry, he agreed, had become a major issue in different states. ''How to handle this is a complicated issue. Since it is a state subject, state governments will have to work out a creative mechanism for acquisition.” However, he did not consider this as a problem that would affect industrialisation. Asked what lesson India had learnt from the global economic meltdown, Ahluwalia said it had only vindicated India's stand that liberalisation must be planned properly.
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‘Global flower export market shrinking’
Chandigarh, September 24 This was stated by S Jafar Naqvi, president, Indian Flowers and Ornamental Plants Welfare Association (iFlora), here today. He said already the global flower export market was shrinking due to recession and the slow production of flowers in India. “The domestic market for flowers is growing, but the production has failed to keep pace with the demand as area under cultivation has not increased. Even as the flower prices in the global market continue to fall, prices in the domestic market are high. Once the buffer enjoyed by the floriculture sector in terms of import duty is withdrawn by 2010, the other countries will start exporting their cheaper flowers to India, leading to a huge crash in prices here,” he said. India mainly exports roses to countries like Japan, The Netherlands, West Asian countries, and has recently started exporting to Australia. It is learnt that as against flower exports worth Rs 650 crore in 2006-07, the exports fell down to Rs 448 crore in 2007-08, and are expected to dip further this year. On the other hand, the domestic market has shot up from Rs 1,000 crore to Rs 1,500 crore in the past two years. Naqvi said globally the flower market was worth $11 billion, and India had a miniscule share of less than 0.5 per cent share. “High input costs and lack of technical know-how has prevented growth in the floriculture sector. Though the total area under floriculture is 1.5 lakh hectare, the area under cut flower cultivation (which is mainly exported) is just 3,000 hectare. Of this, only 800 hectare is under export-oriented (climate controlled green houses) production,” he said. Naqvi said though iFlora was trying to create awareness about the high returns that can be fetched from floriculture, by organising Internatinal Flora Expos, the government, too, should step in and provide improved infrastructure, authorised flower auction markets and better linkages between flower growers and consumers.
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Views sought on cross media ownership curbs
New Delhi, September 24 In the latest consultation paper, TRAI has sought views on whether to limit the number of channels per broadcaster, geographical reach, market share or how much of a television or radio channel, a newspaper can own, besides the kind of restrictions on such ownership. The TRAI has brought out the consultation papers following recommendations sought by ministry of information and broadcasting. The objective of the exercise is to provide for “competition, diversity and plurality of players, news and views.” The issues under consideration are, cross media ownership across different segments of media such as print/television/radio (horizontal integration), cross holding restrictions to prevent consolidation, including ‘vertical integration’ within a media segment such as television or radio, market share in the city/state/country within each media segment, cross control or ownership across telecom and media segments. Currently, such restrictions are applicable to the DTH sector and FM radio. For the former, broadcasting companies and cable networks can only own 20 per cent equity. The ministry has identified the issues that are to be deliberated more widely and deeply as: The need for cross media and ownership restrictions, and whether the existing laws are adequate to address the concerns or a separate legislation is needed; With more and more broadcasting and telecom companies entering into delivery of service, whether there should be restrictions on ownership of cable/DTH/IPTV/mobile TV companies by broadcasting/telecom companies or vice-versa and study the policy structure and restrictions in other parts of the world. Guidelines on cross media restrictions are to also bring a level-playing field amongst players in similar businesses such as IPTV and mobile TV.
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Talks underway with MoD over spectrum release, says Raja
New Delhi, September 24 Telecommunication and information technology minister A Raja said here today that talks with the MoD were underway for releasing spectrum from the armed forces for civilian communication use. "The talks are being held with the defence ministry for release of spectrum. The national security adviser is on the job. Probably, by next month, we are going to meet," he said on the sidelines of a telecom summit here. DoT has been looking at a release of at least 25-30 MHz of spectrum for 3G services by the MoD. The original demand from DoT was for 45 MHz, which has now been scaled down to 25-30 MHz. However, reports suggested that the MoD was facing problems in releasing the spectrum as it does not have much spectrum that can be spared for more of 2G services. |
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Dhoni to bat for Lafarge
New Delhi, September 24 "The new TV commercial holds special importance for all of us at Lafarge because unlike other commercials, this ad in essence is based on reality," Lafarage India CEO Uday Khanna said. "The ad and our association with M S Dhoni reinforces our belief in our sense of pride, determination and achievement," he added.— PTI |
Mumbai IFC lends $100 m to Idea: IFC, a World Bank member, has lent $100-million loan to Idea Cellular to strengthen its network and enable the telecom company to offer services in Bihar. "Improving communications infrastructure creates opportunities for many people and businesses in India, particularly in under-served areas such as Bihar," IFC director Mohsen A Khalil said in a release.— PTI Vedanta defers rejig plan: Diversified metals and mining major Vedanta Resources has deferred its corporate restructuring plans in the wake of developments in the global financial markets and feedback from its investors. The company, however, said it remains committed to simplifying its structure in the interest of investors when the market conditions turn favourable.— PTI Credit policy review on Oct 24: RBI Governor D Subbarao will present the 'Mid-Term Review of the Annual Policy Statement' (credit policy) on October 24, the Central bank said on Wednesday.— PTI New Delhi India Post gets new logo: In an effort to spruce up the image of Indian post which has been lagging behind the high-flying courier companies, the Indian Posts and Telegraph Department on Tuesday launched a new logo. Launching the new logo, communications and IT minister A. Raja said it aimed to give the postal service a corporate look that reflected its new approach towards business. — TNS Kuala
Lumpur
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Federal Reserve chairman Ben S Bernanke today said global financial markets were under "extraordinary stress" and an action by the Congress was urgently required to stabilise the situation to avert any serious consequences to the
economy.
