Markets slide on global slump
Stocks around the world collapsed, with the US markets re-opening after Monday’s holiday and suffering a rout. The S&P 500 Index closed 4.6 per cent lower as President Obama signed off the country’s $787bn stimulus bill. In Asia the falls continued, with the MSCI Asia Pacific Index dropping for a fourth day, to end the session 1.1 per cent down. After the Federal Reserve Bank of New York’s general economic index sank to its lowest level ever, commodity prices tumbled, with Crude oil falling 6.9 per cent. The FTSE 100 Index was 0.52 per cent higher in early trade, after falling 2.43 per cent yesterday.
Alexander Cockburn: Is Obama really the man to steer the US off the rocks 
Deflation expected to hit UK
Inflation fell less than expected in January, but the figures “did little to dispel fears” that Britain could soon be hit by deflation, reported the Independent. While Consumer Price Index inflation “held up” at 3 per cent, falling only slightly from 3.1 per cent the month before, the Bank of England is expected to “keep cutting interest rates”. Retail Price Index inflation stayed in positive territory, at 0.1 per cent, its lowest level for 49 years, and is expected to turn negative soon. The measure includes house prices, which “continue to tumble”.
Mervyn King is failing the British economy
UK’s credit rating under threat
Britain could be “stripped” of its AAA credit rating as a result of the government bank bail-out, reported the Daily Telegraph. Ratings agency Standard & Poor’s confirmed its “stable” outlook for the UK’s debt last month but may now remove its “prized” AAA rating. The change has been prompted by the government’s asset protection scheme, whereby it exposes the taxpayer to losses on the banks’ “toxic debt”. A downgrade would be “calamitous”, as Britain is already on course to borrow an extra £500bn over five years and the costs would “soar”.
Bankrupt Britain: how it could happen
RBS to pay bonuses of £950m
Royal Bank of Scotland is to pay its staff bonuses of up to £950m for 2008 in a “government-approved deal”, reported the Financial Times. The payments are to be made in spite of its £20bn taxpayer-funded bail-out, fuelling the “political furore” over bonuses for bankers. While chancellor Alistair Darling “hailed” the arrangement, which pays out only £175m in cash, others said the “deferred” awards to staff would dwarf the cash payments. Darling said the model, which involves a performance-related element, would be applied to other government-funded banks.
Pros and Cons: bonuses for bankers
GM requests further aid
General Motors asked for $16.6bn in new loans, “more than doubling the aid to date”, reported Bloomberg.com.The struggling carmaker said that “at least” $9.1bn more in loans is needed to complete its restructuring, with the figure rising to a possible $16.6bn if the economic situation deteriorates further. This comes on top of the $13.4bn already received since December. The company plans to reduce its workforce by 19 per cent globally, place Saab in administration, close five US plants and “sell or shut” its Hummer unit.
Slash rates, save car plants - the arguments against
Allen Stanford on fraud charge
Sir Allen Stanford was charged with fraud by the US Securities and Exchange Commission yesterday, said the Financial Times. The billionaire Texan, who funded a recent cricket tournament in the West Indies, was alleged to have committed a fraud of “shocking magnitude”, centring on $8bn of certificates of deposits which promised “unsubstantiated” returns. Despite telling investors that their money was monitored by a team of 20 analysts in Memphis, the SEC said “only Sir Allen” and his chief financial officer know where the multi-billion portfolio is.
People: Sir Allen Stanford apologises for getting too close to England WAGs
...in brief..................
Gold surges on global panic and Mandelson in Starbucks tirade
Gold “surged” to an all-time high against sterling and a number of other currencies on mounting worries that authorities globally are embarking on a “Zimbabwe-style” devaluation, reported the Daily Telegraph. It reached $964 an ounce yesterday on fears over the banking crisis in Eastern Europe…………
Cash was king - now gold is God
Oaktree Capital Management has made its first big investment in the UK, taking a 35 per cent stake in estate agency chain Countrywide, said the Times. The group was taken private at the peak for £1bn by private equity fund Apollo, and under the new deal lenders will write off nearly £600m of debt…………
Asda’s market share hit a “record” 17.2 per cent in 2008 and the retailer has made a “good start” to this year, said the Financial Times. Its reputation has “hit a chord” with British consumers, who are targeting lower-priced retailers in the economic downturn…………
Donald Trump’s Atlantic City-based casino group has gone bust “for the third time”, reported the Independent. The operation filed for bankruptcy protection after missing a deadline on a $53m bond payment, but Trump resigned from the board last Friday in frustration at the decision…………
Societe Generale, France’s third-biggest bank, made a profit in the fourth quarter on domestic consumer lending, reported Bloomberg.com. Net income came to €87m as its customer loan business “outweighed” losses at the international retail banking and asset management arms…………
Business secretary Peter Mandelson launched an “extraordinary tirade” against the head of Starbucks yesterday, reported the Guardian. Chairman Howard Schultz said the UK was in an “economic spiral”, which angered Mandelson, who accused him of spreading “unnecessary misery”…………
People: Mandelson declares war on Starbucks
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