Thumbs-down given to US bail-out
Investors gave an initial “thumbs-down” to plans by the Obama administration to spend up to $2tr to clean up the financial system, reported the Financial Times. While there was generally agreement over the additional restrictions to be applied to banks which receive funds, there was disappointment that the detail over much of the funding mechanism was lacking. Treasury Secretary Timothy Geithner called the plan “comprehensive and foreceful”, but market participants showed their disapproval by selling US shares aggressively.
Alexander Cockburn: why did Obama not see these problems coming? 
Markets slide on rescue scepticism
Stocks fell in America and Asia on scepticism that new proposals designed to rescue the US banking system will succeed. In New York yesterday the Standard & Poor’s 500 Index slumped 4.9 per cent after the announcements by the US Treasury Secretary. In Asia the MSCI Asia Pacific Index, excluding Japan – Tokyo is closed today for a holiday – fell 1.9 per cent. Hong Kong’s Hang Seng Index dropped 3.2 per cent, with HSBC Holdings sliding 4.8 per cent. In London the FTSE 100 Index opened 0.70 per cent lower after a 2.2 per cent drop yesterday.
The Obama White House: Obama hits the road to sell the stimulus plan
The Obama White House: Krugman says revival plan will fail
Bankers accused over risk control
Former bosses of HBOS and Royal Bank of Scotland offered a “litany” of apologies to a parliamentary select committee enquiry over the failure of the banking system yesterday, reported the Financial Times. But even as the executives repeatedly said sorry, ex-HBOS directors faced “fresh accusations” of ignoring warnings from a former head of regulatory risk. The claims were made by Paul Moore, who was dismissed in 2005, but were denied by both the bank and ex-chief executive Andy Hornby. George Mudie, Labour MP for Leeds East, told them “he was right and you were wrong”.
The Mole: Brown refuses to 'do an Obama' and cap bonuses
Pros and Cons: bonuses for bankers
Fresh UK unemployment fears
There are fears that data to be released by the government tomorrow will show that unemployment “shot up” to two million in the final quarter of last year, said the Guardian. The City is “bracing itself” for bad news on the measure as it is expected that 100,000 jobs were lost in January alone, after the Woolworths closure. There have only been two previous six-figure increases in the unemployed count since 1971. One was during the early 1980s recession and the other in March 1991, which saw the record 119,000 rise.
Wanted: domestic servants for the political classes
Trade gap falls on import drop
The UK trade gap narrowed, as a “steep drop” in imports due to the recession led to more of a decline than was expected, reported the Times. As the national appetite for overseas goods diminishes with effects of the credit crunch, the deficit has reduced to £7.4bn, its lowest level for a year and a half. Economists gave a warning, however, that it was not all good news as the value of exports, which should be increasing with the weakness of the pound, eked out only a “meagre gain” of 0.3 per cent in December and actually fell eight per cent in the fourth quarter.
Rio Tinto governance confusion
Rio Tinto, currently in “intense” negotiations with the board of Chinese resources company Chinalco over a capital injection, has issues of corporate governance to face, reported the Daily Telegraph. According to information coming out of the region, the deal would see Chinalco making an investment of "up to $20bn” in Rio, raising its stake in the company to 11 per cent. However shares in Chinalco’s parent company are currently suspended after rumours of a board reshuffle and there is “confusion” about who is actually running the group.
...in brief..................
China faces prospect of deflation and Baugur quits UK HQ
China is facing the prospect of deflation in the opinion of several economists, reported the Financial Times. After data on Tuesday revealed that inflation dropped to one per cent in January - its slowest level in two and a half years - economists warned that it could be negative as soon as February…………
How developing countries can save the bankrupt West
Struggling sportswear retailer JJB is putting its loss-making fashion chains into administration as it faces a “critical deadline” over its future, said the Independent. It has until Thursday to secure “alternative financing” when a two-month stay of execution with its banks come to an end…………
Stylo, the owner of the Barratt and Priceless shoe chains issued a statement yesterday warning that 5,400 jobs were at risk ahead of a creditor vote on Thursday, reported the Daily Telegraph. The main problem is that landlords fear that the administration process will result in empty properties…………
Credit Suisse Group, Switzerland’s second-biggest bank after UBS, reported a 6.02bn Swiss-franc fourth-quarter loss, reported Bloomberg.com. The deficit was worse than analysts had expected and will increase pressure on the bank, which unlike UBS has not received government aid…………
Swiss bankers fear FBI sting at Miami art fair
Sales of “super-prime” property in central London have “seized up” as house prices have collapsed and bonus money disappeared, reported the Times. Estate agent Knight Frank said the number of homes for sale above £10m had fallen by 34 per cent in the past year as owners take their homes off the market…………
Baugur handed over the keys to its UK headquarters to administrators PricewaterhouseCoopers yesterday, consigning the “majority” of its staff to redundancy with one week’s pay, said the Guardian. The office was the “nerve centre” of its 50,000 staff UK retail empire…………
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