Tuesday, 28 October 2008

Newspapers : 28th October

Iceland lifts rates to 18% from 12%. The FT (en)

We can never be part of a federal Europe. Norman Tebbit, The Telegraph (en)
" ...In 1988, Mrs Thatcher's "guiding principles for the future" of Europe were simple.
First, that "willing and active co-operation between independent sovereign states is the best way to a successful community". Secondly, that "community policies must tackle present problems in a practical way". Thirdly, she saw a place for "policies that encourage enterprise" and, lastly, that the "most fundamental issue" was the European countries' role in defence.
Those principles still hold good. What has changed is the recognition by Giscard that total union of all member states is unattainable, and that the New Europe must accommodate both the United European States of those willing to unite and the sovereign national states wishing to remain independent ..."

Financial trouble grows for oligarch with friends in high places. Mathieu Robbins and Vesna Peric Zimonjic, The Independent (en)
" ... Oleg Deripaska, the cash-strapped Russian industrial tycoon, is facing problems with his investments in the Balkan republic of Montenegro and is suing the government of the country for €300m (£240m). Mr Deripaska, who owns the country's biggest aluminium plant, has become embroiled in a dispute with the newly independent state where investors including Nathaniel Rothschild are also investing in real estate and developing exclusive tourist spots ...
... Mr Deripaska, who is already relying on the Russian Prime Minister Vladimir Putin to bail him out in refinancing about $2.5bn (£1.6bn) in loans due to be repaid this week. The sum is part of a $4.5bn loan Mr Deripaska took out for the acquisition of a 25 per cent stake in the Russian metal producer Norilsk Nickel, a situation that sees him opposed to a rival billionaire, Vladimir Potanin, in a fight to control the company ... "

At this rate, it won't be long before we're joining the euro. Steve Richards, The Independent (en)
" ... The long list of those keeping their fingers crossed here that the Bank of England will deliver a headline-grabbing reduction next week includes home-owners with big mortgages, small businesses, big businesses, the Chancellor of the Exchequer and the Prime Minister ...
... Their subservience is the consequence of the government's supposedly one unequivocally successful policy. The Bank of England's independence is seen widely as Mr Brown's great historic move, the one that brought about economic stability for a decade ...
... Until quite recently the government was following one economic policy and the Bank of England another ..."

Mandelson should release diary, says EU . David Charter, Francis Elliott and Kevin O’Flynn, The Times (en)
" ... Lord Mandelson’s erstwhile colleagues in Brussels are increasingly concerned that the reputation of the European Commission's trade department is being dragged through the mire by continued allegations over his relationship with the oligarch ...

VW vies for title of world’s biggest company. Richard Milne, The FT (en)
" ... Volkswagen was on Tuesday vying for the title of the world’s largest company by market capitalisation, growing by another €130bn on the back of panic-buying by hedge funds desperate to cover their losses. Shares in Europe’s largest carmaker soared as high as €1,005, having closed at about €210 on Friday.

EU approves German bailout scheme. Nikki Tait, The FT (en)
"... The European Commission, the European Union’s executive body, made clear that the package included a ”comprehensive set of commitments” designed to ensure that it would be not abused and create undue distortions in competition ...
... The package has three elements: a recapitalisation scheme that will make new capital available to banks and insurers in exchange for shares; a guarantee scheme covering new issues of short and medium-term debt; and a temporary acquisition of assets, provided these assets are bought back after no more than three years without the government making a loss ...

Editorial comment: Borrow and spend. The FT (en)
" ...Gordon Brown, the UK prime minister, has conceded that his long love affair with Prudence is over ...
... But, in the short term, the case for fiscal stimulus looks stronger by the day, not only in the UK, where the economy shrank alarmingly in the third quarter, but also in the US and the eurozone. The non-financial sector is struggling badly ...
... Strange as it sounds, if recession deepens, writing cheques to citizens looks like the prudent response. Under the circumstances, such handouts are likely to relieve credit constraints and allow fresh consumer spending. And if they are able to cushion a hard landing, they will prove to be value for money. Most developed countries – in particular the UK – have room to take on more public debt; they cannot really afford not to.

Job fears hit French consumer confidence. The FT (en)
" ... Companies are expecting an intensification in job cuts, which is something that’s also being felt by consumers so you’ve got two reflections of the worsening state of the labour market,” she said. Interest in France will focus on unemployment figures which are to be published on Thursday. The economy is widely believed to be in recession now after contracting by 0.3 percent in the second quarter and probably shrinking again in the third ..."

Denmark Is Rethinking Its Spurning of the Euro. Carter Dougherty, The NYT (en)
" ... The Danish experience has underscored what American and European governments achieved with monumental bailout packages for banks — and what they did not ...
... Denmark, a sometimes skeptical member of the European Union that has so far refused to abandon its krone for the euro, is also finding out how difficult it can be to go it alone. On Monday, the National Bank of Denmark and the European Central Bank cemented the latest in a string of global currency swap agreements, emergency measures aimed at replacing a currency market that has seized up. The European Central Bank in Frankfurt will provide Denmark 12 billion euros “as long as needed,” the two central banks said in a statement ... "

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