World Bank President Zoellick Pod Cast on EU Coming to the Rescue of Weaker Member Countries

Concerns over currency failures are mounting

Robert Zoellick, World Bank president, has called for European Union-led co-ordinated global support for the economies of central and eastern Europe, even as divisions emerge in the EU over handling the crisis.

Speaking to the Financial Times amid turmoil in central and east European markets yesterday, Mr Zoellick said the bank was trying to work with the International Monetary Fund and other multilateral institutions to help the region but needed more backing from Brussels. “It’s got to have support from the European governments,” he said. “It’s 20 years after Europe was united in 1989 – what a tragedy if you allow Europe to split again.”

Mr Zoellick’s appeal came as he outlined the World Bank’s ambition to restore some health to trade finance in time for the G20 summit of leading and emerging economies in April.

He hoped the World Bank, governments and banks could come together to finance a $25bn facility for trade finance, where the bank would accept the most risky part of the loans.

Mr Zoellick’s comments follow calls for region-wide international action made recently by Austria, the west European country with the greatest exposure to eastern Europe, Hungary and some other east European states.

But the European Commission said that while it was co-operating with the World Bank and other partners, it preferred a country-by-country approach.

Joaquín Almunia, EU monetary affairs commissioner, said the commission felt it would be inappropriate to devise one solution for the region’s problems because the countries fell into different categories, with some being EU members and some not.

Mr Almunia also warned east European leaders in countries with floating exchange rates not to make public statements about their currencies, for fear of making markets more nervous.

He mentioned no one in particular, but Donald Tusk, Poland’s premier, took the unusual step on Tuesday of saying his government might defend the zloty if it fell to five against the euro.

Mr Almunia said: “I am concerned about the volatility of exchange rates in countries with floating currency regimes . . . I’m concerned that some public statements have accelerated this evolution. I would ask all the authorities to be careful when they make public statements, because the markets are very nervous and sometimes they don’t understand very well some of the statements.”

However, east European leaders reinforced their calls for stronger EU-led region-wide action. Andrius Kubilius, Lithuania’s premier, told the FT: “It would be good to see a more co-ordinated approach from the EU authorities.” Ferenc Gyurcsany, Hungary’s leader, urged central and east European government to jointly support Austria’s proposals for an EU bank package.

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HPQ leads the way down

Feb. 19 (Bloomberg) — Most Asian stocks fell, led by technology companies after Hewlett-Packard Co. cut its profit forecast. Japanese exporters and Australian commodity producers advanced.

Samsung Electronics Co., the world’s largest memory-chip maker, dropped 1.1 percent as Hewlett-Packard’s chief executive officer said the industry won’t improve this year. Honda Motor Co., which gets half its revenue in North America, added 1.3 percent in Tokyo as the yen traded near its weakest this year against the dollar. Iluka Resources Ltd., the world’s biggest zircon producer, jumped 10 percent in Sydney after second-half profit surged almost sevenfold.

Five stocks declined for each that rose on the MSCI Asia Pacific Index, which was little changed at 77.60 as of 11:09 a.m. in Tokyo. The measure dropped 13 percent this year, extending 2008’s record 43 percent tumble, as the credit crisis sent the world’s biggest economies into recession.

“It’s difficult to see where significant demand will come in the next three months,” said Gary Anderson, who helps manage $3 billion of international equities in Kansas City for UMB Financial Corp. “The whole world seems to be slowing down by degrees. My concerns are deepening.”

The Nikkei 225 Stock Average gained 0.5 percent to 7,572.37, while Australia’s S&P/ASX 200 Index added 1.2 percent. Hong Kong’s Hang Seng Index dropped 1.3 percent and South Korea’s Kospi Index lost 1.6 percent.

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Japan tries to free up credit

Feb. 19 (Bloomberg) — The Bank of Japan will today unveil details of a plan to buy corporate debt and may extend lending programs in place to prevent a shortage of credit from deepening the nation’s recession.

Governor Masaaki Shirakawa and his colleagues have said they want to lower companies’ borrowing costs rather than trim the key interest rate, which is already close to zero. Policy makers will probably keep the overnight lending rate at 0.1 percent today, according to 27 of 28 economists surveyed by Bloomberg News.

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The Federal Reserve
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History: President Kennedy asked for our help !
[youtube:http://www.youtube.com/watch?v=FOH7MG4px6k&feature=related 450 300]

Culture: A Poem by Langston Hughes

Today we could supplement Obama for Roosevelt:

Ballad of Roosevelt

*****************************************************

The pot was empty,

The cupboard was bare.

I said, Papa,

What’s the matter here?

I’m waitin’ on Roosevelt, son,

Roosevelt, Roosevelt,

Waitin’ on Roosevelt, son.

The rent was due,

And the lights was out.

I said, Tell me, Mama,

What’s it all about?

We’re waitin’ on Roosevelt, son,

Roosevelt, Roosevelt,

Just waitin’ on Roosevelt.

Sister got sick

And the doctor wouldn’t come

Cause we couldn’t pay him

The proper sum—

A-waitin on Roosevelt,

Roosevelt, Roosevelt,

A-waitin’ on Roosevelt.

Then one day

They put us out o’ the house.

Ma and Pa was Meek as a mouse

Still waitin’ on Roosevelt,

Roosevelt, Roosevelt.

But when they felt those

Cold winds blow

And didn’t have no

Place to go

Pa said, I’m tired

O’waitin’ on Roosevelt,

Roosevelt, Roosevelt.

Damn tired o‘ waitin’ on Roosevelt.

I can’t git a job

And I can’t git no grub.

Backbone and navel’s

Doin’ the belly-rub—

A-waitin’ on Roosevelt,

Roosevelt, Roosevelt.

And a lot o’ other folks

What’s hungry and cold

Done stopped believin’

What they been told

By Roosevelt,

Roosevelt, Roosevelt—

Cause the pot’s still empty,

And the cupboard’s still bare,

And you can’t build a

bungalow

Out o’ air—

Mr. Roosevelt, listen!

What’s the matter here?

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Industrial Production down 1.8% last month

WASHINGTON – Big industry production throttled back in January due partly to auto shutdowns, and housing construction tumbled to a record low, weaker-than-expected performances that show the country caught in a worsening economic tailspin.

The Federal Reserve reported Wednesday that production at the nation’s factories, mines and utilities fell 1.8 percent last month. Many economists expected a 1.5 percent decline. It marked the third straight month where production was cut back and December’s performance was even weaker than initially reported, plunging 2.4 percent.

Another report from the Commerce Department said construction of new homes and apartments plunged 16.8 percent in January from the previous month, to a seasonally adjusted annual rate of 466,000 units, a record low. Analysts expected a pace of 530,000 housing units.

Analysts are hoping that a boost from government programs, including new White House efforts to stem foreclosures, will help stop the slide.

The pair of reports underscored the growing toll wrought by a trio of crises — housing, credit and financial — that are the worst since the 1930s.

Many economists believe the current January-March quarter will be the worst of the recession in terms of lost economic activity. The economy contracted at a pace of 3.8 percent in the fourth quarter of last year and is probably shrinking at a pace of 5 percent or more now, analysts said.

The economy is expected to remain feeble this year, with unemployment rising, even with the stimulus package of tax cuts and increased federal government spending signed into law by President Barack Obama on Tuesday.

The Fed’s report showed that factory production dropped by 2.5 percent in January. Shutdowns at plants making autos and related parts figured prominently in that decline. Output at mines fell 1.3 percent last month, while production at utilities rose 2.7 percent.

Manufacturers have slashed production and payrolls as they scramble to survive the economic fallout. The collapse of the U.S. housing market has especially sapped demand for all kinds of building materials and equipment, as well as a range for a consumer goods, including furniture, carpet and household appliances.

With consumers in the U.S. and overseas retrenching, manufacturers have been clobbered. Pushed to the financial edge, Detroit automakers General Motors Corp. and Chrysler LLC are racing to restructure in hopes of securing billions more in federal aid.

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Run on the Banks in Antigua

ST. JOHN’S, Antigua – Hundreds of people lined up to withdraw money from banks in Antigua and Caracas affiliated with Texas billionaire R. Allen Stanford, a day after the tycoon was charged with an $8 billion fraud.

Meanwhile, the brash, 58-year-old financier sought to get a one-way flight out of the U.S. to Antigua, CNBC reported Wednesday. Citing an unnamed source in the private jet industry, CNBC said Stanford contacted a private jet owner Tuesday and attempted to pay for the flight with a credit card, but was refused because the company would only accept a wire transfer.

His whereabouts remained unclear on Wednesday, a day after the U.S. Securities and Exchange Commission accused him of operating a fraud centered on the sale of certificates of deposit from his Antiguan affiliate, Stanford International Bank Ltd. (SIB).

The scheme has drawn comparisons with the alleged $50 billion fraud by Wall Street veteran Bernard Madoff.

Two police officers stood watch at the Bank of Antigua as at least 600 people stood in a line stretching around a street corner, despite assurances from regional monetary authorities that the bank had sufficient reserves.

“I’m worried and I’d like to get my money out,” said Andrea Lamar, 28, who joined the line with a friend on a street popular with tourists in the state capital, St. John’s.

Bank of Antigua, with three branches in the tiny twin-island state of Antigua and Barbuda, is part of Stanford’s sprawling global business interests but is separate from SIB, the offshore affiliate at the heart of fraud charges lodged by U.S. regulators.

The six-nation Eastern Caribbean Central Bank posted a statement at Bank of Antigua saying many depositors had started to withdraw funds, “causing some anxiety,” but that the bank had sufficient reserves.

“If individuals persist in rushing to the bank in a panic, they will precipitate the very situation that we are all trying to avoid,” the statement said.

Antigua’s prime minister, Baldwin Spencer, said in a televised address to the nation late Tuesday that the charges against Stanford could have “catastrophic” consequences for the nation, but he urged the public not to panic.

A similar scene played out in Caracas, where hundreds of Venezuelans lined up to pull their money out of Stanford’s offices. Local officials tried to ease concerns.

“We can say in good faith that Stanford Bank Venezuela is a healthy bank without any type of problem to announce,” said Edgar Hernandez Behrens, the head of Venezuela’s banking regulator, Sudeban.

A Venezuelan official estimated that people in that country have invested about $2.5 billion in Stanford.

In a civil complaint, the SEC said SIB sold $8 billion in certificates of deposit “by promising high return rates that exceed those available through true certificates of deposits offered by traditional banks.”

“We are alleging a fraud of shocking magnitude that has spread its tentacles throughout the world,” said Rose Romero, regional director of the SEC’s office in Fort Worth, Texas.

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Stanford Financial charged with ‘massive’ fraud

In all, the Stanford Group to claims to oversee $50 billion in assets.

The SEC said Stanford failed to respond to subpoenas seeking testimony and did not produce “a single document.”

There were no signs of imminent criminal charges against Stanford, whose personal fortune was estimated by Forbes Magazine last year at $2.2 billion.

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