Federal Reserve Bank of Kansas City President Thomas Hoenig said banks’ business should be confined to loans and deposits to avert a recurrence of the federal bailouts and near-collapse of the financial system in 2008.
“The consequence of expanding the safety net to an ever- increasing range of activities is to invite a repeat of our most recent crisis,” Hoenig said today in a speech in Philadelphia. “With separation of activities, risks will remain in the financial system, but unlike the past decade, this risk will be priced more correctly and failure can be resolved more equitably.”
The proposal by Hoenig, 64, the longest-serving current Fed policy maker, is in line with his previous calls for the breakup of large financial firms and for tougher bank regulations than officials such as Chairman Ben S. Bernanke have publicly supported. Hoenig, who retires Oct. 1, said last month that international capital requirements are too lax to prevent another U.S. banking crisis.
“Banking organizations that have access to the safety net should be restricted to the core activities of making loans and taking deposits and to other activities that do not significantly impede the market, bank management and bank supervisors in assessing, monitoring and controlling bank risk- taking,” Hoenig, who doesn’t vote on Fed monetary policy this year, said in the text of remarks.
He spoke at a conference hosted by the Global Interdependence Center and Drexel University’s LeBow College of Business.
Cease Bets
Hoenig’s comments represent his backing of the Volcker Rule, named for former Fed Chairman Paul Volcker, which Congress passed last year to force bank holding companies to cease bets with their own money outside of traditional lending.
“I strongly support the Volcker Rule and suggest it should be implemented with resolve and should be strengthened in its reach and impact,” Hoenig said.
Hoenig also proposed two other rules to ensure that the so- called “shadow banking” system doesn’t take on excessive risks as financial institutions evade regulation. Money market mutual funds should be required to have a floating net asset value instead of being allowed to maintain a fixed value of $1, he said.
In another change, lenders financing shadow banks would be allowed to liquidate mortgage debt used as short-term collateral in the event of default, rolling back a change in a 2005 bankruptcy law, Hoenig said.
Increase Stability
The changes would “increase the stability of the shadow banking system because term lending would be less dependent on ‘demandable’ funding and more reliant on term funding, and the pricing of risk would reflect the actual risk incurred,” Hoenig said.
The Kansas City Fed chief didn’t comment on the outlook for the economy or interest rates in his prepared remarks.
In a related policy paper released with the speech and co- written by Hoenig and Charles Morris, a Kansas City Fed vice president and economist, they wrote that banks would also be allowed to underwrite securities, advise on mergers and manage trusts and assets. Banks would be forbidden to “conduct broker- dealer activities, make markets in derivatives or securities, trade securities or derivatives for either their own account or customers or sponsor hedge or private equity funds.”
Burst Bubble
The bursting of the U.S. housing bubble and resulting cascade throughout the world financial system resulted in $2 trillion of writedowns and losses for financial companies from 2007 to 2009.
“The combination of securities and commercial banking activities in a single organization provides opportunities for the senior management and boards of directors to be increasingly influenced by individuals with a short-term perspective,” Hoenig said. “As a result, the increased propensity of these corporate leaders to take high risks for short-term gain leads to more of a short-term-returns culture throughout the organization.”
Hoenig dissented all eight times in 2010 from decisions of the monetary policy-setting Federal Open Market Committee, preferring tighter credit.
The Fed is completing its $600 billion of Treasury purchases next month, ending a second round of so-called quantitative easing that was aimed at averting deflation and boosting a sluggish recovery. Hoenig opposed the program. In the first round of bond purchases, the central bank bought $1.7 trillion of mortgage debt and Treasuries. Policy makers are debating how and when to raise interest rates and sell the debt once the economy improves enough.
PARIS
U.K. retail sales surged the most in five years last month as public holidays and the warmest April on record spurred spending, the British Retail Consortium said.
Sales rose 5.2 percent in April from a year earlier on a like-for-like basis, which excludes new-store openings, the London-based BRC said in a report today. The reading follows a 3.5 percent annual drop in March, and taken together the data suggest sales over the two months stalled, the BRC said.
Britons stocked up on food and clothing during two consecutive four-day weekends at the end of the month to mark Easter and the marriage of Prince William and Kate Middleton, the report said. Spending may falter as consumers are squeezed by faster inflation and the government’s fiscal tightening fast cash now.
“Easter and the Royal Wedding bank holiday provided a badly needed boost to many retailers,” BRC Director General Stephen Robertson said in the report. Still, “the underlying pressures on the retail sector of climbing costs and depressed consumer spending will be problems for many months to come.”
Food sales rose an annual 2.1 percent in April, boosted by alcoholic drinks including champagne, the BRC said. Non-food sales fell 1.3 percent.
Confidence among U.S. chief executive officers improved at the start of the second quarter as more business leaders forecast pickups in demand, employment and spending on equipment, a survey showed.
The Young Presidents’ Organization gauge of sentiment rose to 64.1 in April, the highest since the survey began in the second quarter of 2009, from 63.5 in January, according to the Dallas-based group. A reading greater than 50 shows the executives’ outlook was more positive than negative.
With an improving U.S. labor market and stronger consumer spending, chief executives in the world’s largest economy are about as confident as their counterparts across the globe, where the optimism level averaged 64.3, the nonprofit service organization’s survey showed. The International Monetary Fund projects 2011 growth of 2.8 percent in the U.S., compared with 4.4 percent globally.
“After lagging most other regions for the past two years, the United States is now as optimistic as the world as a whole,” Alan Zafran, a YPO member and managing partner at Luminous Capital LLC in Los Angeles, said in a statement. “They clearly believe the worst of the recession is behind them.”
Sixty-seven percent of U.S. respondents said sales will increase in the coming 12 months, while 4.1 percent project weaker demand.
Hiring Plans
Hiring will pick up throughout the year at about 42 percent of the businesses surveyed, and 3.7 expect to reduce employee count, helping maintain six-straight months of U.S. payroll growth. Companies hired more workers than forecast in March, a Labor Department report showed last month.
The fixed investment index climbed to 62.8 in April, the highest level since the group began keeping records. The proportion of CEOs planning to boost capital spending was at 46 percent, according to the survey.
Executives in the construction industry, in which 62 percent of respondents expect a better business and economic climate in the next six months, contributed most to the improved outlook. Fifty-six percent of those executives had positive expectations in the prior survey.
The quarterly survey, conducted during the first two weeks of April, received responses from 2,582 U.S. CEOs.
The index of U.S. leading economic indicators probably increased for a ninth month in March, signaling higher fuel costs will fail to derail the expansion, economists said before a report today.
The Conference Board’s gauge of the outlook for the next three to six months rose 0.3 percent after a 0.8 percent gain in February, according to the median forecast of 53 economists surveyed by Bloomberg News. Other data today may show claims for jobless benefits fell manufacturing continues to expand.
The labor market is improving and manufacturing is enjoying stronger export growth and business investment, underscoring the Federal Reserve’s view of a “moderate” economy. At the same time, the leading index was likely restrained by a drop in consumer expectations linked to higher gasoline prices that mean Americans have less to spend on other goods and services.
“The recovery seems to be strong enough to continue despite all these crises,” including unrest in the Middle East and north Africa that’s helped drive up oil prices, said Harm Bandholz, chief U.S. economist at UniCredit Group in New York. “We probably have seen most of the impact of high oil prices in the first quarter.”
The New York-based Conference Board, a private research group, is scheduled to release its report at 10 a.m. Bloomberg survey estimates ranged from no change to a 0.5 percent increase.
10 Measures
Seven of the 10 measures that make up the Conference Board’s leading index are known ahead of time: stock prices, jobless claims, building permits, consumer expectations, the yield curve, factory hours and supplier delivery times. The Conference Board estimates new orders for consumer goods, bookings for capital equipment and money supply adjusted for inflation.
In February, eight components contributed to the gain, including a positive spread between short- and long-term interest rates, an increase in stocks values and fewer people filing for unemployment benefits for the first time.
Jobless claims have declined since the beginning of the year. A Labor Department report at 8:30 a.m. in Washington may show fewer Americans filed first-time applications for unemployment benefits in the week ended April 16. New claims dropped by 22,000 to 390,000 from the prior week, according to the median forecast in the Bloomberg survey.
Manufacturing Mainstay
Factories have been the mainstay of the expansion that began in June 2009. The Federal Reserve Bank of Philadelphia’s general economic index, due at 10 a.m., will probably show manufacturing in the region moderated in April after expanding last month at the fastest pace in 27 years. The gauge eased to 36.8 from 43.4 in March, according to the median estimate in the Bloomberg survey.
Shares of machinery producers have outpaced the broader market so far this year. The Standard & Poor’s Supercomposite Machinery Index has gained 8.7 percent through yesterday compared with a 5.8 percent rise in the S&P 500.
Strength at the nation’s factories is spilling over into the rest of the economy. CSX Corp., the third-biggest U.S. railroad, said yesterday that profit rose 30 percent as shipping volumes increased.
“We’re continuing to see, quarter after quarter, the markets keep improving,” Chief Executive Officer Michael Ward said in an interview at Bloomberg News’ New York headquarters on April 6.
The Fed said April 13 in its Beige Book report in Washington that most of its districts “stated that gains were widespread across sectors” in February and March.
Hurdles for consumers, whose spending accounts for about 70 percent of the economy, include higher prices for fuel and food. The average price of a gallon of gasoline was $3.84 on April 19, the highest since September 2008. In March, gas averaged $3.53 a gallon, compared with $2.78 a year earlier.
Bloomberg Survey ================================================================ Initial Cont. LEI Philly Claims Claims Fed ,000’s ,000’s MOM% Index ================================================================ Date of Release 04/21 04/21 04/21 04/21 Observation Period 16-Apr 9-Apr March March —————————————————————- Median 390 3675 0.3% 36.8 Average 392 3679 0.3% 36.2 High Forecast 410 3800 0.5% 43.8 Low Forecast 370 3650 0.0% 28.0 Number of Participants 47 17 53 55 Previous 412 3680 0.8% 43.4 —————————————————————- 4CAST Ltd. 390 — 0.4% 38.5 ABN Amro Inc. 390 — — 38.0 Action Economics 385 3670 0.4% 38.0 Aletti Gestielle SGR 385 — 0.1% 36.0 Ameriprise Financial Inc 390 3680 0.4% 35.0 Banesto — — 0.2% 37.5 Bank of Tokyo- Mitsubishi 390 — 0.2% 32.4 Barclays Capital 390 — 0.3% 36.0 Bayerische Landesbank — — 0.4% — BBVA 395 3660 0.5% 33.0 BMO Capital Markets 390 3682 0.3% 36.8 BNP Paribas 395 — 0.4% 38.0 BofA Merrill Lynch Resear 400 — 0.2% 38.0 Briefing.com 370 3650 0.2% 30.0 Capital Economics — — 0.3% 35.0 CIBC World Markets — — 0.3% 35.0 Citi 390 3670 0.2% 30.0 ClearView Economics — — — 38.0 Commerzbank AG 400 — 0.5% 37.0 Credit Agricole CIB — — — 40.0 Credit Suisse 390 — 0.1% — Daiwa Securities America — — 0.1% — DekaBank — — 0.3% 35.0 Desjardins Group 388 — 0.2% 35.0 Deutsche Bank Securities 390 — 0.5% 36.0 Deutsche Postbank AG — — 0.3% — Fact & Opinion Economics 385 — 0.4% 41.0 First Trust Advisors 398 — 0.5% 35.8 Goldman, Sachs & Co. — — — 33.0 Helaba 400 — 0.3% 35.0 HSBC Markets 400 — — 35.0 Hugh Johnson Advisors — — 0.1% 40.0 IDEAglobal 395 — 0.3% 38.0 Informa Global Markets 400 3665 0.2% 39.0 ING Financial Markets 395 3675 0.3% 37.5 Insight Economics 390 3650 0.3% 35.0 Intesa-SanPaulo — — — 37.5 J.P. Morgan Chase 400 — — 39.0 Janney Montgomery Scott L — — 0.3% — Jefferies & Co. 395 — — 33.0 Landesbank Berlin 375 — 0.0% 28.0 Landesbank BW — — — 37.5 Manulife Asset Management 400 3700 — — Maria Fiorini Ramirez Inc 400 — — — MF Global 395 — 0.2% 30.0 Moody’s Analytics 405 3680 0.2% 40.0 Morgan Keegan & Co. — — 0.3% — Morgan Stanley & Co. — — 0.1% — Nomura Securities Intl. — — 0.5% 32.0 Nord/LB 400 — — 38.0 Parthenon Group 393 — 0.3% 32.8 Pierpont Securities LLC 390 — — — PineBridge Investments 380 — 0.5% 41.0 PNC Bank — — 0.3% — Raymond James — — 0.1% — RBC Capital Markets 410 — — 32.0 RBS Securities Inc. 390 — — — Scotia Capital 400 3800 — 40.0 Societe Generale 382 3650 — 43.8 Standard Chartered 380 3703 0.3% 35.0 State Street Global Marke 390 3689 0.3% 38.5 Stone & McCarthy Research 385 — 0.4% 35.7 TD Securities 380 3650 0.2% 35.0 UBS 400 — 0.1% 40.0 UniCredit Research — — 0.3% — University of Maryland 385 — 0.3% 39.0 Wells Fargo & Co. — — 0.5% — WestLB AG — — 0.1% 37.0 Westpac Banking Co. — — 0.3% 30.0 Wrightson ICAP 385 3675 0.4% 38.0 ================================================================
To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net
Credit Suisse Group AG is at odds with Goldman Sachs Group Inc. on the outlook for interest rates in China as analysts differ on the threat from inflation and the government’s likely mix of policy tools.
Increases may be “close to an end” after a quarter-point boost to key benchmarks this week, according to Goldman, the fifth-biggest U.S. bank by assets. In contrast, Swiss lender Credit Suisse estimates the deposit rate will rise by another 1.5 percentage points by year-end, eclipsing the 1 percentage point gain since the global financial crisis.
Credit Suisse sees “limited” room for increases in bank reserve requirements as elevated inflation adds pressure for the central bank to keep boosting rates after four increases since mid-October. Forecasters lack clues to policy makers’ intentions because unlike nations from the U.S. to South Korea, China issues no minutes of monetary policy meetings and the cabinet, not the central bank, has the final say on rate decisions.
“China isn’t a country that solely focuses on interest rates as a policy tool, it also uses quantitative tools, and that makes it harder to predict rates,” said Helen Qiao, a Hong Kong-based economist for Goldman. “The PBOC isn’t independent, it can’t always raise interest rates as it wishes.”
HSBC Holdings Plc is among banks that disagree with the Credit Suisse assessment.
Reserve requirements will continue to climb as so-called quantitative tools are “dominant” in tightening and rate increases play a secondary and “moderate” role, Qu Hongbin, Hong Kong-based chief China economist for HSBC, said by e-mail.
Faster Inflation
China’s statistics bureau may report on April 15 that the annual rate of inflation quickened to 5.2 percent in March, the fastest pace since July 2008 and more than the government’s full-year target of 4 percent.
The Shanghai Composite Index has climbed 7 percent this year as investors and analysts predict the government can sustain growth while taming prices. Credit Suisse, HSBC, Macquarie Group Ltd. and Citigroup Inc. advocate China stocks.
Credit Suisse describes its forecasts for rates as “the highest on the street” and Hong Kong-based economist Tao Dong said in a note this week that the central’s bank’s latest move is “one step closer towards our direction.”
Tao sees the one-year lending rate climbing 1.35 percentage points to 7.66 percent by year-end, a level higher than when Chinese officials were trying in 2007 and 2008 to cool an overheating economy before the financial crisis struck. The central bank has already boosted reserve requirements for banks by 4.5 percentage points since the start of last year and Tao sees “only limited further upside.”
Goldman says officials may increase rates once more in the first half, increase reserve requirements as “a regular tool,” allow more currency gains and maintain controls on bank lending and the property sector. Tightening measures have reduced inflation pressures and officials may be able to loosen policies in the second half, economists Qiao and Yu Song said in a note.
The reserve ratio for the nation’s biggest banks stands at 20 percent, excluding any extra requirements for individual lenders not publicly announced.
–Chinmei Sung. Editors: Paul Panckhurst, Nerys Avery.
To contact Bloomberg News staff for this story: Zheng Lifei in Beijing at +86-10-6649-7560 or lzheng32@bloomberg.net Chinmei Sung in Taipei at +886-2-7719-1543 or csung4@bloomberg.net
Japan’s central bank pledged to ensure financial stability after the strongest earthquake in at least a century forced Toyota Motor Corp. (7203) to shut some plants, knocked out oil refineries and sparked a plunge in stocks.
The magnitude 8.9 earthquake struck off the coast of Sendai, a city of 1 million in the northeast, unleashing a tsunami as high as 10 meters (33 feet) that engulfed towns along the coast. The Tohoku region, which includes Sendai, accounts for about 8 percent of the country’s gross domestic product, according to Macquarie Securities Ltd.
The disaster may slow a recovery from a contraction in the fourth quarter as Prime Minister Naoto Kan struggles to convince credit-rating companies he will get a grip on the world’s largest public-debt burden. While the Finance Ministry said it’s too soon to gauge the quake’s economic impact, the Nikkei 225 Stock Average dropped 1.7 percent and insurers Munich Re and Swiss Reinsurance Co. led declines in European trading.
“It’s early days,” Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London, said in an e-mailed note. “But the horrific events in Japan bear very close watching from a financial perspective, given the bloated problems in Japan’s public sector.”
The price of crude oil fell 3 percent to $99.64 per barrel. The temblor set ablaze a Cosmo Oil Co. refinery near Tokyo and closed at least three others, temporarily curbing demand for crude in Asia’s second-largest oil-consuming nation.
Disaster Response
“I call on citizens to act calmly,” Kan told reporters in Tokyo after convening his emergency disaster response team. He also declared a state of “nuclear emergency,” Kyodo News reported, citing Chief Cabinet Secretary Yukio Edano.
Policy makers will hold a policy board meeting on March 14 and announce their decision on the same day instead of March 15.
“The BOJ considers it’s better to make a policy decision earlier, following the big earthquake,” said Seiichi Tsurumi, a spokesman at the Tokyo-based central bank. Governor Masaaki Shirakawa will hold a press conference on March 14.
Kobe Quake
The earthquake struck less than half an hour before Japan’s stock market closed. The yen initially dropped before paring its losses and later advanced at least 1 percent against all 16 of its most actively traded peers. The Stoxx Europe 600 Index slid 0.7 percent at 2:52 p.m. in London. The Standard & Poor’s 500 Index was little changed at 9:52 a.m. in New York.
Munich Re and Swiss Re, the world’s two biggest reinsurers, lost 5.4 percent and 5.4 percent, respectively.
“It’s difficult to estimate the economic impact right now,” Takuji Okubo, an economist at Societe Generale SA, told Erik Schatzker on Bloomberg Television’s “InsideTrack” from Tokyo today. “I’m sure this earthquake will reduce Japanese manufacturing output.”
The economy may nevertheless weather the shock, which evoked memories of the Great Hanshin Earthquake that hit the port city of Kobe in January 1995, said Richard Jerram, Singapore-based head of Asian economics at Macquarie. While Japanese industrial production dipped 2.6 percent in the month that the Kobe quake hit, it rebounded 2.2 percent the following month and 1 percent in March.
‘Fiscal Crisis’
The area around Sendai “is a lot smaller part of the economy than Kobe, so we would expect the damage to be much less serious on the economy,” said Jerram. “The early indications are that it’s not probably going to be all that destructive from an economic point of view.”
Japan’s economy contracted 1.3 percent in the fourth quarter of 2010 on an annualized basis. It shrank 2.7 percent in the same period of 1994.
“The timing of the disaster could not have been much worse,” Julian Jessop, an economist at Capital Economics Ltd. in London, wrote in a note. “The greater the social and economic damage, the larger the threat to the government’s ability and willingness to ward off a fiscal crisis.”
This year’s quake is disrupting a region that’s a center for auto making in the world’s third-largest economy. Toyota, the world’s biggest carmaker, said it and its affiliates closed three factories, with locations outside of northern Japan operating normally. Nissan Motor Co. said it extinguished two fires at factories and Kyodo reported that the Yokohama-based company halted production at four factories.
Aftershocks
“The Tohoku region is one of the major production areas of cars and other products in Japan, so the quake may affect economic activity mainly through this sector,” said Tohru Nishihama, economist at Dai-ichi Life Research Institute Inc. in Tokyo. “In addition, it’s possible to affect food prices as agriculture is another major industry in the region.”
Nippon Paper suspended three Japan plants after the shock, Kyodo reported. All Nippon Airways Co. said 32,700 people were affected by flight cancellations.
The quake struck at 2:46 p.m. local time 130 kilometers (81 miles) off the coast of Sendai, north of Tokyo, at a depth of 24 kilometers, the U.S. Geological Service said. It was followed by a 7.1-magnitude aftershock at 4:25 p.m., the service said. Aftershocks continued to affect office buildings in Tokyo.
Televised footage showed a tsunami striking northeast Japan. Outside of Tokyo, Narita airport, the area’s main international hub, closed, Kyodo News reported. Haneda, the main domestic airport, was reopened after closing earlier, it said.
Political Controversy
For Kan, managing the aftermath of the disaster may deflect immediate public attention from his becoming embroiled in a political-donation controversy. Earlier today, he told lawmakers he “had no idea” a political contributor to his office wasn’t a Japanese citizen, violating campaign rules. The Asahi newspaper reported Kan received 1.04 million yen ($12,500) from a South Korean resident. A similar charge prompted the foreign minister to resign March 6.
With opposition parties already calling for Kan to step down and refusing to pass bills authorizing sales of deficit- financing bonds, the tumult had risked prolonged paralysis. Political failure to set a path for reining in the world’s largest public debt has spurred credit-rating firms to lower, or put on notice for a cut, Japan’s sovereign grade.
The head of the Liberal Democratic Party, the biggest opposition group, said it would cooperate with the government to approve extra spending to cope with the disaster.
‘Worst Time’
“We will probably need a supplementary budget to work on this,” LDP leader Sadakazu Tanigaki told reporters after Kan convened a meeting of party leaders. “We will cooperate with all our might.”
Boosting fiscal spending on any reconstruction effort in the wake of the temblor would risk adding to the nation’s borrowing without cuts elsewhere or an increase in taxes. Government debt is set to reach 210 percent of GDP in 2012, the highest among countries tracked by the Organization for Economic Cooperation and Development, compared with an estimated 101 percent of GDP for the U.S.
‘There will be fiscal stimulus to reconstruct but Japan already has a budget deficit of close to 10 percent of” GDP and an aging population, Nouriel Roubini, the economist who predicted the global financial crisis, told Bloomberg Television in an interview from London today. “This is certainly the worst thing that can happen in Japan at the worst time.”
Move over, Mickey D’s, and bring Ronald McDonald with you — there’s a new fast food king in town.
Subway has surpassed McDonald’s to become the world’s largest restaurant chain in terms of units, the sandwich company confirmed Monday.
Subway had 33,749 restaurants around the globe at the end of 2010, said company spokesman Les Winograd. McDonald’s had 32,737 at year end, according to a February regulatory filing from the burger giant.
"Last year was actually pretty average for us, growth-wise," Winograd said. "We aim to open between 1,000 and 2,000 locations globally each year."
A McDonald’s (MCD, Fortune 500) spokeswoman said in a prepared statement that her company "continues to be focused on our business, and serving our customers. Our business continues to be strong and we are growing by being better, not just bigger."
As of Monday, Subway has 34,218 locations globally — all of which are owned by franchisees.
About half of the company’s unit growth is overseas, Winograd said no teletrack payday loans. Subway now has more than 1,000 locations in Asia, and it just opened its first store in Vietnam. Other high-growth nations include Brazil, Mexico, India, China, Russia and France.
"A lot of our growth has been in non-traditional spaces that our competitors might not touch," Winograd said. "We have really unique ones, like on a riverboat in Germany, a church in Buffalo, car dealers, bowling alleys and casinos. We’re not just in strip malls."
Fast food as a whole has gotten a boost from the recession — even in unexpected demographics. Last month, an American Express survey showed quick service restaurants saw a bigger rise in spending by ultra-affluent consumers than any other restaurant type last year.
"It’s a feeling of accomplishment, for sure," Winograd said. "But we didn’t set out to surpass anyone in particular."
The German air force evacuated 132 people from the Libya desert in a secret military mission, the country’s foreign minister said Sunday.
Two German military planes landed Saturday on a private runway belonging to the Wintershall AG company and evacuated 22 Germans and 112 others, Foreign Minister Guido Westerwelle said in Berlin.
“I want to thank the members of the Germany military for their brave mission,” he added.
The military planes later landed safely Saturday night on the Greek island of Crete.
German military missions abroad need approval by parliament, and Westerwelle said he had spoken to all party leaders in parliament Friday to tell them about the upcoming military mission. He said the coalition government led by Chancellor Angela Merkel had evaluated the situation in Libya as “very dangerous” and therefore ordered an immediate evacuation by the air force.
The head of Wintershall, Rainer Seele, thanked the government.
“we are all relieved and grateful,” he was quoted as saying by the DAPD news agency.
Westerwelle said another 18 German citizens were rescued by the British military in a separate military operation Saturday that targeted remote oil installations in the Libyan desert.
He said around 100 other German citizens were still in Libya and the government was trying to get them out as quickly as possible.
Thailand’s economy strengthened in the fourth quarter on exports and consumer spending, capping the fastest annual expansion in 15 years and adding to the central bank’s case to raise borrowing costs further.
Gross domestic product rose 1.2 percent from the previous three months, the National Economic and Social Development Board said in Bangkok today. That compared with a revised 0.3 percent decline in the third quarter, which reflected a mid-2010 slump stemming from political unrest and flooding, and the 0.9 percent median estimate in a Bloomberg News survey of 10 economists.
The Bank of Thailand is poised to extend interest-rate increases after saying inflation is a threat, as counterparts from Indonesia to China also strive to damp jumps in the cost of living. Prime Minister Abhisit Vejjajiva has raised the minimum wage and will boost civil service pay, which may push up prices ahead of an election he plans to hold by the end of June.
“A recovery in developed economies toward the year-end supported external demand and export-oriented countries like Thailand will continue to see benefit from that,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc. in Tokyo.
The baht climbed 0.1 percent to 30.56 per dollar as of 11:06 a.m. in Bangkok from Feb. 17 and has risen about 3.2 percent in the past six months, the least apart from the Hong Kong dollar and Indonesia’s rupiah in a basket of 10 major Asian currencies tracked by Bloomberg, excluding the yen.
Asian Tightening
On a year-on-year basis, the expansion slowed to 3.8 percent from a revised 6.6 percent advance in the three months through September. Growth also eased last quarter from a year earlier in neighbor Malaysia while quickening in Indonesia, the Philippines and Vietnam. Thailand has joined Indonesia, South Korea, India and China in boosting borrowing costs this year.
The central bank is expected to raise rates further to tame price pressures, Arkhom Termpittayapaisith, secretary-general at the development board, told a news conference in Bangkok today.
Economic “growth momentum will continue this year,” supported by the global recovery, rising incomes and agricultural prices, Arkhom said, adding the board assumed borrowing costs would rise a total of 1 percentage point in 2011 so that they exceed the pace of inflation.
The agency raised its consumer-price growth forecast for this year to a range of 2.8 percent to 3.8 percent from the 2.5 percent to 3.5 percent estimated in September. The board said the baht would trade from 29.5 to 30.5 per dollar in 2011.
Rising Rates
Private consumption rose 3.8 percent last quarter from a year earlier, manufacturing expanded 4.8 percent and total investment advanced 6.4 percent, according to today’s report payday loans for bad credit.
Exports climbed 22.3 percent in January from a year earlier and may gain 15 percent in the first quarter of 2011, the commerce ministry said separately today.
The Bank of Thailand raised its one-day bond repurchase rate for the fourth time in seven months on Jan. 12, by a quarter of a percentage point to 2.25 percent.
Stocks and bonds across Asia have declined this year amid concern that accelerating inflation will erode purchasing power and spur further rate increases. The MSCI Asia Pacific Excluding Japan Index is down approximately 1.3 percent. Asian local- currency bonds have lost about 0.2 percent, based on an index compiled by HSBC Holdings Plc.
Central bank Governor Prasarn Trairatvorakul said last month the monetary authority needs to raise rates to damp inflation. Consumer prices increased 3.03 percent in January from a year earlier, compared with 3 percent the previous month.
Political Risk
The economy grew 7.8 percent last year, the strongest pace since 1995, today’s report showed. The development board, also known as the state planning agency, maintained its 2011 growth forecast of 3.5 percent to 4.5 percent. The agency, the finance ministry and the central bank release separate projections.
Disputes over the outcome of the last election in 2007 have fueled protests in the country of 67 million citizens, killing about 100 people and souring the investment climate. The government said this month a vote will be held within the first half of 2011, as Abhisit moves to ease the political turmoil.
“Politics remains the main question mark for the Thai economy. It’s very hard to predict what will come out,” said Santitarn Sathirathai, a Singapore-based economist at Credit Suisse Group AG.
Still, rising private consumption backed by higher agricultural prices will help the economy expand 4.6 percent this year, according to the company’s projections. Government efforts to boost incomes and curb costs will help, he said.
Abhisit increased the minimum wage last month and will raise the salaries of civil servants in April. The administration subsidizes the cost of diesel, cooking gas and electricity, and in January approved price controls on 39 products including pork and eggs.
Consumer confidence is rising, climbing for the second consecutive month in January. Central Group, controller of the nation’s biggest operator of shopping malls, said this month it plans to lift investment by 57 percent to tap into higher consumer spending. Sentiment fell in November after the worst flooding in five decades affected a 10th of the population.
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