Britain set to officially exit recession
Britain was this week set to confirm
its official exit from a deep recession, although a return to growth would fail
to signal a rosy future for the country's fragile economy, according to
analysts.Economists' consensus forecast is for Britain, which is not part of
the eurozone, to have returned to growth in the third quarter, or
July-September period, after falling into a double-dip recession in late
2011.Positive retail sales data published last week added to market belief that
British gross domestic product (GDP) had turned positive heading into 2013.All
will be revealed on Thursday, when the Office for National Statistics publishes
its first estimate of third-quarter GDP."The release of the preliminary
GDP data for the third quarter should see the UK officially exit recession
after three quarters of contraction," said Howard Archer, chief UK
economist at IHS Global Insight research group.But he warned: "The UK
still has a very tough job in developing significant sustainable growth given
tighter fiscal policy, ongoing serious problems in the eurozone and generally
soft global growth."In addition, there are still significant pressures
facing consumers that are likely to limit the upside for their spending for some
time to come," Archer added, citing rising inflation on higher energy and
food prices and an uncertain jobs outlook despite recent positive employment
figures as some of the reasons.British annual inflation slowed to almost a
three-year low at 2.2% in September, recent official data showed, but analysts
warned that recent domestic energy price hikes would reverse the decline over
the coming months.With inflation falling for now, the Bank of England has left
the door open for more stimulus in the form of quantitative easing (QE).The
bank's nine-strong Monetary Policy Committee (MPC) has underpinned the British
economy with a total of £375bn in new money since March 2009."With
any recovery currently looking feeble and fragile, we lean towards the view
that a majority of MPC members will decide to give the economy a further
helping hand in November through more quantitative easing," said
Archer.Under QE, the central bank creates new cash which is used to purchase
assets such as government and corporate bonds to increase lending by retail
banks and boost economic activity.Double-dip
recessionBritain escaped a deep downturn in late 2009 but fell back into
recession at the end of 2011. The recent London Olympics and
celebrations to mark Queen Elizabeth II's Diamond Jubilee on the British throne
failed to deliver a major boost to growth."The economy is likely to
continue to underperform in coming quarters, with roughly zero real GDP growth
over 2012-13 combined," said Citi analyst Michael Saunders.The Conservative-Liberal
Democrat coalition government blames Britain's economic ills on the debt crisis
in main trading partner the eurozone and on the high level of debt inherited
from the previous Labour administration.But the main opposition Labour party
claims that Britain's downturn is mainly a result of rapid and hefty cuts to
state spending by the coalition that have resulted in thousands of job losses
across the civil service.British GDP contracted by 0.4% in the second quarter
after shrinking by 0.3% in the first - and by 0.4% in the final quarter of
2011."The UK data week ahead may well prove to be noteworthy with UK
third-quarter GDP figures... set to have a plus sign in front of them for the
first time since the third quarter of 2011," said Victoria Clarke, an
analyst at Investec financial group."Indeed, we expect that the
forthcoming release... to show UK GDP having risen by
0.6% on the quarter, its strongest showing since the third quarter of
2010."
Troubles grow in Spain banking rescue
Spain seems condemned to pay for its
own banking rescue after Germany flatly refused to let the eurozone's future
bank supervisor do so, analysts say.That is bad news for Spain's soaring public
debt.But it is only one of a series of concerns now emerging from a eurozone
bailout of Spain's banks, which have been bogged down with bad loans since a
2008 property crash, diplomatic sources and analysts say.Madrid had battled for
a eurozone banking supervisor to be allowed to pump capital directly into its
weak banks as part of a planned banking union for the 17-member single currency
bloc.That would have relieved Spain of the need to pay back an estimated €40bn
it plans to use from a €100bn eurozone credit line.But German Chancellor
Angela Merkel, who faces general elections next year, left no room for doubt
about her position on direct recapitalisation for banks that have already been
bailed out."There will not be a retroactive direct recapitalisation,"
she said on Friday after a European Union summit, which agreed to work on
setting up a eurozone banking union with supervisory powers during 2013.A
French government source said the question of direct aid for Spain's banks was
not settled.But after the EU summit, a European diplomat was clear:
"Spanish banks won't be recapitalised before the end of 2013, probably in
2014."That would leave Spain holding the bill for
the rescue loan, which was agreed with the eurozone in June and signed in
July."Spain is going to ask for about €40bn from the liquidity line,"
said Daniel Pingarron, analyst at Spanish brokerage IG Markets. "That
means the Spanish public debt grows automatically."In fact, Spain's 2013
budget already takes into account a payment of €30bn for the banking fix,
pushing the level of public debt to 90.5% of gross domestic product from an
expected 85.3% this year.But the banking rescue is also running into other
serious problems, analysts say.Another European diplomatic source said Madrid
was balking at the eurozone's insistence that investors in stricken banks'
subordinated debt and preference shares take losses before any bailout.'There's a stalemate'This is
particularly sensitive in Spain where the banks sold billions of euros in
preference shares to ordinary customers, many of whom believed the complex
instruments were a form of savings."There is a stalemate here," said
Edward Hugh, an economist based in Barcelona.Prime Minister Mariano Rajoy's conservative
government and the eurozone authorities were at odds over the preference shares
because of Madrid's reluctance to force the bank clients to lose their savings,
he said.At the same time, the two sides seemed to be struggling over the
implementation of a "bad bank", created to mop up the bad assets held
by commercial banks and then to sell them to investors, he said.Latest data
show more than one in 10 Spanish bank loans has gone bad, a new record.The
Spanish bad bank is set to launch on November 19 under the name of SAREB with a
formal ceiling of €90bn in so-called toxic assets, an economy ministry
official said.But the key unresolved question is how to value the bad
assets.The lower the price, the easier it is to attract investors. But a low
price also could push up bank losses and force the Spanish government to pump
in yet more money.With the cost of the bailout being added to Spanish debt
under the existing accords, Madrid is trying to handle
the bailout "on a shoestring," Hugh said."Europe is pressing
them obviously for a lower price and is pressing them to do the preference
shares but Spain seems to telling them to go and walk," the analyst
said.In any case, Hugh said, the final cost of the banking bailout is likely to
rise."At some stage there is obviously going to be more," he
said.Indeed, Moody's Investors Service estimated this month that the Spanish
banks would require between €70bn and €105bn.If the cost of the
banking bailout was €40bn, or four percent of Spanish GDP, then Spain may
be able to handle it, Hugh said. But more capital eventually will be needed, he
warned."The story has not ended yet."
Wealthy Presidential Campaign Donors Driving The Election
Here is a look at wealthy individuals who have contributed at least $1 million to the major "super" political action committees as disclosed to the Federal Election Commission.
RESTORE OUR FUTURE
Total raised as of Sept. 30: $110.5 million
(Supports Republican presidential candidate Mitt Romney)
* Bob Perry - Houston builder who was a major donor to Swift Boat Veterans for Truth, a group that helped undermine 2004 Democratic presidential nominee John Kerry by attacking his Vietnam War record. Total donations: $10 million
* Sheldon Adelson - billionaire Las Vegas casino magnate who built the Venetian hotel and casino. Donation: $5 million
* Miriam Adelson - Sheldon's wife. Donation: $5 million
* Bill Koch - brother of conservative financiers David and Charles Koch. He runs Oxbow Carbon, a Florida-based firm that is also a donor and shares its address with another contributor, Huron Carbon. Total donations, including through firms: $4 million
* Steven Lund - runs Nu Skin, a Utah skin care and cosmetics company whose former executives have been linked to two other firms that share an address in Provo, Utah, and donated to the Super PAC: F8 LLC and Eli Publishing. Lund's wife Kalleen is also a donor. Total donations from the Lunds and firms: $3 million
* Julian Robertson - hedge fund industry legend at Tiger Management. Total donations: $1.3 million
* Crow Holdings - Dallas-based investment firm managing the wealth of the family of the late Dallas real estate mogul Trammell Crow, whose sons Harlan and Trammell S. Crow are also donors. Total Crow Holdings and Crow donations: $1.3 million
* Harold Simmons - billionaire Dallas banker and CEO of Contran Corp who has contributed to PACs supporting Rick Perry and Newt Gingrich. Donations: $1.3 million
* Frank VanderSloot - Idaho businessman who runs the nutritional and cosmetics company Melaleuca. The firm and its subsidiaries have also donated. Total donations: $1.1 million
* The Villages of Lake Sumter - a community in Florida run by billionaire Gary Morse, who is also a donor alongside his wife Renee and their several children. Along with the Morse family, thirteen companies controlled wholly or partially by Morse that share an address in The Villages have also contributed. Total donations of all: $1.7 million.
* Kenneth Griffin - Chicago-based hedge fund manager and CEO of Citadel LLC. Total donations: $1.1 million
* Bob Parsons - billionaire founder of web hosting giant Go Daddy. Donation: $1 million
* Jim Davis - chairman of New Balance Athletic Shoes Inc. Donations: $1 million
* Stanley Herzog - CEO of Missouri-based Herzon Contracting Corp. Donation: $1 million
* Bruce Kovner - billonaire hedge fund manager at Caxton Alternative Management. Donation: $1 million
* Rocco Ortenzio - Pennsylvania healthcare executive and founder of Select Medical Corp. Total donations: $1 million
* John Childs - founder of private equity firm J.W. Childs Associates LP in Florida. Donation: $1 million
* Edward Conard - a New York investor and former executive at Bain Capital, a private equity firm co-founded by Romney. Donation: $1 million
* John Kleinheinz - Texas hedge fund manager for Kleinheinz Capital Partners Inc. Donation: $1 million
* J.W. Marriott Jr. - chairman and CEO of Marriott International, brother of Richard. Total donations: $1 million
* Richard Marriott - chairman of Host Marriott International. Total donations: $1 million
* Robert McNair - owner of the Houston Texans football team. Donation: $1 million.
* Robert Mercer - New York hedge fund manager at Renaissance Technologies. Donation: $1 million
* John Paulson - a prominent New York hedge fund manager at Paulson and Co. Donation: $1 million
* Rooney Holdings Inc - private investment firm formed in 1980s to acquire the Manhattan Construction Co. and has since expanded into many areas. Total donations: $1 million
* Paul Singer - hedge fund manager who helped fund efforts to legalize gay marriage in New York. Donation: $1 million
* Paul and Sandra Edgerly - Paul Edgerly of Brookline, Massachusetts, is an executive at Bain. The Edgerlys each have given $500,000. Total donations: $1 million
* Steven Webster - private equity executive at Avista Capital in Houston. Total donations: $1 million
* Robert Brockman - executive at Reynolds and Reynolds, a Dayton, Ohio-based car dealership support company that shares a P.O. Box with CRC Information Systems Inc, Fairbanks Properties LLC and Waterbury Properties LLC, which split the donation three ways. Total donations: $1 million
* Miguel Fernandez - chairman of MBF Healthcare Partners, a private equity firm. MBF Family Investments also donated to the Super PAC. Total donations: $1 million
* Renco Group Inc. - owned by New York billionaire Ira Rennert, another frequent contributor to Republicans this year. Donation: $1 million
* OdysseyRe Holdings Corp - reinsurance underwriting company in Stamford, Connecticut that is a U.S. subsidiary of Toronto-based Fairfax Financial. Donation: $1 million
PRIORITIES USA ACTION
Total raised as of Sept. 30: $50.1 million
(Supports Democratic President Barack Obama)
* James Simons - billionaire hedge fund manager, founder of Renaissance Technologies Corp. Donation: $3.5 million
* Fred Eychaner - founder of Newsweb Corp. Donation: $3.5 million
* Jeff Katzenberg - chief executive of DreamWorks Animation. Donation: $3 million
* Steve Mostyn - Houston attorney. Donation: $2 million
* Irwin Mark Jacobs - former CEO of Qualcomm Inc. Donation: $2 million
* Jon Stryker - billionaire activist and heir to the medical supply company fortune of his grandfather. Donation: $2 million
* Anne Cox Chambers - billionaire daughter of James M. Cox, founder of Cox Enterprises. Total donations: $1.5 million
* National Air Traffic Controllers Association - union representing more than 16,000 workers. Donation: $1.3 million
* S. Daniel Abraham - billionaire creator of Slim-Fast brand, chairman of S. Daniel Abraham Center for Middle East Peace. Donation: $1.2 million
* Barbara Stiefel - retiree in Coral Gables, Florida. Donation: $1.1 million
* United Auto Workers - Donations through various funds: $1.1 million
* Kareem Ahmed - chief executive at Landmark Medical Management in California. Donation: $1 million
* David Boies, Jr - New York lawyer. Donation: $1 million
* Morgan Freeman - Hollywood actor. Donation: $1 million
* Amy Goldman - writer and heiress to the New York real estate fortune of Sol Goldman. Donation: $1 million
* Franklin Haney - owner and CEO of FLH Company, a Washington-based real estate company. Donation: $1 million
* Bill Maher - stand-up comedian. Donation: $1 million
* Mel Heifetz - real estate developer and gay activist. Donation: $1 million
* Michael Snow - Minnesota lawyer. Donation: $1 million.
* Steven Spielberg - film director. Donation: $1 million.
* Ann Wyckoff - Seattle philanthropist. $1 million.
* Service Employees International Union Committee on Political Education - union representing more than 2 million workers. Donation: $1 million.
* United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry - union representing some 340,000 workers. Total donations: $1 million
AMERICAN CROSSROADS
Total raised as of Sept. 30: $68 million
(Supports Republican candidates for federal offices)
* Harold Simmons - Total donations together with Contran Corp: $15.5 million
* Bob Perry - Total donations: $6.5 million
* Robert Rowling - an Irving, Texas, businessman and a conservative and active Republican donor. His company, TRT Holdings Inc, which runs Omni Hotel and Gold's Gym chains, is also a donor. Total donations: $4 million
* Joe Craft - billionaire coal executive from Tulsa, Oklahoma, and CEO of Alliance Holdings, which is also a donor. Total donations: $2.1 million
* Jerry Perenchio Living Trust - a trust of billionaire television tycoon A. Jerrold Perenchio, who is a former chairman of Spanish-language broadcaster Univision. Donation: $2 million
* Crow Holdings - Dallas-based real estate investment firm. Total donations: $1.5 million
* Weaver Holdings and Weaver Popcorn - Indiana-based company specializing in popcorn. Total contributions: $1.9 million
* Stephens Inc - a Little Rock, Arkansas, broker dealer. Total donations: $1.3 million
* Armstrong Group - telecommunications conglomerate in Pennsylvania. Donation: $1.3 million
* JWC III Revocable Trust - Donatoin: $1.3 million
* Robert Brockman - executive at Ohio-based Reynolds and Reynolds. Similarly to Restore Our Future, three firms sharing a P.O. Box - CRC Information Systems Inc, Fairbanks Properties LLC and Waterbury Properties LLC - split the donation three ways. Total donations: $1 million
* Whiteco Industries - Indiana-based company involved in advertising, construction, entertainment and hotels. Donation: $1 million
* The Mercury Trust - entity linked to California private equity firm of Saul Fox. Donation: $1 million
* Clayton Williams Energy Inc - Midland, Texas-based drilling company. Donation: $1 million
* Jay Bergman - of PETCO Petroleum Corporation. Donation: $1 million
* Kenneth Griffin - Citadel Investment Group chief executive. Total donations: $1 million
* Wayne Hughes - Founder of Public Storage. Total donations: $1 million
* John Childs - Chairman and CEO of Boston-based JW Childs Associates. Total donations: $1 million
* Philip Geier - New York executive. Total donations: $1 million
* Irving Moskowitz - a Florida bingo magnate who runs a charity in California and is known for his support of Jewish settlers in East Jerusalem. Donation: $1 million
* Robert Mercer - co-CEO of hedge fund Renaissance Technologies. Donation: $1 million (Reporting by Patrick Temple-West, Alexander Cohen and Alina Selyukh; editing by Todd Eastham)
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