$14 Billion Auto Loan

11 12 2008

The House of Representatives handily passed a bill Wednesday night that
would provide up to $14 billion in bridge loans to automakers, but
Republican opposition cast doubt about the bill’s fate in the Senate
later this week.


Nigeria Announces Budget Cuts

18 10 2008

Nigeria has announced major budget cuts following recent falls in the price of oil, after a special cabinet meeting.

Nigeria is one of the world’s biggest oil exporters, but a violent campaign in the main oil region has cut production by 20%. The oil price has fallen by more 50% in just three months and Nigeria relies almost exclusively on oil for its revenue.

The government had been expected to present its budget for 2009 to the national assembly next week.

AIG Seeks Federal Aid

14 09 2008

The American International Group is seeking a $40 billion bridge loan from the Federal Reserve, as it faces a potential downgrade from credit ratings agencies that could spell its doom, a person briefed on the matter said Sunday night.

Ratings agencies threatened to downgrade the insurance giant’s credit rating by Monday morning, allowing counterparties to withdrew capital from their contracts with the company. One person close to the firm said that if such an event occurred, A.I.G. may survive for only 48 hours to 72 hours.

A.I.G.’s sickly financial health emerged late into one of the most tumultuous days in Wall Street history. Lehman Brothers, the 158-year-old investment bank, is expected to file for bankruptcy protection Sunday night, while Bank of America has agreed to buy Merrill Lynch for $50.03 billion.

Though this past weekend was convened to focus on Lehman, the Wall Street chieftains who gathered at the Federal Reserve Bank of New York also pondered a solution for A.I.G. The firm had become one of the biggest underwriters of complex debt securities known credit default swaps, used as insurance for a wide range of products, including the mortgage instruments that have been the bane of Wall Street for the past year and a half.

Eric Dinallo, the New York state insurance superintendent, has been deeply involved in discussions about A.I.G.’s survival, this person said.

The firm had planned to move $20 billion from its regulated insurance business to its holding company and to sell assets and a stake in the company to private equity firms. But A.I.G. has ruled out the capital shift because of the time and complexity involved.

J. C. Flowers & Company, a buyout firm focused on financial services firms, offered $8 billion for a stake in the business that would have given it an option to buy all of A.I.G. down the road.

Kohlberg Kravis Roberts and TPG also said they would bid, but withdrew at the last minute, citing anxiousness over the company’s precarious financial health.

A.I.G.’s extraordinary move of reaching out to the Fed for help may spur other non-investment banks to try a similar move. Companies ranging from General Electric to GMAC have been hurting badly and would desperately love the liquidity that the Fed would provide.

Yet it isn’t clear whether the Fed would acquiesce to A.I.G.’s request.

The firm had earlier been reported to be interested in selling its aircraft leasing business. But people briefed on the matter said that unit bore special tax advantages that A.I.G. had decided would be lost on any other owner.

Axel Springer AG Springs for 12,000 Macs

4 07 2008

One of Germany’s largest newspaper publishers will become one of Apple’s largest-ever customers when it converts all of its 12,000 computers from Windows systems to Macs. Also, the latest beta of Flash Player 10 promises to boost sluggish performance with Apple computers.

German firm in record PC-to-Mac shift

In a major overhaul of its IT system, German publisher Axel Springer AG said it has struck a deal with Apple to replace every one of its 12,000 active computers with Macs.

Axel Springer produces the popular German newspaper Bild and becomes the single-largest company in Europe to depend entirely on Apple hardware for its day-to-day business. The shift helps modernize the publisher’s culture, according to company chief Dr. Mathias Döpfner.

The total cost of ownership of each system over its useful lifespan and simple design are also cited as reasons for the switch.

The company will use all of Apple’s desktop line, including the Mac mini, iMac, and Mac Pro, and should also use MacBooks and MacBook Airs for its mobile workers; depending on the context, users will either run Mac OS X, Windows XP, or Windows Vista. The iPhone will also be on hand, Apple notes.

All company-owned systems will be Macs within the next one to two years, though Axel Springer says self-purchased Macs and iPhones will be usable with the company network from July.

10,000,000 Millionaires!

25 06 2008

Add an extra zero to the ranks of the millionaires club.

American investor Warren Buffett is the world’s richest person. His ranks — the superrich — are growing.

The number of people around the world with at least $1 million in assets passed 10 million for the first time last year, according to a report. And their bank accounts are growing even faster.

The combined wealth of the globe’s millionaires grew to nearly $41 trillion last year, an increase of 9 percent from a year before, Merrill Lynch & Co. and consulting firm Capgemini Group said Tuesday.

That means their average wealth was more than $4 million, the highest it’s ever been. Home values were not included in asset totals.

“The growth of their wealth is outpacing the growth of their population, and that’s a trend that’s going to continue in coming years,” said Ileana Van Der Linde, a principal with Capgemini.

The ranks of the wealthy are growing fastest in the developing economies of India, China and Brazil. The number of millionaires in India grew by about 23 percent.

The United States still reigns supreme when it comes to fat wallets, though: One in every three millionaires in the world lives in America. Combined, Africa, the Middle East and Latin America account for one in 10.

All told, there were about 600,000 more millionaires in the world in 2007 than in 2006, for a total of about 10.1 million. That’s a 6 percent increase from the previous year.

Ten million may seem like a big number for such an elite club, but it still represents less than one-fifth of 1 percent of the world’s 6.7 billion people.

The rarefied group of the superrich — those with at least $30 million in assets — got richer, too. There were 103,000 of them around the world last year, 9 percent more than the year before, and their wealth grew by nearly 15 percent.

The 600,000 new millionaires was unsurprising to Brian Bethune, an economist with Global Insight, who said inflation and the expansion of the world economy account for the growth.

Besides, $1 million isn’t what it used to be. One million dollars in 1996, the first year the report was issued, would have been worth about $1.3 million last year, Van Der Linde said.

Steady growth powered economies worldwide in the first half of 2007, but more mature markets were hammered in the second half by the U.S. housing and credit crises. Emerging economies were largely unaffected, the report found.

The downturn started catching up with emerging economies in the beginning of 2008, Van Der Linde said.

Already, the report found, the millionaires club wasn’t expanding as fast as before. From 2005 to 2006, the group swelled by more than 8 percent. The club has grown every year since the report was started.

Because of the economic slowdown, the wealthy tended to shift their money to safer investments such as bonds and money-market savings accounts, and away from less stable investments such as real estate, the report found.

Cash deposits and fixed-income securities accounted for 44 percent of the assets of the world’s millionaires, up from 35 percent in 2006.

The wealth of the world’s richest is projected to reach almost $60 trillion by 2012, the report said.