The Cypriot government plans to sell part of its gold reserves within the next months, Finance Minister Haris Georgiades said

Cyprus Central Bank Must Approve Gold Sale, Finance Chief Says

The Cypriot government plans to sell part of its gold reserves within the next months, a decision that needs to be approved by the country’s central bank, Finance Minister Haris Georgiadessaid.

“The exact details of it will be formulated in due course primarily by the board of the central bank,” Georgiades, 41, told Bloomberg TV’s Ryan Chilcote in an interview in Nicosia. “Obviously it’s a big decision.”

Cypriot President Nicos Anastasiades is trying to unlock 10 billion euros ($13.2 billion) of loans from the euro area and the International Monetary Fund. To do so, he must come up with a further 11 billion euros through measures including a tax on bank deposits of more than 100,000 euros at the country’s two biggest banks and the sale of assets and gold.

An April 9 debt assessment by the European Commission said Cyprus had committed to selling about 400 million euros of “excess” gold reserves, prompting gold futures to fall the most in five months. In response to the disclosure, the Central Bank of Cyprus said it wasn’t considering a sale. Read more of this post

Minxin Pei: China’s Dream World; Political slogans, however high-sounding, become stale when their purveyors fail to make good on their promises

China’s Dream World

Minxin Pei is Professor of Government at Claremont McKenna College and a non-resident senior fellow at the German Marshall Fund of the United States.

16 April 2013

CLAREMONT, CALIFORNIA – Ruling elites almost everywhere – whether in democracies or in authoritarian regimes – believe that clever sloganeering can inspire their people and legitimize their power. There are, of course, crucial differences. In functioning democracies, government leaders can be held accountable for their promises: the press can scrutinize their policies, opposition parties are motivated to show that the party in power lies and cheats. As a result, incumbents are frequently forced to carry out at least some of their promises.

Autocratic rulers, by contrast, face no such pressures. Press censorship, repression of dissent, and the absence of organized opposition allow rulers the luxury of promising whatever they want, with no political consequences for failing to deliver. The result is government of the sloganeers, by the sloganeers, and for the sloganeers. Read more of this post

China has over-invested in itself: IMF official; The government has extracted money from the population to help pay the huge cost of maintaining its rapid growth

China has over-invested in itself: IMF official

Staff Reporter, 2013-04-17

China has over-invested its resources domestically, according to a report by Li Yiheng, chief representative of the International Monetary Fund in the country.

Domestic investment has accounted for about 50% of China’s GDP, which is far higher than the 12%-20% average found around the globe, said the report. The situation is primarily due to large investments by the government to try to overcome the negative effect of the global financial crisis during the period 2007-2011.

Though the over-investment will not immediately cause a crisis, the government should keep an eye on the possible negative effects, said Li, adding that loans made for the purpose of investment projects will become a burden on the nation’s population.

The country’s outstanding economic growth was the result of long-term large-scale investment over the past 20 years, said Li. The government has extracted money from the population to help pay the huge cost of maintaining its rapid growth and has only recently tried to slow down investments and promote local consumption, said Li. Read more of this post

Asia slowly losing its luster – Nomura

Asia slowly losing its luster – Nomura

By Prinz P. Magtulis (The Philippine Star) | Updated April 15, 2013 – 12:00am

MANILA, Philippines – Strong economies in the Asian region are slowly losing their luster as the low interest environment here and abroad is beginning to cause some problems, an investment bank said.

“We are becoming more concerned that Asia’s once solid economic fundamentals are deteriorating,” Nomura economist Rob Subbaraman said in the bank’s Asia Economic Monthly report. Read more of this post

Europe Car Sales Plunge 10% as Germany’s Decline Hurts VW

Europe Car Sales Plunge 10% as Germany’s Decline Hurts VW

European car sales dropped 10 percent in March as declines at PSA Peugeot Citroen (UG), Ford Motor Co. (F) and Volkswagen AG (VOW3) and a plunge in Germany put the industry on pace for the fewest annual deliveries in 20 years.

Registrations fell to 1.35 million vehicles last month from 1.5 million a year earlier, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today in a statement. First-quarter sales dropped 9.7 percent to 3.1 million cars.

A recession stemming from the European sovereign-debt crisis has led to 12 percent unemployment in the 17 countries sharing the euro, the highest rate since records began in 1995. Four of Europe’s five biggest car markets shrank last month, with the steepest drop at 17 percent in Germany, the region’s largest economy and home to producers such as VW and Bayerische Motoren Werke AG (BMW). The region’s sales declined for an 18th consecutive month, the ACEA said. Read more of this post

Axa cuts 450 jobs as it ends face-to-face financial advice

Axa cuts 450 jobs as it ends face-to-face financial advice

Insurer blames regulations banning commission payments for move affecting staff based in UK bank branches

guardian.co.uk, Monday 15 April 2013 15.41 BST

Axa says it has withdrawn its in-branch financial advice because it could not find a profitable model. Photograph: Tom Saunderson for the Guardian

Insurer Axa is cutting 450 jobs in branches of the Co-operative, Yorkshire and Clydesdale banks under plans to cease face-to-face financial advice.

The group blamed the decision on new regulations that banned commission payments, forcing customers to pay up front. Read more of this post

It is time to audit our auditors; Investors can only trust capital markets if they trust their auditors; Big Four earn annual audit fees of US$10 billion in US

April 16, 2013 7:30 pm

It is time to audit our auditors

By Anthony Catanach

Investors can only trust capital markets if they trust their auditors, writes Anthony Catanach

The revelation that a partner at KPMGleaked privileged information to a “golfing buddy” for a few silver coins is not just another accounting scandal. A 29-year veteran of the accounting firm provided advance notices of client earnings releases and merger plans in exchange for more than $50,000 in cash and gifts, including a $12,000 Rolex watch. It would be easy to dismiss this event, given its minor monetary consequences relative to some of the auditing blunders of the past decade. But this event just may be a watershed.

Investors can view today’s global capital markets as secure only if they trust the financial statements issued by publicly traded companies. Fundamental to this is the belief that information provided by market participants is accurate, complete, and reliable. Accountants have been given the task of certifying this. Investors must, therefore, trust that public company auditors are not only knowledgeable and experienced, but also independent and possess the highest levels of integrity.

There is already mistrust of the profession. The auditors who allowed Enron to flatter their balance sheets have not been forgotten. Nor those who signed off on the infamous Lehman Brothers “Repo 105” accounting wheeze, which magically transformed loans into sales. Such cases cause one to wonder if our current levels of trust in the auditing profession may be too high. What makes the KPMG case so important is that it involves a senior partner with authority over 50 other partners and more than 500 staff in one of the firm’s largest offices. He placed his own self-interest before that of his clients, much less the investing public. As a result, KPMG has withdrawn several years of audit reports for some clients. This is quite a moment: it is the first significant withdrawal of an audit report since 2007, when PwC did the same for Yukos, the bankrupt oil company, over concerns about the accuracy of information provided to the auditor by the management. Read more of this post

Accounting: Stalking the Big Four; Scandals have given Chinese accounting a toxic reputation internationally

April 16, 2013 7:18 pm

Accounting: Stalking the Big Four

By Adam Jones and Simon Rabinovitch

Homegrown auditors are eroding the influence of established western firms in China

When Zhang Ke left Coopers & Lybrand in 1999 to set up his own accounting firm, some doubted the upstart would survive. Outside Coopers – now part of PwC – and the other big western outfits, the profession in China was weak. This did not deter Mr Zhang. “I thought China was so big, it should have some of its own accounting firms,” he recalls. Little more than a decade later, the gamble has paid off. ShineWing, the firm he started, is snapping at the heels of the industry’s biggest names in China and the avuncular, soft-spoken Mr Zhang has become perhaps the most influential accountant in the land. “He is the dean of the accounting profession right now in China,” says Paul Gillis, a professor at Peking University. “He’s the guy.” Such praise will be hard to swallow in some quarters. Scandals have given Chinese accounting a toxic reputation internationally. Instead of Zhang Ke, the name on the lips of many western investors is Muddy Waters, the research firm that has levelled accounting fraud accusations against several Chinese companies. Carson Block, Muddy Waters’ founder, has said questionable auditing is endemic in the fast-growing Chinese market. But even as weaknesses continue to be exposed in the way accounts are drawn up and vetted in China, a subtler trend has emerged. The local dominance of the world’s leading audit and consulting networks – PwC, Deloitte, Ernst & Young and KPMG – is being eroded by ShineWing and other homegrown rivals after two lucrative decades. Read more of this post

India’s first theme park opens its gates, the world’s first to boast a ride involving a gigantic six-armed animatronic Hindu god, standing astride a trio of curly-horned fire-breathing rams

April 16, 2013 11:18 am

India’s first theme park opens its gates

By James Crabtree in Mumbai

India’s debut theme park is also almost certainly the world’s first to boast a ride involving a gigantic six-armed animatronic Hindu god, standing astride a trio of curly-horned fire-breathing rams.

But the opening of the Adlabs Imagica complex on Thursday on a 65-acre site between the major western cities of Mumbai and Pune marks a first of a different sort too, as India takes an initial step into a market where, so far at least, the likes of Disney have feared to tread.

Set up by Bollywood entrepreneur Manmohan Shetty, the park expects up to 3m visitors a year to enjoy its roughly two dozen international-standard rides, raising hopes that India’s nascent industry might in time follow a recent theme park boom in China.

Speaking before the launch, Mr Shetty said global operators like Disney and Universal Studios should now rethink concerns about infrastructure, land acquisition and cost-conscious customers, which have so far led them to avoid the country’s 1.2bn-strong market. Read more of this post

Foreign investment: Brazil is now ‘ugly mirror image of Mexico’ in beauty parade

April 17, 2013 12:08 am

Foreign investment: Brazil is now ‘ugly mirror image of Mexico’ in beauty parade

By Joe Leahy in São Paulo

Brazil has become used to being top of the class rather than the dunce at the back as far as rating agencies have been concerned in recent years.

So it was with some surprise it recently received a slap on the wrist from Fitch, which warned that the country’s difficulties in kick-starting its flagging economic growth were “weighing” on its rating.

“With a slower growth trajectory, making inroads into fiscal consolidation becomes harder,” said Shelly Shetty, a Fitch analyst.

It is not that Brazil is facing any kind of crisis. It still has one of the world’s largest foreign exchange reserves, at about $377bn, a sound financial system and a government and central bank still more or less committed to targeting inflation and maintaining a floating exchange rate.

It is just that Brazil, the original currency warrior accustomed to discouraging capital inflows during the boom years between 2009 and 2011, now finds itself in a different world in terms of foreign exchange and capital markets trading. Read more of this post

Forget Gold, the Gourmet-Cupcake Market Is Crashing

Updated April 16, 2013, 8:06 p.m. ET

Forget Gold, the Gourmet-Cupcake Market Is Crashing

By EMILY MALTBY and SARAH E. NEEDLEMAN

Sales at gourmet cupcake maker Crumbs have softened lately.

The icing is coming off America’s cupcake craze. The dessert became a cultural and economic phenomenon over the last decade, with gourmet cupcake shops proliferating across the country, selling increasingly elaborate and expensive concoctions. The craze hit a high mark in June 2011, when Crumbs Bake Shop Inc.,CRMB -3.41% a New York-based chain, debuted on the Nasdaq Stock MarketNDAQ +0.35% under the ticker symbol CRMB. Its creations—4″ tall, with fillings such as vanilla custard, caps of butter cream cheese, and decorative flourishes like a whole cookie—can cost $4.50 each. After trading at more than $13 a share in mid-2011, Crumbs has sunk to $1.70. It dropped 34% last Friday, in the wake of Crumbs saying that sales for the full year would be down by 22% from earlier projections, and the stock slipped further this week. Crumbs in part blamed store closures from Hurricane Sandy, but others say the chain is suffering from a larger problem: gourmet-cupcake burnout. “The novelty has worn off,” says Kevin Burke, managing partner of Trinity Capital LLC, a Los Angeles investment banking firm that often works in the restaurant industry.

Read more of this post

Gold’s fall costs billionaire hedge fund manager John Paulson $1.5bn this year

April 16, 2013 6:00 pm

Gold’s fall costs Paulson $1.5bn this year

By Dan McCrum in New York

The tumbling gold price has personally cost billionaire hedge fund manager John Paulson at least $1.5bn so far this year, as a decline in the price of the metal turned into a rout.

The estimated losses for Mr Paulson, who has made and lost more money on gold than almost any other hedge fund manager, reflect a bold all-in bet on the precious metal.

While many investors hold some gold in case of financial calamity or a return of the rampant inflation of the 1970s, since 2009 Mr Paulson has allowed clients of Paulson & Co to denominate their holdings in gold, rather than US dollars. Mr Paulson enthusiastically embraced the option, according to people familiar with the situation, and has about 85 per cent of his personal capital in the firm linked to the gold price. Read more of this post

Tears, reality TV and the Chinese dream

April 16, 2013 7:34 pm

Tears, reality TV and the Chinese dream

By Patti Waldmeir in Shanghai

Xi Jinping is cooking up the China of the future, writes Patti Waldmeir

His wife acts like Jackie Kennedy and he sounds like JFK: Xi Jinping, the new president of China, seems to have beamed us all back to 1960.

It is not just that Peng Liyuan, Mr Xi’s celebrity wife, looks like a clone of America’s First Fashionista. There is also the fact that Mr Xi seems unable to open his mouth without uttering the phrase “Chinese dream” – with all that evokes of the saccharine sentimentality and social mobility of the Kennedy era. The American dream may have had a bad 50 years since JFK’s untimely demise but Mr Xi seems to think it is ripe for reinvention now, halfway across the world in China.

He is not the only one. Mainland television magnateshave figured out that the Chinese dream also sells well in the form of reality TV shows such as MasterChef China, the local version of the cookery cliffhanger that has a global audience of 250m. This month, millions of mainlanders watched the coronation of a new MasterChef: “desperate housewife” Zhao Dan, who rose from the obscurity of her provincial kitchen to win Rmb1m ($160,000) and a future in the restaurant business by cooking up a plate of ribs and frying a slab of goose liver on national TV.

There was no shortage of culinary skill involved in the finale, which pitted a cleaver-wielding Ms Zhao against an unemployed Taiwanese single father who, like all the other contestants, had never cooked a meal professionally in his life. But the contestants’ sob stories may turn out to be more memorable than their stir-fries. Read more of this post