China’s banks face no-win situation; Given the continued downgrading of Chinese prospects, there may well be worse to come

May 21, 2013 5:29 pm

Inside Business: China’s banks face no-win situation

By Henny Sender

Given the continued downgrading of Chinese prospects, there may well be worse to come

When hundreds of private equity executives met in Washington last week to discuss emerging markets, China dominated the debate. This outcome at the International Finance Corporation and Emerging Markets Private Equity Association conference is hardly surprising, given how important China is for the health of the world economy and for the price of everything from coal to copper to credit.

Analysts have downgraded China’s growth prospects once more, making it clear that its slowdown is more than a cyclical phenomenon. Growth of 8 per cent used to be the floor and has instead become the ceiling, as Ruchir Sharma, managing director of Morgan Stanley Investment Management, puts it. Slowing growth is not necessarily a bad thing, if the quality of the growth improves. Maybe in time, it will. But not today. The rebalancing is still more aspiration than reality. Read more of this post

Buffett, With His Magic Touch, May Be Irreplaceable

MAY 21, 2013, 6:50 PM

Buffett, With His Magic Touch, May Be Irreplaceable

By STEVEN M. DAVIDOFF

Acquisitions usually come with a nice premium for the seller. But when Warren E. Buffett is the buyer, there is typically something of a discount.

The ability to make acquisitions on favorable terms is a testament to Mr. Buffett’s personality and skills as a deal maker. It also highlights an almost unsolvable problem for his company, Berkshire Hathaway, and its shareholders. When its 82-year-old chief executive is gone, who will negotiate such sweet deals?

A case in point is the $28 billion buyout of the H.J. Heinz Company by Berkshire Hathaway and a partner, the investment firm 3G Capital. The deal, announced in February, is expected to be completed by the end of the summer. Read more of this post

Korean chaebol CJ Group is under a prosecution investigation over an alleged slush fund

CJ hit by slush fund probe

2013-05-21

By Kim Jae-won prosecutors target chairman, raid offices

Prosecutors on Tuesday raided CJ Group’s Main Office and Affiliate firms, along with The Homes of a Number of executives in What appears to be an Investigation targeting Chairman Lee Jay-Hyun who is Suspected of Running a Slush Fund.  Read more of this post

World Not Ready for Mass Flu Outbreak: WHO

World Not Ready for Mass Flu Outbreak: WHO

By Agence France-Presse on 9:53 am May 22, 2013.
Geneva. The world is unprepared for a massive virus outbreak, the deputy chief of the World Health Organization warned on Tuesday, amid fears that H7N9 bird flu striking China could morph into a form that spreads easily among people. Keiji Fukuda told delegates at a WHO meeting that despite efforts since an outbreak of another form of avian influenza, H1N1, in 2009-10, far more contingency planning was essential. “Even though work has been done since that time, the world is not ready for a large, severe outbreak,” Fukuda said. Rapid-reaction systems were crucial, given that health authorities’ efforts are already hampered by lack of knowledge about such diseases, he insisted. “When people get hit with an emerging disease, you can’t just go to a book and know what to do,” he said.

Read more of this post

Pesticides Make a Comeback; Many Corn Farmers Go Back to Using Chemicals as Mother Nature Outwits Genetically Modified Seeds

May 21, 2013, 8:28 p.m. ET

Pesticides Make a Comeback

Many Corn Farmers Go Back to Using Chemicals as Mother Nature Outwits Genetically Modified Seeds

By IAN BERRY

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Insecticide sales are surging after years of decline, as American farmers plant more corn and a genetic modification designed to protect the crop from pests has started to lose its effectiveness. The sales are a boon for big pesticide makers, such as American Vanguard Corp.AVD +0.94% and Syngenta SYNN.VX -2.64% AG. But it has sparked fresh concerns among environmental groups and some scientists that one of the most widely touted benefits of genetically modified crops—that they reduce the need for chemical pest control—is unraveling. At the same time, the resurgence of insecticides could expose both farmers and beneficial insects to potential harm. Read more of this post

The Debt Problem Hasn’t Vanished; While deficit projections have recently moderated, the cost of servicing the national debt will explode once interest rates begin to rise

May 21, 2013, 6:59 p.m. ET

Gramm and McMillin: The Debt Problem Hasn’t Vanished

While deficit projections have recently moderated, the cost of servicing the national debt will explode once interest rates begin to rise.

By PHIL GRAMM AND STEVE MCMILLIN

President Obama has raised the national debt by nearly $6.2 trillion, the equivalent of $78,385 per family of four. It is true that projected deficits recently have been reduced. April tax filings increased 28% from 2012, but much of this was thanks to a one-time rush at the end of 2012 to report income before rates rose in January. The second largest reduction in the deficit came from Fannie Mae FNMA +11.04% taking a one-time accounting adjustment.

But unless the economy soars, or a significant budget agreement is reached, the most lasting legacy of the Obama presidency will be a $10 trillion increase in the national debt—a burden that bodes ill for the nation’s future.

Once the Federal Reserve’s easy-money policy comes to an end and interest rates return to their post-World War II norms, the cost of servicing this debt will explode. The cost will increase further as the Fed sells down its $1.85 trillion holding of government bonds, and the Social Security system runs deeper and deeper into the red. The Treasury will then have to pay interest on an ever-growing percentage of the debt. Read more of this post

Canada Real Estate Slump Only Just Beginning, Madani Says

Canada Real Estate Slump Only Just Beginning, Madani Says

Canada’s housing slump has only just begun and it is premature to say the market will have a so-called soft landing, said David Madani, an economist at Toronto-based Capital Economics Ltd.

“We don’t expect prices to rebound this year,” Madani said today at the Bloomberg Economic Summit in Toronto.

Finance Minister Jim Flaherty has acted four times in the past five years to make mortgage-lending rules more restrictive amid concern that the Vancouver and Toronto markets were overheating. Flaherty has said he welcomes a slowdown of condominium construction in the two cities and has warned consumers, who have a record debt-to-disposable-income ratio of 165 percent, not to become overextended. Read more of this post

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