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Policy Options Dwindle as Economic Fears Grow - (www.nytimes.com) THE American economy is once again tilting toward danger. Despite an aggressive regimen of treatments from the conventional to the exotic — more than $800 billion in federal spending, and trillions of dollars worth of credit from the Federal Reserve - fears of a second recession are growing, along with worries that the country may face several more years of lean prospects. On Friday, Ben Bernanke, chairman of the Fed, speaking in the measured tones of a man whose word choices can cause billions of dollars to move, acknowledged that the economy was weaker than hoped, while promising to consider new policies to invigorate it, should conditions worsen. Yet even as vital signs weaken — plunging home sales, a bleak job market and, on Friday, confirmation that the quarterly rate of economic growth had slowed, to 1.6 percent — a sense has taken hold that government policy makers cannot deliver meaningful intervention. That is because nearly any proposed curative could risk adding to the national debt — a political nonstarter. The situation has left American fortunes pinned to an uncertain remedy: hoping that things somehow get better.
Warning on public sector job cuts - (www.ft.com) Thousands of public sector workers facing redundancy will not be absorbed by the private sector, the chief executive of Britain’s biggest hiring agency has warned. With the government expected to slash 750,000 public sector jobs by 2015, Alistair Cox, chief executive of Hays, said: “It’s impossible to imagine the private sector is going to have the confidence to create enough jobs to absorb these people; and the private sector is the only place these people can go.” Mr Cox called for employers’ National Insurance to be abolished in an emergency measure that would make it easier for companies to hire staff. The government has already reversed a proposed increase to employers’ national insurance (NI) in its June Budget and granted a 12-month NI holiday on the first 10 hires for start-up businesses outside the south-east. Employers’ NI brings in about £55bn a year for the Treasury and Mr Cox acknowledged its abolition would be a “bold, brave” move that would leave a black hole in the public finances. However, he said: “If the government wants the private sector to create jobs, you have to make it easier for them. There’s a sense of urgency here.” The warning underlines the pressure the government is under as it attempts to cut Britain’s ballooning deficit. The Office for Budgetary Responsibility has projected private sector employment growth will make up for public sector job losses. But with long-term unemployment at its highest level in 13 years and the health of the economy still uncertain, Mr Cox said this was unlikely.
Frontline warns on oversupply of oil tankers - (www.ft.com) A spike in ship deliveries over the next two years could threaten the balance of the market for crude oil tankers, the sector’s biggest operator said yesterday. Frontline, whose largest shareholder is John Fredriksen, the Norwegian-born tycoon, sounded the warning as it cautioned that third-quarter earnings would be “materially below” the $81.3m net income on $356m revenue achieved between April and June this year. The warning sent Frontline’s shares down NKr7.50 in Oslo to NKr164.40. Crude oil tankers’ rates have collapsed since the end of June, as the segment has become the latest area of shipping to be hit by a combination of weak demand and excess ships. Over the next two years 180 very large crude carriers – equivalent to 33 per cent of the existing fleet – are scheduled for delivery.
BBC seeks to head off pensions clash - (www.ft.com) The BBC is trying to head off a brutal confrontation over pensions with staff and unions by considering the securitisation of assets such as its commercial arm BBC Worldwide or its property portfolio, according to people familiar with negotiations. The unions are involved in discussing plans that would see the pension trustees receiving assets – for example, a part share of BBC Worldwide, conservatively estimated to be worth £1bn – in lieu of cash payments to the fund. The trustees would then hold the assets as a surety against part of the £1.5bn to £2bn shortfall in the pension fund, while the BBC’s executive would still be able to manage the assets and enjoy the use of their facilities or income. The arrangement would relate to about 25 per cent of the shortfall. Another possibility is that BBC management might persuade the pension trustees to accept repayment of the shortfall over 15 years rather than the current 10 years.
BOJ Holds Emergency Meeting as Strengthening Yen Threatens Japan's Economy - (www.bloomberg.com) The Bank of Japan held an emergency board meeting today as the yen’s surge to a 15-year high forces policy makers to find ways to support the nation’s slowing expansion. Governor Masaaki Shirakawa and his board were scheduled to gather at 9 a.m. “to discuss monetary control matters based on recent economic and financial developments,” according to a central bank statement. Shirakawa returned yesterday to Tokyo, cutting short a U.S. trip by one day after Prime Minister Naoto Kan said he expected the bank to implement policy “swiftly.” The yen slipped and stocks rose after the announcement backed speculation the BOJ will step up injections of liquidity to sustain the recovery. The bank’s meeting follows signs that its U.S. counterpart is also open to further monetary stimulus, with Federal Reserve Chairman Ben S. Bernanke saying three days ago that he has the tools to prevent another recession.
OTHER STORIES:
Steel glut to hit iron ore price - (www.ft.com)
High-Grade Bonds Whip Junk; GM Sets Terms on Loan for IPO: Credit Markets - (www.bloomberg.com)
Hedge funds struggle to justify star rating - (www.ft.com)
UK quarterly growth revised upwards - (www.ft.com)
Yen Falls on Speculation BOJ Will Decide to Weaken Currency - (www.bloomberg.com)
Dubai World opens talks with small creditors: report - (www.reuters.com)
Downbeat mood at Jackson Hole - (www.ft.com)
Hiring, Manufacturing Probably Cooled on Signs U.S. Recovery Is Stumbling- (www.bloomberg.com)
US consumers split into two camps - (www.ft.com)
Jackson Hole Debate on Recession Risk Shows Challenge for Central Bankers - (www.bloomberg.com)
Sanofi Said to Be Planning to Go Public With Proposal to Acquire Genzyme - (www.bloomberg.com)
Rivals to Apple’s iPad ready to take the stage - (www.ft.com)
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