News & Current Affairs

July 17, 2009

US firm averts French explosion

Filed under: Business News, Entertainment News, Latest, Politics News — Tags: , , , , , , , , , , , , , — expressyoureself @ 6:15 pm

US firm averts French explosion

Gas bottles have been placed around the New Fabris site

A threat to blow up another French factory has not been defused

A US construction equipment firm has agreed to pay extra compensation to French workers who had threatened to explode gas canisters at their plant.

Staff at JLG Industries in Tonneins, south-western France, made the threat in order to get better redundancy terms for 53 workers.

It is the third such incident in which workers have threatened violence against employers.

Elsewhere, French workers have taken managers hostage in “boss-nappings”.

The French Employment Minister, Laurent Wauquiez, described the tactics as “blackmail”.

In the JLG deal, the 53 affected workers were each guaranteed 30,000 euros (£26,000; $42,000) in severance pay.

JLG Industries is a subsidiary of the US company Oshkosh, which makes cranes and work platforms.

Meanwhile, a tense stand-off continues at the bankrupt New Fabris car plant in Chatellerault, south-west of Paris, where workers have also made a threat to blow up the factory.

They have given a 31 July deadline for Renault and Peugeot, which provided 90% of the plant’s work, to pay them 30,000 euros each.

Renault and PSA Peugeot said it was not their responsibility to pay workers.

The BBC’s Emma Jane Kirby in Paris says there is an acute sense of injustice in France at the moment, with many workers complaining that while their bosses continue to reap company benefits and bonuses, they are paying for this economic crisis with their jobs.

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July 12, 2009

Jackson children hearing delayed

Filed under: Entertainment News, Latest — Tags: , , , , , , , , — expressyoureself @ 5:11 am

Jackson children hearing delayed

Michael Jackon's children

Jackson’s children appeared at his televised memorial concert

A hearing to decide who will take care of Michael Jackson’s three children is to be delayed by a week, says his mother’s lawyer.

Katherine Jackson and her son’s ex-wife Deborah Rowe joined on Friday to ask the judge for a delay to the hearing. The case has been delayed once already.

Ms Jackson will remain the temporary guardian of her son’s three children, whose ages range from seven to 12.

The two sides are believed to be trying to broker an out-of-court settlement.

‘Privately and amicably’

In a statement to the Associated Press news agency, L Londell McMillan, a lawyer acting for Ms Jackson, said the delay would “allow us to privately and amicably resolve this most important matter in a dignified manner for the benefit of the children first and all involved”.

Lawyers for Ms Rowe, who was married to the pop singer from 1996 to 1999, have declined to comment.

She is the mother of Jackson’s two oldest children, 12-year-old Prince Michael, and 11-year-old Paris Michael Katherine Jackson.

The surrogate mother of Jackson’s youngest child, seven-year-old Prince Michael II, has never been identified.

In his will, Michael Jackson stated he wanted his mother to care for his children if he died. As an alternative, he named singer and friend Diana Ross.

June 30, 2009

Yemen jet crashes in Indian Ocean

Filed under: Latest, Politics News — Tags: , , , , , , , , , , , , , , — expressyoureself @ 11:22 am

Yemen jet crashes in Indian Ocean

The Yemenia Airbus 310 that crashed - photo Air Team Images

The plane has been found to have had a number of faults

A Yemeni airliner with more than 150 people on board has crashed in the Indian Ocean near the Comoros islands.

Some bodies have been found and a child rescued alive, officials from the carrier, Yemenia, said.

The Airbus 310 flight IY626 was flying from the Yemeni capital Sanaa, but many passengers on the plane began their journey in France.

The cause of the crash is not clear. A French minister said faults were found on the plane during a check in 2007.

“The A310 in question was inspected in 2007 by the DGAC [French transport authorities] and they noticed a certain number of faults. Since then the plane had not returned to France,” Transport Minister Dominique Bussereau was quoted as telling French TV.

RECENT AIR CRASHES
1 June: An Air France Airbus plane travelling from Rio de Janeiro to Paris disappears in the Atlantic with 228 people on board
20 May: An Indonesian army C-130 Hercules transport plane crashes into a village on eastern Java, killing at least 97 people
12 February: A plane crashes into a house in Buffalo, New York, killing all 49 people on board and one person on the ground

“The company was not on the black list but was subject to stricter checks on our part, and was due to be interviewed shortly by the European Union’s safety committee.”

Mr Bussereau had earlier told French media that bad weather was the likely cause.

The European Union Transport Commissioner Antonio Tajani said he would propose setting up a worldwide blacklist of airlines deemed to be unsafe. The EU already has its own list.

Reports say the plane was due in the Comoros capital Moroni at about 0230 (2230GMT on Monday). Most of the passengers had travelled to Sanaa from Paris or Marseille on a different aircraft.

The flight on to Moroni was also thought to have made a stop in Djibouti.

There were more than 150 people on board, including three babies and 11 crew.

An airport source told AFP news agency that 66 of the passengers were French, although many are thought to have dual French-Comoran citizenship.

This is the second air tragedy this month involving large numbers of French citizens.

On 1 June an Air France Airbus 330 travelling from Rio de Janeiro to Paris plunged into the Atlantic, killing all 228 people on board.

‘Aborted landing’

A search is under way, with the French military assisting with the operation.

French military personnel leave Reunion to join rescue operation

French military are assisting with the search operation

Officials told AFP that wreckage from the plane, an oil slick and bodies had been spotted in the water a few kilometres from Moroni, on the island of Njazidja (Grande Comore).

“The weather conditions were rough; strong wind and high seas,” Yemenia official Mohammad al-Sumairi told Reuters news agency.

The BBC’s Will Ross, in Kenya, says that given the fact the crash happened during the night and in the sea, the chances of finding any survivors are slim.

The three Comoros islands are about 300km (190 miles) northwest of Madagascar in the Mozambique channel.

A resident near the airport told the BBC about 100 people were trying to get into the airport to find out more information, but without much success.

The airline Yemenia is 51% owned by the Yemeni government and 49% by the Saudi government.

In 1996, a hijacked Ethiopian airliner came down in the same area – most of the 175 passengers and crew were killed.

Map of aircraft's route


Have you been affected by the crash? Do you have any information about it you would like to share?

March 29, 2009

Biden appeals to G20 protesters

Biden appeals to G20 protesters

Prime Minister Gordon Brown meets US Vice-President Joe Biden (R) in Chile on Saturday 28 March 2009

Joe Biden (right) asked protesters to give G20 leaders a fair hearing

US Vice-President Joe Biden has called for G20 protesters to give governments a chance to tackle the economic crisis.

At a G20 warm-up meeting in Chile, Mr Biden said heads of state would agree proposals to remedy the crisis at next week’s meeting in London.

As they spoke, tens of thousands of protesters marched in the UK capital and in Germany, France and Italy.

US billionaire George Soros told the news the G20 meeting was “make or break” for the world economy.

“Unless they do something for developing world there will be serious collapse in that part of the world,” Mr Soros said.

Massive security operation

At a news conference in Vina del Mar, Mr Biden said he hoped the protesters would give the politicians a chance.

“Hopefully we can make it clear to them that we’re going to walk away from this G20 meeting with some concrete proposals,” he said.

British Prime Minister Gordon Brown said he understood why people were demonstrating in the UK.

“We will respond to [the protest] at the G20 with measures that will help create jobs, stimulate business and get the economy moving,” he said.

But Brazil’s President Luiz Inacio Lula da Silva told the Chile meeting that everyone was suffering from the recklessness of those who had turned the world economy into “a gigantic casino”.

“We are rejecting blind faith in the markets,” he said.

In London on Saturday, demonstrators demanding action on poverty, jobs and climate change called on G20 leaders to pursue a new kind of global justice.

Police estimated 35,000 marchers took part in the event.

A series of rallies are planned for Wednesday and Thursday by a variety of coalitions and groups campaigning on a range of issues from poverty, inequality and jobs, to war, climate change and capitalism.

There have been reports that banks and other financial institutions could be targeted in violent protests.

British officials have put a huge security operation in place.

‘We won’t pay’

Before the London summit, Mr Brown has been visiting a number of countries trying to rally support for his economic plans.

In Chile on Friday he said people should not be “cynical” about what could be achieved at the summit, saying he was optimistic about the likely outcome.

But in an interview, German Chancellor Angela Merkel dampened expectations of a significant breakthrough.

She said one meeting would not be enough to solve the economic crisis and finish building a new structure for global markets.

In Berlin, thousands of protesters took to the streets on Saturday with a message to the G20 leaders: “We won’t pay for your crisis.”

Another march took place in the city of Frankfurt. The demonstrations attracted as many as 20,000 people.

In the Italian capital, Rome, several thousand protesters took to the streets.

In Paris, around 400 demonstrators dumped sand outside the stock exchange to mock supposed island tax havens.

January 15, 2009

Go-ahead for new Heathrow runway

Go-ahead for new Heathrow runway

The government has given the go-ahead for a third runway at Heathrow, saying it is the “right” move for the country.

The decision, confirmed by Transport Secretary Geoff Hoon, comes despite opposition from environmentalists, local residents and many MPs.

Mr Hoon outlined measures to limit noise and emissions but told MPs doing nothing would “damage our economy”.

The debate was halted and local MP John McDonnell thrown out after he grabbed the mace and shouted “disgrace”.

Alongside the commitment to a new runway, Mr Hoon also announced increased investment in public transport, including the possibility of new high-speed rail links from the airport.

WHAT HAPPENS NEXT?
MPs told of decision
Planning process begins – this will take years
Legal challenge likely in days
If Tories win next election they would scrap plan
If all goes according to government plan, construction would start in 2015
Third runway due to finish 2019

In an effort to appease critics he said airlines using the new runway would be required to use the newest, least-polluting aircraft.

He told MPs the government was satisfied environmental targets could be met, as it would put an initial cap on additional flights from the new runway of 125,000, would ensure new slots were “green slots” used by only the “cleanest planes” and would set a new target on aircraft emissions – that they would be lower in 2050 than in 2005.

“Taken together this gives us the toughest climate change regime for aviation of any country in the world,” he told MPs.

He also announced he would set up a company to look into creating a high speed rail line between London and Scotland – adding there was a “strong case” for a new high speed rail hub at Heathrow.

Heathrow ‘hub’

And he said hard shoulders could be used to ease traffic on the the most congested parts of the M1, M25, M6, M62, M3 and M4, as well as motorways around Manchester, Birmingham and Bristol.

But he ruled out ending “mixed mode” use of runways – where planes land on one runway until 3pm then the other for the rest of the day to give residents a break from noise.

However, he said the Cranford agreement, which limits planes taking off to the east of the airport, would end, which he said would benefit Windsor and other towns to the west of the airport and Hatton and North Feltham to the east.

“Heathrow is the only hub airport, it’s our most important international gateway, it connects us with the growth markets of the future – essential for every great trading nation,” he told MPs.

Doing nothing would only give an advantage to its competitors, he said, adding: “The government is taking the right decisions for the long term.”

The debate was halted when John McDonnell, whose constituency borders Sipson – where hundreds of homes will be bulldozed to make way for a third runway and sixth terminal – shouted “disgrace” as the transport secretary said MPs would not get a vote on the decision.

Labour unease

After marching from the backbenches to the despatch box he picked up the mace and placed it on an MPs’ bench – he refused requests to end his protest and was ordered out of the Commons and suspended for a week.

The government has long argued, in principle, that it is in favour of the scheme, subject to pollution limits and access concerns.

But there has been deep unease within Labour ranks about the decision, with several cabinet members reported to be unconvinced and more than 50 MPs openly opposed.

At a press conference in Berlin ahead of the Commons statement, Prime Minister Gordon Brown said he wanted to “protect the economic future of the country while, at the same time, meeting the very tough environmental conditions we have set ourselves”.

Shadow transport secretary Theresa Villiers told BBC Radio 4’s Today any government environmental promises would be shown “to not be worth the paper they are written on” and said her party would cancel the project if they win the next general election.

In the Commons she said: “This is a bleak day for our environment and for all those of us who care about safeguarding it.”

The Liberal Democrats also oppose the third runway and have urged ministers to invest in high-speed rail links instead.

Their spokeswoman, Susan Kramer, told the BBC the arguments in favour of expansion were “glib” and south west London would become a “pretty miserable” place to live.

“There’s this conventional wisdom amongst business that you must grow the airport … it just isn’t held up by the reality. Actually Heathrow has been serving fewer destinations over the last ten years.”

The statement to MPs – it is not subject to a vote in the Commons – marks the start of the planning process which would be a lengthy one, even without the opposition and legal challenges expected.

Work on a new runway is unlikely to start until 2015 and it is not expected to be operational for at least a decade.

About 700 homes will have to be demolished to make way for the runway, which will increase the number of flights using Heathrow from about 480,000 a year now to 702,000 by 2030.

‘At risk’

Campaigners have bought some land earmarked for the construction of the runway in an effort to frustrate the expansion plans.

Environmental campaigners say proceeding with the new runway will leave the government’s legal commitment to cut carbon emissions by 80% by 2050 in tatters.

Energy Secretary Ed Miliband told the the plans represented “constrained expansion” with strict rules on air quality and noise.

But Greenpeace director John Sauven said: “If Gordon Brown thinks this is a green runway then he must be colour-blind. This package is designed to patch up a cabinet split and will do very little to reduce the huge environmental impact of an expanded Heathrow, which will now become the single biggest emitter of carbon-dioxide in the country.”

Supporters of the runway say Heathrow is already operating at full capacity and the UK economy will lose business to the rest of Europe if it does not go ahead.

They point out that rival airports such as Paris, Frankfurt and Amsterdam already have at least four runways and that Heathrow is at risk of falling further behind.

Former Labour MP Lord Soley, campaign director of Future Heathrow, which represents groups in favour of expanding the airport said Heathrow brought jobs and “prosperity” to west London and the Thames Valley that was “at risk”.

The boss of British Airways, Willie Walsh, said he was “very pleased” by the decision and welcomed the fact the scheme would be subject to “very strict environmental conditions”.

Virgin Atlantic’s Paul Charles told BBC Radio 5 Live that if there was no third runway “jobs won’t be created and people will go to Europe instead”.

Richard Lambert, director-general of the Confederation of British Industry, said: “This approach to expanding Heathrow’s capacity makes real sense. It will create the integrated transport system necessary for an economy that needs to grow in an environmentally sustainable fashion.”


December 30, 2008

Gaza air campaign ‘a first stage’

Gaza air campaign ‘a first stage’

Israel’s air assault on Gaza is “the first in several stages” of operations aimed at ending militant rocket fire, Prime Minister Ehud Olmert has said.

As bombing continued for a fourth day, another top official said Israel was ready for “long weeks of action”.

Palestinian officials say more than 360 people have been killed since Saturday. Four Israelis have died in rocket fire.

As EU officials prepared to discuss the crisis, some reports from Israel said it was considering a temporary truce.

Mr Olmert was set to discuss the idea of a 48-hour suspension, suggested by France, with his officials later in the day, the French news agency AFP said.

But Infrastructure Minister Benjamin Ben-Eliezer warned a truce would allow militant group Hamas – which controls Gaza – “to regain strength… and prepare an even stronger attack against Israel”.

US President Bush agreed in a telephone conversation with Palestinian President Mahmoud Abbas that for any ceasefire to be effective it had to respected by Hamas, the White House said.

A BBC reporter says Israeli tanks and troops are massed along Gaza’s border.

Correspondents say this could be a prelude to ground operations, but could also be intended to build pressure on Hamas.

European Union foreign policy chief Javier Solana called for an immediate ceasefire and the opening of crossings to allow humanitarian aid into Gaza, as EU foreign ministers prepared to discuss the crisis in Paris.

‘Defenseless population’

On Tuesday, Israeli jets attacked more targets linked to Hamas, hitting a number of government buildings and security installations.

At least 10 people were killed and 40 said to have been wounded in the raids.

One air strike killed two sisters, the eldest aged 11, riding in a donkey cart in Beit Hanoun, northern Gaza, Palestinian medical sources said.

Palestinian children search the ruins of a destroyed house following an Israeli air strike in the northern Gaza Strip, 29 December 2008

The UN has called for an investigation into the attacks, which are causing heavy civilian casualties. It says at least 62 of the Palestinians killed so far were women and children.

Richard Falk – the UN special rapporteur for human rights in the Palestinian territories – said the international community must put more pressure on Israel to end its assault.

“Israel is committing a shocking series of atrocities by using modern weaponry against a defenceless population – attacking a population that has been enduring a severe blockade for many months,” Mr Falk said in a BBC interview.

But Israeli officials said there was more to come.

The Israeli military “has made preparations for long weeks of action”, deputy defence minister Matan Vilnai said.

Mr Olmert’s statement that the bombardment was “the first of several stages approved by the security cabinet” was quoted from a briefing he gave to President Shimon Peres on Tuesday.

Separately, Israeli naval vessels confronted pro-Palestinian activists seeking to break the Gaza blockade by boat. The activists said one vessel rammed them; their boat made port in Lebanon with heavy damage on one side.

Rocket fire

The Egyptian-Gaza border was due to be opened to permit more trucks carrying aid to enter the territory, and for wounded Palestinians to be transported to Egyptian hospitals.

Egyptian President Hosni Mubarak, under popular pressure to open the crossing fully, said that could not happen while Hamas, rather than the Palestinian Authority, led by its rival Fatah, controlled the border.

Demonstrators in Yemen, angered by Egypt’s co-operation with the blockade on Gaza, briefly stormed the country’s consulate in Aden, where they burned an Egyptian flag and hoisted a Palestinian one.

There have been angry protests against the Israeli offensive in many other cities across the Arab world and in several European capitals.

Hamas has pressed on with rocket and mortar assaults, killing three Israeli civilians and a soldier in areas that have not previously suffered such fatalities.

Israeli military officials said rocket attacks landing more than 25 miles (40km) from Gaza put nearly 10% of Israel’s population of seven million within range.

Israeli political leaders have been under pressure to act against rocket fire with a general election looming in early February.

Opposition leader Binyamin Netanyahu has backed the offensive, telling the BBC that “Israel is using a fraction of its power to try to target surgically the terrorists”.

The strikes began less than a week after the expiry of a six-month-long ceasefire deal with Hamas, which has controlled Gaza since 2007.

Correspondents say short of a full-scale invasion of Gaza, it is unlikely Israel will be able to prevent rocket fire permanently.

Israel dismantled its strategic settlements and military bases in Gaza in 2005 but has kept tight control over access in and out of the narrow coastal strip and its airspace.

GAZA VIOLENCE 27-30 DECEMBER
Map of attacks in and around Gaza

1. Ashdod: First attack so far north, Sunday. Woman killed in second rocket attack, Tuesday
2. Ashkelon: One man killed, several injured in rocket attack, Monday
3. Sderot: rocket attacks
4. Nevitot: One man killed, several injured in rocket attack, Saturday
5. Civilian family reported killed in attack on Yabna refugee camp, Sunday
6.
Israeli warplanes strike tunnels under Gaza/Egypt border, Sunday
7. Three brothers reported killed in attack on Rafah, Sunday
8. Khan Younis: Four members of Islamic Jihad and a child reported killed, Sunday. Security officer killed in air strike on Hamas police station, Tuesday
9. Deir al-Balah: Palestinians injured, houses and buildings destroyed, Sunday
10. Tel al-Hawa – Interior ministry and Islamic University badly damaged, Monday. At least three buildings in ministry compound hit, Tuesday
11. Gaza City port: naval vessels targeted, Sunday
12. Shati refugee camp: Home of Hamas leader Ismail Haniya targeted, Monday
13. Intelligence building attacked, Sunday
14. Jebaliya refugee camp: several people killed in attack on mosque, Sunday 15. Beit Hanoun – two girls killed in air strike, Tuesday
16. Israeli soldier killed at unspecified military base near Nahal Oz border crossing – five other soldiers wounded in same rocket attack, Monday night.

October 2, 2008

Toyota eyes European growth

Toyota eyes European growth

Toyota Avensis

The launch of the Avensis was a low-key affair

Given its significance, the Monday night preview of Toyota’s new Avensis was a remarkably low-key affair.

A few dozen journalists and company executives witnessed the car’s unveiling at the event at the Pavillon Gabriel in Paris.

Tadashi Arashima, president and chief executive of Toyota Motor Europe, started out by bemoaning the “current business situation”.

By the time he got around to talk about the Avensis – a model that is not only designed for and built by Europeans but also kick-starts a frantic launch period as Toyota aims to bring 18 new models to market by the end of 2009 – any celebratory mood had been replaced by earnest concern.

However, Toyota’s new models will include a few attention-grabbing cars. These include the next generation Prius, which will have its global premiere at the Detroit motor show in January, and Paris premieres of the iQ mini-car and the Urban Cruiser.

We expect to grow our market share month by month in 2009
Tadashi Arashima, chief executive, Toyota Motor Europe

“We have a lot of new products that are meeting the current market conditions,” says Mr Arashima, pointing to how cars developed to meet stricter emission regulations in Europe are also delivering the fuel economy currently demanded by frugal consumers.

So does this mean the Japanese carmaker is set to take advantage of the economic downturn by boosting its market share in Europe?

When BBC News posed the question during a pre-launch briefing, Mr Arashima responded with a modest smile.

“Maybe by accident,” he said. “We didn’t really expect the market to go down so quickly.”

Bouncing back

In Toyota’s case, sales have slipped 15% so far this year in Western Europe, though a 25% rise in sales in Russia helped to compensate for the slump.

Nevertheless, its European market share has shrunk to 5.3% during the year to date, down from 5.6% a year ago.

Mr Arashima acknowledges that in 2008 it will be “tricky” to match the sales seen in 2007, when Toyota hit its 11th consecutive sales record in Europe.

However, he insists the tables will turn come the New Year.

“I am fully convinced there is no better time for our new line-up to hit Europe,” Mr Arashima says.

“We expect to grow our market share month by month in 2009.”

Shrinking markets

Globally, Toyota hopes to add 200,000 sales to its books during 2009, to 9.7 million cars and other vehicles.

Western Europe is definitely going to go down
Thierry Dombreval, chief operating officer, Toyota Motor Europe

That would be no mean feat at a time when pretty much all its rivals are cutting back.

In Western Europe, total car sales by the industry as a whole are set to fall 10% in 2009, according to Toyota’s own internal forecast.

“Western Europe is definitely going to go down,” Thierry Dombreval, executive vice president and chief operating officer of Toyota Motor Europe, told journalists during a briefing.

“Spain is now down 32% in September, and the UK is very fragile.”

In Russia, Europe’s fastest-growing market, growth is set to slow to 5% next year, from some 25-30% growth so far this year, Mr Dombreval added.

This latest prediction is much lower than Toyota’s previous forecast of 15% sales growth in the Russian car market during 2009.

Long-term growth

Toyota’s optimism is not limited to its growth in market share in 2009. Over time, regardless of whether or not the current economic downturn is lengthy or not, the company predicts that global demand for cars will grow fast.

“Cars are indispensable anywhere in the world for people to move, and the current financial situation does not change that,” says Mitsuo Kinoshita, executive vice president, Toyota.

US markets wary over rescue deal

US markets wary over rescue deal

Wall Street trader

The markets remain nervous

US shares have fallen sharply with investors cautious over whether the House of Representatives will back the revised bank rescue plan.

The House is due to discuss the scheme later, with a vote expected on Friday. The bill successfully passed through the US Senate on Wednesday.

On Wall Street, the Dow Jones index was down 263 points or 2.4% at 10,571, a slide dragging European shares lower.

The falls came as France said it would host a summit on the financial crisis.

The UK’s FTSE 100 closed was down 1.8% to 4,870.3 points while Germany’s Dax index shed 2.5% and France’s Cac 40 lost 2.3%.

Sentiment was further hit by glum economic data – showing that the number of people filing for new unemployment benefit claims rose to a seven-year high, while factory orders had seen a steeper-than-expected drop in August.

European talks

The office of French President Nicolas Sarkozy said the special meeting on Saturday would discuss a co-ordinated response to the financial turmoil amongst European members of the G8 ahead of a meeting of world finance leaders in Washington next week.

UK Prime Minister Gordon Brown is due to attend, together with German Chancellor Angela Merkel, Italian Prime Minister Silvio Berlusconi and European Central Bank President Jean-Claude Trichet.

Investors are still concerned about the efficiency of this rescue plan and how it can help the global economy
Aric Au, Phillip Securities

But with just two days to go before the talks start, EU members are deeply divided, correspondent said.

France and Holland favor a European response to help banks hit by the credit crisis while Germany and Luxembourg believe a joint rescue plan is not necessary.

European leaders have denied speculation that they wanted to establish a unified 300bn euro ($418.4bn; £236bn) banking rescue deal along the same lines as the US plan.

The rescue idea was said to be being proposed by France, but Mr Sarkozy insisted that there were no such plans.

“I deny both the amount and the principle [of such a plan],” he said.

‘Essential’

In the US, a number of changes had to be made to the $700bn (£380bn) bail-out plan in order to help win approval in the Senate.

These include raising the government’s guarantee on savings from $100,000 to $250,000, tax breaks to help small businesses, expansion of child tax credit, and help for victims of recent hurricanes.

President George W Bush said that the package was “essential to the financial security of every American”.

However, economists said doubts remained about how effective the package would be.

“Investors are still concerned about the efficiency of this rescue plan and how it can help the global economy,” said Aric Au of Phillip Securities in Hong Kong.

McCain and Obama

US presidential hopefuls John McCain and Barack Obama, who both returned from the campaign trail for last night’s Senate debate, voted in favor of the rescue plan.

Senate majority leader Harry Reid, a Democrat, said he was happy with the result and praised both presidential candidates for voting.

“I think it shows that when we work together we can accomplish good things,” he said.

Mitch McConnell, leader of Republican senators, was also in jubilant mood.

“This was a measure that was much needed, to unfreeze the credit markets and get America’s economy working again,” he said.

September 19, 2008

Shares surge on US bail-out plan

Shares surge on US bail-out plan

Wall Street shares have rebounded sharply after a proposed US government plan to buy billions of dollars of US banks’ bad mortgage-related loans.

The Dow Jones index jumped 3.8% in early trading, while London’s FTSE 100 index was up 8.6%. In Paris, the Cac 40 was 7.6% higher.

US Treasury Secretary Henry Paulson said the bad debts were “clogging up” the financial system.

He said more details of the rescue package would be announced next week.

“To restore confidence in our markets and our financial institutions, so they can fuel continued growth and prosperity, we must address the underlying problem,” Mr Paulson said.

Financial stocks have gained the most from the rise in confidence on the markets. In London, the Royal Bank of Scotland and HBOS rose as much as 50%.

Moves to restrict short-selling in the US and UK also helped to boost financial shares.

Short-selling occurs when a trader borrows shares from another to sell them with the hope of buying them back at a lower price, thereby profiting from the difference. It has been blamed for the recent sharp falls in some banking shares.

Crisis of confidence

The proposed US government rescue plan comes at the end of a week of almost unprecedented turmoil on world financial markets:

  • Central banks around the world have pumped billions of dollars of extra funding into money markets on Thursday and Friday to ease the liquidity crisis
  • The US Treasury also said it would guarantee US money market funds – mutual funds that typically invest in low-risk credit such as government bonds and are often used by pension funds – up to a value $50bn to further restore confidence
  • Stock markets in Russia have been suspended for the second time on Friday at the end of a week of wild swings and stop-go trading
  • The US financial regulator the Securities and Exchange Commission banned short-selling in the stock of 799 financial companies until 2 October
  • The move followed similar moves by the UK’s City watchdog on Thursday
  • Nervous traders turned on the last independent US Wall Street giants Morgan Stanley and Goldman Sachs on Thursday sending their shares lower
  • There are rumours that Morgan Stanley is looking for a partner. Reports have cited talks with US bank Wachovia and the possibility that China Investment Corp – China’s sovereign wealth fund – could buy a major stake

Dramatic measures

News of a US bail-out emerged after a meeting with Congress members late on Thursday, when Mr Paulson announced plans to introduce new laws to buy hundreds of billions of dollars of bad debt from banks.

There will be serious long-term damage to the ability of the US to export its way of doing business to the rest of the world.
Robert Peston,
BBC Business Editor

This, he said, was at the heart of the almost unprecedented malfunction of the banking system, which has caused havoc in world stock markets this week.

“We talked about a comprehensive approach that will require legislation to deal with illiquid assets on financial institutions’ balance sheets,” he said.

Mr Paulson and Federal Reserve Chairman Ben Bernanke are expected to thrash out the details of the plan over the weekend.

It is thought options under consideration include establishing a government agency that would buy bad loans to allow troubled Wall Street banks to clear their balance sheets.

Reports said Mr Paulson was looking into setting up something akin to the Resolution Trust Corp (RTC), which was formed after savings and loans banks collapsed in the 1980s.

The RTC took over most of the smaller banks in the US at a cost of $400bn – about $1 trillion (£550bn) in today’s money – and then tried to sell off their assets.

The cost of such a bailout would probably be higher this time, with bad mortgage debt believed to be around $2 trillion.

Some analysts welcomed the news.

“It’s a relief, it allows for an orderly workout for the impaired assets and it will help the banking sector get back to business,” said Hans Kunnen of Colonial First State Fund Managers in Australia.

Howard Wheeldon, senior strategist at London-based BGC Partners, also welcomed the market rally after a “torrid week”.

But he added: “We still face many problems not least the threat of recession because of the fallout of the banking crisis.

And he cautioned against central banks flooding the financial system with too much liquidity.

“In a way we are now paying the price for the liquidity-boosting measures taken after the September 11 atrocities. We can’t afford to have a short-term fix and then in three or four years have an even bigger bubble explode,” he warned.

BBC Business Editor Robert Peston said that the taxpayer funded bail-out “represents a massive humiliation for Wall Street” and will severely dent the ability of the US to export its way of doing business to the rest of the world.

But an even bigger risk could be a loss of confidence in the American government’s balance sheet, he said.

“This could ultimately undermine the dollar, push up inflation even more and raise the cost of servicing debt for the US authorities,” our correspondent explained.

Market moves

The UK’s FTSE 100 index of largest shares added 8.6% with banking stocks among the biggest gainers.

Halifax owner HBOS, which was forced into the arms of rival Lloyds TSB after its shares slumped this week, traded up 30.5%.

France’s Cac 40 and Germany’s Dax indexes joined in the rally, up 7.5% and 5.1% in afternoon trade.

Earlier, Japan’s Nikkei jumped 3.8%, while the Shanghai Composite recovered from 22-month lows to close up 9.5% and Hong Kong’s Hang Seng soared almost 10%.

Graph of FTSE 100 this week

Court orders Diana photos damages

Court orders Diana photos damages

Princess Diana

The photographs were taken off the Italian Riviera in 1997

A British photographer who took pictures of Princess Diana on Mohamed Al Fayed’s yacht has been ordered to pay damages to the Harrods owner.

Jason Fraser, 41, was cleared two years ago of breaking French criminal privacy laws by taking the photos in 1997.

But a court in Paris overturned the verdict and ordered Fraser to pay Mr Al Fayed 5,000 euros (£3,900). He was also fined a total of 3,000 euros (£2,400).

Fraser, of London, said he hoped the latest ruling would be overturned.

Car crash

“I remain confident and would expect a French supreme court to now confirm my continuing faith in the common sense of the French legal system,” he said.

The publishers of France Dimanche, which printed the pictures, were fined the same amount.

The photographs, which show the princess kissing her boyfriend, Mr Al Fayed’s son Dodi, were taken just days before the couple were killed in a Paris car crash in August 1997.

The yacht was off Portofino on the Italian Riviera but proceedings were able to take place in France because the photos were printed in British tabloids on sale in the country and featured in local publications.

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