Also today: Chinese currency analyst vindicates US concerns; Nasa to scrutinise Toyota’s sudden acceleration woes; Greeks test mettle of EU pledge, sell pricey bonds; Barclays squeals on Royal Bank of Scotland ; Malawi’s foreign currency problem eases; CNN prime-time ratings hit a wall; Malaysians looking to open markets.
Chinese dismiss accusations of Rio Tinto trial secrecy
China has rejected Australian government criticism of its jailing of four Rio Tinto executives for between seven and 14 years, in what many in Australia see as a secretive trial. China’s foreign ministry dismissed Australian Prime Minister Kevin Rudd’s comments that the Chinese government had missed a chance to give foreign companies more confidence in investing in China because it tried parts of the bribery and commercial espionage case behind closed doors. Stern Hu, the Australian executive who led Rio’s iron ore unit in China, was sentenced to 10 years in prison after China’s anti-graft authorities vowed to crack down on corruption. But in usual Chinese style, most of the evidence was placed behind the bamboo curtain.
Photo: Australian Consulate General, Tom Connor speaks to journalists after the trial of an Australian citizen, outside of the Shanghai’s No. 1 People’s Intermediate Court in Shanghai March 29, 2010. The court on Monday sentenced a Chinese-Australian executive of Rio Tinto to 7 years in prison on Monday on charges of accepting bribes and 5 years on charges of stealing commercial secrets. REUTERS/Aly Song
Chinese currency analyst vindicates US concerns
The US has a seeming new ally in its fight with China over the yuan exchange rate. Xia Bin, a newly appointed researcher for the central bank’s monetary policy committee, says the country should resume a “managed” floating exchange rate as quickly as possible, as pressure from the global financial crisis ebbs. Beijing allowed the yuan to rise 21% against the dollar between July 2005 and July 2008, before pegging the currency substantially lower to help its exporters survive the world credit crunch. The US and EU say this unfairly helps Chinese exporters, with the US treasury department soon to rule on whether China is deliberately manipulating its currency. But the big decisions on exchange and interest rates are taken by Chinese politicians, not researchers and bureaucrats, so Xia’s words are just advice.
Nasa to scrutinise Toyota’s sudden acceleration woes
Toyota ’s accelerators and electronic vehicle controls will be examined by Nasa, after the world’s biggest carmaker recalled more than 8 million vehicles worldwide for defects that may trigger sudden acceleration. The Japanese manufacturer has focused on modifying accelerator pedals and installing new floor mats, but many critics think the company’s software and electronic controls are at fault, a charge Toyota strongly denies. So now US officials have brought in the big guns, and Nasa scientists will look into Toyota, while experts from the National Academy of Sciences will conduct a separate investigation into unintended acceleration across the vehicle industry as a whole. Meanwhile, Toyota says it’ll listen more carefully to customers and respond faster to complaints over safety fears, pledging to enlist the help of outside experts. That’d be nice.
Greeks test mettle of EU pledge, sell pricey bonds
Greece put new EU guarantees over its spiralling debt to the test, selling $6.7 billion in seven-year bonds, but paying 3.34% above the European benchmark on similar maturities. That’s well above the rates paid by Portugal, Spain, Ireland and Italy, which are also scrabbling for cash. But Greece’s debt of some $410 billion is the principal domino in the whole bad debt edifice, and the high price of financing is the market’s way of saying that confidence-building will take some time. The Greeks have promised to make severe fiscal cuts to bring down their annual budget deficit of 12.7% – three times the allowed EU limit – but at the current cost of borrowings, they claim they’ll never reach their targets.
Barclays squeals on Royal Bank of Scotland
Britain’s Office of Fair Trading has fined the Royal Bank of Scotland nearly $43 million for breaking competition law between late 2007 and early 2008, down from an original $50 million for admitting the breaches, and promising they won’t happen again. It’s a tale of real skulduggery as the OFT began the probe after Barclays Bank said RBS employees passed it confidential information about the pricing of loans to firms such as solicitors, accountants and property companies. Barclays used the information to set its own prices, but escaped a fine because it reported the matter to the OFT. And, provided Barclays continues to cooperate, it’s not expected to pay a fine in this case. How’s that for behaving like a stooge?
Malawi’s foreign currency problem eases
Foreign currency shortages in Malawi have eased, Bloomberg reports, so the central bank can now cut interest rates. But there’s no certainty about how soon this will be done, as inflation’s still likely to average 8% in 2010 from 8.4% last year. The country’s reliant on tobacco for its foreign exchange earnings, so the link between the exchange rate and inflation is high. As Africa’s biggest producer of burley tobacco, foreign currency was in short supply last year after the world financial slump cut tobacco prices and foreign investment in the country. The bank has left its benchmark interest rate unchanged at 15% since October 2007 by keeping the kwacha in a stable band. But the International Monetary Fund says this is curbing exports and worsening a foreign exchange shortage.
CNN prime-time ratings hit a wall
CNN’s suffering a plunge in ratings for its prime-time programmes, after first-quarter 2010 figures show its main news personalities lost almost half their viewers in a year. The bad news comes as rival Fox News Channel enjoyed its best quarter ever. But while CNN had an even worse fourth quarter in 2009, high-profile events early this year, such as the earthquakes in Haiti and Chile and the US battle over healthcare, still seemed to keep audiences in decline. The losses continue a pattern that’s gone on for much of last year, as CNN trailed its competitors in every prime-time hour. It still easily beats MSNBC during daytime, but that draws far less advertising dollars, and both networks are far behind Fox News at all-hours.
Malaysians looking to open markets
The Malaysian government’s investment arm, Khazanah Nasional, and state-owned oil company, Petroliam Nasional, will sell stakes in subsidiaries to reduce the government’s presence directly or indirectly in business activities. Prime Minister Najib Razak says these tasks are best carried out by the private sector. Khazanah will sell its stake in the national postal service, while Petronas will sell shares in two of its listed units. Najib says the sales are a clear signal of government’s commitment to promoting competition in the economy, risk-taking and long-term economic growth. Malaysia has recently eased investment rules and opened up the nation’s companies to foreign ownership, as China’s booming growth draws money away from the rest of Asia. The country’s also trying to free up more shares for investors to trade in, to make its financial markets more attractive. But as a Muslim country with affirmative action for ethnic Malays, free markets are still some way away.
Some firing squads are all issued with blank cartridges with the exception of one person. This helps alleviate personal responsibility for the execution squad.