ARAB TIMES, SUNDAY, APRIL 17, 2011
Spain warns of record five million jobless Medvedev seeks Hong Kong expertise
The number of unemployed in Spain, the crisis, the workforce has been very 20.33 percent at the end of 2010, the Russian President Dmitry Medvedev sphere of cooperation with Hong suit.
which has the highest jobless rate erratic.” highest in the industrialised world. arrived in Hong Kong Saturday on the Kong,” Medvedev’s foreign policy “The deepening of financial coop-
among developed countries, could Spain‚Äôs booming construction The government this month revised first visit by a Kremlin chief to the ex- adviser Sergei Prikhodko said ahead eration is also useful for Russia with
reach a record of more than five mil- industry drew millions of unskilled upwards its forecast for 2011 to 19.8 British colony, seeking to harness its of the visit. an eye to plans to make Moscow an
lion, the labour minister warned in an immigrant workers and generated high percent from 19.3 percent, but said the financial expertise in modernising A former British colony which was international financial centre,” the
interview published Saturday. levels of economic growth in the rate will ease to 18.5 percent in 2012. Russia. returned to China in 1997, Hong Kremlin said, adding that it also want-
“Whether or not we exceed five mil- decade to 2008. The labour ministry said on April 4 Medvedev, who is seeking to diver- Kong has for years been ranked the ed to boost trade and investment ties.
lion unemployed will depend on the But the collapse of the property bub- that the number of Spaniards out of sify his country’s economy beyond oil world’s freest place to do business. Medvedev will seek to persuade
active population,” Valeriano Gomez ble, compounded by the global finan- work rose for a third consecutive and gas, will on Sunday meet with Last year United Company Hong Kong-based investors to take
told the business daily Expansion, cial crisis, left many people out of month in March, up 0.8 percent from Hong Kong chief executive Donald RUSAL, the world’s top aluminium part in the development of a high-tech
referring to a possible rise in the work- work, especially immigrants and February to 4.33 million for the highest Tsang and visit the stock exchange in producer, became the first Russian hub outside Moscow which the
ing-age population. youths. level since records began in 1996. the southern Chinese territory. company to list in Hong Kong, and Kremlin chief sees as Russia’s
“It must be said that in Spain during The unemployment rate soared to (AFP) “Finances are no doubt a priority several others are seeking to follow answer to Silicon Valley, it said. (AFP)
Beijing renews promises of ‘more flexible’ yuan
China sovereign fund seeks new Europe investments
BEIJING, April 16, (Agencies): ness and academia from Asia and other Meanwhile, China’s central bank reform in the financial department, Chinese companies and cost jobs. On Friday the government reported
China’s $300-billion sovereign wealth continents every year since 2001 to dis- governor has renewed promises to ease including currency reform, pushing Analysts expect Beijing to allow the China’s consumer price index rose 5.4
fund is looking for investment opportu- cuss pressing issues in the region and controversial exchange rate controls — forward development of an ‘exchange- yuan to rise to cool inflation, which percent in March from the year-ago
nities in debt-hit Europe even though it the rest of the world. but says change will be gradual. able renminbi’ and making the renmin- surged to a 32-month high of 5.4 per- level — the highest annual rate since
is not very optimistic about the region’s CIC was set up in 2007 to invest a Zhou Xiaochuan said Friday that the bi exchange mechanism more flexi- cent in March. A stronger yuan would July 2008 — and 5.0 percent in the first
prospects, a media report said chunk of China’s massive foreign- exchange rate of China’s yuan will be ble,” Zhou said at a conference in the help to restrain prices by making oil quarter of 2011.
Saturday. exchange reserves — the world’s made “more flexible” but in a “step by southern Chinese city of Bo’ao, and other imported goods cheaper in The data added to fears that China
China Investment Corp (CIC) largest at $3.0447 trillion at the end of step” way, the official Xinhua News according to Xinhua. Chinese currency terms. was having trouble getting control of
already has a big exposure to Europe March — partly to gain better returns. Agency reported. “This is what we want to do, and we Also: inflation as food, fuel and other com-
and its investment return from the con- The stockpile has been rising as Washington and other governments should do it step by step,” Zhou said. modity prices were soaring around the
tinent is not bad, its chairman Lou Beijing buys foreign currencies used to complain China keeps the yuan under- Beijing’s controls require it to buy WASHINGTON: Chinese inflation
should fall to just above four percent by world.
Jiwei told a forum on the southern pay for the country’s exports in order to valued, distorting trade and hampering dollars and other foreign currency to But the IMF said the government
Chinese island of Hainan, Dow Jones control the value of the yuan. a global recovery. Officials of the restrain the yuan’s rise. China’s foreign the end of this year on the back of
Newswires reported. The reserves are mainly parked in Group of 20 major economies meeting reserves soared above $3 trillion in Beijing’s tough tightening policies, the had made fighting inflation its top pri-
“From the investment perspective, safe but low-yielding instruments such Friday in Washington agreed to look March, a sign the central bank is still International Monetary Fund said ority and that its policies were having
(we’re) not very optimistic about as US Treasury bonds, but amid the at “currency misalignments,” a intervening in currency markets despite Saturday. an impact in slowing price rises.
Europe,” Lou said at the Boao Forum. global crisis CIC has tried to diversify response to frequent complaints about the June promise. “We are seeing credit growth in the “Our current prediction is that infla-
“But it doesn’t mean we wouldn’t its investments and be more aggressive the yuan. In a report this week, the first quarter come down,” said Nigel tion in China should peak shortly and
like to invest (in Europe). There are to improve returns. Beijing promised more flexibility in International Monetary Fund cited Chalk, the IMF mission chief for will come down later in this year,” said
still opportunities in Europe, such as According to the latest financial June, but the US Treasury Department Beijing’s currency controls as one fac- China, at a news briefing in Anoop Singh, IMF director for Asia
infrastructure sectors ... we’re looking reports available, CIC had total assets says the 4.5 percent increase in the tor that might weaken a global eco- Washington. and the Pacific.
for some investment opportunities of $332 billion at the end of 2009, and yuan, also known as the renminbi, nomic recovery. “Should they continue with that tra- “We can be sure that the measures
there.” the European region accounted for 20.5 against the dollar since then has been Officials including Premier Wen jectory, inflation will come down. We that they have taken so far, these will
The gathering in Boao has brought percent of CIC’s diversified equity too slow. Jiabao have ruled out a fast apprecia- forecast for a little bit over four percent be increased until they are certain that
together leaders in government, busi- investments. “China will continue to carry out tion of the yuan, saying that might hurt by the end of the year.” inflation is coming down.”
Investors fault ABN Amro role G-20 countries reach agreement
Warhol dream fund to monitor economic imbalances
turns to nightmare World finance chiefs chastise US on deficit
PARIS, April 16, (RTRS): As the was suspended. Moccia says this
financial crisis loomed in late has been partly repaid, leaving
2007, Federico Moccia was in an around $40 million in liabilities. WASHINGTON, April 16, (Agencies): The world’s major The hope is that the monitoring process will highlight problems before they
upbeat mood. It remains unclear how long it nations have put together a new monitoring process that they become so big that they pose a threat to global growth. But the deal announced
The 40-year-old ex-JPMorgan will take to refund the bank, now Friday by the G-20 left many questions unanswered about just how effective the
banker with a penchant for works being criticized by some investors
hope will halt the types of destabilizing economic imbalances new procedures will be.
by pop artist Andy Warhol had cre- for collecting interest and debt that contributed to the worst global downturn since World Global financial reform will continue to be the focus of meetings Saturday of the pol-
ated a $600 million hedge fund and repayments — even as they have War II. icy-setting committees of the 187-nation International Monetary Fund and the World
was preparing to move to Asia to no access to their money. Bank. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben
Finance officials in the United States and other members of the Group of 20 Bernanke were representing the United States at the talks.
woo the region’s deep-pocketed In a letter to ABN Amro’s Chief major economies said the new program will closely follow key measurements
investors. Executive Gerrit Zalm in February, Geithner also had a round of one-on-one meetings scheduled Saturday with finance
After making a big impression Brussels-based lawyer Robert of economic health such as government budget and trade deficits, personal officials from Portugal and Greece, two nations facing serious debt troubles, and offi-
on the Singapore art scene with his Wtterwulghe accused the bank of savings levels and investment flows between nations. cials from the European Union and Germany who have been involved in the efforts to
recent Warhol exhibition, Moccia putting its own interest before its deal with Europe’s debt problems.
was confident the brewing US sub- fiduciary duty to investors as cus- Geithner was also scheduled to meet
prime mortgage meltdown could todian and called for the appoint- with Egyptian Finance Minister Samir
not dent his plan to stoke returns ment of an independent liquidator. Radwan for talks likely to focus on the
from his “Cannonball” fund with “The financing granted to the types of financial support that Egypt
art and real estate investments. Cannonball funds by your institu- needs during its governmental transition.
“I had received a working permit tion places you in a conflict of After the daylong G-20 talks ended,
from the Singapore authorities,” interests,” wrote Wtterwulghe, French Finance Minister Christine
recalls Italian-born Moccia, speak- who represents 169 investors who Lagarde told reporters Friday that the
ing from his London office. “The have paid around $9 million into monitoring agreement was a significant
future was bright.” the funds. achievement in efforts to restore confi-
Moccia never got there. “The unjustified non-liquidation dence and prevent future financial crises.
of these funds serves your and the “We have made huge progress in rela-
Exposed tion to the framework for growth,” she
His sprawling portfolio — other parties’ interest in the first said. “This is a major step in the right
including holdings in everything place, with little consideration for direction.”
from leveraged hedge funds, pop- the interest of the investors. Lagarde said that all G-20 nations will
art prints of Superman and bou- Responding to the accusations, take part in the monitoring process but in
tique hotels in Bali — was sus- an ABN Amro spokesman said: the beginning the focus would be on
pended in October 2008 when the “The bank has a contractual rela- seven of the world’s largest economies.
financial crisis peaked. Moccia’s tionship with Cannonball Funds She declined to name all of those coun-
diversification only left him more Limited and, based on that rela- tries but the group is expected to include
exposed. tionship, the bank has obligations the United States, China, Japan,
Cannonball’s biggest money- to the fund and not to the investors. Germany, France, Britain and India.
spinners were the funds that invest- Obligation Much about the monitoring process,
ed in other hedge funds, a strategy “And as far as there might be however, is still to be determined includ-
ing whether countries found to have dan-
that blew up when credit markets any obligation to the investors gerous imbalances will be identified pub-
froze. Some of them were also ABN Amro is of the opinion that licly. China in the past has blocked public
found to have put money into vehi- these obligations have been ful- release of criticism it has received from
cles linked to Minnesota business- filled and we do not see any basis the International Monetary Fund.
man Tom Petters’ $3.65 billion for any accusation or claim as sug- The initial monitoring effort will be
Ponzi scheme. gested in the letter by reviewed at an October meeting of the G-
“I couldn’t honour the redemp- Wtterwulghe.” 20 finance officials who will report on
tions. There was this thing, this The Cannonball Fund prospec- how the process is working to G-20 lead-
crazy fraud,” said Moccia. tus forewarns investors that Fortis, ers who are scheduled to meet in Cannes,
To make matters worse, “if required”, would provide the France, in November. Since there is no
Moccia’s much-vaunted art fund fund with credit facilities. enforcement mechanism, it was unclear
was also frozen after he fell victim Investors also received an advisory what pressure can be brought to bear on
to one of the oldest and riskiest that the funds’ activities might countries found with dangerous imbal-
In a picture taken on April 1, 2011, a South Korean cashier swipes credit card at a restaurant in Seoul. (AFP) ances.
strategies — putting all his eggs in involve “a high degree of lever-
However, officials sought to portray
Moccia had stockpiled work by
Moccia contends that appointing Card transactions worth $475 bln in 2010 the agreement as a major step forward in
“Pope of Pop” after he saw the an independent liquidator would addressing the types of problems that
were uncovered by the financial crisis
value of a Marilyn Monroe print
shoot from $1,000 to $200,000 in
the space of a generation.
But his decision to buy into just
kick off a fire-sale that would be
against investors’ interests, adding
that he is best positioned to unwind
the complex positions he helped
‘Plastic’ trumps cash in S. Korea that erupted in the United States in the
fall of 2008 and contributed to pushing
the global economy into the worst down-
SEOUL, April 16, (AFP): “Do you have Card transactions were worth 517.4 tril- “I use a credit card or debit card instead turn since the Great Depression of the
one artist - even a “blue-chip” one invent. any of the credit cards listed here? You can lion won ($475 billion) last year, a 6.6 per- of cash because using a card raises my 1930s.
like Warhol - perplexed some Technically the funds are still get up to 20 percent discount,” a restaurant cent rise on 2009, according to the credit status and allows me to pay large Meanwhile, World finance leaders on
experts. alive, able to collect fees and not cashier asks a diner settling her bill, indi- Financial Supervisory Service. sums in instalments,” said businessman Saturday chastised the United States for
“Andy Warhol prints? That’s an bound to be dissolved. They are cating a wall chart. South Koreans’ usage of credit cards as Kim Chang-Hwan, 28. not doing enough to shrink its massive
area we would never touch,” said registered and recognised in the Kim Lee-Soo, 22, shuffles quickly a percentage of total consumption reached There are also the tax breaks. The gov- budget deficit and warned that fiscal
Constanze Kubern, who manages British Virgin Islands, where the through a stack of cards in her bulging wal- 54.9 percent in the first half of 2010 com- ernment recently caused a stir when it strains in rich nations threaten the global
Castlestone Management’s art regulator says Globefin is also still let. After passing on five or six of them, she pared to 34.6 percent in the US and 43.9 announced it was considering dropping recovery.
fund. licensed to provide management finally finds one that matches the list and percent in Britain, Seoul’s Credit Finance these this year. It later agreed to extend the Although global tensions over the pos-
Such popular prints were among services. claims the full discount. Association says. policy for an unspecified period. sibility of currency wars and Europe’s
the worst hit when the crisis swept Keeping the funds suspended It’s a typical scene in South Korea, The bubble burst in 2003, with 3.7 mil- The tax breaks from card usage were growing debt crisis continue to simmer,
through the art market as they does at least give Moccia some where people use plastic to pay for every- lion defaulters on loans and the govern- worth 13 trillion won for 5.6 million peo- finance ministers in Washington for semi-
lacked the one-of-a-kind appeal of prospect of making money and thing from a highway toll to a single cup of ment forced to step in to bail out card com- ple in 2009, according to tax service fig- annual talks also took sharp aim at the
a single canvas. Warhol repeated thus, amends. coffee — earning a variety of discounts panies. The firms tightened measures when ures. United States’ $14 trillion debt.
silkscreen prints of the same The Cannonball Art Fund, for and even income tax rebates in the process. issuing cards but spending continued to But Lee Jae-Youn said even the expira- While most of the criticism came from
celebrity in a series of garish example, charges no management “I use credit cards most of the time and increase. tion of the tax concession would not hit emerging market economies, some rich
the small amount of cash I carry is only for Lavish rewards for cardholders are the card usage excessively. nations also joined the chorus.
colours. fee but instead takes a 30 percent emergency use,” said businesswoman Lee main reason, according to Lee Jae-Youn, a “Rewards by the credit card companies “The fiscal situation in the advanced
As if rollercoaster markets and commission on the sale of any art- Chae-Hwan, 38. senior research fellow at the Korea and convenience have accustomed people economies gives us great concern, and it
exposure to fraud were not enough, work. Moccia said he was consid- Office worker Moon Seon-Young, 42, Institute of Finance. to use cards instead of cash, and this is not is in this area that we see the major risks
Moccia’s queasy investors have ering waiving the fee. uses cash only in places like traditional “In Korea, users don’t have to pay a expected to change much even with the to the global economy,” Russian Finance
also had to swallow demands from Moccia says if he can negotiate markets. membership fee, and rewards for using expiration,” he said. Minister Alexei Kudrin told the
Moccia’s primary creditor Fortis asset sales and unwind positions he The process began in 1999 as part of a credit cards such as discounts in shops are The Credit Finance Association expects International Monetary Fund’s advisory
Bank — now part of Dutch state- will be in a better position to government drive to fight corruption and incomparably large compared to those in usage to expand further, but there is a panel.
owned lender ABN Amro after suf- refund investors - and, hopefully, tax evasion centred on the underground other countries,” Lee told AFP. downside. All those discounts must be paid The IMF this week noted that the U.S.
fering its own collapse during the to forget his own brief “15 minutes “black” economy. It gave tax breaks to Card companies also give holders “point for somehow — sometimes in the form of budget deficit was on course to hit 10.8
crisis. of fame.” encourage consumers to use credit cards cash”, a small percentage of each settle- higher overall prices. percent of nation’s economic output this
Moccia’s holding company “I want to give back the money and threatened tax audits for businesses ment, which is saved in the cardholder’s The cost of discounts for using credit year, tying Ireland for the highest deficit-
Globefin has pledged first to fully to all the investors, close the fund, which refused to accept them. account and can be spent like cash. cards is passed on to consumers in ways to-GDP ratio among advanced
repay the $165 million lent by and end this story,” Moccia said. Now the country of around 49 million Good infrastructure for electronic trans- such as an increase in overall price levels, economies.
ABN when the Cannonball fund “I’m fed up.” people has 117 million credit cards, almost actions in one of the world’s most wired Lee said. “And consumers may use credit It urged Washington to move quickly
five for each economically active person, societies, and the convenience factor, also cards too recklessly, possibly causing over- to put a credible plan in place to tighten
the central bank says. swell usage. consumption.” its belt.