Bahrain Unrest Brings Economy to Standstill
REUTERS: In the marble lobby of one of Bahrain's most prestigious hotels, smartly-uniformed staff with polite smiles outnumber the few guests. The Saudi cars normally parked outside are conspicuous by their absence.

Once a relaxed and business-friendly island on the edge of the conservative kingdom of Saudi Arabia, Bahrain's economy has been brought to a standstill by unrest that has sucked in neighbouring armies and sent investors and expatriates running.

Gulf Hotel has closed some of its floors and cut back restaurant hours while some of its staff are on voluntary leave.

"Our occupancy has dropped from the high 90s to the low 25 and 30s, so our business has been badly effected in all areas," Gulf Hotel CEO Aqeel Raees told Reuters in an interview.

"Everybody in Bahrain has been affected ... For the business to recover[, it] will take time, because all planned activities, conferences, exhibitions, meetings have been postponed or cancelled."

Bahrain has been gripped by unrest since protesters took to the street last month, setting up camp at Pearl roundabout. Last week, they cut off the road to the financial district, prompting the government to call in Gulf Arab troops, impose martial law and launch a crackdown that drove protesters off the streets.

Bahrain's four main shopping malls were cut off from customers for five days and shops around the city were shut as fear spread. They have begun to reopen, but business is slow.

"The unrest has not just affected us but the whole economy," said Ahmed Sanad, head of the hotel and restaurant association.

"Our occupancy is down from near 100 percent to 30 percent. We can't do anything... People want one thing, the government wants another and business...is stuck in the middle and losing."

"If everyone pulls in a different direction we will all suffer. We must all offer concessions or we are all losers." » | Lin Noueihed | MANAMA | Thursday, March 24, 2011

Portugal Government in Vote Crisis
Mar 23 - Portugal's PM is threatening to resign if austerity measures are rejected in Wednesday's vote, potentially forcing the country's hand to seek an international bailout. Ciara Sutton reports

Related »

Portugal Braces for Government Collapse
THE WALL STREET JOURNAL: LISBON, Portugal—Portugal's government could collapse Wednesday after opposition parties withdrew their support for another round of austerity policies aimed at averting a financial bailout.

The expected defeat of the minority government's latest spending plans in a parliamentary vote will likely force its resignation and could stall national and European efforts to deal with the continent's protracted debt crisis.

The vote comes on the eve of a two-day European Union summit where policy makers are hoping to take new steps to restore investor faith in the fiscal soundness of the 17-nation euro zone, including Portugal.

Last year, both Greece and Ireland had to accept massive rescue packages after markets lost faith in their governments' efforts to deal with their debt burdens.

The political tension fueled a rise in Portugal's borrowing rates, just as it is trying to cut spending. The yield on the country's 10-year bond, for example, was up to 7.57%Tuesday—just shy of its euro-era record level. The interest rate has been above 7% for several weeks despite the government's earlier austerity measures that, its political rivals say, failed to quell investor fears.

As in Greece, the austerity policies—including tax hikes and pay cuts—have prompted an outcry from trade unions and numerous demonstrations and strikes. Train engineers walked off the job during the morning commute Wednesday, causing widespread travel disruption.

By most measures, Portugal is one of the euro zone's smallest and feeblest economies but its financial collapse would likely trigger a fresh bout of nerves over other debt-heavy—and bigger—euro countries such as Spain, Belgium and Italy.

"Portugal seems very likely to become the third … eurozone country to need a bailout," Emilie Gay, European economist at Capital Economics, said. » | Associated Press | Wednesday, March 23, 2011

Bahrain Unions to Extend Strike
THE WALL STREET JOURNAL: MANAMA—Bahrain's largest trade union Sunday called for nationwide strikes to be prolonged until foreign troops are withdrawn from the kingdom and pro-government militias are disbanded, posing another threat to Bahrain's fragile economy.

Speaking after a meeting of the General Federation for Bahrain Trade Unions, which represents more than 60 trade unions across Bahrain, general secretary Sayed Salman said that unions wanted to avoid causing lasting damage to the economy, but were left with no choice but to extend the general strike. He said foreign troop intervention and mounting attacks on Bahraini workers by armed government loyalists are "unacceptable."

"As of now 70% of Bahraini workers are on strike and in this situation we cannot call our people back to duty. We hope that it won't be a long time as our workers are also suffering, but we want all the militias and foreign forces to be taken off the streets...The situation here is unacceptable," Mr. Salman said in an interview.

The trade union group represents workers from across Bahrain's services and construction sectors, including Gulf Air, the national carrier, and Bapco, the island's largest oil company.

An official from the Bapco trade union said that the refinery, which has the capacity to produce more than 250,000 barrels a day of crude, has partially shut down production owing to staff shortages.

"Only 10% is working properly at BAPCO…80-85% of production and distribution is now affected," the union official said.

Bahrain's government has urged employees to return to work after days of closures and shortened hours. But the announcement of persistent large-scale strikes could aggravate the problems facing Bahrain's economy. Over a month of antigovernment protests has seen hotels and restaurants report a collapse in bookings, and fed fears about Bahrain's status as a financial center. » | Joe Parkinson | Sunday, March 20, 2011

Cost of Japan Quake May Top $200 Bln
Mar 16 - Japan's devastating earthquake and deepening nuclear crisis could result in losses of up to $200 billion for the world's third largest economy, but the global impact remains hard to gauge. Ciara Sutton reports

REUTERS: Analysis: Japan heading back into recession – Japan's economy seems to be in a state of almost suspended animation as its nuclear crisis shows no sign of ending, sorely testing analysts' hopes for a swift rebound led by reconstruction efforts. » | Wayne Cole | SYDNEY | Thursday, March 17, 2011

Niall Ferguson: China Will Overtake the US within a Decade
Niall Ferguson, historian and author of Civilization, tells Robert Miller that the credit crisis means China's economy will overtake the US much quicker than expected
Watch Telegraph video here | Monday, March 07, 2011

Greek Debt Price Soars as Moody's Cuts Credit Rating Below Egypt
THE DAILY TELEGRAPH: The Greek government has reacted angrily to Moody's decision to cut the country's credit rating below that of Egypt, a move that prompted investors to dump the debt of other struggling European economies.

The country's debt was lowered to B1 from Ba1, as the ratings agency warned that Greece faces a shortfall in tax revenue and huge challenges in reforming state-owned companies and its costly healthcare system.

"The sheer magnitude of the task is becoming ever more apparent," said Sarah Carlson, an analyst at Moody's.

The Greek Finance Ministry yesterday described Moody's move as "totally unjustfied".

"Having completely missed the build-up of risk that led to the global financial crisis in 2008, the rating agencies are now competing with each other to be the first to identify risks that will lead to the next crisis," it said. >>> Richard Blackden | Monday, March 07, 2011

Inside Story - Iran's Economic Surgery
December 22, 2010: Iran's government has slashed subsidies on food, water, electricity and fuel. is Mahmoud Ahmadinejad, Iran's president, breaking his electoral promise to help the poor, his main source of support? And are sanctions the only reason behind Iran's economic woes?

Saudi Arabia’s Economic Woes

Egypt’s Economy in Turmoil

Detroit in Ruins
THE OBSERVER: Yves Marchand and Romain Meffre's extraordinary photographs documenting the dramatic decline of a major American city

To the photo gallery >>> | Sunday, January 02, 2011

George Papandreou Risks Sparking Class War Over Austerity Cuts
THE GUARDIAN: A mob attack on a politician in broad daylight has highlighted how desperate Greeks are becoming about political decisions imposed on them

Riot police clash with protesters in September outside the Thessaloniki International Fair where the Greek prime minister, George Papandreou, was delivering a keynote speech. Photograph: The Guardian
Stung by fury on the streets, criticism within his own party and rising poverty, the Greek prime minister, George Papandreou, addressed an emergency session of his socialist MPs yesterday as parliament prepared to debate one of the toughest budgets in the near-bankrupt nation's modern history.

Amid mounting hostility over austerity measures that last week sparked some of the ugliest scenes of violence since the eruption of Europe's debt-crisis in Athens, he appealed for calm in navigating what he has increasingly come to call a "state of war".

"These are critical times for Greece," said Kostas Panagopoulos, a political analyst. "It is going through its worst period in 30 years."

An attack in broad daylight on Kostas Hadzidakis, a minister in the former conservative government, has highlighted fears that Greeks are at a tipping point. He was set upon as he walked through Athens during one of the capital's biggest ever anti-austerity demonstrations. Protesters were seen shouting "thieves, thieves" and "let the parliament burn" as they punched him in the face, threw stones at him and tried to attack him with sticks. >>> Helena Smith | Sunday, December 19, 2010

En route vers le yuan
Image : Le Temps
LE TEMPS: Prudemment plutôt que délibérément, la Chine est en train d’internationaliser son renminbi. Un processus qui pourrait avoir un gros impact sur le commerce, ainsi que sur le système financier mondial. Et même sur la politique internationale

Le marché des emprunts obligataires émis dans la devise chinoise est tellement neuf qu’il doit encore se trouver un nom. A défaut d’autre chose, il est surnommé marché «dimsum», une allusion à la cuisine de Hongkong, où il est basé. En dépit de sa ­jeunesse, ce marché fait l’objet d’un intérêt grandissant. Le mois dernier, Caterpillar, le fabricant américain d’équipements de chantier, a lancé une émission d’obligations pour 1 milliard de renminbis [145 millions de francs]. C’est la deuxième multinationale à exploiter ce marché, après la chaîne de fast-food McDonald’s en août.

Ces émissions d’obligations sont importantes, car le marché des emprunts obligataires en renminbis par des entreprises étrangères représente bien plus qu’une nouvelle voie pour financer de la dette, c’est un atout majeur dans un plan visant à internationaliser la monnaie chinoise. Le processus sera lent, à pas de bébé bien plus qu’à pas de géant, et il n’est en aucun cas garanti que le renminbi – connu aussi sous le nom de yuan – jouera un rôle décisif au niveau mondial. Mais il pourrait avoir un énorme impact sur le commerce, sur le système financier global et même sur la politique internationale. >>> Robert Cookson et Geoff Dyer | Jeudi 16 Décembre 2010

EU Rescue Costs Start to Threaten Germany Itself
THE DAILY TELEGRAPH: The escalating debt crisis on the eurozone periphery is starting to contaminate the creditworthiness of Germany and the core states of monetary union.

Credit default swaps (CDS) measuring risk on German, French and Dutch bonds have surged over recent days, rising significantly above the levels of non-EMU states in Scandinavia.

"Germany cannot keep paying for bail-outs without going bankrupt itself," said Professor Wilhelm Hankel, of Frankfurt University. "This is frightening people. You cannot find a bank safe deposit box in Germany because every single one has already been taken and stuffed with gold and silver. It is like an underground Switzerland within our borders. People have terrible memories of 1948 and 1923 when they lost their savings."

The refrain was picked up this week by German finance minister Wolfgang Schäuble. "We're not swimming in money, we're drowning in debts," he told the Bundestag.

While Germany's public and private debt is not extreme, it is very high for a country on the cusp of an acute ageing crisis. Adjusted for demographics, Germany is already one of the most indebted nations in the world. Read on and comment >>> Ambrose Evans-Pritchard | Friday, November 26, 2010

Euro Crisis: Britain Needs to Prepare for an Economic Dark Age Next Door
THE DAILY TELEGRAPH: The crisis in the eurozone shows why this country must widen its horizons, writes Simon Heffer.

The Euro might not survive in its present form. Photo: The Daily Telegraph
On a shimmering day last June, I was talking to one of our most intelligent diplomats about the future of the euro. He told me, matter-of-factly, that there would be a serious crisis again before Christmas, and he suggested that it might not even survive in its present form. He has been proved right about the first point. Whether he is right about the second is anyone's guess, but if the markets have their way, he will be.

Privately, those who understand the workings of the European Union, but who can manufacture the right amount of detachment about them, admit that the iron façade of common purpose in the European project is starting to creak and rust. For years, a series of pretences has been entered into by dreamers of the European dream about the union's ability to advance as one entity. It has become worse since the inception of the single currency, of which this country is not, thank heaven, a member.

The club pretends (or sought to pretend: it is now wearing a bit thin) that the great disparities between, say, an economy like Germany's and one like Ireland's or Portugal's could be accommodated within the same common policy; and could be so while individual countries were allowed a measure of economic sovereignty, such as setting their own tax rates. Technically, deficits were to be regulated, but in practice, and in the interests of not upsetting any applecarts, they were not: otherwise, France and Italy would have been booted out long ago. The result is that some countries are now threatening to break the system. And poor old Ireland, with a number of its state-owned banks facing oblivion, cannot even turn its economy around, despite heroic amounts of self-flagellation. But then, if you were trying to have an export-led recovery when your goods were denominated in a currency that is among the most expensive in the world, you would be suffering, too. Read on and comment >>> Simon Heffer | Tuesday, November 16, 2010

Midterms 2010: Obama Acknowledges 'Frustration’ with Economy
THE DAILY TELEGRAPH: Barack Obama has said he is looking forward to working with Republicans and admitted Americans were deeply “frustrated” with the pace of economy recovery.

Barack Obama in the White House. Photo: The Daily Telegraph
Mr Obama spoke after Republicans seized control of the House of Representatives. The president now faces legislative gridlock and potentially a roll back of some of his key legislative reforms.

“After what I’m sure was a long night for a time of you and needless to say it was for me, I can tell you that, you know, some election nights are more fun than others. Some are exhilarating. Some are humbling,” Mr Obama said.

“And yesterday’s vote confirmed what I’ve heard from folks all across America. People are frustrated. They’re deeply frustrated with the pace of our economic recovery and the opportunities that they hope for their children and their grandchildren.”

Mr Obama would not concede that the Republican win represented a public rejection of his agenda but he took "direct responsibility" for the slow economy.

Republicans scored the chamber’s biggest party turnover in more than 70 years. Democrats lost ground in the Senate, but kept their majority, vote tallies showed on Wednesday.

John Boehner, the House Republican Leader on Wednesday claimed a voter mandate to roll back the Obama administration’s health care overhaul, calling it is a “monstrosity”.

The presumptive next speaker of the House said that the Republican takeover of the House and its success in narrowing the Democratic Senate majority in Tuesday’s elections was proof that “the Obama-Pelosi agenda” was rejected by the American people. >>> | Wednesday, November 03, 2010

America Will Need Another Ronald Reagan to Reverse President Obama’s Pitiful Legacy of US Decline
Margaret Thatcher and Ronald Reagan on the White House lawn. Photo: The Telegraph
THE TELEGRAPH – BLOGS – NILE GARDINER: The Obama administration is bracing itself for more bad news this week with the release of stunning census figures which are projected to show the biggest increase in poverty in the United States since the 1960s. As Associated Press reports:

The number of people in the U.S. who are in poverty is on track for a record increase on President Barack Obama’s watch, with the ranks of working-age poor approaching 1960s levels that led to the national war on poverty. Census figures for 2009 — the recession-ravaged first year of the Democrat’s presidency — are to be released in the coming week, and demographers expect grim findings.

Interviews with six demographers who closely track poverty trends found wide consensus that 2009 figures are likely to show a significant rate increase to the range of 14.7 percent to 15 percent. Should those estimates hold true, some 45 million people in this country, or more than 1 in 7, were poor last year. It would be the highest single-year increase since the government began calculating poverty figures in 1959. The previous high was in 1980 when the rate jumped 1.3 percentage points to 13 percent during the energy crisis.

The new figures are an indictment of President Obama’s handling of the economy, and will add to the growing perception that his Big Government agenda has been a spectacular flop. Despite a huge $787 billion stimulus package (with another $50 billion in spending on the way), and a wave of public bailouts, unemployment continues to rise towards 10 percent, and the housing market remains on a downward trajectory.

Added to this grim picture is a spiraling budget deficit which threatens America’s long-term economic prosperity. As I’ve noted before, the United States is drowning under a mountain of debt, with a Greek-style financial crisis a strong possibility. Under its alternative fiscal scenario, the Congressional Budget Office projects that US debt could rise to a staggering 87 percent of GDP by 2020, to 109 percent of GDP by 2025, and to 185 percent of GDP in 2035. >>> Nile Gardiner | Tuesday, September 14, 2010

Obama Says Stimulus Healed Economy (And If You Believe That, You'll Believe Anything!)
THE WALL STREET JOURNAL: President Barack Obama said his economic stimulus plan help stop the economic "bleeding." Deborah Lutterbeck reports. Video Courtesy of Reuters.

Tensions Rise in Greece as Austerity Measures Backfire
Photograph: Spiegel Online Internation
SPIEGEL ONLINE INTERNATIONAL: The austerity measures that were supposed to fix Greece's problems are dragging down the country's economy. Stores are closing, tax revenues are falling and unemployment has hit an unbelievable 70 percent in some places. Frustrated workers are threatening to strike back.

The feast of the Assumption of Mary on Aug. 15 is the high point of summer in the Greek Orthodox world. Here in one of the country's many churches, believers pray to the Virgin for mercy, with many of them falling to their knees.

The newspaper Ta Nea has recommended that the Greek government adopt the very same approach -- the country's leaders have to hope that Mary comes up with a miracle to save Greece from a serious crisis, the paper writes. Without divine intervention, the newspaper suggested, it will be a difficult autumn for the Mediterranean state.

This dire prognosis comes even despite Athens' massive efforts to sort out the country's finances. The government's draconian austerity measures have managed to reduce the country's budget deficit by an almost unbelievable 39.7 percent, after previous governments had squandered tax money and falsified statistics for years. The measures have reduced government spending by a total of 10 percent, 4.5 percent more than the EU and International Monetary Fund (IMF) had required.

The problem is that the austerity measures have in the meantime affected every aspect of the country's economy. Purchasing power is dropping, consumption is taking a nosedive and the number of bankruptcies and unemployed are on the rise. The country's gross domestic product shrank by 1.5 percent in the second quarter of this year. Tax revenue, desperately needed in order to consolidate the national finances, has dropped off. A mixture of fear, hopelessness and anger is brewing in Greek society. >>> Corinna Jessen in Athens | Wednesday, August 18, 2010

Savings Accounts Will Become 'Obsolete'
THE TELEGRAPH: Savings accounts will become “totally obsolete” if inflation rises next week, experts have warned.

Latest figures suggested that not a single saver in Briton would make a real return on their cash if the cost of living continues to rise.

Historically low interest rates and the government’s preferred measure of inflation, the Consumer Prices Index, at 3.2 per cent means savers are already struggling to get an income.

There are currently no accounts available to higher rate taxpayers that provide a real rate of return after tax and inflation, and just a handful available to basic rate taxpayers. But even these could be nudged off the savings landscape, financial experts warned.

They suggested that if CPI rises to above 3.8 per cent, there will be no point any taxpayer using a savings account to produce an income.

In this situation, savers would actually end up losing money and could end up being more than £300 out of pocket in a year on a £10,000 investment.

Darren Cook, of personal finance website Moneyfacts, said: “If inflation rises to 3.8 per cent, all savings accounts will effectively be totally obsolete. >>> Myra Butterworth, Personal Finance Correspondent | Friday, August 13, 2010