World financial news

The Japanese government may delay an economic stimulus package after members of Prime Minister Yukio Hatoyama’s coalition said the proposed plan was insufficient.

“It probably won’t come together” today, Mikio Shimoji, head of policy research at the People’s New Party, told reporters in Tokyo. The head of the Social Democratic Party, also a minority coalition member, said the government was still debating the plan.

PNP leader and Financial Services Minister Shizuka Kamei has urged for spending of at least 8 trillion yen ($90 billion). Hatoyama’s Democratic Party of Japan had planned a package of as much as 4 trillion yen, Finance Ministry officials familiar with the matter have said.

Kamei “won’t relent on the 8 trillion yen figure,” Shimoji said, adding “We’ve put negotiations on hold same day payday loans.” He said signs the economic expansion has been weakening mean the government will need to spend more than planned.

“We’re in deflation, so we need something quantitative,” Shimoji said. “We think that unless it’s around 8 trillion yen, the economy won’t respond. They have no choice but to bow down,” he added, referring to the DPJ.

“I think there’s a possibility it won’t happen today,” SDP leader Mizuho Fukushima told reporters at the Prime Minister’s residence in Tokyo.

Source

Whole Foods Market announced Wednesday that it is seeking space in downtown Honolulu as an alternative to its planned Ward Village Shops location.

In a brief announcement, the company said it is looking for “a new location to serve the downtown area of Honolulu as construction of the Ward Village development has halted.”

The company said that no Whole Foods representatives were available for comment.

The store at the Ward Village Shops had originally been planned as Whole Foods’ flagship store for Hawaii. It was scheduled to open in early 2008, but the Texas-based natural foods chain instead opened its first Hawaii store at Kahala Mall in September 2008.

Construction at the Ward site — between Auahi Street and the Queen Street extension — stopped in December 2008 when landlord General Growth Properties ordered the general contractor on the project to stop work.

The Whole Foods building and the adjoining 900-stall parking structure are about 60 to 70 percent complete.

It was not clear from the statement if Whole Foods was permanently abandoning the Ward site or if it would still locate there if General Growth resumed construction. General Growth, which owns the Ward complex as well as Ala Moana Center, declared bankruptcy in April with about $10 billion in debt.

General Growth has not said when construction on the $100 million project, which has already been stopped several times because of the discovery of ancient Hawaiian remains on the site, would resume.

Whole Foods said it is still on track to open a Maui store in February and a Kailua store on Oahu in 2011.

Source

Dubai’s debt crisis may not sow lasting global contagion, but it may color a 2010 investment landscape where asset managers will likely differentiate more between risks rather than embracing them indiscriminately.

The global market sell-off after last Wednesday’s Dubai bombshell on delaying debt payments from its state-owned conglomerates lasted only two days. World stocks have bounced back 2.5 percent this week.

For all the ripples this aftershock of the credit crisis will create, the direct material impact of any debt rescheduling on international banks or governments outside the region pales in comparison to an event like last year’s bankruptcy of Lehman Brothers, for example.

Of the $26 billion affected by the rescheduling, analysts reckon no more than 50 percent is held by global banks, and individual lenders can absorb that sort of hit. Credit ratings firm Moody’s said on Tuesday it saw no reason to alter international bank ratings due to developments.

But while there’s little rationale for direct contagion, the implications may seep through market psychology for many months to come.

The event was a reminder of the excessive leverage the world is still trying to shed and triggered what many investors, including giant U.S. bond fund Pimco, saw as a much-needed correction to 2009’s surge in risky assets and emerging markets.

While many may see this as a good opportunity to re-enter the market, they will likely be more choosy on their return.

“Fundamentals will become more apparent again. It’s the theme that will carry on in 2010. It’s going to become much more discerning. We do appreciate next year will be turbulent for investors,” said Rekha Sharma, global strategist at JP Morgan Asset Management.

CAVEAT EMPTOR

Growth-sensitive emerging market assets were the main beneficiaries this year of the wholesale shift out of low-risk, low-yielding money market instruments that took place since March of this year.

But the liquidity and growth landscape is set to change next year as Western central banks seek to time their exits from super-cheap money policies flooding the world and as many emerging economies attempt to frustrate speculative flows with a variety of controls, taxes and state intervention.

As a result, country-specific risks are rising in the face of recent capital curbs by the likes of Brazil and Taiwan.

Reflecting these rising idiosyncratic risks, for example, Brazil has moved to the top of Swiss bank UBS’s growth surprise rankings followed by China, Korea and Poland.

“We have, since October, been in a decidedly different phase of the recovery where differentiation increasingly matters. Recent events will only serve to intensify the market’s scrutiny,” Morgan Stanley said in a note to clients.

“If March-September was a beta trade — buy anything and it will go up — now it’s all about picking your spots. The run-on risks have increased as the scrutiny on sovereign balance sheets has intensified.” 

Read more

Citigroup Inc. hired Willem Buiter, a former Bank of England official who has criticized the Federal Reserve for being too close to Wall Street, as its chief economist.

Buiter, 60, will join the bank in January and fill the position left vacant by Lewis Alexander’s move to the U.S. Treasury eight months ago, New York-based Citigroup said in a statement today.

The appointment by the bank, which is 34 percent owned by the U.S. government, puts an academic known for his outspokenness in its most senior economics position. In 2008, Buiter told the Fed’s annual symposium in Jackson Hole, Wyoming, that it pays an “unhealthy and dangerous” amount of attention to the concerns of the biggest U.S. financial institutions.

“As one of the world’s most distinguished macroeconomists, Willem’s deep knowledge of global markets and economies, and emerging markets economies in particular, will be invaluable to our clients,” Hamid Biglari, Vice Chairman of CitiCorp, said in the statement.

Buiter, currently a professor of political economy at the London School of Economics, has been unafraid to speak his mind about former or potential future employers.

CDO Comments

“In August 2007, several CEOs of major cross-border banks admitted they didn’t know what a CDO was,” Buiter said at the European Banking Congress on Nov. 20 in a discussion on the role of collateralized debt obligations in the financial crisis. “Most members of the Bank of England’s Monetary Policy Committee didn’t either.”

Buiter called Citigroup “a conglomeration of worst- practice from the across the financial spectrum,” in an April posting on his blog, posted on the Web site of the Financial Times.

In June, he wrote in the blog that the appointment of former Citigroup Chairman Winfried “Win” Bischoff to help oversee a report on the future of U.K. international financial services was “the most ridiculous appointment since Caligula appointed his favorite horse a consul.”

Citigroup spokeswoman Danielle Romero-Apsilos declined to comment. A message left for Bischoff at Lloyds Banking Group Plc, where he is now chairman, wasn’t returned. Felix Salmon of Reuters reported Buiter’s comments on Citigroup and on Bischoff earlier today.

Founding Member

Buiter was one of the founding members of the U.K. central bank’s rate-setting panel when he joined in June 1997. In March 1999, he voted for a 0.4-point interest-rate cut, the only attempt in the MPC’s history for a move that wasn’t in a quarter-point multiple.

In 2008, Buiter turned his fire on his hosts when the Fed invited him to its annual retreat in the Teton Mountains.

“The Fed listens to Wall Street and believes what it hears,” Buiter told an audience of central bank officials from the Fed and around the world. “This distortion into a partial and often highly distorted perception of reality is unhealthy and dangerous.”

Fed Governor Frederic Mishkin said at the same event that Buiter’s paper fired “a lot of unguided missiles,” and former Vice Chairman Alan Blinder “respectfully disagreed” with his analysis of the central bank’s crisis management.

Dubai Views

Buiter has been a consultant to Goldman Sachs Group Inc. since 2005, according to today’s statement. He has a bachelor’s degree from Cambridge University and a doctorate from Yale University.

Questioned on Bloomberg Television today about government- controlled Dubai World’s request for a standstill agreement with creditors, Buiter said that they shouldn’t expect a full state- backed rescue.

“This is a business that’s fallen on hard times and its creditors and bondholders simply have to take their lumps and not expect a sovereign bailout,” he said.

Buiter was chief economist for the European Bank for Reconstruction and Development from 2000 to 2005. He has been an adviser to the International Monetary Fund, the World Bank and the Inter-American Development Bank, according to the statement.

Alexander, who had worked at Citigroup since 1999, left in March to become a counselor on domestic finance issues to Treasury Secretary Timothy Geithner. He was paid $2.4 million by Citigroup in 2008 and the first months of 2009, according to his financial-disclosure form filed with the Treasury. In December 2007, he predicted the U.S. would probably avoid a recession.

Buiter is married to Anne Sibert, an economics academic who was appointed as a member of Central Bank of Iceland’s five- member Monetary Policy Committee earlier this year, according to a Web log posting on his site.

Source