U.S. to Shelve Nuclear-Missile Shield

Defense Plans for Poland, Czech Republic to Be Dropped as Iran Rocket Threat Downgraded; Moscow Likely to Welcome Move
By PETER SPIEGEL

WASHINGTON -- The White House will shelve Bush administration plans to build a missile-defense system in Poland and the Czech Republic, according to people familiar with the matter, a move likely to cheer Moscow and roil the security debate in Europe.

The U.S. will base its decision on a determination that Iran's long-range missile program has not progressed as rapidly as previously estimated, reducing the threat to the continental U.S. and major European capitals, according to current and former U.S. officials.
The findings, expected to be completed as early as next week following a 60-day review ordered by President Barack Obama, would be a major reversal from the Bush administration, which pushed aggressively to begin construction of the Eastern European system before leaving office in January.

The Bush administration proposed the European-based system to counter the perceived threat of Iran developing a nuclear weapon that could be placed atop its increasingly sophisticated missiles. There is widespread disagreement over the progress of Iran's nuclear program toward developing such a weapon, but miniaturizing nuclear weapons for use on long-range missiles is one of the most difficult technological hurdles for an aspiring nuclear nation.

The Bush plan infuriated the Kremlin, which argued the system was a potential threat to its own intercontinental ballistic missiles. U.S. officials repeatedly insisted the location and limited scale of the system -- a radar site in the Czech Republic and 10 interceptor missiles in Poland -- posed no threat to Russian strategic arms.

The Obama administration's assessment concludes that U.S. allies in Europe, including members of the North Atlantic Treaty Organization, face a more immediate threat from Iran's short- and medium-range missiles and will order a shift towards the development of regional missile defenses for the Continent, according to people familiar with the matter. Such systems would be far less controversial.
Critics of the shift are bound to view it as a gesture to win Russian cooperation with U.S.-led efforts to seek new economic sanctions on Iran if Tehran doesn't abandon its nuclear program. Russia, a permanent member of the U.N. Security Council, has opposed efforts to impose fresh sanctions on Tehran.

Security Council members, which include the U.S. and Russia, will meet with Iranian negotiators on Oct. 1 to discuss Iran's nuclear program.

Current and former U.S. officials briefed on the assessment's findings said the administration was expected to leave open the option of restarting the Polish and Czech system if Iran makes advances in its long-range missiles in the future.

Mr. Obama phoned the Czech prime minister to discuss a controversial missile defense system, according to the Associated Press. Government spokesman Roman Prorok declined Thursday to detail what Mr. Obama told Prime Minister Jan Fischer, saying only that Mr. Fischer later informed Czech President Vaclav Klaus.

The Czech national news agency CTK, citing a diplomatic source it didn't identify, reported that Mr. Obama indicated the U.S. intends to "withdraw from its missile defense project in the Czech Republic and Poland."

But the decision to shelve the defense system is all but certain to raise alarms in Eastern Europe, where officials have expressed concerns that the White House's effort to "reset" relations with Moscow would come at the expense of U.S. allies in the former Soviet bloc. "The Poles are nervous," said a senior U.S. military official.

Polish officials said Thursday they had no information on whether Mr. Obama also phoned that country's top leaders, the Associated Press reported.

Earlier, a Polish official said his government wouldn't "speculate" on administration decisions regarding missile defense, but said "we expect the U.S. will abide by its commitments" to cooperate with Poland militarily in areas beyond the missile-defense program.

Last week, Russian Foreign Minister Sergei Lavrov said he expected the Obama administration to drop the missile-defense plans. He said that Moscow wouldn't view the move as a concession but rather a reversal of a mistaken Bush-era policy.

Still, the decision is likely to be seen in Russia as a victory for the Kremlin. Russian President Dmitry Medvedev will meet with Mr. Obama at next week's meetings of the U.N. General Assembly and Group of 20 industrialized and developing nations.

Although a center-right government in Prague supported the Bush missile-defense plan when it was first proposed, the Czech Republic is now run by a caretaker government. A Czech official said his government was concerned an announcement by the White House on the missile-defense program could influence upcoming elections and has urged a delay. But the Obama administration has decided to keep to its original timetable.

European analysts said the administration would be forced to work hard to convince both sides the decision wasn't made to curry favor with Moscow and, instead, relied only on the program's technical merits and analysis of Iran's missile capabilities.

"There are two audiences: the Russians and the various European countries," said Sarah Mendelson, a Russia expert at the Center for Strategic and International Studies. "The task is: How do they cut through the conspiracy theories in Moscow?"

The Obama administration has been careful to characterize its review as a technical assessment of the threat posed by the Iranian regime, as well as the costs and capabilities of a ground-based antimissile system to complement the two already operating in Alaska and central California. Those West Coast sites are meant to defend against North Korean missiles.

The administration has also debated offering Poland and the Czech Republic alternative programs to reassure the two NATO members that the U.S. remains committed to their defense.

Poland, in particular, has lobbied the White House to deploy Patriot missile batteries -- the U.S. Army's primary battlefield missile-defense system -- manned by American troops as an alternative.

Although Polish officials supported the Bush plan, U.S. officials said they had indicated their primary desire was getting U.S. military personnel on Polish soil. Gen. Carter Hamm, commander of U.S. Army forces in Europe, said Washington has begun talks with Polish officials about starting to rotate Europe-based American Patriot units into Poland for month-long training tours as a first step toward a more permanent presence.

"My position has been: Let's get started as soon as we can with the training rotations, while the longer-term stationing...is decided between the two governments," Gen. Hamm said in an interview.

For several years, the Pentagon's Missile Defense Agency has been pushing for breaking ground in Poland and the Czech Republic, arguing that construction must begin so the system would be in place to counter Tehran's emerging long-range-missile program, which intelligence assessments determined would produce an effective rocket by about 2015.

But in recent months, several prominent experts have questioned that timetable. A study by Russian and U.S. scientists published in May by the East-West Institute, an international think tank, downplayed the progress of Iran's long-range-missile program. In addition, Gen. James Cartwright, the vice chairman of the Joint Chiefs of Staff and an expert in missile defense and space-based weapons, said in a speech last month that long-range capabilities of both Iran and North Korea "are not there yet."

"We believed that the emergence of the intercontinental ballistic missile would come much faster than it did," Gen. Cartwright said. "The reality is, it has not come as fast as we thought it would come."

It is not an assessment that is shared universally. Eric Edelman, who oversaw missile-defense issues at the Pentagon as undersecretary of defense for policy in the Bush administration, said intelligence reports he reviewed were more troubling.

"Maybe something really dramatic changed between Jan. 16 and now in terms of what the Iranians are doing with their missile system, but I don't think so," Mr. Edelman said, referring to his last day in office.

There is far more consensus on Iran's ability to develop its short- and medium-range missiles, and the administration review is expected to recommend a shift in focus toward European defenses against those threats. Such a program would be developed closely with NATO.

Electric cars shine at Frankfurt Motor Show

Frankfurt's 63rd motor show is a compact version of the last event two years ago that will be jumpstarted by electric autos as the sector searches for a future without state lifelines.
The event, known by its initials IAA, opens to the media Tuesday and the public on Thursday, but this year there are fewer participants and visitors but more world premieres, the German VDA auto federation said this week.

"Innovation is the way out of the crisis" that global automakers have been in since last year, said Matthias Wissmann, head of the German VDA auto federation that organises the show in alternance with one in Paris.


A total of 781 auto and auto parts manufacturers from 30 countries are to present around 100 new models, VDA said Monday.

The sector is abuzz about electric vehicles (EVs) being developed by major auto makers, and cross-border cooperation is another hot topic of discussion.

In the background, western European car sales have fallen by 11 percent in the first half of 2009 according to the European Automobile Manufacturers' Association, despite hefty government subsidy schemes.

Major markets in Germany, Britain, Italy, France and Spain have been spared the worst owing to "cash-for-clunker" programmes that encouraged drivers to scrap old cars for new ones, but the boost they gave will peter out in 2010.

In terms of visitors, the Frankfurt show expects around 750,000 people to turn up, compared with almost one million two years ago.

"There will be claims that the end of the crisis is in sight, but in truth the sector is in grave danger," warned the Sueddeutsche Zeitung (SZ) newspaper as key Japanese brands like Honda and Mitsubishi bowed out of the show.

Wissmann nonetheless insisted that the number of new items would see this year's edition "gain in quality" despite the lower numbers.

Many manufacturers plan to present EVs or hybrid vehicles that run on petrol and electricity.

Among the eagerly awaited roll-outs are one from BMW's Mini unit and a four-auto range from city cars to utility models by Renault-Nissan.

"Electric vehicles will be seen on almost every stand," German auto expert Ferdinand Dudenhoeffer forecast.

Fuel-cell and hybrid vehicles from Mercedes, Peugeot and Toyota are getting polished up for opening day as well.

Sector experts will be looking meanwhile for automaker plans to boost joint efforts in a bid to bring down development costs, with former and current rivals possibly unveiling alliances.

Among the flashy high-end premieres, Audi, BMW and Mercedes have new models ready to roar, not to mention Ferrari's latest rocket, the 458 Italia.

Some highlights

• Speaking publicly for the first time at the Frankfurt Auto Show, Porsche's new president and CEO, Michael Macht, revealed that Porsche is working hard on an electric-powered sports car that would meet the high standards of the Porsche brand.

"I am also convinced that one day Porsche will have an electric sports car in its line-up," said Macht at the company's press conference today. While he cautioned that so far the available battery technology is not "sufficient to meet Porsche's strict requirements," he said "our engineers are already working hard on this challenge."

"An electric sports car would therefore only make sense for Porsche if it offers performance and a cruising range similar to that of current sports cars in the market," he said. "We are therefore taking the first step in this direction with a full hybrid - in the Cayenne, the Panamera and maybe in the not too distant future also in a racing car or a production 911. Why not?"

Macht pointed out that Porsche has a long legacy with hybrids as it was 109 years ago that Professor Ferdinand Porsche built the first fully functioning car with hybrid technology.

• Toyota reveals Prius plug-in Hybrid. Based on the third-generation Prius, the PHV Concept expands Toyota's Hybrid Synergy Drive technology, utilizing first generation lithium-ion battery technology and enabling electric operation at higher speeds and longer distances than conventional hybrids. When fully charged, the vehicle is targeted to achieve an electric-only range of approximately 20 km and will be capable of achieving highway speeds in electric-only mode. For longer distances, the PHV concept reverts to "hybrid mode" and operates like a regular Prius. This ability to utilize all-electric power for short trips or hybrid power for longer drives alleviates the issue of limited cruising range encountered with pure electric vehicles.

Beginning in late 2009, Toyota will begin global delivery of 500 Prius PHV vehicles. This program will allow Toyota to gather real world driving feedback and understand customer expectations for plug-in technology. In addition, the program will allow evaluation of the first generation lithium-ion battery's durability, reliability and performance.

"This is an important next step in the world's evolution of hybrid technology," said Stephen Beatty, Managing Director, Toyota Canada Inc.

• Ford will launch the all-new, 7-seat C-MAX in North America in late 2011 as a "whitespace" vehicle. C-MAX is the first of a new generation of Ford global C-cars scheduled for introduction during the next several years; lineup also will include next-generation Ford Focus.

• Audi presented the e-tron, a high-performance sports car with a purely electric drive system. Four motors – two each at the front and rear axles – drive the wheels, making the concept car a true quattro. Producing 313 hp and 3,319 lb-ft) of torque, the two-seater accelerates from 0 to 100 km/h in 4.8 seconds, and from 60 to 120 km/h in 4.1 seconds. The lithium-ion battery provides a truly useable energy content of 42.4 kilowatt hours to enable a range of approximately 248 kilometers.

• Lamborghini presented the Reventón Roadster, a sports car "of breathtaking fascination, menacing power and uncompromising performance." The 6.5 liter twelve-cylinder catapults the Roadster from 0 to 100 km/h in 3.4 seconds and onwards to a top speed of 330 km/h. The open-top Reventón is not only one of the fastest, but also one of the most exclusive cars in the world as Lamborghini has limited the series.

• MINI reveals a Roadster Concept in which it hopes to set "a new trend for individual mobility borne out by the brand." The MINI Roadster Concept is clearly recognizable at very first sight as a MINI. At the same time, with its two seats, a tight-fitting soft roof and innovative rear-end design, the new model opens up new perspective for the compact roadster segment.

• Audi revealed the Audi R8 Spyder 5.2 FSI quattro. The car has a lightweight cloth top, carbon fiber body parts, mid-mounted V10 engine producing 525 hp with zero to 100 km/h in 4.1 seconds on its way to a top speed of 313 km/h along with the other technologies we've come to expect from Audi, such as Audi Space Frame (ASF), quattro permanent all-wheel drive, full-LED headlights and with an innovative seatbelt microphone available as an option.

• Aston Martin reveals four-door Rapide. Four 'swan wing' doors provide access to sports seats both front and rear giving occupants with ample accommodation. A 301-litre luggage compartment affords generous space for belongings for all four passengers whether they be sports bags or sets of skis. Rapide features a hand-built 6.0-litre V12 engine producing 470 bhp with peak power being delivered at 6,000 rpm and 443 lb.-ft. of peak torque at 5000 rpm. A specifically tuned six-speed Touchtronic 2 automatic transmission features as standard, allowing the driver to change gear automatically or manually via the steering column-mounted magnesium paddles.

• The Abarth 695 "Tributo Ferrari" makes its world debut at Frankfurt. This new performance version of the Abarth 500 confirms the link between Abarth and Ferrari based on shared values that include a passion for performance, a racing soul, attention to detail and Italian style.

• The Lexus LF-Ch compact hybrid concept made its world premiere. The LF-Ch concept was designed by Calty Design Research Inc., Toyota's North American-based research and design center located in Newport Beach, Calif. "The LF-Ch concept is the next evolution of the compact luxury vehicle," said Kevin Hunter, president of Calty. "We were able to create a beautifully designed hybrid with a deep sense of mystery and intrigue." It will also be on display for the first time in North America at the 2009 Los Angeles Auto Show in December.

Click here to find out more! Judge rejects Bank of America settlement in Merrill Lynch bonus case

The bank was ready to pay a $33-million fine to settle the case, in which the Securities and Exchange Commission alleged that BofA misled shareholders over the bonuses. A trial is ordered for February
Pedestrians walks outside a Bank of America branch in New York. A federal judge rejected a deal in which the bank would have paid $33 million to settle charges that it misled shareholders about bonuses being paid to Merrill Lynch executives. (Daniel Acker / Bloomberg / September 14, 2009)
Reporting from Los Angeles and New York - In a rare move, a federal judge threw out a deal in which Bank of America Corp. would have paid $33 million to settle charges that it misled shareholders about $3.6 billion in bonuses being paid to Merrill Lynch & Co. executives, contending that the punishment was too light.

U.S. District Judge Jed Rakoff in New York also lashed out at federal regulators, saying they didn't dig deeply enough to determine whether Bank of America executives intentionally set out to deceive shareholders about plans to pay bonuses to employees of Merrill Lynch last year, when the bank was acquiring the Wall Street firm.

Rakoff's ruling Monday was another embarrassment for the Securities and Exchange Commission, which has come under fire for failing to heed repeated warnings about Bernard Madoff's Ponzi scheme, and could put more pressure on the agency to toughen its stance on corporate misconduct.

By casting a harsh spotlight on the SEC's willingness to settle cases without proving allegations in court or forcing companies to admit wrongdoing, the ruling could embolden other judges to view such settlements critically, legal experts said.

"The SEC can no longer count that other federal judges will be rubber stamps," said John Coffee, a Columbia University law professor. "The judges are going to take a closer look."

The judge issued his decision as President Obama marked the one-year anniversary of the collapse of Lehman Bros. by speaking in New York to push for his financial regulatory overhaul, including measures to rein in executive pay.

"We will not go back to the days of reckless behavior and unchecked excess that was at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses," Obama said in remarks at historic Federal Hall across from the New York Stock Exchange.

The government alleged that Bank of America deceived shareholders into believing that Merrill Lynch, staggering from financial losses, would not pay year-end 2008 bonuses. In fact, the SEC says, the bank had already approved $5.8 billion in Merrill bonuses, of which the brokerage eventually handed out $3.6 billion.

In his 12-page ruling, Rakoff criticized the $33-million payment, saying that if Bank of America intentionally deceived shareholders, "$33 million is a trivial penalty for a false statement that materially infected a multibillion-dollar merger."

He also questioned why Bank of America shareholders should foot the bill for misdeeds approved by executives. Regulators say shareholders weren't aware of the bonuses before voting to approve the deal to acquire Merrill late last year, according to regulators.

"The notion that Bank of America shareholders, having been lied to blatantly in connection with the multibillion-dollar purchase of a huge, nearly bankrupt company, need to lose another $33 million of their money . . . is absurd," Rakoff wrote.

"The SEC gets to claim that it is exposing wrongdoing on the part of the Bank of America in a high-profile merger," the judge wrote. "The bank's management gets to claim that they have been coerced into an onerous settlement by overzealous regulators. And all this is done at the expense, not only of the shareholders, but also of the truth."

Rakoff had signaled in August that he was unhappy with the settlement. In formally rejecting it Monday, the judge ordered that a trial in the civil case be held in February. The government and the bank issued statements saying they were contemplating their next moves.

"We believe the proposed settlement properly balanced all of the relevant considerations," the SEC said. "We will carefully review the court's most recent order."

Bank of America repeated its position that "proper disclosure was made to shareholders about Merrill bonuses. We are prepared to prove that through litigation. We will consider all our legal options."

Before taking the case to trial, the government could propose another settlement with harsher penalties. It also could drop the case, but such a move is considered unlikely given the criticism it would provoke.

Legal analysts said perhaps the most surprising aspect of Rakoff's decision was that it came at all. Settlements with federal regulators are almost always greenlighted by judges.

"This is an unprecedented judicial rebuke of the agency," said Jacob Frenkel, a partner at law firm Shulman Rogers Gandal Pordy & Ecker in Potomac, Md., and a former attorney in the SEC's enforcement unit. "I think it telegraphs a new level of scrutiny of settlements."

One option for regulators, Frenkel said, would be to charge individual BofA executives with wrongdoing and seek financial penalties from them rather than from the company itself. Presumably, those penalties would be paid by liability insurance that companies typically carry on their top executives.

Barry Barbash, a partner at Wilkie Farr & Gallagher in Washington and a former head of the SEC's investment-management division, said he couldn't recall another case of a judge dealing such a smack-down to the agency.

"It may be a sign of the times," Barbash said, referring to the taint on the SEC from the Madoff debacle. "Judges read the newspapers too."

Defenders of the SEC say it's chronically underfunded and must rely on settlements because it has the resources to pursue only a handful of cases.

But if regulators respond to Rakoff's decision -- and similar rulings that might follow -- by taking more cases to court instead of settling, the agency will ultimately improve its credibility, Coffee of New York University predicted.w

Wow! Volkswagen Unveils The 158 MPG Hybrid

German car maker, Volkswagen, unveiled several new models at this week's Frankfurt Auto Show. The one drawing the most attention being the L1 concept, designed to go 100 kilometers on one liter of fuel.

The new L1 does fall short of its goal, requiring 1.49 liters of diesel to cover the 100 kilometer distance, and the equivalent of 158 mpg, reports MotorTrend.com. Wow...

It's a bullet-shaped vehicle, made with a carbon fiber-reinforced body, all weighing in at an estimated 650 pounds, thanks to aluminum brakes, carbon-fiber wheels, titanium hubs and ceramic bearings.

Despite the advancements, you're not going to be trekking cross-country without refueling. Why? Because it's fuel tank is just 2.6 gallons, so it won't break your pockets either. But, you'll be able to travel around 416 miles.

The vehicle is small too. It seats just two people, a driver and passenger seat right behind it. The interior is just as futuristic as outside looks. It doesn't have traditional doors. Instead, it has a hinged canopy that slides back to make your entrance.

There are also camera-based rearview OLEDs, offering a 180 degree view behind the car, while the speedometer and other instruments are all virtual.

Power-wise, you might not want to enter it in a drag race, because it takes 14.3 seconds to get to 62 mph. But, top speed is a reasonable 99 mph. It boasts a 0.8-liter version of its TDI engine with only two cylinders. When driving, you can select between Eco producing 27 horsepower, or Sport pushing out 52 horsepower.

While is all sounds good, this baby isn't expect to hit the production line until around 2013.

BoA Ruling Leaves SEC in Tight Spot

A long-held Securities and Exchange Commission tradition of resolving investigations into financial wrongdoing through settlements may have been put into question by a judge's ruling on Monday, reports the Wall Street Journal.

U.S. District Judge Jed S. Rakoff
harged that Bank of America shareholders were misled by a proxy statement into believing that Merrill Lynch employees would not receive bonuses. The judge said the proposal was unfair and asked the SEC to explain why it charged the company and not individuals.

In its defense, the SEC said the proxy was written by lawyers, not executives, and that it was trying to soften the burden of a penalty which would ultimately rest on shareholders. But the judge's decision calls into question the practice of settlement at the SEC, which resolves 90% of its cases in this manner. By settling financial cases, the SEC deters other companies from wrongdoing while allowing the companies under investigation to escape the scrutiny and expense of a courtoom.

"They were hoping to slip a quick and dirty settlement past the judge and got called on it," Peter Henning, a professor of law at Wayne State University Law School in Detroit, told the Wall Street Journal.

Merrill Lynch Bonuses Rejected by Judge

A $33 million settlement between the Bank of America and the Securities and Exchange Commission over bonuses paid to Merrill Lynch executives was rejected Monday morning by a Federal District judge. The bonuses were paid right before Bank of America took over Merrill Lynch last year.

Federal Court judge Jed S. Rakof noted that the settlement "does not comport with the most elementary notions of justice and morality". At this time, the S.E.C. will have to either hammer out a settlement or go back to court. There is also the option for the S.E.C. to drop the case.


Shortly before the merger between Bank of America and Merrill Lynch at the end of 2008, $3.6 billion in bonuses were paid out by Merrill Lynch. None of the shareholders were involved in this decision even though the merger was approved on December 5, 2008. This was very close to the time of the bonus payouts.

The case fines would be paid by the bank’s shareholders if had been settled. This led Judge Rakof to question the case's validity as the shareholders were considered to be the injured party due to lack of disclosure about the bonus payouts.

There are several other investigations going on concerning the bank’s deal with Merrill Lynch. Among them is an investigation by Andrew M. Cuomo, the attorney general of New York. He is investigating the bank's disclosure of bonuses as well as Merrill's losses late in 2008.

Oil falls slightly to US$72

SINGAPORE - OIL fell slightly in Asian trade on Thursday on profit-taking after overnight gains that were fuelled mainly by a bigger-than-expected drop in US crude stocks, analysts said.

New York's main contract, light sweet crude for October delivery fell seven cents to US$72.44 (S$102.11) dollars a barrel. Brent North Sea crude for November delivery was five cents lower at US$71.62.

Data released on Wednesday by the US Department of Energy showed the country's crude stocks dropped by 4.7 million barrels in the week to September 11.


Analysts polled by Dow Jones Newswires had forecasted an average decline of 2.5 million barrels.

The sharper-than-expected drop in crude stocks was seen as an indication that oil demand was improving in the US, the world's biggest energy user.

Crude prices, which closed firmer Wednesday, also received a boost from positive US data showing the world's biggest economy was recovering from a recession that started in late 2007.

The drop in inventories 'caused the rally in crude oil but in addition to that, the reaction of the stock market based on economic data is really what made the oil market rally during the day,' said Andy Lipow of Lipow Oil Associates.

US Federal Reserve chairman Ben Bernanke said earlier this week the economy had turned a corner but cautioned that the pace of growth remained weak.

'Even though from a technical perspective the recession is very likely over at this point, it's still going to feel like a very weak economy for some time as many people will still find that their job security and their employment status is not what they wish it was,' he said.

'So that's a challenge for us and policymakers going forward,' he added in response to a question at a Washington forum on Tuesday. -- AFP

Oracle profit rises 4 per cent

The business software maker's results reflect a familiar pattern that has emerged during the recession. Sales of new software licenses fell, while contracts for upgrades and software maintenance were up. Existing Oracle customers usually pay Oracle to do the follow-up work on their software.

Net income was $1.12-billion (U.S.), or 22 cents per share, against $1.08-billion, or 21 cents per share, in the same quarter a year ago.

Excluding one-time items, profit was 30 cents per share, matching Wall Street's forecasts.

BOJ upgrades economic view

TOKYO - THE Bank of Japan (BOJ) kept interest rates on hold on Thursday and upgraded its assessment of the economy, as improving exports and output heighten the chance the economy will meet its forecast of a moderate pick-up early next year.

The central bank also upgraded its view on financial conditions, saying they remained severe but were increasingly showing signs of improvement.

The BOJ maintained its view on prices, saying that annual core consumer price falls would narrow in the latter half of the year to March 2010.

The decision to keep rates on hold at 0.1 per cent was made by a unanimous vote.

BOJ Governor Masaaki Shirakawa will hold an embargoed news conference and his comments are expected to come out some time after 4:15pm (0715 GMT, 1515 Singapore time).

Exports and output have bounced back from a steep fall triggered by the global crisis due mainly to solid demand for Japanese goods in emerging countries, helping the economy return to growth in the second quarter.

But analysts warn of a rocky road ahead as the nascent recovery is largely due to the temporary effects of government stimulus measures taken around the globe.

The BOJ has kept interest rates near zero and in July it extended measures aimed at easing corporate credit strains, such as buying commercial paper and corporate bonds from banks, by three months to December.

While credit markets have been on the mend, many market players expect the corporate fund support measures to be extended again beyond December given uncertainty on whether the economic recovery will be sustained after government stimulus effects fade. -- REUTERS

Skype founders suing eBay

NEW YORK - THE founders of Skype are suing its owner eBay Inc and the investor group that has agreed to buy the Internet telephone service, alleging theft of technology, according to the Wall Street Journal.

The suit, which could complicate eBay's US$1.9 billion (S$2.68 billion) sale of a 65 per cent stake in Skype, was brought by Joltid Ltd, a company owned by Skype founders Niklas Zennstrom and Janus Friis.

EBay's deal to sell its majority stake valued Skype at US$2.75 billion but that was well below the US$3.1 billion eBay spent in acquiring Skype. Joltid controls key peer-to-peer technology behind Skype, and the two companies are already in a legal dispute.

Earlier this year, Skype had filed a claim against Joltid in the United Kingdom in a dispute over a software licensing agreement that Joltid was seeking to terminate.

Joltid had brought a counterclaim, claiming that Skype was in violation of the original agreement.

Wednesday's report also comes after Internet auction house eBay said earlier this month that it agreed to sell a 65 per cent stake in Skype to a consortium including venture firm Index Ventures and private equity firm Silver Lake.

The Journal report said Joltid's suit names those investors, in addition to eBay, as defendants. EBay officials were not immediately available, while a Skype spokesman declined to comment.

The latest report also comes after Web TV firm Joost, also owned by Zennstrom and Friis, removed its high-profile chairman Mike Volpi, who joined Index Ventures. Joost had said they were investigating Volpi's actions during his tenure as CEO and Chairman but did not elaborate.

Sources last week said Zennstrom and Friis had contacted several private equity firms in an effort to launch a bid to buy back their old business.

EBay shares dipped 1.6 per cent in extended trade to US$23.92 after closing at US$24.32. -- REUTERS

I chased gang leader into a hut ... he picked up a baby and threw it at me

TOP Scots cop Mike Dowie survived a bombing attempt and having a BABY thrown at him during four decades of busting evil crimelords in the Far East.

Mike, 56, retired last week after 37 years as Hong Kong's most senior ex-pat officer - where his uncompromising investigating saw Triad mobsters nickname him Colonel Gadaffi.


The Edinburgh-born lawman received countless death threats as he probed murders, high-profile kidnappings, counterfeiting, fraud and drug trafficking.
I chased gang leader into a hut ... he picked up a baby and threw it at me
But one of his clearest memories is of a sick gangland boss picking up an infant and hurling it at him as the shady thug tried to escape arrest.

Mike said: "We were searching for riot instigators inside a camp that held Vietnamese boatpeople - and I was spotted by the ringleader, who immediately fled.

"He ran into a hut and as we chased him he picked up a baby of about nine months and threw it. Luckily, I was able to catch the tot, but it could have been killed."

Mike was also PLEASED when furious underworld chiefs tried to blow him up with a homemade bomb
Mike emigrated in 1974 to join one of the world's largest metropolitan forces, which employs 27,000, and at the time was trying successfully to stamp out corruption in its ranks.

He said: "I wanted to be a police officer, and at the end of my last week in the force I still wanted to be a police officer."

Mike quickly graduated to become a detective in the notorious Wong Tai Sin district, where he ordered a crackdown on the booming trade in ketamine - the animal tranquilliser used as a recreational drug by humans.

He also probed financial cons, corruption and even a sickening attack on a Down's Syndrome centre, before eventually rising to become Senior Assistant Commissioner.

For the past six years he has headed a police service quality scheme that aims to make officers more responsible to the public.

He said: "No organisation in Hong Kong is under as much scrutiny as the police force.

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"But we are not angels, we are not robots programmed to be perfect.

"The public sometimes have a very naive and simplistic understanding of the challenges.

"Officers need a bit of flexibility. If everything had to follow order and procedure it could take away initiative and it could take away passion." Mike, who speaks fluent Cantonese, now plans to stay in Hong Kong and help rehabilitate young offenders - as well as indulging in his passion for Feng Shui and taking up bowls and cricket.

He said: "I received encouragement from colleagues and my wife, who is a Hong Kong Chinese, did not want to go.

"I feel fortunate, happy and satisfied with my career."

Euro zone deflation prospects diminish

The prospect of sustained deflation across the euro zone dimmed today as final European Union figures for August confirmed a sharp slowing of price drops.

The cost of living throughout the zone fell by 0.2% in August over 12 months - far less than the record 0.7% fall in July, the official Eurostat EU data agency said.

After figures on Monday showed that the euro zone is expected to have emerged from its worst recession since World War II by the end of this month, these latest results further boost hopes of an economic rebound.
Today's inflation figures marked the third monthly drop in a row for consumer prices, itself the first decline since households began paying for goods in euro notes and coins at the start of 2002.

Despite signs of price stabilisation, the overall rate remains far removed from the rate of 3.8% inflation a year earlier.

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By Binyamin Appelbaum
Washington Post Staff Writer
Thursday, September 17, 2009

The Federal Deposit Insurance Corp. launched a new program Wednesday to subsidize investor purchases of loans that the agency has acquired from failed banks, as it tries to attract more bids and higher prices for its rapidly expanding collection of troubled assets.

The long-awaited program was announced earlier this year as a way to help banks that remained in business get rid of their soured loans, but a lack of interest from banks led the FDIC to focus on its own holdings instead.

The agency said Wednesday that it would form a partnership with a Texas company, Residential Credit Solutions, to take ownership of mortgage loans originally worth $1.3 billion. The company, which will manage the partnership, will pay the FDIC $64.2 million for a half-share of any profits as the loans are repaid or sold.

An FDIC official said a second deal would soon follow, and that he expected others before the end of the year.

The official said that the agency continued to believe that the program could help banks and that the agency in part was moving ahead so that it would be ready if the industry took a turn for the worse.

"We'd be ready to apply this process either on failed bank assets or on open banks," said the official, who conducted a briefing for the media on the condition of anonymity.

The FDIC repays depositors in failed banks and then seeks to recoup as much money as possible from the wreckage. Historically it has relied on the basic approach of immediately selling everything it can to another bank, but 92 failures so far this year have started to sate the appetite of eligible buyers. Increasingly the FDIC has sweetened the deal by guaranteeing to limit any potential losses, but even that sometimes is not enough, leaving the agency with a growing pile of assets that must be sold.

The FDIC said that 12 groups placed bids for the mortgage portfolio, which comes from Franklin Bank, a Houston company that failed in November. An executive with a group that placed an unsuccessful bid said that the FDIC had offered a particularly attractive portfolio in this first auction. Roughly 70 percent of the mortgages are still being paid on time.
An FDIC official said the portfolio sold Wednesday also was chosen because the loans resembled those held by many banks, creating a meaningful dry run for any revival of the program's original focus on helping the industry sell troubled assets.

The winner, Residential Credit Solutions, is a Fort Worth firm that specializes in working with borrowers who have fallen behind on their payments. Under the terms of the deal, the company agreed to modify the mortgages of borrowers who meet federal eligibility standards.

The FDIC will make money on the deal in three ways. First, it plans to sell a note to investors worth $727.7 million, plus interest, against the value of the loans held by the partnership with RCS. The money the partnership collects on the mortgages that it holds will first be used to repay that note.

Second, the FDIC will collect $62.4 million from RCS.

Finally, the FDIC gets to keep the rest of the profits after the note and RCS are paid.

The FDIC originally projected up to a $1.6 billion loss on cleaning up after the failure of Franklin Bank, in part because it expected to recover 50 percent of the value of the loan portfolio sold Wednesday. The agency says the new program should allow it to recover 71 percent of the value. Officials said they did not have an updated estimate of the loss.

There are risks, however. The FDIC will guarantee the value of the note sold to investors. It also plans to match the RCS investment in the partnership. If the value of the loans falls below expectations, the FDIC could lose some or all of its stake.

The government has announced a series of efforts to help banks clear away troubled loans, including the Bush administration's original $700 billion financial rescue program and the Obama administration's idea for investment partnerships.

Administration officials say the need for such purchases has faded because banks have been able to raise new capital from investors.

But the Congressional Oversight Panel, which monitors the federal bailout efforts, warned in a report last month that many smaller banks were still overwhelmed by troubled assets, and it urged the Treasury to launch some kind of program to help banks sell those assets

Japan's new govt to review JAL turnaround plan

TOKYO — Japan's new government said Thursday that it would overhaul the restructuring process for Japan Airlines (JAL), which is seeking state financial aid.

Asia's largest carrier unveiled earlier this week the outline of an emergency revival plan under which it would cut 6,800 jobs, slash flights and seek a tie-up with a foreign carrier.

But new Transport Minister Seiji Maehara said he would scrap a panel appointed by the previous Liberal Democratic Party (LDP) government to review the planned revamp.

"Since it is a framework formed by the LDP government, we want to go back to a clean slate and select new members," he said in his first press conference early Thursday.

A JAL spokesman said the carrier had "no idea" about how the decision would affect its restructuring process because it had only just heard the news.

JAL, which lost more than one billion dollars in the April-June quarter, has said it aims to seal a tie-up with an overseas carrier by mid-October.

Delta Air Lines and American Airlines' parent company, as well as Korean Air, are reportedly considering taking a stake. European carrier Air France-KLM is also in talks with JAL as a possible partner, a source has told AFP.

The incoming Democrats are generally seen as less business-friendly than the outgoing conservatives and have pledged to put the interests of ordinary people before those of corporate Japan.

But some analysts believe that the new government will be anxious to avoid precipitating mass layoffs or even a collapse of the carrier given its close links to labour unions

U.S. credit card defaults up, signal consumer stress

By Juan Lagorio

NEW YORK (Reuters) - Bank of America Corp and Citigroup Inc customers defaulted on their credit card debts in August at the highest rates since the onset of the recession, a sign that the banks' consumer lending woes are far from over.

The trend was echoed among most other major credit card issuers, dashing optimism sparked when many banks and specialty finance companies reported lower default rates for July.

"People have gotten very bullish with the July data, and (the August data) raises the question about how fast the consumer will get better," said Scott Valentin, an analyst at FBR Capital Markets. "People were assuming the pace would be pretty rapid, and this maybe slows the pace down."


The worse-than-expected August numbers bolstered the contention of some analysts that the July decline in defaults was due more to seasonal effects, like tax refunds, then an improvement in consumers' financial health.

Many analysts expect bad-loan levels will keep rising until later this year or early 2010.

"The defaults are a wake-up call for those expecting a V-shaped recovery," said Elliot Spar, options market strategist at Stifel Nicolaus & Co.

Bank of America said its charge off-rate -- loans the company does not expect to be repaid -- rose to 14.54 percent in August from 13.81 percent in July.

Citigroup, the largest issuer of MasterCard-branded credit cards, said its charge-off rate rose to 12.14 percent in August from 10.03 percent in July.

The charge-off rates for both Citi and Bank of America, two of the biggest recipients of U.S. government bailouts, were the highest yet during the financial crisis.

JPMorgan Chase & Co, the largest issuer of Visa-branded credit cards, said its charge-off rate rose to 8.73 percent from 7.92 percent, while smaller Discover Financial Services said its rate rose to 9.16 percent from 8.43 percent.

American Express Co's default rate fell to 8.5 percent from 8.9 percent as the company increased its lending portfolio.

JPMorgan, Discover and Capital One Financial Corp reported late payments on credit cards -- an indicator of future defaults -- rose in August after several monthly declines.

Valentin said the rise in delinquencies at some companies was double or triple the levels expected.

NOT OUT OF THE WOODS YET

Credit card defaults usually track unemployment, which rose to a 26-year high of 9.7 percent in August. The jobless rate is expected to peak at more than 10 percent by year-end.

Nikkei pares gains as banks weigh, but data supports

By Elaine Lies

TOKYO (Reuters) - Japan's Nikkei stock average rose 0.7 percent on Thursday, buoyed by exporters such as Sony Corp after positive U.S. data strengthened recovery hopes, but with gains capped by a slide in banking shares.

Mitsubishi UFJ Financial Group, Japan's largest bank, lost nearly 3 percent and other banks fell after comments on lending by Shizuka Kamei, the new minister for banking and market regulation who is seen as an opponent of market-friendly reforms.

Kamei said he would like to introduce a moratorium on some loan repayments to help small and midsize businesses and individuals struggling from the economic downturn.

"Basically, the issue is banks -- that's why the Nikkei began paring its gains in the afternoon," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.

"Otherwise, the current level is really just about right for the Nikkei at this point. Much higher, and it would start to seem overbought; much lower, and it would be oversold."

The benchmark Nikkei was up 73.88 points at 10,344.65 after rising as much as 1.4 percent in morning trade. The broader Topix edged up 0.1 percent to 932.18.

U.S. industrial output rose for a second consecutive month in August, while a government report showed a bigger-than-expected drop in crude inventories last week, indicating higher demand. Both helped push Wall Street to 2009 highs.

A government survey showing that big manufacturers had turned optimistic in the three months to September as well as a mostly smooth start for Japan's new government were also lending support to market sentiment, market players said.

In addition, a Reuters Tankan survey also showed improvement in manufacturers' sentiment, with an index measuring their mood climbing to a one-year high.

"We have had bits and bobs of positive news and not much in the way of negative news except for maybe Kamei's comment," said Soichiro Monji, chief strategist at Daiwa SB Investments.

The Nikkei's advance came despite comments from new Finance Minister Hirohisa Fujii the previous day, who said that recent currency moves were not rapid and that a strong yen had merits for the economy, pushing the yen to a seven-month high of 90.12 yen on Wednesday though it recovered to just above 91 yen on Thursday.

Investors fret about a stronger yen as it curbs exporters' profits when they are repatriated.

Toyota Motor Corp added 0.8 percent to 3,740 yen, while industrial robot maker Fanuc Ltd gained 2 percent to 7,840 yen and chip-tester maker Advantest Corp jumped 4.2 percent to 2,385 yen.

Sony climbed 1.6 percent to 2,515 yen after Mitsubishi UFJ Securities raised its rating on the electronics maker to "1" from "3" while setting a 3,200 yen target price.

It cited expectations for an earnings rebound in the next business year to March 2011 thanks to a return to profitability in its LCD TV, games and mobile phone operations.

U.S. to Shelve Nuclear-Missile Shield in Europe

Defense plans for Poland, Czech Republic to be dropped as Iran rocket threat downgraded; Moscow likely to welcome move
WASHINGTON -- The White House will shelve Bush administration plans to build a missile-defense system in Poland and the Czech Republic, according to people familiar with the matter, a move likely to cheer Moscow and roil the security debate in Europe.

The U.S. will base its decision on a determination that Iran's long-range missile program has not progressed as rapidly as previously estimated, reducing the threat to the continental U.S. and major European capitals, according to current and former U.S. officials.

The findings, expected to be completed as early as next week following a 60-day review ordered by President Barack Obama, would be a major reversal from the Bush administration, which pushed aggressively to begin construction of the Eastern European system before leaving office in January.

The Bush administration proposed the European-based system to counter the perceived threat of Iran developing a nuclear weapon that could be placed atop its increasingly sophisticated missiles. There is widespread disagreement over the progress of Iran's nuclear program toward developing such a weapon, but miniaturizing nuclear weapons for use on long-range missiles is one of the most difficult technological hurdles for an aspiring nuclear nation.

The Bush plan infuriated the Kremlin, which argued the system was a potential threat to its own intercontinental ballistic missiles. U.S. officials repeatedly insisted the location and limited scale of the system -- a radar site in the Czech Republic and 10 interceptor missiles in Poland -- posed no threat to Russian strategic arms.

The Obama administration's assessment concludes that U.S. allies in Europe, including members of the North Atlantic Treaty Organization, face a more immediate threat from Iran's short- and medium-range missiles and will order a shift towards the development of regional missile defenses for the continent, according to people familiar with the matter. Such systems would be far less controversial.

VW Will Design for America, Says Chief Designer

Looking out from a balcony above the Volkswagen pavilion at the Frankfurt auto show, Klaus Bischoff, chief designer for the VW brand, surveyed his creations.Mr. Bischoff, who has helped define VW’s design language, from the smiley face on the electric concept E-Up to the swoopy lines of the Passat CC to the stubby, uncluttered body of the new Golf, was dressed in a conservative suit. He spoke about his affection for America. “Designing cars specifically for the American market will pay off for Volkswagen,” he said. “At the moment, not one of those is being built. Our cars now are built for European roads. In the moment, we struggle. But wait.”



















Mr. Bischoff’s “wait” refers to the midsize car that will be built in a VW plant that’s under construction in Chattanooga, Tenn. The car is yet to be named, although it is due to start production in 2011. “For the U.S., I think attractiveness, quality and sustainability are the three most important factors,” Mr. Bischoff said. Considering the new model, he added, “the design must be unique, even though a sedan is a sedan is a sedan.”

Mr. Bishoff adheres to the company line — indeed, now the industry line — “that we manufacturers have to be responsible to the planet,” and cites the new Golf R as an example.

The R is the latest super Golf, an all-wheel-drive version powered by a 270-horsepower, turbocharged 4-cylinder. The engine is similar to the power plant in the Audi TTS. The fabric-and-leather seats are extraordinarily form-fitting. The R will be available in Europe early next year. It will be preceded in the United States by the 6-cylinder R32.

“We needed to reduce the gas consumption while keeping the fun,” said Mr. Bischoff. “If a customer demands performance, here’s our answer.”

What about the Phaeton, the large, expensive VW sedan that flopped in the United States and was withdrawn, although it lives on elsewhere? “The Phaeton was important for the brand,” he said. “It brought us a lot of new technology.” What about the slow-selling CC? “We all expected that, in a way.”

Mr. Bischoff said the Golf is among his favorite designs: “Classic.” He was reluctant to cite other favorites, but we asked him to keep it in the family. He said, “The Audi A5.”

Banks, GE Lead Stocks Up

he Dow opened lower, hit its intraday trough in the first half-hour of trading, and built a fairly steady rally thereafter. That pattern was similar to Tuesday's action and suggested increased buying by mutual funds and other institutions looking to put cash to work before they have to mail out annual statements to investors, traders said.

"It looks like this is going to be a trend you can ride through the end of the year," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "The whole thing has been confounding to an investing base that entered September with a fair amount of trepidation."

Conventional wisdom on Wall Street is that small investors tend to trade around the open and big players tend to be more active toward day's end, for a number of reasons. Many professional money managers are required by their charters to price their funds' shares for clients at day end, so they prefer to buy individual stocks toward the close as well.

Firms also try to minimize the market impact that their own trades have on shares that they want to hold. Having a large pool of fellow deep-pocketed buyers and sellers tends to help toward that goal.

The Nasdaq Composite Index gained 30.51 points, or 1.5%, to 2133.15.

The S&P 500 rose 16.13 points, or 1.5%, to 1068.76. Its financial sector rose 3.5% and its energy sector climbed 2.5%. Materials stocks climbed 1.4% as a continued rise in gold futures spurred interest in mining stocks.

September, often a tough month for stocks, has so far bucked its historical trend amid growing hopes for a rebound in the global economy. The Dow is up 3.1% for the month to date. The S&P 500 is up 4.7% and the Nasdaq is up 6.2%.

Doreen M. Mogavero, president of the New York floor brokerage Mogavero, Lee & Co., said that trading has been marked by continued improvement in sentiment among professional traders and a marked absence of short sellers, many of whom have dabbled in bullish bets or stopped trading altogether after taking a drubbing this year.

According to data from Treflie Capital Management, which tracks shortselling activity, the average short portfolio has fallen 27.5% in 2009, including a 3.4% decline in August. That's the worst performance through August since 1987, when the firm began collecting data.

Despite the market's recent gains, however, Ms. Mogavero said the rally still seems "fragile."

"This is not a market that I would say, as a blanket statement, everyone should be in," said Ms. Mogavero. "You have to look at it as a real personal issue. Are you prepared to enter and possibly lose money?"

In the latest round of encouraging economic news on Wednesday, the Federal Reserve said industrial production jumped 0.8% in August as factories boosted production of cars, machinery, food products, clothing and other goods. In a separate report, the consumer-price index climbed 0.4% in August, the Labor Department said, in line with the expectations of economists.

Budding hopes for an economic recovery have also helped commodity prices in recent days, with metals in particular gaining strength. Spot gold prices jumped $13.90 a troy ounce, or 1.38%, to settle at $1018.90 in Comex trading.

Weakness in the dollar has aided gold's jump. Wednesday was no different, as the dollar hit a 12-month low against the euro and a seven-month low against the yen.

Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams, noted that stock-trading volume was strong, with recent composite volume in the New York Stock Exchange reaching five billion shares, compared to a full-day average of about six billion shares this year.

"Everybody's back from vacation, so there's a lot more volume and there's just a lot more buyers than sellers out there," Mr. Rovelli said.

Forex Top Story

Dollar Hits Yearly Low Versus Euro As Risk Appetite Rises
(RTTNews) - Rising risk appeal drove the dollar to a yearly low versus the euro on Wednesday. Improving stocks and renewed optimism about the prospects of a V-shaped economic recovery offered further support for higher-yielding currencies
ndustrial production increased for the second consecutive month in August, according to a report released by the Federal Reserve on Wednesday, with the rate of growth coming in above the expectations of economists.

Yesterday, Federal Reserve Bank Chairman Ben Bernanke said that the U.S. financial system is beginning to emerge from a deep recession that is "technically over."

The dollar dropped through support versus the euro to hit 1.4736, its lowest level since last September. With the loss, the dollar continued to edge toward a record low near 1.6000 last July.

Eurozone inflation stayed negative for the third month in August, data released by the Eurostat confirmed Wednesday.
The consumer price index fell 0.2% year-on-year in August after dropping 0.7% in July. That matched a preliminary estimate released on August 31. A year ago, the rate of inflation was 3.8%.

The dollar came within a whisper of its yearly low versus the loonie before finding support. A move below C$1.0630 would take the buck to its lowest since last September.

The dollar also edged lower versus the yen, hitting a new 8-month low of 90.11. Back in January, the dollar dropped to a 13-year low of 87.08. The Bank of Japan will make its latest interest rate decision on Thursday.

Against the sterling, the dollar failed to move out of its range near 1.6500.

Looking ahead to Thursday, the Department of Labor reports on initial jobless claims for the week ended Sept. 12. Economists expect 555,000 claims, up from 550,000 the previous week.

by RTT Staff Writer

Fiat chief: Fiat-Chrysler can reach 6 million

FRANKFURT—Fiat and Chrysler CEO Sergio Marchionne said Wednesday that the new auto alliance can reach a production level of 5.5 million to 6 million cars a year on its own once the economy stabilizes -- the level he says is needed for long-term survival.
We will arrive alone at 6 million units. Between us and Chrysler, we will get there," Marchionne said on the sidelines of the 63rd Frankfurt Auto Show in Germany.

Marchionne has said that threshold is critical for an automaker's survival, creating speculation about whether Fiat was still looking around for other partners. The two groups delivered just over 4 million vehicles total in 2008, with the second half seriously weakened by the crisis.

"Wait until November," Marchionne said, when Chrysler will release its business plan looking ahead five years. "You will see whether I get there on my own."

Many automakers were looking for the silver lining at the Frankfurt Auto Show, boosted by news of sales that revived on cash-for-clunker schemes that revived sales but questioning how strong any recovery will be. It is the first major industry gathering since the crisis reshaped the industry landscape, with Fiat Group SpA taking a controlling stake of Chrysler LCC in June as it went through bankruptcy, Volkswagen taking over Porsche and Canada's Magna locking up a deal for General Motor's European Opel subsidiary.

The focus at was on electric vehicles, even though many manufacturers acknowledged it could be as many as 10 years until sales reach mass market levels. A toned down U.S. presence was a clear indication of the toll from the recession.

More than an "auto show of recovery," Marchionne said this year's event was "an auto show of hopes."

"We know that 2010 will be a difficult year, but it won't be difficult like 2009," he said.

Marchionne said he expects that the U.S. auto market will be around 11 million cars in 2010, with "healthier competition" returning when the numbers get to 12 million and above.

"The Cash for Clunkers stuff in the United States has really warped demand. You will see some astronomical numbers in August" suggesting that annual car sales at that rate would reach 14 million, Marchionne said. "I thought I'd died and went to heaven. It's not a real number. We are going to see harsh reality in September, it is going to drop."

The issue is more problematic in Europe where the incentives have not required the industry to address overproduction, he said, and where it is still unclear if the programs will continue in countries like Italy, France and Britain. Germany says it has no plans to renew its scheme.

Fiat took a 20-percent controlling stake in Chrysler LLC in June after Chrysler emerged from bankruptcy restructuring, making Marchionne CEO of both groups. Fiat's successful offer hinged on contributing the small-car platforms and cleaner-burning engines lacking in the Chrysler mix, as well as its industrial know-how

Gold close to record high

LONDON - THE price of gold soared on Wednesday close to a record peak above 1,000 dollars as investors turned to the precious metal by the tumbling US currency, analysts said.

The precious metal hit US$1,022.72 (S$1,443.51) an ounce on the London Bullion Market, the highest level since March 2008 when it had struck a record US$1,032.70.

'Gold remained strong in early European trading and hit a new high for the year as euro/dollar broke through 1.4700,' said UBS analyst John Reade.

The European single currency struck a new nine-month peak at 1.4714 dollars as investors snapped up riskier assets amid mounting hopes of a global economic recovery.

Market action came after US Federal Reserve chairman Ben Bernanke said that recession in the United States 'is very likely over'.

A struggling US unit makes dollar-priced gold cheaper for holders of stronger currencies, and therefore tends to boost demand. -- AFP

Experts puzzled over Adobe's surprise purchase of Omniture

-• $1.8bn bid takes industry by surprise
• Insiders attempt to parse possible implications
With its reputation for voracious, big-money acquisitions and hard-fought mergers, Silicon Valley is used to surprise deals. That has not stopped many observers, however, from being left puzzled by American software maker Adobe's unexpected move to buy online measurement company Omniture for $1.8bn (£1.09m).

Omniture, which is based in Utah and offers a suite of products that allow website owners and marketers to monitor the way people use the internet, may seem a strange fit for the company best known for programs like Photoshop.

Indeed, the news shocked many technology industry insiders - especially as it came hard on the heels of the news that Adobe had suffered a 29% decline in profits over the same time last year. But despite questions about the potential for crossover between the two companies, Adobe chief executive Shantanu Narayen insisted that the deal was a "game-changer" that made sense for the veteran Californian business.

"We will enable advertisers, media companies and e-tailers to realise the full value of their digital assets," he said, adding that incorporating Omniture's products would allow them to "close the loop" for customers who use Adobe software to build their websites and online advertising campaigns.

Adobe is one of the world's biggest software companies, employing more than 7,000 workers out of its headquarters in San Jose. While the company is probably best known for desktop programs such as Photoshop and Acrobat, it has been gaining greater influence on the web in recent years.

Its Creative Suite product now contains a number of tools for building web content, and since 2005 - when it bought Macromedia for $3.4bn - it has also owned the popular Flash multimedia platform: now the de facto choice for online video, games and advertising.

Despite this, however, some were still left scratching their heads about precisely how the two companies would come together.

"I don't really see the synergy in the deal," said Eric Peterson of research and consulting group Web Analytics Demystified. "But I admit that I love Adobe and so I'm willing to be surprised. I think of Adobe as a software company for creative types; Omniture sells software-as-a-service to analytical types. These are different business models and very different customers."

Others pointed out that owning Omniture will allow Adobe to have a complete set of tools for website production - allowing customers to design, build, publish and monitor websites within a single system.

"This acquisition has the potential to embed measurement technologies into a burgeoning landscape of interactive media," said Forrester analyst John Lovett.

"Adobe's content creation tools are widespread and this acquisition now provides the opportunity for both developers and content creators to use a measurement tool that is inherent to the development platform."

That could be an important for Adobe as it seeks to mitigate waning take-up of its expensive desktop software business. CS4, the latest version of its suite of programs, received a lukewarm reception when it was released last autumn - perhaps partially due to the economic downturn.

However Global Equities Research analyst Trip Chowdry said that the decision is underpinned by a more systemic problem than could simply be blamed on the recession - with customers increasingly looking to powerful free applications as a replacement for high-cost professional-level packages like Photoshop.

"Their Creative Suite is decline, and there's no way to organically revive it," he told Forbes. "People believe software tools need to be free, and the market is saturated."

VW Unveils World’s Most Efficient Road-Legal Hybrid

The L1 is powered by a turbo diesel engine and electric motor and weighs only about 840 pounds.

By the end of the 2009 Frankfurt Auto Show, Volkswagen will have unveiled as many as nine world premier vehicles. What’s the common denominator? “Maximum efficiency," according to VW. The coolest in the bunch are the L1, a two-seat hybrid concept that could get hundreds of miles per gallon, and the E-Up! all-electric minicar. With these concepts, VW is pointing to small innovative platforms, new levels of aerodynamic design, and electric or hybrid drive.


Today’s car shoppers should not get too excited. The L1 and e-Up! are futuristic models with little or no chance of going into volume production. Referring to the E-UP!—perhaps the more practical of the two concepts—Martin Winterkorn, VW chairman of the board, said, “To be a genuine success, such an electric car must be affordable to a broad customer base and must be uncompromisingly practical in everyday driving. Only then, in high volumes, and ideally on all continents, can one truly speak of the beginning of the electric age in automobiles and a perceptible reduction of their environmental impact."

Winkerton indicated that production numbers would need to approach levels of the VW Polo, and that would probably not happen until 2020. He said, “That is why our highly efficient TDI and TSI engines are the most important waypoints of the present.”
L1: World’s Most Efficient Road-Legal Hybrid



The L1 is powered by a turbo diesel and electric motor and weighs only about 840 pounds. Its narrow body is made of carbon fiber, and its drag coefficient is 0.195, lower than any production car on the road today. The L1 name refers to the European concept of a "1-Liter" car, meaning it uses no more than 1.0 liters of fuel per 100 kilometers, or about 235 miles per gallon. The L1 is capable of a top speed of 100 miles per hour, and 0-to-62-mph acceleration in a leisurely14.3 seconds.

The L1’s 0.8 liter TDI is the smallest diesel engine intended for production applications every built by Volkswagen. It’s derived from the 1.6 TDI just introduced a few months ago. The 1.6 TDI is making its debut in Frankfurt in cars such as the new version of the Golf BlueMotion and Passat BlueMotion. The engine is mated to a 10-kilowatt electric motor and a 7-speed direct-shift gearbox—all situated at the back of the car. Volkswagen calls the L1 the "most fuel-efficient road-legal car hybrid drive in the world."

The passenger sits directly behind the driver. You enter the car through a roof cover hinged at the side. All instruments and controls are arranged over a 180-degree radius to the driver. To start the L1, the driver pushes a button on the right side of the steering wheel. When it is rotated, the round start button simultaneously serves as a gear selector switch and is used to activate the electronic handbrake. The driver controls the on-board computer, navigation and entertainment systems, via keys in the steering wheel. Due to the driver's low seating position, there is an additional window in the roof used to view traffic lights.
E-Up!: Beetle for the 21st Century

Volkswagen’s other piece of green car eye candy is the E-Up!, a 10.5 foot minicar that seats four—three in front and one in back. Top speed is less than 85 miles per hour, with a 0-60 mph pace of about 11 seconds. E-Up! weighs about 2,400 pounds—with more than 500 pounds coming from the 18 kWh battery pack that can deliver about 80 miles of range from a single charge. The driver activates forward or reverse gear via a rotary knob in the center console.




VW is suggesting that the E-Up! could be the “Beetle for the 21st Century,” although its design is decidedly current, more closely resembling previous VW concept vehicles, such as the Up! city car and Space-Up! microvan.

The VW logo on the V-shaped engine bonnet of the E-Up! is more than just an homage to the Beetle. Hidden behind the folding logo is the integrated port for charging the batteries. The concept car has a touch-screen interface that monitors battery state of charge, provides traffic data, and locates available charging stations.

Oil lower in Asia ahead of US energy report

Oil fell in Asian trade today as investors awaited the release of a widely monitored US energy data report.

New York's main contract, light sweet crude for October delivery dropped 67 cents to $70.26 a barrel. Brent North Sea crude for November delivery was off 76 cents to $69.10.

The US Department of Energy is to release later today its weekly inventory report which is seen as an indicator of oil demand in the world's biggest energy user.


Analysts expect oil inventories to have fallen 2.5 million barrels last week while petrol reserves are seen rising by 600,000 barrels. Distillate stocks, which include heating oil and diesel, are forecasted to rise by 1.4 million barrels, the poll showed.

Crude prices closed firmer yesterday, buoyed by economic data indicating a recovery in the US economy, with Americans spending more in August.

Official data showed US retail sales leapt a stronger than expected 2.7% in August from July, led by the government's popular 'Cash for Clunkers' rebate programme that boosted car sales.

Meanwhile, OPEC, which pumps about 40% of the world's crude, said in its monthly report yesterday that world oil demand in 2009 was expected to contract by 1.56 million barrels per day to 84.05 million bpd. But it said in 2010, demand is seen rising to 84.6 million.

Hosted by Google Back to Google News Euro under pressure after ZEW survey

LONDON — The European single currency dropped against the dollar on Tuesday after a key index published in Germany, the biggest eurozone economy, was slightly weaker than expected.

In late morning trade here, the euro fell to 1.4588 dollars from 1.4619 dollars in New York late on Monday.

Against the Japanese currency, the dollar rose to 91.09 yen from 90.92 yen on Monday.

Investors are increasingly confident that Germany's economy will rebound quickly from recession, a survey showed on Tuesday, providing some cheer less than two weeks before the country goes to the polls.


The closely-watched ZEW survey, which measures the mood of financial market players, rose slightly in September to 57.7 -- its highest level since April 2006 -- from 56.1 in August.

While the reading was well above the historical average for the survey, it was slightly lower than analysts surveyed by Dow Jones Newswires had expected.

"Markets have been used to upside surprises in the ZEW index so today's softer figure pushed the euro lower," said Calyon analyst Frederik Ducrozet.

"However, in the current context of dollar weakness, the trend is not expected to last."

Official data last month showed that Germany's economy climed out of its worst recession in six decades, registering a growth rate of 0.3 percent in the second three months of the year.

The brighter outlook has boosted Chancellor Angela Merkel, who is seeking a second term in elections on September 27 and who has based her campaign around economic competence with the slogan: "The clever way out of the crisis."

Meanwhile, the dollar won a modest boost against the yen on Tuesday after Japan's outgoing Finance Minister Kaoru Yosano said rapid swings in currency rates were undesirable.

The greenback rallied away from seven-month lows against the Japanese currency after Yosano said a stronger yen would eventually undermine the competitiveness of Japanese exporters on global markets.

"It's hard to say what level (of the yen) is appropriate, but rapid currency moves are undesirable anyway," he told reporters.

Investors were watching to see who would be named Japan's next finance minister by incoming premier Yukio Hatoyama, whose centre-left government is due to take power on Wednesday.

In London on Tuesday, the euro was changing hands at 1.4588 dollars against 1.4619 dollars late on Monday, at 133.09 yen (132.94), 0.8788 pounds (0.8820) and 1.5160 Swiss francs (1.5124).

The dollar stood at 91.09 yen (90.92) and 1.0379 Swiss francs (1.0342).

The pound was at 1.6622 dollars (1.6571).

On the London Bullion Market, the price of gold fell to 999.09 dollars an ounce from 999.25 dollars an ounce late on Monday.

Microsoft Zune HD launches in the US

Microsoft's Zune HD portable music and video player has gone on sale today in America.
Microsoft's Zune HD launches today

The device, which replaces the original, poorly received Zune, comes in 16GB and 32GB models. It has a touchscreen, wifi internet access and FM radio tuner. The smaller of the two costs $219.99 (£133) and the larger version costs $289.99 (£176), which is cheaper than the comparable Apple iPod Touch.

Users can rent or buy high definition films from the new Zune Marketplace online store. The Zune Marketplace also offers a streaming music service, which allows users to listen to music in their web browser.
Microsoft said that a Zune video service would be launched for the XBox 360 in the autumn. It will allow users to watch films and TV shows on their games console, PC and Zune HD.

Enrique Rodriguez, corporate vice president of the TV, Video and Music Business at Microsoft, said “Zune lets consumers connect to their music, TV shows and movie content and enjoy it on the three screens they use every day.”

The Zune HD is currently in the US and the company has not confirmed plans to sell it in other countries. However, it did announce plans to launch the Zune video service in 17 countries, including the UK, later this year, which suggests that the Zune HD player may be released as well.

Automakers try to energize electric-car business

By MATT MOORE AND GEORGE FREY
AP BUSINESS WRITERS
FRANKFURT -- The race is on among the world's auto companies to make electric cars go farther on a single charge, bring the price down to compete with gas-powered vehicles, and give drivers more places to recharge them than just the family garage.

Electric is the big buzz at the 63rd Frankfurt Auto Show this week, and nearly every major automaker has at least one on display. Renault introduced no fewer than four electric models, while Tesla, the only company producing and selling purely electric cars, handed over the keys to its 700th all-electric vehicle, a blue Roadster Sport, to a German buyer at the show.


If the models unveiled Tuesday are any indication, the notion of electric cars as small, stunted boxes with little range is about to be junked.

"People have realized that ... electric vehicles don't have to be golf carts," said Diarmuid O'Connell, vice president of business development for Tesla Motors Inc. "They don't have to be anemic little putt-putts."

The company's sleek, two-seat Roadster sells for $101,500 in the U.S. and has a range of 244 miles on one charge. Its planned Model S, which will seat seven and has a 300-mile range, will go for $49,900.

Others automakers, including BMW, General Motors and Daimler, are also developing electric-powered vehicles, including hybrid cars that boast a small gas or diesel engine backed up with an electrical motor, and say the prices will drop as bulky batteries become smaller, faster to charge and easier to replace.

Daimler said it will put its first electricity generating fuel-cell car on the road by the end of this year, the B-Class F-Cell. It will also develop a high-performance electric sports car, its Mercedes-Benz SLS AMG.

Volkswagen AG will put its new E-Up! electric compact into production in 2013. VW did not disclose how much it will cost or when it might be available in the U.S. It said the battery will give drivers a range of around 80 miles, or about 130 kilometers.

Analysts expect global production of purely electric cars to expand rapidly in the coming years. IHS Global Insight forecast that it will grow from nearly 9,500 this year to more than 58,000 in 2011.

Electric cars generally run between 40 and 120 miles (60 to 200 kilometers) on a single charge, while taking anywhere from two to seven hours to fully recharge.

Analysts have long contended that a roadblock to the deployment of electric cars has been the lack infrastructure to ensure they can be charged, whether at home, at the office or at stations in the city or along a highway. Building that infrastructure could cost billions and billions of dollars.

Europe is likely to get charging networks faster than the U.S. because of its higher gasoline prices, greater population density and compact size compared with the United States.

In the U.S., Japan's Nissan Motor Co. has taken the lead, forming partnerships to bring electric vehicles and charging stations to Seattle, Tennessee, Oregon and elsewhere. For example, Arizona's Electric Transportation Engineering Corp. recently struck a $100 million deal to build charging stations for Nissan's planned Leaf electric car.

Elsewhere around the world, Renault Nissan has teamed up with Palo Alto, Calif.-based Better Place, which is building a network of charging stations and stands in Israel and Denmark and plans to do the same in Australia. Drivers will be able to plug their cars in or swap out their depleted batteries for freshly charged ones.

Better Place said the networks could operate like cell phone service, with customers buying a certain number of miles in advance or getting an unlimited amount for a set fee with a contract.

To help bring Germany up to speed, its government plans to spend some euro500 million ($730 million) on a plan that aims to put 1 million electric cars on the road by 2020. The figure includes euro170 million for battery research.

Analysts say it will take at least a decade to see if electric cars can keep pace with, or surpass, gas-powered automobiles. The massive, sensitive, costly and fast-depleting batteries that take the place of internal combustion engines are expensive to produce, as well.

"The industry needs to continue to overcome the obstacles of extended range, price and impact on the grid if we're going to be able to deliver a better experience than what consumers currently get," said Shai Agassi, founder and CEO of Better Place.

Asian stocks hit 2009 highs, U.S. dollar slips

By Anirban Nag

SYDNEY (Reuters) - Asian shares hit their highest levels for 2009 on Wednesday after upbeat U.S. economic news gave riskier assets leveraged to global growth a boost, while the U.S. dollar slipped to a one-year low.

Most major Asian stock indexes posted gains of 1 percent or more in the wake of Tuesday's strong reading on U.S. retail sales. Japan's benchmark Nikkei .N225 climbed 111.31 points to 10,328.93. The broader Topix rose 0.75 percent to 939.48.

Many regional currencies likewise did well, especially those of big commodity exporters such as Australia, largely at the expense of the U.S. dollar.

"As the global recovery continues and risk diversification takes place we could see the U.S. dollar stay under pressure for the next six months," said Amber Rabinov, economist, foreign exchange and international economics at ANZ in Sydney.

Measured against a basket of major currencies .DXY the dollar slipped as deep as 76.406, the lowest since last October, while the euro came within a whisker of its 2009 high at $0.4681.

The dollar also eased to 90.95 yen amid talk investors were using the dollar for carry trades. Until recently, the low-yielding yen was the currency of choice for investors who borrow cheap to buy riskier assets or high-yielding currencies. But that has changed since 3-month U.S. LIBOR rates fell below Japanese rates.

"We expect the dollar to test its recent lows on the yen, and probably fall as low as 87 yen as talk of it replacing the yen as a funding currency gathers momentum," said Rabinov.

AUSSIE RESOURCES IN DEMAND

The brighter outlook for global growth helped an Australian share market packed with resource exporters. The benchmark S&P/ASX 200 index .AXJO jumped 2 percent to a year-high of 4,633.4, with mining giant BHP (BHP.AX) up 1.9 percent.

The MSCI index of Asia-Pacific shares excluding Japan rose 1.3 percent, its highest this year. The MSCI benchmark is now up about 53.5 percent for the year.

The Bank of Japan began a two-day policy meeting, but analysts aren't holding their breath for the outcome given rates are already near zero and policymakers are reluctant to go any further with exceptional easing measures.

Still, investors are busy trying to second-guess the likely economic policies of the new government.

Japan's new prime minister, Yukio Hatoyama, takes office on Wednesday and is expected to announce his cabinet line-up after a huge election win on August 30.

The gains for Asian came courtesy of better U.S. news.

Tuesday's data on retail sales showed a jump of 2.7 percent in August, the fastest pace of growth in 3- years.