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US bank hit after debit fee news

2011-10-23T08:25:00.000-07:00

30 September 2011 Last updated at 21:56 GMT Bank of America will roll out the change from next year on a state-by-state basis Shares in Bank of America have fallen 2%, a day after it announced plans to charge debit card users $5 (￡3.20) per month to pay for their purchases.

Bank of America, the largest US bank by deposits, said it would introduce the fee early in 2012.

The move comes ahead of a new rule that will limit how much lenders can bill retailers for customer debit card transactions.

The bank's debit card holders will still get free cash withdrawals.

The monthly charge will apply to users of Bank of America's basic bank accounts, and will be in addition to any service fees they already have to pay.

A number of smaller US banks, such as SunTrust, a regional lender based in Atlanta, have already introduced charges for debit card purchases.

So far only Citigroup has ruled out introducing the change.

'Changed economics'

Bank of America said the new fee would be rolled out on a state-by-state basis.

Continue reading the main story

Bank of America is trying to find new ways to pad their profits by sticking it to its customers”

End Quote Richard Durbin Domocrat Senator Its move comes as an amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act goes into effect from 1 October.

The amendment, brought by Democrat Senator Richard Durbin, limits the fees that banks can charge retailers for processing debit card transactions to 21 cents.

This compares to the previous average of 44 cents, meaning a substantial fall in revenues for the banks.

A Bank of America spokeswoman said: "The economics of offering a debit card have changed."

Sen Durbin said Bank of America's move was "overt and unfair" and that he hoped its customers would "have the final say".

"Bank of America is trying to find new ways to pad their profits by sticking it to its customers," he said.

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Manager changes cost clubs £99m

2011-10-23T04:40:00.000-07:00

By Ian Dennis
BBC senior football reporter Five managers have lost their job this season, with pressure mounting on more Premier League and Football League clubs spent almost ￡100m changing their manager last season.

According to figures released to the BBC by the League Managers Association (LMA), the cost of compensation, legal fees and 'double contracts' amounted to ￡99m.

A 'double contract' is when a sacked manager's contract is honoured until a certain point in time but his replacement also requires a salary.

October is traditionally the month when clubs begin sacking their managers. Between October 2010 and February 2011, 25 clubs opted for that course of action.

Continue reading the main story In 2010-11, managers sacked in the Championship had an average tenure of less than a year.It was 1.33 years in League 2, 1.67 years in League 1 & 2.07 years in the Premier League.

Several managers have already lost their job this season, including Peter Reid, who was sacked by League Two Plymouth Argyle last week.

Keith Millen left Bristol City on Monday with the club bottom of the Championship, while Steve McClaren departed Nottingham Forest on Sunday, resigning after only 112 days in charge.

The figure of ￡99m would have been higher had agents fees and the cost of sacking and replacing a manager's backroom team been taken into account.

According to the LMA, which represents managers in the Premier League and Football League, more than 100 coaches also lost their jobs last season.

Reid, who was in charge of Plymouth at a time when the club were battling to avoid administration, was on BBC Radio 5 live to discuss the issue.

He said: "Chairman and owners need to be more realistic about their expectations.

"Certainly in the Championship where they're all trying to get to the Holy Grail and that's the Premiership. There needs to be a bit of realism."

Reid was joined by LMA chief executive Richard Bevan, who believes managers are not being given enough time to prove themselves.

"We want to move away from managers being judged on their last three results," Bevan said.

Continue reading the main story The average length of time it takes a sacked manager to get another job is currently 1.63 years.Almost half of first-time managers are never appointed to a second management position.

"In fact, when results take a downturn that is when the club should support its manager even more, not jump for the quick fix."

Sir Alex Ferguson, who has been in charge of Manchester United for almost 25 years, agrees.

"It's always a problem in modern-day management," said the 69-year-old Scot. "You see time and time again that these guys are only in a position a year before the clubs are sacking them."

According to the LMA, Championship managers who were sacked in 2010-11 had an average tenure of less than a year.

The average was 1.33 years in League 2, 1.67 years in League 1 and 2.07 years in the Premier League.

The average length of time it takes a sacked manager to get another job is currently 1.63 years. Almost half of first-time managers are never appointed to a second management position.

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Bank injects £75bn into economy

2011-10-23T01:01:00.000-07:00

6 October 2011 Last updated at 14:11 GMT The governor of the Bank of England, Mervyn King, tells the BBC that quantitative easing will have an effect

The Bank of England has said it will inject a further ￡75bn into the economy through quantitative easing (QE).

The Bank has already pumped ￡200bn into the economy by buying assets such as government bonds, in an attempt to boost lending by commercial banks.

But this is the first time it has added to its QE programme since 2009. There have been recent calls for it to step in again to aid the fragile recovery.

The Bank also held interest rates at the record low of 0.5%.

On Wednesday, data showed the UK economy grew by 0.1% between April and June, which was less than previously thought.

"In the United Kingdom, the path of output has been affected by a number of temporary factors, but the available indicators suggest that the underlying rate of growth has also moderated," the Bank said in a statement.

"The deterioration in the outlook has made it more likely that inflation will undershoot the 2% target in the medium term.

"In the light of that shift in the balance of risks, and in order to keep inflation on track to meet the target over the medium term, the committee judged that it was necessary to inject further monetary stimulus into the economy."

Sterling fell by almost two cents after the announcement to $1.5280, its lowest since late July 2010.

'Warranted' Continue reading the main story Use the dropdown for easy-to-understand explanations of key financial terms:AAA-rating GO The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is miniscule.The CBI and the British Chambers of Commerce (BCC) business groups welcomed the Bank's move to expand the QE programme to ￡275bn, but said that on its own, its impact would be limited.

"This measure will help support confidence, but we need to recognise that its impact on near term growth prospects is likely to be relatively modest," said Ian McCafferty, the CBI's chief economic adviser.

"Only once the turmoil in the eurozone is resolved will confidence be fully restored."

David Kern, chief economist at the BCC, said: "Higher QE on its own is not enough and we urge the MPC [Monetary Policy Committee] to look at other radical methods.

"There is a strong case for the MPC to help boost bank lending to businesses by immediately raising its purchases of private sector assets."

The manufacturers' organisation, the EEF, said that the Bank's decision to act now, before the third-quarter estimates of GDP and its latest inflation forecast were released, "would indicate that members believed immediate action was warranted in order to head off a deteriorating growth outlook".

However, the National Association of Pension Funds (NAPF) is calling for an urgent meeting with the pensions regulator to discuss ways of protecting UK pension funds from the negative effects of QE.

QE tends to push down long-term bond yields, therefore reducing the return on the investments made by pension schemes.

"Quantitative easing makes it more expensive for employers to provide pensions and will weaken the funding of schemes as their deficits increase," said Joanne Segars, chief executive of the NAPF.

"All this will put additional pressure on employers at a time when they are facing a bleak economic situation."

Complementary actions Continue reading the main story

If you're not sure of the quality of your ammunition, it's best to fire first. Some will see that as the explanation for the slightly early launch of QE2 from the Bank of England today”

End Quote Stephanie Flanders Economics editor, BBC News The governor of the Bank of England, Mervyn King, wrote to the chancellor earlier on Thursday, setting out the MPC's case for expanding the asset purchasing programme.

In his letter of response, in which he authorised the move, Chancellor George Osborne said: "I agree that an increase in the ceiling would provide the MPC with scope to vary the stance of monetary policy to meet the inflation target."

In his speech to the Conservative Party conference earlier in the week, Mr Osborne said that the Treasury would look into "credit easing" - a way to underwrite loans to small businesses who are struggling to get credit now.

He confirmed this in his letter to Mr King: "Given evidence of continued impairment in the flow of credit to some parts of the real economy, notably small and medium-sized businesses, the Treasury is exploring further policy actions. Such interventions should complement the MPC's asset purchases."

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American Airlines shares plummet

2011-10-22T21:16:00.000-07:00

3 October 2011 Last updated at 21:35 GMT American Airlines said it would have the youngest fleet in the US within five years Shares in American Airlines' parent company have ended the day down 33% on fears the airline may have to seek bankruptcy protection.

At one point shares in AMR fell by as much as 41% in New York on Monday, sparking automatic halts in trading.

American Airlines is the third largest carrier in the US but has been struggling with high debt loads and sluggish demand.

A spokesman said a Chapter 11 bankruptcy "is certainly not our goal".

More losses

American Airlines is expected to post its fourth straight year of losses in 2011, and analysts expect that to continue into 2012.

It's one of the few major carriers not to have restructured in a Chapter 11 bankruptcy, leaving it with higher costs and debts than competitors.

Several rumours about a possible restructuring appear to have sparked Monday's sell-off, including reports that a large number of pilots were retiring from the company early in case a filing affected their retirement plans.

Fears of a second recession in the United States also contributed towards the share drop, which affected other airline stocks as well.

"The market was ugly," Ray Neidl, an analyst with Maxim Group in New York told the BBC.

"Consumer variables such as airlines were down big time across the board as fears of recession grew bigger."

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Growing trade ties between Indian and Pakistan

2011-10-22T17:17:00.000-07:00

2 October 2011 Last updated at 16:04 GMT By Shahzeb Jillani BBC News Pakistan's commerce minister (right) took a large delegation with him Business leaders from India and Pakistan say there's new optimism about the efforts their governments are making to improve trade ties. But critics warn that overcoming decades of mistrust may not be that easy.

For the first time in 35 years, a Pakistani commerce minister led a business delegation to India last week. The entourage included nearly 80 leading industrialists, traders and high-ranking officials.

Peace talks between the two nuclear-armed neighbours broke down in 2008 after the attacks in the Indian city of Mumbai, which India blamed on Pakistan-based militants.

Nearly three years on, as if to emphasize a sense of normalcy, the Pakistani Commerce Minister, Makhdoom Amin Fahim, was hosted at the city's iconic Taj Mahal Hotel - which was one of the main targets of the 2008 attacks.

There, leading Pakistani traders got a chance to mingle with their equally eager-for-business Indian counterparts.

Between them, they spoke not just of the profits their individual businesses could make if their governments removed the long standing hurdles in their way. But also of how much the people of their two countries, and indeed the wider region, stand to benefit from freer movement of goods, money and commodities.

Win-win situation Continue reading the main story

The only way I see realization of trade potential between our two countries is for India to remove its non-tariff trade barriers and for Pakistan to reciprocate by granting the MFN status to India”

End Quote Hasan Khan Former advisor to Pakistan's Ministry of Finance Vijay Kalantri, president of All India Association of Industries, said traders on both sides feel business between India and Pakistan is a win-win situation for everyone.

"Why are Indians and Pakistanis forced to trade unofficially via third countries like Dubai or Sri Lanka?" he tells the BBC from Mumbai.

"All we are asking is, let there be direct business-to-business contact between us."

After the talks in Delhi, ministers from the two sides announced their agreement to boost their annual bilateral trade from current $2.7bn (￡1.7bn) to $6bn by 2015.

They also pledged to ease business travel and promote bilateral trade through the land route.

For Pakistan, a significant announcement was a pledge by India to drop its opposition to the European Union's plan to grant Pakistan tariff waiver on select commodities to help it recover from the devastation of 2010 floods.

There was hope that Pakistan might reciprocate and grant India the Most Favoured Nation status (India granted Pakistan MFN status way back in the 1990s).

Even though no such announcement came, Pakistan committed itself to a road map to implement preferential trade ties with India, as prescribed under the South Asia Free Trade Agreement (SAFTA).

Trade barriers

There are a number of explanations why Pakistan has so far withheld the MFN status from India.

At present there are a number of barriers to prevent trade between Indian and Pakistan

First is political. Pakistani leaders have often linked it to the resolution of the core issue of Kashmir.

It's a stance which has long been propagated for mainly domestic consumption.

But there is a sense in Pakistan that while the country should continue to push for a negotiated settlement of the Kashmir issue, trade and commerce should not be held hostage to resolution of political disputes.

The second is protectionism. For years, domestic industry in Pakistan has feared it would be swamped by imports from India. But even there, the mood appears to have shifted.

Senator Haji Ghulam Ali, president of Federation of Pakistan Chambers of Commerce and Industry, says there's a consensus that Pakistan should open up to Indian business.

"Everyone now recognizes it will be beneficial for both sides. It's just a matter of time before it's done," he tells the BBC from Delhi.

Business leaders say that less trade barriers would benefit firms in both countries

However, the last, and more plausible, obstacle is the issue of non-tariff barriers.

"In my experience, India has one of the most restrictive trade regimes in the region," asserts Dr Ashfaq Hasan Khan, a former advisor to Pakistan's Ministry of Finance. His view matters, given has decades of dealings with South Asian governments on trade liberalization.

He explains that despite granting Pakistan the MFN status, India has a variety of non-tariff barriers in place - such as, stringent certification codes, customs rules, security clearances and movement restrictions - which make it virtually impossible for Pakistani traders to do business in India.

"The only way I see realization of trade potential between our two countries is for India to remove its non-tariff trade barriers and for Pakistan to reciprocate by granting the MFN status to India," says Mr Khan.

He adds: "Unless there's political will to do that, everything else is just talk and photo-op."

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Kodak denies any bankruptcy plans

2011-10-22T14:06:00.000-07:00

2 October 2011 Last updated at 10:09 GMT Kodak is one of the best-known and most iconic brands in photography Eastman Kodak has said it has "no intention of filing for bankruptcy".

The struggling US camera and printing group's comments came after it confirmed it had hired a law firm well-known for handling bankruptcy protection cases, Jones Day.

Kodak said it was "not unusual for a company in transformation to explore all options".

Shares in the firm fell 54% on Friday as fears persist about its future. It has not made a profit since 2007.

Kodak, synonymous with film photography for more than 100 years, has struggled to adapt to the digital age.

Last week it announced plans to borrow $160m (￡103m) for "general corporate purposes".

Kodak is now continuing to explore a sale of its digital imaging patents, worth an estimated $2bn.

Mark Kaufman, an analyst at Rafferty Capital Markets, said: "I don't believe bankruptcy is inevitable.

"This is a pretty valuable portfolio, they should get a good price.

"They need to get this [sale] out of the way. They need to sell this portfolio, raise some type of cash."

The company currently has a market value of $210m. This compares with $31bn at its height in February 1997.

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Japanese manufacturers optimistic

2011-10-22T10:02:00.000-07:00

3 October 2011 Last updated at 02:40 GMT Japanese carmakers have seen their production levels return to pre-quake levels Japan's big manufacturers expect conditions to improve in the next three months, according to the Bank of Japan's Tankan survey.

The business sentiment index stood at plus two for September, up from minus nine in June, the survey showed.

Confidence was badly damaged by the March 11 earthquake, but factory output is now increasing as supply chains are restored and infrastructure rebuilt.

The survey is keenly watched and influences Japan's monetary policy.

"Manufacturers are planning a sizeable output expansion in the next few months, so we expect conditions to improve even further," Takuji Okubo of Societe Generale told the BBC.

External risks

However, despite the optimism, big firms in Japan revised down their plans for capital expenditure.

According to the survey, large businesses plan to increase capital expenditure for the current financial year by 3%, down from an earlier projection of 4.2%.

Continue reading the main story

The uncertainty over what is going to happen over the next few months seems to be hurting the sentiment”

End Quote Takuji Okubo Societe Generale Analysts said that while things have started to improve in Japan, external factors continue to dampen spirits.

There have been concerns that the ongoing debt crisis in Europe may hurt growth in the region. At the same time, economic problems in the US have raised fears of the world's biggest economy slipping into a recession.

"The biggest concerns are external, not internal, such as the impact of Europe's debt problems on global growth," said Yutaka Shikari of Mitsubhishi UFJ Morgan Stanley Securities.

There are fears that if growth in these regions slows, it would have an impact on consumer spending and hurt demand for Japanese exports.

Analysts said that until a long-term sustainable solution was found to these issues, they are likely to impact the expansion plans of Japanese companies.

"The uncertainty over what is going to happen over the next few months seems to be hurting sentiment," Societe Generale's Mr Okubo added.

Yen factor

The uncertainty surrounding the global economic outlook has also has a big impact on the Japanese currency. Investors have been flocking to the yen, considered as a safe-haven asset in times of economic turmoil.

That has seen the Japanese currency strengthen by as much as 8% against the US dollar in the past 12 months.

It does not bode well for the Japan's export-dependent manufacturers. A strong yen not only makes their goods more expensive but also hurts profits of companies when they repatriate their foreign earnings back home.

"If you look carefully, you can see the heavy burden of a higher yen, and their profits are under pressure," said Hideo Kumano of Daiichi Life Research Institute.

According to the Tankan survey, large manufacturers said they based their business plans on the yen averaging 81.15 against the US dollar for the current financial year. It was trading close to 77 yen against the US dollar in Asia trade on Monday.

The Japanese authorities have already intervened in the currency markets this year. Last week, the Finance Ministry said it was ready to act again and could spend another 15tn yen ($196bn; ￡125bn) to stabilise the currency.

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VIDEO: Will China help at-risk Italy?

2011-10-22T06:54:00.000-07:00

5 October 2011 Last updated at 00:32 GMT Help

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AUDIO: Would you go off sick with stress?

2011-10-22T03:37:00.000-07:00

5 October 2011 Last updated at 15:40 GMT Help

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VIDEO: Workers in NY cuts protest

2011-10-22T00:03:00.000-07:00

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What went wrong with Dexia?

2011-10-21T19:53:00.000-07:00

5 October 2011 Last updated at 23:09 GMT By Leo Kelion Business reporter, BBC News France and Belgium plan to break up Dexia because of its exposure to the eurozone debt crisis Dexia is set to become the first European bank to fall victim to the eurozone debt crisis.

A decision to split up its operations has been taken after investors sent its shares plunging to an all-time low.

As late as 27 September the firm's board boasted of a "robust capital base" and insisted a break-up was firmly off the agenda.

But one week on, Belgian and French finance ministers plan to split off the firm's riskiest assets into a "bad bank" and remove its French local government lending operations.

So how did Dexia get into this mess?

Origins

Dexia was created in 1996 when Credit Local de France merged with Credit Communal de Belgique.

The company combined France and Belgium's biggest municipal lenders providing finance for spending on schools, public transport, street lighting and other locally controlled budgets.

It also included a retail branch network in Belgium and a private banking unit in Luxembourg.

The aim was to strengthen the business ahead of the euro's launch in 1999. The single currency's introduction was expected to increase competition across the bloc's banking sector.

Over subsequent years, Dexia continued to expand. It took control of the Italian lender Crediop, Belgium's Artesia Banking Corporation, the Israeli bank Otzar Hashilton Hamekomi and Turkey's DenizBank. It also formed a joint venture with the Royal Bank of Canada combining their institutional investor services units.

The first bailout

Dexia's bigger-is-better strategy first came unstuck in 2008. The collapse of the US investment bank Lehman Brothers caused lenders worldwide to become wary of lending to each other.

Attention focussed on Dexia's loss-making US asset management and bond insurance unit, FSA. It had been caught out by the sub-prime mortgage crisis.

In June that year, Dexia had been forced to announce that it was providing a $5bn credit line to the subsidiary, but the sum was still dwarfed by the unit's distressed assets.

Finding itself unable to borrow placed Dexia in an impossible situation. It relied on being able to take out short-term loans to finance the longer term credit it offered public authorities.

On 30 September 2008 the governments of Belgium, France and Luxembourg announced they were taking control of the business with a 6.4bn euro bailout funded by the three governments and the firm's existing shareholders.

According to France's finance minister Christine Lagarde, there had been a risk that Dexia "would not make it through the day, which would have represented a systemic risk for the stability of the financial system".

The move in 2008 had been supposed to put the business on safe ground, yet three years later Dexia requires a second rescue.

Eurozone debt crisis

While problems in the US prompted the first intervention, the eurozone debt crisis is at the root of Dexia's current difficulties.

The firm has 3.4bn euros ($4.5bn, ￡2.9bn) of exposure to Greek government bonds. Analysts estimate it has a further 17.5bn euros of exposure to sovereign debt issued by Italy, Spain, Portugal and other troubled eurozone economies.

In spite of all this, Dexia passed July's banking stress tests carried out by the European Banking Authority.

This happened because the bank had a core tier one capital ratio of 10.3%.

The measure weighs up a bank's top-notch assets against its more risky holdings and is used to gauge its financial strength. Dexia's score put it well above the 6% threshold demanded for a clear pass.

So on 15 July, the bank issued a press release headlined "2011 EU-wide stress test results: no need for Dexia to raise additional capital".

The problem is that the tests did not take into account a scenario in which Greece might default on its bonds.

Dexia has written down the value some of its long-term Greek holdings by 21%. However, some speculate that creditors may ultimately have to absorb a 50-60% loss.

While the bank should have enough capital to absorb such writedowns, analysts are worried about the knock-on damage to other investments owned by the bank that would be caught up in the turmoil.

"Of course, the Greek exposure is a consideration," says Pierre Lambert, a banking analyst at Keefe Bruyette & Woods.

"But the key catalyst today is its freeze of access to market short-term liquidity.

"Dexia relies on short-term funds, which are renewed on a rolling basis. But the access to those funds is no longer there because of market concerns about its exposure to the euro periphery and the requirement of higher collateral."

Record loss

Dexia had made efforts to clear its balance sheet of risky assets.

Dexia's corporate motto is "Short term has no future"

In May, it announced plans to sell off low quality US mortgage-backed securities and other loans.

At the time, investors applauded the decision, but it came at a cost. Dexia had to mark down the value of the assets by 3.6bn euros.

That propelled the bank to a record loss in its second quarter. Furthermore, worries remain about what is left on its books.

"Back in 2008 the bank reclassified over 100bn euros of trading assets as loans, which had the effect of it not having to mark them to market value," says Simon Maughan, a banking commentator at MF Global.

"Its view was that if it held them to maturity they would be paid back, but the outcome has been very different. And these legacy assets have only been partly addressed."

In August, Dexia's chief executive said that it should return to profit in its third quarter, but the firm was already on some analysts' danger lists.

On Monday, the ratings agency Moody's warned it was considering cutting the firm's credit score, saying that the bank was finding it increasingly hard to source funds.

Dexia's shares closed more than 10% lower on the news before falling as much as a further 37% on Tuesday after details leaked of a crisis board meeting.

That evening, France and Belgium announced plans for a second rescue.

Why it matters

Guaranteeing Dexia's loans puts extra pressure on Belgium and France's finances, but the rescue has wider implications.

The stress tests' failure to highlight Dexia's vulnerability calls into question how many other European lenders are at risk.

Until the debt crisis is resolved, the issue of contagion remains.

As Andrew Bell, chief executive of Witan Investment Trust puts it: "You can put a firebreak around Greece, but as soon as the markets start worrying about the solvency of big countries like Spain and Italy and possibly even France eventually, at that point the amount of debt held by a wider range of banks is so much greater."

Dexia is also a reminder of the financial system's interconnected nature.

The bank plays a key role in helping some US states and cities raise funds. Concerns about its health have caused their borrowing costs to rise.

Breaking up Dexia may offset the dangers posed by its collapse, but it also serves as a warning that the debt crisis can cause unforeseen damage so long as it remains unresolved.

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Thai rice policy draws criticism

2011-10-21T15:12:00.000-07:00

6 October 2011 Last updated at 16:25 GMT By Rachel Harvey BBC South East Asia Correspondent Thailand is the world's largest rice exporter Thailand, the world's biggest rice exporter, introduces a new pricing scheme on Friday.

The government says it will boost the incomes of farmers and help alleviate rural poverty.

But critics fear the new policy will skew the market at home and, potentially, globally as well.

The government is offering to buy paddy, or unmilled, rice at 15,000 Thai baht ($482.6; ￡312) per metric tonne, which is a 50% premium on the current market rate.

However, private exporters say the high price will place them at a disadvantage, putting Thailand's dominant global position in jeopardy.

"Private millers, private traders, private exporters will go out of business if the government keeps one price way above the market price for too long," complains Vichai Sripraset, President of Riceland International.

Fixed prices, Mr Vichai says, are too inflexible.

"When the [fixed] price is too low, the producer, the farmer, cannot survive. When it's too high, the consumer cannot stand it. Market forces are better at adjusting to changing circumstances."

Radical change

The previous government, which lost power in July's election, introduced its own policy for the rice industry - a subsidy programme that compensated farmers if market prices fell below a fixed benchmark.

Under the new system, however, farmers will be encouraged to use rice as collateral against loans from the state-owned bank for agriculture.

Under the new scheme, farmers are not guaranteed a minimum income if their crop underperforms

If prices on the open market are higher than the government offer, farmers are free to sell privately.

But if the market price falls, they will have the option of selling at the government fixed price.

One of the fundamental differences between the two schemes is that under the old system, farmers were guaranteed a minimum income based on the amount of rice they normally produced, even if their crop underperformed.

With the introduction of the new government programme, farmers will need harvested paddy rice to sell before they get any money.

Global impact

Ammar Siamwalla, senior?economist?at the Thailand Development Research Institute, says the short term impact on the global market will depend on how much of the government-bought rice it decides to store and how much it exports.

"If they put it in storage, it means that much rice is taken away from the world market which we used to export [to], and I expect a substantial amount will be put in storage.

"That will effect international prices because there will be less rice in world markets."

Continue reading the main story

We have a dominant share in high quality rice and we're going to lose it”

End Quote Ammar Siamwalla Thailand Development Research Institute If the government does decide to store large quantities of rice, it could be good news for owners of private warehouses.

But it would also be an additional cost to the Thai taxpayer.

It also raises fears that the government might be tempted to dump large quantities of rice on the market as the price moves up, and before the rice spoils, forcing a sudden correction.

An alternative scenario would see the Thai authorities trying to control supply by discouraging increases in production.

But that could hurt the very farmers the new policy is designed to help.

The government argues that any shortfall in production will be offset by the higher price.

Thailand currently supplies about a third of global rice exports, which means decisions made in Bangkok can have far reaching implications.

The US Famine Early Warning Systems Network says a recent spike in global prices can, in part, be explained by the market anticipating the Thai government's new scheme.

Other exporters, the FEWSN says, are poised to take advantage.

India has just lifted an export ban on rice other than basmati and is thought to have a surplus of 15 million metric tonnes ready for market (another 10 million is being held back for food security).

Critics say the new policy will skew the market at home and globally

Mr Ammar, a prominent critic of the new scheme, is less worried about the quantity of rice Thailand exports than he is about reputation.

"Thai rice in the marketplace is known for its high quality. Only the private sector can make distinctions and pay everybody along the supply chain according to quality. We have a dominant share in that [high quality rice market] and we're going to lose it."

The government is determined to press ahead, describing the new rice pricing scheme as one of its most important policies.

The ultimate test will be whether rice farmers like the new arrangement.

An unscientific survey of a handful of farmers contacted by the BBC suggested a good deal of confusion, along with a feeling that the new price plan is coming into effect too late to be of benefit.

"We have lots of debts so we have to sell the rice as soon as it's harvested, even though we know that if we wait we can make more money under the new scheme," said one.

Another added forlornly: "With so many rice fields flooded right now, farmers are not going to have rice to sell."

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Making Olympic technology work

2011-10-21T11:08:00.000-07:00

28 September 2011 Last updated at 23:07 GMT Weighty task: Making the technology for the London Olympics work is a "huge responsibility" says chief integrator Michele Hyron Each week we ask high-profile technology decision-makers three questions.

Michele Hyron: Viewers will be able to choose which competition, nation or athlete they want to follow

This week it is Michele Hyron of Atos,?chief integrator for the Olympic Games in London. She is responsible for leading the consortium of IT partners to design, build and operate the massive IT infrastructure that will support the London 2012 Games.

Ms Hyron leads a team that include employees from Atos and technology partners LOCOG, as well as volunteers.

She already has nearly 10 years of Olympic Games experience, serving as operations manager at the Beijing 2008 Olympic Games, integration manager at Athens 2004 and quality manager at the winter Games in Salt Lake City 2002.

What's your biggest technology problem right now?

As the chief integrator for the London 2012 Olympic and Paralympic Games, I suppose that people would expect me to have a long list of problems. After all, if the IT doesn't work, then effectively the Games can't take place.

It is a huge responsibility, and one that everyone takes extremely seriously, but this is now my third Olympic Games and Atos's sixth.

While the technologies advance every time and we are faced with fresh problems as we integrate new applications, we have developed a robust process that ensures that we test everything in the lab over and over again.

By the time we get to the Games themselves, we have covered an extensive testing program.

In fact, our work is analogous to training pilots in aircraft simulators.

We throw every possible scenario at the IT teams - from the failure of the communications network to someone accidentally pulling out a plug - and ensure that we can recover from these without anyone at the Games or watching on TV noticing that a problem has even occurred.

The most challenging aspect of the job, though, is undoubtedly the massive increases in the amount of data which has to be organised and channelled with split-second timing.

It is estimated that between the dawn of civilisation - some four to five thousand years ago - and 2003, mankind had created about five exabyte's of data, which is 5bn gigabytes.

Across the world, we now create that amount of data every two days and the volume of business data is doubling every 18 months.

The Olympic Games is no exception. For Beijing, we produced 50% more data than we handled at the Athens Games.

The London 2012 Games will see us process significantly more information than we had at Beijing, as we meet the demands of sports fans worldwide for the latest information on their favourite events and sports stars, and deliver this information via broadcasters, internet and mobile.

What's the next big tech thing in your industry?

Atos is a global business with a presence in more than 42 countries and a workforce of 78,500 business technologists. In many respects our industry covers virtually every aspect of IT and every industry sector.

However, from my personal perspective it is the magic that we can now work with metadata to create a completely different TV experience for watching sport which is the most exciting.

We will have the ability to offer viewers the chance to choose exactly which competition, nation or athlete they want to follow, and enable them to follow more than one sporting event simultaneously.

This digital quality service will be offered over fixed and mobile devices, and is designed to allow sports fan to watch events that aren't even being broadcast on a regular programme.

So unlike the type of technologies people are used to today, with a personal video recorder (PVR) integrated into a set-top box allowing them to select when they view broadcasts, this new approach makes the viewer the director, selecting what they watch, when and from what angle.

Our approach incorporates face-recognition technologies, and this means that a viewer can either have automatic selection of the best shot or a recommendation that they can accept or reject.

The amount of data that has to been managed to offer this service is staggering, and by 2014 we estimate that more than 90% of all data traffic in the world will be video content.

It will be the equivalent of 32 million people streaming Avatar in 3D continuously every month.

What's the biggest technology mistake you've ever made - either at work or in your own life?

As a complete beginner in software development, at the start of my career, I enjoyed developing a program in Assembler.

I made it as compact as possible, playing with the stack and using other tricks. It was great fun!

What I didn't appreciate at the time was that this piece of code was completely unmaintainable.

My colleagues were still blaming me for this work years after I moved on to other things.

It was a really good lesson so early on in my career, and taught me the importance of looking ahead and appreciating the impact of what I do, not just tomorrow but years into the future.

It also taught me that while playing with software is really fun - and it is - delivering programs that are robust and practical is what counts.

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VIDEO: 'Too much euphoria' over Asian economy

2011-10-21T07:54:00.000-07:00

Asian nations face huge unresolved challenges - of poverty, poor governance and environmental degradation.

Stephen Sackur spoke to Rajat Nag, Managing Director General of the Asian Development Bank about inequality and governance in Asia, and asked whether there is too much optimism about Asian economy growth.

You can watch the full interview on Wednesday 5 October on BBC World News at 03:30 GMT, 08:30 GMT, 15:30 GMT and 20:30 GMT.

And on BBC News Channel at 04.30 BST on Wednesday repeated on Thursday 00.30 BST.

Find out who is coming up on the programme by following us on Twitter.

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IBM's bet on data-centric computing

2011-10-21T03:26:00.000-07:00

3 October 2011 Last updated at 23:01 GMT IBM's Watson computer was a proof of concept, says Dr Menon Each week we ask high-profile technology decision-makers three questions.

This week it is Dr Jai Menon, the chief technology officer and vice-president for technical strategy for IBM's Systems and Technology Group.

He holds 52 patents and is arguably most famous for his contribution to the Raid storage technology. Computing giant IBM has more than 426,000 employees, generating an annual turnover of just under $100bn (￡64.6bn) and profits of $14.8bn.

What's your biggest technology problem right now?

There are always multiple problems, but one problem that we are focused on is providing our customers with IT solutions that are flexible to their needs, but easily consumable.

Our customers have many different kinds of workloads they have to run, for example transaction-based systems that have to serve thousands or millions of users at the same time, 24/7.

Or analytics systems with fewer users that require deep complex computation. The challenge is how do you satisfy all these different kinds of tasks?

The are two different approaches: You can standardise it all on one kind of computer, and use that for all their business tasks. But that doesn't really work: it's like saying 'buy just one type of car', and hope it meets the needs of a small family, and doubles up as a pick-up truck, a big van or an MPV [people carrier].

So the other approach is to realise that you have lots of different types of workload, and you buy systems that are optimised for these tasks. That's clearly preferred to the first approach. The challenge over time is that with lots of different workloads, you end up with many kinds of computers, and then there's the challenge to make that consumable.

We are working on a technical approach that will create a system that has all the pieces that make up a computer system. You build this system with different kinds of processors, and there are memory and storage and networking elements, and then you have very sophisticated software that comes with the system. And the software is able to construct the kind of computer you need.

So if you need a lot of computing power, medium-sized storage and not a lot of memory, that's what the system provides. And once the task is running, and you need more memory or computing power, then the system will make that choice for you.

And when your workload goes away, you simply deconstruct the system.

This is not just virtualisation, where you have one kind of standardised computer, with a standardised processor and a certain amount of storage and memory.

You need to be able to assign more than what a single computer can do.

This is very much customer driven. What our customers are telling us is: 'Come up with newer better computers, that take up less floorspace and are faster.'

People have amazing amount of workload, and require lots of different virtualisation environments, but they also have too many different systems.

So I've got to let customers reuse their existing assets, skills and software.

The software is key - it's a universal resource manager.

What's the next big tech thing in your industry?

The next big thing in our industry are new kinds of computers. I call them data-centric computers, because right now our computers are very processing-centric computers.

These new computers can extract and find information in data that can aid human cognition. When we created [supercomputer] Watson, it combined hardware and deep analysis software that we designed to work together.

We are moving away from computers that compute, to computers that can extract information from the huge amounts of unstructured data - because every two days we generate more data than all data from the dawn of civilisation until 2003.

Watson was just an example to prove the point. There are very interesting business problems out there, and rather than having to be programmed these computers learn as they go along.

They are data-centric rather than compute-centric.

For example, they could work as a physician's assistant, providing all the knowledge, the data about the patient itself, manage the doctor's notes.

Right now, all we do is Google a medical problem, and we get back 20 documents, and we have to go through them and rate them and find the answer.

In the future, the computer will give you an answer with a probability to go with that, and that's so much better than what we do today.

That to me is the next big technology thing. And it also applies to government. Computers could help governments find answers to tax issues, zoning laws, financial issues.

From a technology point of view, we still need a few things that to support this - more memory in the system, and solid state memory and storage, and obviously the deep software.

This is not Skynet [as described in the Terminator movies]. People always worry about new technology. When pocket calculators were introduced, people said we would forget to multiply; when computers came they said we would forget how to spell.

In reality all these computers are assistants, and they save us time so that we can focus on doing the things that only humans can do.

Pilots, for example, have always had things to helped them fly a plane. But at the end of the day I would not fly without a real human on-board.

What's the biggest technology mistake you've ever made - either at work or in your own life?

This is probably an unusual kind of answer, but the timing of innovation is really important. My experience is, as innovators, we are always frustrated if we are too late.

We say: "I had the idea first, why did product development not move fast enough?" But my biggest mistake was in pushing an innovation too early to market, and I've learned from that.

What I've learned is that you really have to prepare the market. You have to shape the market, prepare your customers, create a standard, get enough people to buy into the standard.

And if you introduce your product too early and you haven't done that, then your product doesn't do very well. You just create a vicious circle, because you don't have the profits from the product to recycle and improve and innovate the product.

And then, once the market is ready and prepared, then you will be hesitant because you tried this once before and it didn't work. Then it gets very difficult to reenter the market.

For example in the storage space, we developed this IP [internet protocol] driven storage attached to the network. We shipped it in 2001, and it didn't do so well in the market.

This is now a $3bn market - 10 years later it's a great story, but by pushing it too soon, maybe five years too soon, it soured our executives as to whether this really was a good idea.

And then it is hard to catch up later.

Timing is everything. You can be wrong on both sides, too early and too late, and both are bad.

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VIDEO: iPhone 5 'critical' for Apple

2011-10-20T22:38:00.000-07:00

4 October 2011 Last updated at 02:20 GMT Help

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VIDEO: Market fears over Greek deficit

2011-10-20T19:12:00.000-07:00

3 October 2011 Last updated at 13:54 GMT Help

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'Bad bank' plan for Dexia assets

2011-10-20T15:34:00.000-07:00

4 October 2011 Last updated at 22:46 GMT Dexia shares have fallen sharply in the past two days The Belgian government has approved the creation of a "bad bank" for risky assets held by the troubled Franco-Belgian bank Dexia.

Shares have fallen sharply in the past two days amid fears about its large exposure to Greek government debt.

Belgian Prime Minister Yves Leterme said his cabinet had agreed to isolate at-risk assets and to guarantee debts.

There are fears that Greece may end up defaulting on more than 50% of its debt, mostly held by European banks.

Shares fell by as much as 37% at the start of European trading on Tuesday - adding to a 10% Monday drop prompted by an alert by ratings agency Moody's - but rallied back to a mere 22% down at the end of the day.

Reorganisation

The commitment to guarantee debts raised questions over the heavily indebted Belgian government's own solvency.

Belgium's 10-year cost of borrowing jumped from 3.7% to 3.8% in bond markets on Tuesday.

Separately, the French and Belgian central banks also stated that they "fully support" Dexia, indicating that they will provide whatever borrowing is needed by the bank to ensure it does not run out of cash.

Continue reading the main story

The European Banking Authority... portrayed Dexia as one of the strongest banks in Europe”

End Quote Robert Peston Business editor, BBC News The bank is to be restructured. As well as the creation of a "bad bank" supervised by the French and Belgian governments, a unit of the bank responsible for lending to French local authorities, Credit Local, will be sold off.

A joint statement from the countries' finance ministers said: "In the framework of Dexia's restructuring, the governments of France and Belgium, in co-ordination with our central banks, will take all necessary steps to ensure the protection of depositors and creditors."

The two ministers, who were meeting at a wider EU finance ministers' meeting in Luxembourg, have been discussing ways to support the bank.

Many investors anticipate that the bank will ultimately have to be recapitalised by the two governments - in other words, nationalised.

The crisis at Dexia comes just weeks after the bank passed stress tests by regulators of all the major European banks, further undermining the credibility of the entire exercise.

Exposure

Market concerns over Greece's ability to repay its debts were further heightened on Monday, as eurozone finance ministers again delayed a decision on giving Greece its next instalment of bailout cash.

It came after Greece said it would not meet this year's deficit cutting target.

Eurozone banks have been hit by cash outflows since the summer amid fears that Greece, and possibly other governments, may ultimately default on their debts, and even exit the eurozone, leaving their lenders sitting on big losses.

Dexia's exposure to Greek government debt totals 3.4bn euros ($4.5bn; ￡2.9bn). Its total exposure to Greece - including to private-sector Greek borrowers - is 4.8bn euros.

It has already written off 21% of its Greek debts, but market prices now suggest the eventual loss to lenders could be in excess of 50% of the amount owed by Greece.

The bank is partly-owned by the French and Belgian governments, after it received a 6bn-euro joint bailout at the height of the financial crisis in 2008.

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Pension talks yield 'no progress'

2011-10-20T11:25:00.000-07:00

6 October 2011 Last updated at 00:19 GMT TUC secretary general Brendan Barber has said the sides are a long way apart Talks between ministers and union chief Brendan Barber over public sector pension reform have resulted in no progress, sources have told the BBC.

TUC chief Mr Barber met Cabinet Office minister Francis Maude for impromptu private talks at the Conservative conference in Manchester this week.

Unions are balloting members for strike action on 30 November over plans to increase contributions from employees.

The next round of face-to-face talks is due on 24 October in London.

A source close to Mr Barber said he used the impromptu meeting to again urge the government to "give a degree of confidence that they are serious about maintaining sustainable public service pensions in the future".

'Groundhog day'

Unions say the changes are unfair and financially unnecessary. Ministers insist that pension contributions must be increased to make schemes sustainable.

In recent weeks Mr Maude has described the talks as "like Groundhog Day", with no progress being made.

Both sides have previously insisted they are committed to resolving their differences through talks but the BBC understands the latest meeting again yielded little.

Mr Barber also met Chancellor George Osborne at a party during the conference, although it is unclear whether the issue of pensions was discussed.

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Supergroup facing £9m profit hit

2011-10-20T07:13:00.000-07:00

5 October 2011 Last updated at 15:59 GMT Continue reading the main story Shares in clothing firm Supergroup have fallen by a quarter after it said problems at a distribution warehouse would hit profits by between ￡6m and ￡9m.

The company behind the Superdry brand said the problems had seen a "reduction both in the amount of stock and range of sizes reaching its UK stores".

The firm said the problems centred on an upgrade to its Gloucester warehouse.

Supergroup's shares ended the day 30% lower at ￡7.07.

In a management statement, the firm said it estimated "the total cost of this isolated event, including the additional temporary warehousing capability and resulting lost sales will impact the current year's profitability by between ￡6m and ￡9m".

Supergroup, which is based in Cheltenham, also said its stock levels would increase by ￡2m.

Analysts believe the problem will add to a range of difficult factors facing the firm, including the tough consumer climate, a weak August and the unseasonably warm September weather discouraging the purchase of autumn clothes.

In July, Supergroup said that profits for the year to May had jumped by 110% to ￡47.3m.

Supergroup floated its shares on the London Stock Exchange in March 2010, at a price of ￡5 per share.

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VIDEO: Check, check and check again

2011-10-20T02:16:00.000-07:00

29 September 2011 Last updated at 14:12 GMT Help

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VIDEO: Eurozone troubles worry Australia

2011-10-19T22:43:00.000-07:00

4 October 2011 Last updated at 01:21 GMT Help

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HP completes buy-out of Autonomy

2011-10-19T19:36:00.000-07:00

3 October 2011 Last updated at 21:51 GMT Continue reading the main story Hewlett-Packard has completed the $12bn (￡7.8bn) buy-out of UK software firm Autonomy, despite the departure of the man who initiated it.

Leo Apotheker was replaced as HP chief executive last month amid falling sales and a share price collapse.

The Autonomy deal was part of a massive overhaul of the troubled US computer giant unveiled by Mr Apotheker.

But plans to spin off its core PC business received a thumbs down from the market.

HP's shares have fallen 47% this year, making it one of the worst performers in the Dow Jones index of leading US companies.

The purchase price for Autonomy was also widely criticised by market analysts as too high, but British takeover rules made it almost impossible to cancel the bid.

Meg Whitman, the former head of eBay who replaced Mr Apotheker, said shortly after her appointment that the deal would still go ahead.

The UK firm's head, Mike Lynch, later got into a colourful spat with HP rival Oracle, who claimed that Mr Lynch had sought a rival bid from them and been declined.

Oracle's chief executive Larry Ellison described the asking price as "absurdly high".

HP's shares closed 1.1% lower on Monday, outperforming the wider market.

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Shares up on eurozone bank plan

2011-10-19T15:55:00.000-07:00

5 October 2011 Last updated at 21:02 GMT German support is considered crucial for any European bank rescue proposal European stock markets ignored fresh warnings about Italy's ability to repay its debts by staging a strong rally.

Reports that European leaders are considering co-ordinated action to bolster banks sent European markets up 3%-5%, while Wall Street also rallied.

On Tuesday, Moody's cut Italy's credit rating by three notches and warned about the country's growth rate.

But investors focused on signs that the debt-laden banking system may soon be recapitalised by European authorities.

German support

In an interview in the Financial Times, Olli Rehn, European commissioner for economic affairs, said: "There is an increasingly shared view that we need a concerted, co-ordinated approach.

"There is a sense of urgency among ministers and we need to move on," he said.

German Chancellor Angela Merkel also said she favoured a pan-European recapitalisation programme if it proves necessary, and that she stood ready to help German banks absorb losses from a possible write-off of Greece's debts.

Continue reading the main story

There are some European regulators and politicians who regard the downgrade of Italy and the woes of the Franco-Belgian bank Dexia as positive events (oh yes)”

End Quote Robert Peston Business editor, BBC News German support is seen as crucial for any such proposal to succeed.

Meanwhile, the International Monetary Fund (IMF) - which has also been calling for eurozone governments to bolster their banks - put the likely cost of such a programme at 200bn euros ($267bn; ￡173bn).

That would put it within the means of the eurozone's bailout fund - the European Financial Stability Facility (EFSF) - which is currently being augmented.

In an embarrassing gaffe, the IMF's Europe director, Antonio Borges, suggested in a press conference that the IMF itself may add its own money to the EFSF's.

But he later rushed out a statement retracting his comments, noting that the IMF lacked the legal authority for such a move, nor did the idea have the backing of the IMF's shareholders, which include the US government.

Banks rise

Signs that Europe's leaders were ready to act came on Tuesday when plans were announced to split struggling Franco-Belgian financial group Dexia into its "good" and "bad" banks.

This plan to ring-fence Dexia's toxic debts led to an initial 10% jump in the firm's share prices in early trading, but it ended the day only 1.4% higher.

Continue reading the main story The problems at Dexia have further undermined the credibility of stress tests carried out earlier this year by European regulators to determine the resilience of the EU's banks - tests that Dexia comfortably passed.

Any recapitalisation programme may need to be preceded by a new round of stress tests, according to the BBC's business editor, Robert Peston, and would presumably consider the possibility of a significant write-off of Greek - and possibly other government - debts.

France's three big banks, which are also heavily exposed to Greece, rose sharply on stock markets, with Credit Agricole 9.9% higher at the close of trading.

Italy's biggest banks were up 5%-7%, while in London Barclays rose 7.7% and RBS was 5% higher.

The rally, which began as a late surge on Wall Street on Tuesday night, continued into US trading hours on Wednesday.

By the close of trading in New York, the Dow Jones was up a further 1.2%, with tech and media stocks taking the lead, while the Nasdaq rose 2.3%.

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Shell Singapore fire 'contained'

2011-10-19T11:34:00.000-07:00

29 September 2011 Last updated at 04:27 GMT The refinery is on Bukom island about five kilometres away from Singapore's mainland Royal Dutch Shell said a fire that broke out at a refinery in Singapore - its biggest globally - has been contained.

The fire started on the plant on Bukom island, five kilometres off Singapore, on Wednesday and affected a unit that helps make diesel fuel.

Shell said it is shutting down units at the refinery as a precaution.

Singapore is a trading hub and analysts said a prolonged shutdown could tighten supplies.

Shell said that, while the fire was contained, firefighters were still working to completely extinguish it.

It also said an inquiry would be forthcoming

"We believe it was an accident," the company said in a statement. "A full investigation will be conducted once the fire is put out."

Trading centre

Shell shut down a hydrocracker at the refinery, which will affect gas oil and jet fuel production. All crude units were also operating at reduced rates.

Capacity at the Bukom plant is 500,000 barrels a day.

The fire hit at a time when refiners around Asia are already running near full capacity to meet demand.

Singapore is the world's largest market for fuel oil and Asia's hub for crude and refined product trading.

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