Monday Morning Business Update

Bankers said an administration proposal to jump-start lending, a problem at the heart of the industry’s crisis, is encouraging.

“People are looking at that. It’s positive,” Morgan Stanley’s John Mack told The Associated Press in an interview. “We think it’s the right thing to do and now we just need to get the details.”

“The decision wasn’t difficult at all, even though we’re struggling,” said Wrinn, of Rockport, Mass. “Camp Glen Brook has offered him a sense of place where he’s developed into his own self, in a way that only a summer camp can do.”

Parents like Wrinn are helping keep America’s vast summer camp industry in a relatively upbeat mood as the recession takes a toll on many other sectors. Many camps were booked up weeks or even months ago, and the American Camp Association says overall enrollment for its 2,400 accredited camps is on track to match the past two summers.

In London, where leaders of the world’s largest economies will gather for a G20 summit next Thursday, the discontent may spill out into protests starting with a rally on Saturday that police expect will draw 40,000 demonstrators.

In France there have been cases of workers holding bosses hostage over layoffs and shut downs, while in Scotland a prominent banker’s home was attacked. With these incidents in mind, police and security providers are getting ready for busy times.

Ask her how much she’s got stashed in one of those teetering banks, and she looks puzzled, then breaks into a toothless grin. “That’s so far away from me,” says Muminovic, whose life savings – a few notes and coins – are stuffed beneath a mattress.

The 54-year-old widow, haggard after a life of hardship, ekes out an existence on a wind-swept hill overlooking Sarajevo. She had a milking cow, but had to sell it last month to make rent. Now she survives on a meager patch of vegetables and a $190 monthly pension.

That question is of more than artistic interest to the family that rules the tiny principality and their 35,000 subjects. Prince Alois agreed earlier this month to start following the rules set down by the Organization for Economic Cooperation and Development in Europe aimed at curbing tax havens – like his scenic patch of mountain valley between Switzerland and Austria, which owes much of its prosperity to its role as a place to put money.

Liechtenstein is hardly alone.

Treasury expects the banks this year to return about $25 billion of money that they received from the government, because they were able to replace it with private capital or decided that they do not want money with strings attached.

“We have roughly $135 billion left of uncommitted resources. The rest is out the door,” Geithner said on ABC-TV’s “This Week with George Stephanopoulos” program. That means some $565 billion out of $700 billion approved by lawmakers last October already has been deployed and Geithner said banks still need help.

Speaking to the BBC, he played down talk of a deep rift between countries that support further stimulus, such as Britain and the United States, and those that have urged caution, including Germany and France.

Countries will not be asked to reveal their public spending plans at the summit, but they should realize that boosting demand will play a key role in any recovery, he said.

Obama is expected to announce additional aid for General Motors Corp and Chrysler LLC on Monday as both automakers run down cash reserves that had been bolstered by $17.4 billion in emergency loans from the U.S. government.

Obama, who appeared in a taped interview on the CBS-TV news program “Face the Nation,” did not specify what steps he would announce, but said the automakers had more work to do to reduce costs in the face of slumping demand.

Germany’s national banking sector stabilisation fund SoFFin would acquire the stake as a first step and “intends to gain full control over Hypo Real Estate Group” (HRE), said a statement from the bank.

“(SoFFin) intends to take action to stabilise Hypo Real Estate Group, in the interest of stabilising the financial markets,” it said.

“After several days of bargaining in good faith, Chrysler and the CAW have not reached an agreement that closes the competitive gap with other automobile manufacturers in Canada, to ensure Chrysler’s immediate viability,” said Al Iacobelli, Chrysler’s chief bargainer.

If both sides fail to reach an agreement, Chrysler has vowed to permanently shutter its Canadian operations, putting some 8,000 Canadians out of work.

Shops in malls which used to stay open until nearly midnight in some states — and 24 hours in others — have begun opening later in the morning and closing earlier at night.

“Generally, we open a half-hour later and close a half-hour earlier, for a net reduction of five to six hours a week,” said Katy Dickey, spokeswoman for Australian group Westfield, which manages 55 malls across the United States.

The veteran bricklayer is entitled to the maximum jobless benefits in Denmark: $594 a week. After taxes, that’s enough to cover rent for his two-room apartment outside Copenhagen, utilities and payments on his 1996 Opel Vectra.

“There’s not much left for fun,” mutters Harmon, a 40-year-old Dane whose surname is tattooed on his right forearm.

Speaking ahead of a London G20 summit where the global economic crisis will take center stage, he said most private economists believed the US economy would hit “a more durable bottom” in the second half of 2009 to set the stage for resumption of growth.

“We want to have a stronger, more sustainable recovery, not a recovery based on an artificial boom that is not going to be sustainable,” he said in an interview with the NBC broadcast network.

Most haven’t seen any kind of medical professional in months, many have run out of vital medicines for chronic conditions, and all have few other options to access any kind of healthcare.

According to a recent study by the non-profit organization Families USA, one out of three Americans spent a stretch of time last year with no medical coverage. Health insurance is out of reach to many in the United States because it is so expensive.

Geithner used his first Sunday talk show appearances to promote President Barack Obama’s massive government spending plan to ease credit, help borrowers and inject billions of dollars into the financial sector. Long kept behind the scenes, the treasury secretary has emerged as the administration’s champion of a plan that fueled an uptick in Wall Street markets.

“We came through a period where people borrowed too much and we let our financial system take on much too much risk,” Geithner said. “And the consequences of those choices, made over years, were a huge boom. And that boom, the air is now coming out of that and that’s causing enormous damage.”

The officials asked not to be identified because details of the restructuring plan have not yet been made public. On Monday, Obama is to announce measures to restructure GM and Chrysler LLC in exchange for additional government loans. The companies have been living on $17.4 billion in government aid and have requested $21.6 billion more.

Wagoner’s departure indicates that more management changes may be part of the deal, but it is still unclear who will be put in charge of GM. The automaker recently promoted Fritz Henderson, its former chief financial officer, to become president and chief operating officer. Many in the company thought he would eventually succeed Wagoner.

Still suffering whiplash from the worst holiday selling season in at least four decades, major toy sellers and upscale merchants – who must order Christmas stock earlier than most retailers – are exercising extreme caution as they plan for the rest of the year.

They’re ordering at lower prices, they’re keeping orders small and they’re planning to buy more only if consumer demand picks up, said David Wolfe, creative director of The Doneger Group, which consults with stores on apparel buying.

Although the ethnic press once seemed immune to the forces hurting mainstream newspapers across the country, a growing number of publications that serve immigrant and minority communities are laying off staff, closing print editions or shutting down altogether.

Unlike mainstream newspapers, which have seen circulation decline over the decades, most ethnic publications have been retaining or expanding their print readership base, thanks to the growth of immigrant populations with strong newspaper reading habits.

Although the ethnic press once seemed immune to the forces hurting mainstream newspapers across the country, a growing number of publications that serve immigrant and minority communities are laying off staff, closing print editions or shutting down altogether.

Unlike mainstream newspapers, which have seen circulation decline over the decades, most ethnic publications have been retaining or expanding their print readership base, thanks to the growth of immigrant populations with strong newspaper reading habits.

Nothing better illustrated this watershed than the bustle and scope of the past few days.

Obama’s treasury secretary, Timothy Geithner, touched off a Wall Street rally with a long-awaited plan to help rid banks of their toxic assets. Geithner rolled out a comprehensive overhaul of financial regulations in hopes of avoiding another meltdown. Congressional Democrats worked to put their own imprint on a budget full of ambition but saddled with deficits.

Every day, thousands of Americans begin their lives again after they are ejected from their homes.

They rent, live with friends or family, or seek refuge in a shelter. They usually have stacks of overdue bills, empty savings accounts, and a red flag on their credit reports that will take years to fade. They often suffer from feelings of shame, failure and displacement.

Countries like Venezuela, Libya and Russia have kept a tight grip on their vast oil reserves in recent years as crude prices soared above $100 per barrel, translating into big revenues. Much of that money, rather than going back into the oil industry, was spent on unrelated political and social programs.

At $50 per barrel, these countries are far more constrained and can’t adequately fund some oil and gas projects.

Across Dalton, the self-proclaimed “Carpet Capital of the World,” storefronts stood vacant, once bustling restaurants were virtually empty and police battled a rising methamphetamine problem.

This city in the foothills of the Appalachians, which makes nearly 75 percent of the country’s floor coverings, has felt a mountain of economic troubles since the country’s real estate boom went bust.

Clinton didn’t name Venezuela, Ecuador and Bolivia, whose presidents have all demonized Washington and expelled U.S. diplomats in recent months, referring to them rather as “Colombia’s neighbors.”

He said he doesn’t agree with their politics but “I do understand why poor people who feel powerless turn away from the messy world of democracy.”

In his second rebuke of U.S. leadership this past week, the central bank governor, Zhou Xiaochuan, said China’s rapid response to the downturn – including a 4 trillion yuan ($586 billion) stimulus package – proved the superiority of its authoritarian, one-party political system.

“Facts speak volumes, and demonstrate that compared with other major economies, the Chinese government has taken prompt, decisive and effective policy measures, demonstrating its superior system advantage when it comes to making vital policy decisions,” Zhou said in remarks posted on the People’s Bank of China’s Web site.

“By the end of 2010 the unemployment rate could be approaching double digit figures in all G8 countries with the sole exception of Japan, as well as in the OECD area as a whole,” the OECD forecast in a background paper to G8 labor and employment ministers gathering in Rome.

In new projections to be issued on Tuesday the OECD will forecast growth in the 30-nation bloc will contract by 4.2 percent this year, the Paris-based body’s general secretary, Angel Gurria, told reporters on Friday.

Ahead of a Tuesday visit by Chancellor Angela Merkel to Opel’s headquarters in Ruesselsheim, Economy Minister Karl-Theodor zu Guttenberg tempered hopes that the government would stick out its own neck to save the company.

Opel, a unit of struggling U.S. carmaker General Motors (GM.N), employs about 25,000 people in Germany and has said it needs 3.3 billion euros in state aid from European governments to save jobs and keep plants open.

The development comes two days before U.S. President Barack Obama is expected to make an announcement on auto industry aid and more than two months after teams from Chrysler and Fiat began reviewing the proposed tie-up and developing a business plan for their combined operations.

Final terms of any deal will depend on what terms the U.S. autos task force headed by former investment banker Steve Rattner imposes on Chrysler as a condition for providing additional funding, according to the sources, who asked not to be identified because of the confidential nature of the talks.

Shares in UBS, the world’s largest wealth manager in terms of assets, fell 7 percent on Friday as rumors swirled of a profit warning and more writedowns in the first quarter. The bank, one of Europe’s hardest-hit in the crisis, has already written down more than $49 billion since mid-2007.

Sonntag said UBS would write down at least another $2 billion on illiquid assets, including asset categories so far not much in the spotlight such as Credit Linked Obligations (CLOs), the paper said citing people familiar with the matter.

“Given the extraordinary difficulties currently faced by the automotive industry, the supervisory board decided unanimously that a change in the senior leadership position was necessary,” PSA Peugeot-Citroen supervisory board chairman Thierry Peugeot said in a statement.

The company said Streiff will be replaced by Philippe Varin, 56, current chief executive of the Anglo-Dutch steel group Corus, who will take over as Peugeot chief on June 1.

The central bank said in a statement that it placed the Caja de Ahorros Castilla La Mancha (CCM) under special administration, and the government met to discuss a cash injection of up to nine billion euros (12 billion euros).

CCM “faces problems of liquidity that can only be resolved through financing from the Bank of Spain,” Economy Minister Pedro Solbes told reporters after an urgent government meeting.

Speaking a day after unveiling a net 2008 loss of 5.46 billion euros (7.26 billion dollars), chief executive Axel Wieandt hailed the state’s decision to buy 20 million HRE shares for 60 million euros as “good news.”

“With the proposed long-term liquidity and capital support, the Federal Republic … has put in place the necessary requirements for HRE to continue,” Wieandt said in a conference call.

The three-day meeting comes after protests in several European capitals on Saturday ahead of a much-anticipated summit of the Group of 20 developed and developing nations Thursday in London on the financial crisis.

The Rome meeting will aim to “get a seat at the table” at the G20 for labour concerns, said John Evans, the chief trade unions adviser to the Organisation for Economic Co-operation and Development (OECD).

And as jobs are slashed and liquidity dries up in the Gulf emirate, borrowing has become almost impossible, especially for items such as luxury cars, financial experts and traders say.

Thousands of job cuts have been announced in the emirate as companies pare staffing levels, while according to reports salaries of some highly paid executives have been slashed in half, reversing a six-year upward trend that had lured foreigners to the city in droves.

Marine consultant Mike Derrett estimates that boat sales in the Middle East will halve in the next one to two years, down from 1,200 boats sold last year and 1,500 sold in 2007, due to the global economic downturn.

Despite the market hitting the doldrums, however, the effects of the credit crunch will be gentler in the Middle East than in the United States or Europe, where sales are expected to plunge by 75 percent, he predicts.

The Dunfermline Building Society is expected to announce losses of 26 million pounds (37 million dollars, 28 million euros) next week and Scottish Secretary Jim Murphy said the government was stepping in to protect depositors.

The BBC reported that the regulators — the Bank of England, the Financial Services Authority (FSA) and the British government — decided the Dunfermline was no longer viable and forced its sale.

But the clean-up drive has stirred controversy as several former executives of major firms, suspected of embezzling sums which total hundreds of millions of dollars, have been held for months without charge.

The economic boom of the past several years appears to be the main culprit.

Former maths teacher Kaing Guek Eav — better known as Duch — will be read charges that he ran the main prison for the hardline communist regime which killed up to two million people, and is expected to apologise later this week.

“It’s certain that he will use the opportunity given to him to speak to the judges, to the victims and, beyond that, with the Cambodian population,” Duch’s French lawyer Francois Roux told AFP.

The AK Party was unable to win the city of Diyarbakir, the largest in the Kurdish southeast, and several other key cities, including Izmir. The secularist opposition also made inroads in Istanbul, Turkey’s largest city, and in the capital Ankara.

The vote, the first time the Islamist-rooted AK Party had suffered a slide in support since it swept to power in 2002, took place against a backdrop of record unemployment and a worsening economy. Turkey’s once booming economy has been severely hit by the global economic crisis.

“We are announcing the victory of the Democratic Party of Socialists,” DPS political director Predrag Sekulic told cheering supporters at its campaign headquarters in the capital Podgorica.

“This victory is even more important because it comes at a time of the speeding up of European integration and the maturing of democracy in Montenegro,” Sekulic said.

The latest violence, coupled with a pattern of arrests of Sunni leaders in other parts of Iraq , raises fears that the integration plan could collapse, and with it the understandings that led to drastically lower levels of violence throughout the country.

Tensions were high in Baghdad’s Fadhil neighborhood Sunday, where at least 18 people were wounded in hours-long clashes on Saturday and Sunday morning. The Iraqi Army sealed off the district, and helicopters circled in the air, as Iraqi troops surrounded members of the Sons of Iraq and demanded they hand over their arms.

The continuing economic crisis has raised the stakes high for Obama, as for every other leader of the so-called G-20 nations, whom he’ll meet at a summit Wednesday night and Thursday, following a State visit to Britain .

Effects of the downturn are rippling around the world, hitting Europe in some ways harder than the United States . Britain’s economic outlook is even bleaker than America’s despite its own massive government stimulus.