economics - Markets rise on US recovery hopes

World stock markets have risen after US central bank chief Ben Bernanke said the world's biggest economy was nearing the start of a recovery.

"The prospects for a return to growth in the near term appear good," Mr Bernanke told a conference in Wyoming.

On Wall Street, the Dow Jones index rose more than 1%, while European markets were also sent higher.

But the Fed boss said unemployment, which is expected to top 10% in the US, would fall "only gradually".

However, European Central Bank president Jean-Claude Trichet expressed concern at what he saw as premature talk of a full recovery.

After contracting sharply over the past year, economic activity appears to be levelling out, both in the United States and abroad Ben Bernanke, Federal Reserve chairman

"I am a little bit uneasy when I see that, because we have some green shoots here and there, we are already saying, 'well, after all, we are close to back to normal'," he said, speaking later at the conference.

'Slow at first'

Central bankers were speaking as data showed sales of existing US homes rose by more than 7% in July.

That was the largest monthly increase in the 10 years that the National Association of Realtors has been keeping records.

But Mr Bernanke warned that the road to recovery would be a long one.

"The economic recovery is likely to be relatively slow at first, with unemployment declining only gradually from high levels," he said.

The International Monetary Fund (IMF) has predicted that the US economy will expand by 0.75% next year, after earlier predicting no growth.

The Fed chief was also upbeat on the prospects for the world economy.

"After contracting sharply over the past year, economic activity appears to be levelling out, both in the United States and abroad," he said.

The IMF has previously said that the global economy was "starting to pull out of recession".

'Bullish'

The Dow Jones finished 156 points higher at 9,506. The Nasdaq and the S&P 500 also rose by more than 1%.

London's FTSE 100 climbed 2% to close at 4,851, while Germany's Dax index rose 2.8% and France's Cac 40 gained 3.1%.

"Bernanke was a little bit more bullish than most people were expecting," said Jacob Oubina, currency strategist at Forex.com.

"He's saying that the global economy is starting to emerge from the recession and that the fears of a financial collapse have receded substantially.

"I think the market is just taking those headlines as extreme positives for the outlook."

http://news.bbc.co.uk/

Vietnam massacre soldier 'sorry'

The US army officer convicted for his part in the notorious My Lai massacre during the Vietnam War has offered his first public apology, a US report says.

"There is not a day that goes by that I do not feel remorse for what happened," Lt William Calley was quoted as saying by the Columbus Ledger-Enquirer.

He was addressing a small group at a community club in Columbus, Georgia.

Calley, 66, was convicted on 22 counts of murder for the 1968 massacre of 500 men, women and children in Vietnam.

Cold blood

"I feel remorse for the Vietnamese who were killed, for their families, for the American soldiers involved and their families. I am very sorry," the former US platoon commander said on Wednesday.

He was sentenced to life in prison for his role in the killings in 1971. Then-US President Richard Nixon commuted his sentence to three years' house arrest.

But Calley insisted that he was only following orders, the paper reported.

Calley maintains that he was following orders from his superior

He broke his silence after accepting a friend's invitation to speak at the weekly meeting of the Kiwanis Club, a US-based global voluntary organisation.

At the time of the killings, the US soldiers had been on a "search and destroy" mission to root out communist fighters in what was fertile Viet Cong territory.

Although the enemy was nowhere to be seen, the US soldiers of Charlie Company rounded up unarmed civilians and gunned them down.

The My Lai massacre was a turning point in the Vietnam War

When the story of My Lai was exposed, more than a year later, it tarnished the name of the US army and proved to be a turning point for public opinion about the Vietnam War.

news.bbc.co.uk

Bank split over money injection

The Governor of the Bank of England, Mervyn King, wanted to pump more money into the UK economy this month but was outvoted by fellow policymakers.

Minutes of the bank's Monetary Policy Committee (MPC) meeting on 6 August reveal that Mr King wanted £75bn rather than the £50bn that was injected.

Two fellow committee members also voted for a bigger cash injection.

The decision to pump £50bn came as a surprise, and was already twice the £25bn that the market expected.

The bank originally set aside £150bn for buying assets, but the decision to inject an extra £50bn took the total to £175bn.

The governor, backed by Tim Besley and David Miles, voted instead for a £75bn expansion.

They argued that too little stimulation would mean inflation remaining below its target of 2% for "a sustained period of time... and might harm public confidence in the recovery, causing it to falter".

They added that if £75bn proved to be too much, they could reverse the policy, by selling assets, and increase interest rates.

Sterling fell sharply as a result of the minutes, as they expressed concern about the strength of any recovery in the UK economy.

The pound fell 1% against the dollar, to $1.639, and by 0.8% against the euro, to 1.162 euros.

'Additional measures'

The bank has been pursuing a policy of pumping money into the economy - known as quantitative easing - by buying assets from financial institutions.

The aim was that these institutions would then lend some of the money made from these sales to businesses and individuals.

The central bank hoped that this would, in turn, boost spending and help the economy emerge from recession.

Following the committee's meeting earlier this month, the bank issued a statement saying that the UK recession "appears to have been deeper than previously thought".

But the 6-3 split on the MPC shows that views within the bank differ on just how deep the recession is, and the outlook for inflation.

Analysts said the differing views meant the bank might pump even more money into the economy.

"It was surprising we had three members looking for £75bn," said analyst Peter Dixon at Commerzbank.

"This clearly suggests the bank is leaving the door open for additional measures should they feel need a rise. Quantitative easing is still very much in play."

Vicky Redwood at Capital Economics said the minutes "gave a strong signal that QE might yet be extended even further."

'Promising signs'

The committee noted that stock markets had "increased considerably", and that Libor, the rate at which banks lend to each other, had fallen.

It also noted that there were "promising signs" that quantitative easing was "having a positive impact".

But against this, the committee said that lending conditions remained tight, economic activity remained weak and the "recovery in global demand remained susceptible to further shocks".

These factors would, it said, "most likely lead to a slow recovery in the level of economic activity", which meant further action needed to be taken.

"I think [the minutes] underline the fact that a significant faction of the MPC is still very concerned about the weak growth prospects," said Brian Hilliard at Societe Generale.

All nine members of the committee voted in favour of keeping interest rates at 0.5%.

news.bbc.co.uk

National Clean Energy Project: Building the New Economy Season2

http://www.youtube.com

Unveil New Economic Plan: 'Let's Move In Together' Season 1

YOUTOBE.COM

Bank split over money injection

The Governor of the Bank of England, Mervyn King, wanted to pump more money into the UK economy this month but was outvoted by fellow policymakers.

Minutes of the bank's Monetary Policy Committee (MPC) meeting on 6 August reveal that Mr King wanted £75bn rather than the £50bn that was injected.

Two fellow committee members also voted for a bigger cash injection.

The decision to pump £50bn came as a surprise, and was already twice the £25bn that the market expected.

The bank originally set aside £150bn for this policy, but the decision to inject an extra £50bn took the total to £175bn.

The governor, backed by Tim Besley and David Miles, voted instead for a £75bn expansion.

They argued that too little stimulation would mean inflation remaining below its target of 2% for "a sustained period of time... and might harm public confidence in the recovery, causing it to falter".

They added that if £75bn proved to be too much, they could reverse the policy, by selling assets, and increase interest rates.

'Additional measures'

The bank has been pursuing a policy of pumping money into the economy - known as quantitative easing - by buying assets from financial institutions.

The aim was that these institutions would then lend some of the money made from these sales to businesses and individuals.

The central bank hoped that this would, in turn, boost spending and help the economy emerge from recession.

Following the committee's meeting earlier this month, the bank issued a statement saying that the UK recession "appears to have been deeper than previously thought".

But the 6-3 split on the MPC shows that views within the bank differ on just how deep the recession is, and the outlook for inflation.

Analysts said the differing views meant the bank might pump even more money into the economy.

"It was surprising we had three members looking for £75bn," said analyst Peter Dixon at Commerzbank.

"This clearly suggests the bank is leaving the door open for additional measures should they feel need a rise. Quantitative easing is still very much in play."

Vicky Redwood at Capital Economics said the minutes "gave a strong signal that QE might yet be extended even further."

'Promising signs'

The committee noted that stock markets had "increased considerably", and that Libor, the rate at which banks lend to each other, had fallen.

It also noted that there were "promising signs" that quantitative easing was "having a positive impact".

But against this, the committee said that lending conditions remained tight, economic activity remained weak and the "recovery in global demand remained susceptible to further shocks".

These factors would, it said, "most likely lead to a slow recovery in the level of economic activity", which meant further action needed to be taken.

"I think [the minutes] underline the fact that a significant faction of the MPC is still very concerned about the weak growth prospects," said Brian Hilliard at Societe Generale.

All nine members of the committee voted in favour of keeping interest rates at 0.5%.

news.bbc.co.uk

Fed's motto: This is not an exit

Despite more recovery hopes, the central bank isn't showing signs of backing off efforts to pump more than $1 trillion into the still struggling U.S. economy.

The Federal Reserve clearly isn't rushing for the exits any time soon.

Even though the Fed suggested last week that the economy had bottomed out and is poised to start growing again, the central bank has yet to lay out details of its so-called "exit strategy" to unwind all the steps it has taken in the past year to try and get the economy back on track.

In fact, the Fed's latest moves show that there are no immediate plans to stop pumping money into the economy.

On Monday, it extended the Term Asset-Backed Securities Loan Facility, or TALF until June 30 of 2010. That program, which essentially guarantees securities backed by a wide variety of consumer and business loans, was originally set to expire in December.

Last week, Fed policymakers announced they would complete their purchase of $300 billion in long-term Treasurys this fall and also confirmed plans to buy up to $1.25 trillion in mortgage-backed securities by the end of the year.

These and other extraordinary programs come on top of the Fed's decision in December to slash its key overnight lending rate to nearly 0% for the first time in its history.

Some economists worry that if the Fed is too slow to rein in its various liquidity programs, all the cash it has injected into the financial system could spark a jump in inflation.

"The ingredients for runaway inflation down the road remain in place," said Allen Sinai, chief global economist for Decision Economics. "Right now inflation is quiet, but it's a sneaky problem, it's like cancer. It sneaks in and sneaks up and one day the world wakes up and it's there."

Fed Chairman Ben Bernanke has repeatedly said the central bank has the tools it needs to pull back on these programs, but he has yet to say how or when it will do so.

Sinai thinks it's important for the Fed to start providing such details in order to give investors confidence that inflation will not get out of hand.

If the markets start to doubt the Fed's commitment to fighting inflation, investors could sell bonds and drive up long-term Treasury rates in the process. (Bond prices and yields move in opposite directions.) Higher long-term interest rates could negate some of the steps the central bank has taken to spur a recovery through low rates.

"They have nothing to lose by being more explicit about an exit plan," Sinai said. "The view of the inflation risk down the road isn't going to go away until the Fed makes them goes away."

0:00 /8:56Can the Fed be trusted?

But other experts say that with the economy still so weak, it's even more important to convince businesses that the Fed is committed to doing everything it can to spur stronger demand ahead.

Supporters of Fed policies said it was particularly crucial for the Fed to extend TALF because it is the most effective tool it has to address growing problems in the commercial real estate market. This should limit the risk of new shocks to the still vulnerable banking system.

"There are a lot of challenges ahead in the commercial mortgage market," said Kevin Petrasic, a banking lawyer in the Washington office of Paul Hastings. "The Fed recognizes the reality we're in; things are improving but they're not where we need to be."

In addition, some argue that if the Fed gives hard and fast rules for how it plans to unwind its lending programs, it could make it more difficult to respond to future economic or financial market challenges.

"'The Fed has articulated a broad strategy to explain how it will extricate itself," said Bernard Baumohl, executive director of the Economic Outlook Group. "They can't describe it entirely because it might defeat their goals."

No need for an expiration date?

Those who think the Fed won't find itself behind the curve on inflation added that most of the Fed's programs will essentially unwind themselves well before there is any inflation threat.

The Fed programs generally charge borrowers a premium over normal market rates. That should give companies incentives to look elsewhere once the conditions in various financial markets improve.

For example, the Fed announced a program last fall to buy commercial paper, the debt instruments used by major businesses and financial firms to fund their operations, when that market seized up.

In January, near the height of the financial crisis, the Fed held $350 billion in such debt. Now, it holds only $60 billion, and experts believe the balance could be down to nearly zero by the time the program expires next February.

To be sure, the Fed's balance sheet is still fairly bloated. With $2.1 trillion in assets, that is more than double the level of a year ago and down only slightly from the high water mark of $2.3 trillion from last December.

But some economists said it's worth pointing out that the balance sheet shrunk even as the Fed rolled out TALF and its programs to buy mortgage-backed securities and Treasurys. So as long as the Fed isn't pumping additional money into the system, there may not be a significant inflation risk.

"What the Fed is saying is 'Don't expect any more, but we're going to leave what we have in place for a fair amount of time,'" said Keith Hembre, chief economist for First American Funds

money.cnn.com

Man who stole 130 million credit cards

A 28-year-old man was charged with the largest credit card theft ever in the United States, in which more than 130 million card numbers were stolen , the justice department said.

Albert Gonzalez, of Miami, Florida, and two co-conspirators were accused of hacking into the computer networks of firms supporting major American retail and financial organizations and stealing data.

The two co-conspirators were not named and were identified in the indictment handed down in New Jersey only as “Hacker 1” and “Hacker 2” living “in or near Russia” .

Beginning in October 2006, Gonzalez used a sophisticated hacking technique to get around firewalls and steal information related to more than 130 million credit and debit cards, the Justice Department said in a statement .
“The scheme is believed to constitute the largest hacking and identity theft case ever prosecuted by the US Department of Justice,” the US attorney’s office for the district of New Jersey said.

Targeted companies included Heartland Payment Systems, a New Jersey-based card payment processor; 7-Eleven Inc, a Texas-based nationwide convenience store chain; and Hannaford Brothers Co Inc, a Mainebased supermarket chain.

Gonzalez and his co-conspirators sent stolen data to computer servers they operated in Latvia, the Netherlands, the United States and Ukraine and used “sophisticated hacker techniques to cover their tracks and to avoid detection by antivirus software used by their victims” , the justice department said. Gonzalez, who operated online as “segvec” , “soupnazi” and “j4guar17”, was charged with conspiracy and conspiracy to engage in wire fraud.

An unspecified portion of the stolen credit and debit card numbers were then sold online, and some were used to make unauthorized purchases and withdrawals from banks, according to the indictment.

If convicted, he faces up to 20 years in prison for wire fraud conspiracy and an additional five years for conspiracy as well as a fine of $250,000 for each charge.

Gonzalez once worked with federal investigators. In 2003, after being held in a computer crime, he helped the Secret Service identify his former conspirators in the online underworld where credit and debit card numbers are stolen, bought and sold.
economictimes.indiatimes.com

Japan Economic economic news -Recovery May Falter After Second-Quarter Bounce

Japan’s 3.7 percent economic expansion last quarter ended the country’s worst postwar recession. The bounce may be as good as it gets.

Growth will slow to an annual 2.9 percent pace in the three months ending Sept. 30, according to the median forecast of 10 economists surveyed after yesterday’s gross domestic product report. Falling business investment and rising unemployment may hamper a recovery that has been fueled by $2.2 trillion in emergency spending by governments worldwide.

Companies including Nikon Corp. and NEC Electronics Corp. are cutting costs and firing workers to narrow losses. Japanese will head to the polls for a general election on Aug. 30 against a backdrop of unemployment approaching a record high and a public debt that’s almost twice the size of the economy.

“We have our doubts about the durability of this,” said Robert Feldman, head of economic research at Morgan Stanley in Tokyo. “There’s isn’t enough demand to get us back on a very strong recovery path. We don’t see a huge downside, but nevertheless the upside is pretty limited.”

The Nikkei 225 Stock Average plunged the most in four months yesterday on concern growth will falter once the effects of government stimulus packages start to fade. Japan joins France and Germany in being the first Group of Seven economies to climb out of the global recession.

Polls show Prime Minister Taro Aso’s ruling Liberal Democratic Party is likely to lose the lower house election to the opposition Democratic Party of Japan, which has never held power before. The DPJ would inherit an economy that after last quarter’s expansion is still at its 2004 size.

‘Temporary Factors’

“We’ve only recouped about a tenth of what we lost in the last year and what’s driving the recovery at the moment is essentially temporary factors,” said Hiroshi Shiraishi, an economist at BNP Paribas in Tokyo.

Economists surveyed last month said growth will slow in each of the next three quarters and come to a near standstill in the three months to June 2010.

Japan’s first expansion in five quarters was driven by exports that jumped 6.6 percent, led by demand from China, yesterday’s report showed. At home, Aso’s 25 trillion yen ($264 billion) in stimulus helped consumer spending rise 0.8 percent and government investment climb 8.1 percent.

The sustainability of Japan’s recovery hinges largely on its overseas markets. A report last week showed confidence among U.S. consumers unexpectedly fell in August on concern over jobs and wages.

Half the Pace

Bank of Japan Governor Masaaki Shirakawa said last week that demand for the country’s products and services may not gain momentum. The central bank estimates Japan’s potential growth rate has fallen to about 1 percent, about half the pace achieved during the country’s six-year expansion through 2007.

“It’s very simple: domestic demand is very, very weak and that’s about 70 percent of the economy,” said Seiji Shiraishi, chief economist at HSBC Securities Japan Ltd. in Tokyo. “Once the fiscal stimulus fades, the underlying trend will emerge, which is basically weak income and weak consumption.”

A lack of demand is already weighing on prices, sparking concern that deflation may once again become entrenched in the economy. Consumer prices plunged a record 1.7 percent in June and yesterday’s GDP report showed wages fell a record 4.7 percent from a year earlier.

“It’s going to be very hard to shake off the deflation,” said Richard Jerram, chief economist at Macquarie Securities Ltd. in Tokyo. “You don’t want to be too much of a spoilsport when there’s quite good headline growth numbers, but at the same time you can’t really ignore that prices are falling.”

Being Cautious

Businesses are also being cautious. Capital spending, which accounts for about 15 percent of the economy, fell 4.3 percent last quarter. A survey published this month by the Development Bank of Japan showed companies will cut fixed investment 9.2 percent this fiscal year. Reductions by manufacturers will be the steepest since 1993.

Nikon, which is cutting 1,000 jobs, this month forecast a record 28 billion yen annual loss as customers scale back orders for semiconductor equipment. NEC Electronics is predicting its fifth straight year of losses and eliminating 1,200 jobs.

Spending by companies “is likely to remain weak for at least another year,” said Julian Jessop, chief international economist at Capital Economics Ltd. in London. “A robust V- shaped recovery remains unlikely.”

By Jason Clenfield and Tatsuo Ito

UK inflation rate stays at 1.8%

A key measure of inflation in the UK has unexpectedly remained at 1.8%.
Economists had expected the Consumer Prices Index (CPI) to decline to 1.5% in July.

The Retail Prices Index (RPI) inflation measure, which includes mortgage interest payments, also unexpectedly rose to -1.4%, from -1.6%.

The RPI rate has fallen sharply over the past year as the Bank of England slashed interest rates to a record low amid a recession.

The figures suggest that deflationary pressures on the economy may be easing.

Below target

Prices of recreational devices, such as computer games, DVDs and CDs, rose the most in the month, according to the Office for National Statistics (ONS).
There was also upward pressure from furniture prices because of less aggressive discounting in the July sales.

The chief downward impact on prices came from food and non-alcoholic drink prices.

The drop to 1.8% in June was the first time in two years that CPI rate - the government's preferred measure of inflation - fell below the Bank of England's 2% target rate.

The Bank aims to keep inflation at 2% to maintain price stability and more broadly, economic stability.

Earlier this month, the Bank said it was "more likely than not" that the annual rate of growth in consumer prices would temporarily fall below 1% in the autumn and stay low until the end of its two-year forecast period.

"With the amount of spare capacity in the economy still building, core price pressures should soon start to ease," said Vicky Redwood, an economist at Capital Economics.

"Accordingly, we expect that this halt in the downward trend in inflation will prove to be only temporary.

"Indeed, these figures do little to alter our view that a prolonged period of low inflation or even deflation remains a serious risk," she added.

Train fares

The RPI rate in June fell to its lowest since the records started in 1948, according to the ONS.

Among other things, the RPI should mean lower season ticket prices for trains next year.

Annual rail fare rises are pegged to the RPI figure in July of the prior year, plus 1%.

Last July, the RPI was 5%, meaning that rail prices this year rose by 6%.
news.bbc.co.uk

U.S. Economy: New-Home Sales Up 11%, Most Since 2000 (Update1)

July 27 (Bloomberg) -- Purchases of new homes in the U.S. climbed 11 percent in June, the biggest gain in eight years, underscoring evidence that the deepest housing slump since the Great Depression is starting to stabilize.

Sales increased to a 384,000 annual pace, higher than every forecast in a Bloomberg News survey and the most since November, figures from the Commerce Department showed today in Washington. The number of houses on the market dropped to the lowest level in more than a decade.

Deutsche Bank Securities Inc. and Goldman Sachs Group Inc. economists said today’s figures signal an end to the slide in home construction and sales. While that means the drag on economic growth will turn to a stimulus in the second half of the year, property values are likely to continue falling and rising unemployment will temper the recovery, analysts said.

“We’re barely past the housing bottom, this thing is still fragile,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities in New York. “It’s not premature to talk about home prices bottoming -- it’s somewhere in the next three to six months. There is light at the end of the tunnel.”

Builders’ stocks jumped, with the Standard and Poor’s Supercomposite Homebuilding Index gaining 4.4 percent. The broader S&P 500 Stock Index was up 0.3 percent to close at 982.18. Treasuries, which fell earlier in the day, remained lower, with benchmark 10-year note yields rising to 3.72 percent at 4:37 p.m. in New York from 3.66 percent at last week’s close.

Construction Recovers

The Commerce Department earlier this month reported that builders began work on 582,000 residential properties at an annual rate in June, the most since November. Home construction has subtracted from U.S. gross domestic product every quarter since the start of 2006.

The jump in sales signals the U.S. economy is on the way to recovery, said Rebecca Blank, under secretary for economic affairs at the Commerce Department.

“Across the board this is good news,” Blank, formerly a fellow at the Brookings Institution in Washington, said in an interview. “It’s what you would expect to see at the beginning of a recovery.”

Standard Pacific Corp., the U.S. homebuilder that gets most of its revenue from California, is among companies seeing stabilization. It’s net loss, the 11th consecutive drop, narrowed to $23.1 million in the second quarter from $249 million a year earlier, the Irvine, California-based company said last week. Revenue fell 29 percent.

Smaller Losses

“While we still obviously have not achieved the level of profitability that we ultimately need, we are a lot closer than we were a couple of quarters ago and believe that we are in pretty good shape in the short run,” Chief Executive Officer Ken Campbell said in a July 22 statement.

While prices continue to fall, the pace of the decline is easing. The S&P/Case Shiller index of 20 major metropolitan areas tomorrow may show property values fell 17.9 percent in May from a year earlier, according to the median forecast in a Bloomberg survey. The measure was down 18.1 percent in the 12 months ended April.

“In terms of residential investment and home sales and housing starts, I think it has” bottomed, said Jan Hatzius, chief U.S. economist at Goldman Sachs in New York, referring to the housing slump. “We still have a period of declines ahead of us” in prices, he also said.

The decline in prices and a drop in mortgage rates have started to lure buyers even amid the surge in unemployment, which reached a quarter-century high of 9.5 percent in June.

Economists’ Forecasts

Economists had forecast new home sales would rise to a 352,000, according to the median of 62 projections in a Bloomberg News survey. Estimates ranged from 335,000 to 377,000. Commerce revised May’s reading up to a 346,000 rate from a previously reported 342,000.

The median price of a new home decreased 12 percent to $206,200 from $234,300 in June 2008. Last month’s value compares with $219,000 in May.

Builders had 281,000 houses on the market last month, down 4.1 percent from May and the fewest since February 1998. The number of unsold properties fell a record 36 percent from June 2008. It would take 8.8 months to sell all homes at the current sales pace, the lowest level since October 2007.

Foreclosure filings reached a record in the first half of the year, providing competition for homebuilders and pushing down the value of all houses. Also, rising unemployment, which economists forecast will top 10 percent by early 2010, threatens to restrain any recovery in housing.

Fed Efforts

Federal Reserve policy makers have committed to a $1.25 trillion program to purchase securities backed by home loans in an effort to put a floor under the housing market and lower borrowing costs. Those purchases, as well as direct government purchases of Treasuries, drove the rate on 30-year mortgages to a record-low 4.78 percent in April, according to figures from Freddie Mac. Rates have since hovered around 5 percent.

Fed Chairman Bernanke said July 21 that the economy is showing “tentative signs of stabilization” and the “decline in housing activity appears to have moderated.”

Another incentive is the $8,000 tax credit for first-time buyers that is part of the Obama administration’s economic stimulus plan. Purchases have to be completed before Dec. 1.
(www.bloomberg.com)

Townhall Protest Liberal Left Lies & Assault A Disabled Women

Youtobe.com

Japan economy set to show growth

Japan's economy is tipped to show growth for the three months to June, after showing four consecutive quarter-on-quarter contractions.

Analysts predict growth of 1% during the quarter, after shrinkage of 3.8% in the previous three-month period.

The data, released on Monday, could mean the recession is over in Japan.

Recent figures have shown other nations are also coming out of the recession, including Germany, France and Hong Kong, a sign the slowdown is easing.

Not worsening

Japan is heavily reliant on its exports so growth overseas could bode well for its recovery.

But while the worst might be over, the pace and depth of the recovery will rely on whether Asia can be a "true engine of global growth", the Bank of England's Andrew Sentance said in the Sunday Times.

Mr Sentance, who is part of the bank's rate-setting monetary policy committee, said consumer demand from Asian nations would have to increase to boost growth.

Japan's economy - like other Asian nations - is heavily reliant on exports. The slowdown in the US has hit it hard as American consumers have limited their spending.

China's government has made a point of saying that recovery will have to be based on domestic demand.

"The prospects for global recovery depend on whether Asia can become a true engine of global growth, not simply by meeting demand originating in America and Europe but propelled by consumer spending and investment in this key region," wrote Mr Sentance.

In a recent Bank of Japan report, the central bank underlined its cautious view of the economy.

While it said conditions in the world's second-largest economy had stopped worsening, it warned that unemployment would stay high and consumer spending low.

Last month, the bank forecast that Japan's economy would shrink by 3.4% in the 12 months to 31 March 2010.

Beating forecasts

The French and German economies both grew by 0.3% between April and June, bringing to an end recessions in Europe's largest economies that have lasted a year.

Analysts had not expected the data, suggesting recovery could be faster than previously expected.

And Hong Kong recorded growth of 3.3% in the three months from April to June.

That data was also better than had been expected, with the government subsequently increasing its forecast for growth in the whole year.
news.bbc.co.uk