Financial life in a big town

U.K. Prime Minister David Cameron pledged more action to deal with

+%3Cp%3EMervyn+King%2C+vice+chairman+of+the+European+Systemic+Risk+Board%2C+said+Europe%92s+sovereign+debt+crisis+is+threatening+to+hurt+the+real+economy+and+the+outlook+for+financial+stability+has+worsened.+%3C%2Fp%3E+%3Cp%3EGrowth+prospects+%93have+deteriorated%94+since+September%2C+King%2C+who+is+also+governor+of+the+Bank+of+England%2C+said+at+a+briefing+hosted+by+the+European+Central+Bank+in+Frankfurt+yesterday.+%93Investors+lack+confidence+to+continue+to+provide+normal+levels+of+funding.+Dependence+on+central+banks+has+risen.%94+%3C%2Fp%3E+%3Cp%3EThe+ECB+loaned+banks+a+record+489+billion+euros+%28%24636+billion%29+for+three+years+on+Dec.+21+to+avert+a+credit+crunch+from+the+sovereign+debt+crisis.+The+central+bank+said+earlier+this+week+that+the+turmoil+has+taken+on+systemic+proportions+not+seen+since+the+2008+collapse+of+Lehman+Brothers+Holdings+Inc.+%3C%2Fp%3E+%3Cp%3EKing+said+the+outlook+for+financial+stability+has+%93worsened%94+since+the+last+ESRB+meeting+in+September%2C+and+while+intervention+by+the+ECB+is+expected+to+%93assuage+funding+problems+in+the+near+term%2C+in+the+longer+term+private+funding+markets+must+be+revitalized.%94+%3C%2Fp%3E+%3Cp%3EBank+shares+have+suffered+this+year+as+borrowing+costs+surged+in+the+euro+region.+The+Stoxx+600+Banks+Index+has+fallen+28+percent+since+the+end+of+June%2C+compared+with+a+12+percent+decline+by+the+Stoxx+Europe+600.+%3C%2Fp%3E+Capital+Plea++%3Cp%3EKing+also+appealed+to+banks+not+to+%93reduce+lending+to+the+real+economy%94+as+they+increase+their+capital+levels+to+meet+new+standards+set+by+regulators.+%3C%2Fp%3E+%3Cp%3E%93We+are+very+conscious+there+is+extreme+risk+aversion+in+private+financial+markets%2C%94+he+said+%3Ca+href%3D%22http%3A%2F%2Fus-fast-cash-now.com%22%3Ecash+advance%3C%2Fa%3E%3C%21–+.+–%3E.+%93We+want+a+more+robust+banking+system+so+that+whatever+risks+crystallize%2C+whatever+their+source%2C+the+banking+system+is+in+a+better+position+than+2008.%94+%3C%2Fp%3E+%3Cp%3EThere+was+%93no+discussion%94+at+the+ESRB+meeting+of+any+country+leaving+the+euro+area%2C+King+said.+Still%2C+%93all+financial+institutions+are+advised+to+prepare+for+a+wide+range+of+contingencies%2C%94+he+said.+%3C%2Fp%3E+%3Cp%3EAndrea+Enria%2C+the+second+ESRB+vice+chair+who+is+also+the+chairman+of+the+European+Banking+Authority%2C+said+he+is+%93disappointed%94+by+European+leaders+dithering+over+putting+rescue+measures+in+place%2C+effectively+delaying+Europe%92s+bank+recapitalization.+%3C%2Fp%3E+%3Cp%3E%93We+have+always+been+quite+adamant+in+all+occasions%2C+also+in+the+debate+running+up+to+the+decision%2C+that+this+should+have+been+a+comprehensive+package%2C%94+Enria+said.+This+includes+%93recapitalization%2C+some+measures+–+funding+guarantees+–+addressing+the+funding+problems+and+strengthening+of+the+European+Financial+Stability+Facility+and+of+the+tools+to+deal+with+the+sovereign+crisis.%94+%3C%2Fp%3E+%3Cp%3EThe+ESRB%2C+which+aims+to+warn+of+brewing+risks+in+the+financial+system%2C+was+set+up+in+January+as+part+of+a+new+European+architecture+designed+to+ward+off+another+financial+crisis+such+as+that+which+followed+the+Lehman+collapse.+Its+65-+member+board+is+headed+by+ECB+President+Mario+Draghi.+%3C%2Fp%3E++%3Cp%3E%3Ca+href%3D%27http%3A%2F%2Fwww.bloomberg.com%2Fnews%2F2011-12-23%2Fking-says-crisis-threatens-europe-s-economy-as-stability-outlook-worsens.html%27+rel%3D%27nofollow%27%3ESource%3C%2Fa%3E%3C%2Fp%3E+

The ousted chief of Olympus, the Japanese camera-maker under investigation for hiding investment losses for years, is confident about making a comeback _ a return he vows will clean up the company’s scandal-tainted management for good.

Michael Woodford, the former President and Chief Executive at Olympus Corp., said Thursday he was lining up investor support and talking to other “influential people in the Japanese establishment” for his return to the company.

Woodford, in town this week for such meetings, declined to give specifics, saying the discussions were “delicate.” But he was clearly upbeat about the prospects, noting he had enough support to call a general shareholders’ meeting _ a key move for managerial change.

“I wouldn’t be doing this. I wouldn’t be putting myself through this enormous physical and emotional effort if I didn’t think it could be successful,” he told The Associated Press, weary but flushed from the bustle of reading email from Olympus employees cheering him on.

“This is uncharted territory. You have the world looking at this story,” he said at a Tokyo hotel.

The deception at Olympus, dating back to the 1990s, to hide 117.7 billion yen ($1.5 billion) in investment losses became known only when Woodford blew the whistle. He questioned exorbitant fees for advice on the acquisition of British medical equipment maker Gyrus Group and other expensive acquisitions in 2008.

Woodford recalled that he thought the Gyrus purchase was unwise and unneeded at the time, but said he never dreamed it involved anything illegal.

Woodford, a 51-year-old Briton and a rare foreigner to lead a major Japanese company, was fired in October after confronting Olympus directors.

Woodford is demanding the resignation of the entire board, including President Shuichi Takayama, who replaced him and initially declared all the spending as legitimate in a news conference.

“It’s offensive to common sense,” said Woodford.

The battle over who will lead the camera and medical equipment maker and its 40,000 employees could come to a head at the next shareholders’ meeting. Takayama said Thursday that might be held in March or April.

Olympus met its deadline to avoid being removed from the Tokyo Stock Exchange by filing corrected earnings for the April-September first half and for the past five fiscal years on Wednesday.

But it is still under a criminal investigation, and could be delisted later on.

Olympus appointed three outsiders to a new reform committee Thursday to beef up governance and present a plan to shareholders. The committee is in addition to an earlier panel announced by Takayama, which is investigating the scandal.

The Olympus fiasco has prompted soul-searching in Japan Inc. on living up to global standards. Ruling and opposition legislators met with Woodford earlier this week to hear his ideas about governance.

The company’s loss of 32.3 billion yen ($414 million) for the first half of the fiscal year, through September, a reversal from a 3.8 billion yen profit the same period a year earlier, was mainly from the economic downturn and losses from Thai flooding, Takayama said.

“Capital adequacy ratio is a big problem, and we are considering how we can overcome it,” Takayama told reporters. “We are considering various options, including a capital tie-up and operational or sales tie-ups.”

Woodford said he was opposed to alliances, which he said would likely compromise Olympus’ independence, and he had better ways to get capital to shore up its hobbled balance sheet.

“Because of the strong cash flows and profitability of the medical business, we could raise funding from additional sources without losing our sovereignty,” he said.

Olympus should focus on core businesses _ medicine, microscopes, industrial products and cameras and other consumer products _ and stop acquiring unrelated companies, such as pet food, plastic plates and cosmetics, he said.

He promised a more transparent Olympus, with more outside board members. He said he was preparing the candidates already.

Olympus stock, which plunged after the scandal hit, has recouped some of the losses but dropped 21 percent to close at 1,041 yen Thursday.

A third-party panel set up by Olympus, including a former Japanese Supreme Court judge, released the findings of an investigation earlier this month, which said top executives who were “rotten to the core” had orchestrated the accounting cover-up spanning three decades.

The fees for financial advice and overvalued acquisitions were part of an elaborate deception utilizing overseas banks and several funds to keep the massive losses off the company’s books, according to Olympus. Japanese magazine Facta was first to report the dubious money.

It is still unclear if Woodford will manage a comeback.

Some people, such as former board member Koji Miyata, see him as a hero and have begun an online campaign to bring back Woodford.

Miyata says Woodford, a 30-year employee at Olympus, was groomed from the start to lead the company.

“There are a lot of senior managers who might be good for the No. 2 post, but someone who is destined to be No. 1 is totally different,” he said in a recent interview with The AP.

“He has principle. He is uncompromising,” he said of Woodford, whom he has known for 25 years. “He isn’t swayed. He doesn’t avoid confrontation. He sticks to his guns that what is wrong is simply wrong.”

Woodford, who sees himself as a “salaryman,” denied it was his nationality that might make him Olympus’ savior.

“I’m sure there are some Japanese people who could do similarly to me,” he said. “I know the company. I’ve worked there. It doesn’t matter if I’m English or Japanese, in that sense.”

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Forecasters say Jova has become a hurricane out in the Pacific Ocean.

The U.S. National Hurricane Center in Miami said Saturday evening that Jova had maximum sustained winds near 75 mph (121 kph) but was still far from land. It was moving east-northeast at 3 mph (5 kph) and was about 440 miles (708 kilometers) west-southwest of Manzanillo, Mexico.

No coastal watches or warnings had been issued, but current forecast models show Jova it could make landfall over Mexico by Tuesday or Wednesday.

Meanwhile, Irwin has weakened to a tropical storm in the eastern Pacific, about 930 miles (1497 kilometers) southwest of the southern tip of Baja, Calif personal loans for people with bad credit. It was expected to start moving toward land in the coming days. Irwin had maximum sustained winds of about 70 mph (113 kph).

In the Atlantic, Tropical Storm Philippe continued to weaken far from land.

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South Korea’s monthly inflation rate rose to its highest level in three years in August as price gains accelerate despite a series of interest rate hikes and slowing economic growth.

The country’s consumer price index increased 5.3 percent from the same month last year as costs for food and transportation rose, the government’s Statistics Korea said Thursday. That followed an increase of 4.7 percent in July.

The latest result was the highest since 5.6 percent recorded in August 2008 and marked the first time the index broached the 5 percent level since September of the same year.

South Korea is battling price pressures along with other countries including China, where inflation rose to a 37-month high of 6.5 percent in July.

The Bank of Korea, the country’s central bank, has raised its benchmark interest rate five times since July 2010 in a bid to stem price gains. The BOK last raised its key borrowing cost in June and holds its next monthly policy meeting to set the rate on Sept. 8.

The surge in inflation comes as South Korea’s economy, Asia’s fourth largest, is slowing. Economic growth came in at 0.8 percent in the second quarter, weaker than the 1.3 percent recorded in the first three months of the year.

Inflation has now accelerated for three straight months and has been outside the Bank of Korea’s stated comfort zone for price increases every month this year.

The central bank’s inflation target is 3 percent, but it recognizes a “tolerance range” of plus or minus one percentage point from that level cash advance. The consumer price index, however, has exceeded 4 percent _ the upper end of that range _ for eight months.

Kwon Young-sun, an economist at Nomura International in Hong Kong, said the August increase was driven by a temporary surge in vegetable prices due to heavy rains.

“We expect CPI inflation to slow sharply next month, but to remain above the Bank of Korea’s 4 percent target ceiling,” he wrote in a report.

The BOK in July raised its inflation forecast for 2011 to 4 percent from its previous outlook of 3.9 percent.

The International Monetary Fund last month called for higher interest rates in South Korea to bring down inflation and protect the country’s economic recovery.

So-called core inflation, which strips out volatile agriculture and oil prices, also accelerated in July, increasing 4 percent from the year before, Statistics Korea said. It had risen 3.8 percent in July.

Compared with the previous month, the overall consumer price index rose 0.9 percent in August.

Nomura’s Kwon said that the BOK is unlikely to raise its benchmark borrowing cost until February of next year, given the more benign outlook for inflation and the slowing economy.

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European stocks held on to small gains Wednesday, shrugging off a credit downgrade of Japan that weighed on Asian markets, as investors hoped that the Federal Reserve will this week announce more stimulus for the U.S. economy.

Markets are expected to fluctuate ahead of Friday’s speech by Fed Chairman Ben Bernanke at an economics conference in Jackson Hole, Wyo.

Hopes that Bernanke will signal new action to kick start the struggling U.S. economy helped lift most major markets Monday and Tuesday, in spite of disappointing indicators on both sides of the Atlantic, and appeared to persevere in morning trading in Europe.

Britain’s FTSE 100 rose 0.4 percent to 5,148. Germany’s DAX was 1.1 percent higher at 5,590 and France’s CAC-40 rose 1 percent to 3,114.

Wall Street, however, appeared to be headed lower, after recording big gains Tuesday. Dow Jones industrial futures and S&P 500 futures were down 0.8 percent at 11,075 and 1,152 respectively.

That followed losses on most major Asian markets, as well as declining oil prices, underlining investors’ reluctance to commit to assets that could quickly lose value if the global economy heads for another downturn.

“If Bernanke does not pull a rabbit out of the hat at Jackson Hole on Friday risk trades could look vulnerable once again,” warned analysts at Credit Agricole.

Fresh data out of the eurozone indicated that businesses are already preparing for potential troubles.

Germany’s closely watched Ifo index of business optimism for fell more than expected in another negative signal about Europe’s largest economy. The index fell to 108.7 for August from 112.9 in July. Market analysts had expected a smaller drop to 111.0.

“August’s drop in Ifo business confidence adds to the growing evidence that the German economic recovery has faltered,” analysts at Capital Economics wrote in a note, adding that a slowdown for the eurozone’s growth engine is set to hurt other members of the currency union that are still fighting to pull themselves out of crisis no fax payday loans.

In Asia, Japan’s Nikkei 225 index fell 1.1 percent to close at 8,639.61 after opening higher early Wednesday.

Sentiment was dented after Moody’s Investors Service downgraded Japan’s credit rating to Aa3 from Aa2, citing weak growth prospects for the world’s No. 3 economy, massive government debt and constant political uncertainty. The new rating is three notches below Moody’s top Aaa rating.

The downgrade, which puts Moody’s rating in line with other major credit rating agencies, is the latest blow for Japan after its economy remained mired in recession in the second quarter due to tumbling factory production and exports following the March 11 earthquake and tsunami.

South Korea’s Kospi dropped 1.2 percent to 1,754.78. Hong Kong’s Hang Seng tumbled 2.1 percent to 19,466.79.

Australia’s S&P/ASX 200 fell 0.1 percent to 4,167.60 after spending much of the session in positive territory. Markets in Singapore, Taiwan and Indonesia also fell.

Mainland Chinese shares were mixed with the benchmark Shanghai Composite Index falling 0.5 percent to 2,541.09 while the Shenzhen Composite Index edged 0.1 percent higher to 1,144.74.

In commodities markets, benchmark oil for October delivery was down 16 cents to $85.28 a barrel in electronic trading on the New York Mercantile Exchange. In London, Brent crude for October delivery fell 27 cents to $109.04 on the ICE Futures exchange.

The euro rose, meanwhile, to $1.444 from $1.442 in late trading Tuesday in New York. The dollar fell to 76.54 yen from 76.66 yen.

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Pamela Sampson in Bangkok contributed to this story.

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In an unforgiving display of partisanship, the House passed emergency legislation Friday night to avoid an unprecedented government default and the Senate scuttled it less than two hours later.

The final outcome _ with the White House and Senate Democrats calling anew for compromise while criticizing Republicans as Tuesday’s deadline drew near _ was anything but certain.

“We are almost out of time” for a compromise, warned President Barack Obama as U.S. financial markets trembled at the prospect of economic chaos next week.

The House vote was 218-210, almost entirely along party lines, on a Republican-drafted bill to provide a quick $900 billion increase in U.S. borrowing authority _ essential to allow the government to continue paying all its bills _ along with $917 billion in cuts from federal spending.

It was rewritten hastily overnight to say that before any additional increase in the debt limit could take place, Congress must approve a balanced budget-amendment to the Constitution and send it to the states for ratification. That marked a concession to tea party-backed conservatives and others in the rank and file who had thwarted House Speaker John Boehner’s attempt to pass the bill Thursday night.

“Today we have a chance to end this debt limit crisis,” Boehner declared, his endgame strategy upended by rebels within his own party.

But the changes he made to the House GOP bill further alienated Democrats. And they complicated prospects of a compromise that could clear both houses and win Obama’s signature by next Tuesday’s deadline.

At the other end of the Capitol, Senate Democrats scuttled the measure without so much as a debate on its merits. The vote was 59-41, with all Democrats, two independents and six Republicans joining in opposition.

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Being a world-class city doesn

An Egyptian prosecutor on Thursday charged 25 Mubarak-era officials with manslaughter, attempted murder and assault for their part in organizing a February attack on anti-regime protesters in which assailants on horses and camels charged into crowds, Egypt’s official news agency reported.

Those to stand trial included the speakers of parliament’s two chambers, lawmakers from Hosni Mubarak’s ruling party, Cabinet ministers and business people, the Middle East News Agengy said. It gave no date for the start of the trial.

The Feb. 2 attack on the protesters came during an 18-day uprising that forced Mubarak to step down on Feb. 11.

The assault, carried live on regional television channels, provided protesters with what they took to be solid proof that Mubarak’s regime was desperate and teetering on the brink of collapse. The initial attack sent protesters at Cairo’s Tahrir Square, the epicenter of Egypt’s revolution, running away from the assailants, armed with whips and swords. However, many protesters later found the courage to pounce on the attackers, wrestling them down to the ground before beating them.

Feb. 2 was among the most violent days of the uprising, with protesters and Mubarak loyalists fighting it out at Tahrir Square and adjacent streets with rocks, firebombs and slabs of concrete. The fighting lasted the whole day and well into the night.

At least three people were killed and 600 others were wounded that day.

The horse and camel charge have become known as “The battle of the Camel.”

The two speakers charged in the case, Fathi Surour and Safwat el-Sharif, are facing separate charges of corruption and are expected to stand trial for them too.

The 83-year-old Mubarak is scheduled to face trial next month for ordering the use of deadly force against the protesters. More than 800 protesters are believed to have been killed in the uprising.

News of the charges being brought came before massive protests planned for Friday to demand justice for the revolution’s victims as well as measures to purge former regime officials from political and economic life. The Muslim Brotherhood, Egypt’s most organized political movement, has said it will join the pro-democracy demonstrators at Cairo’s Tahrir Square, the epicenter of the revolution, for the so-called “Friday of Accountability.”

Justice for those who killed demonstrators has become a rallying point for the protest movement, nearly five months after Mubarak’s ouster after a nearly three-decade rule marred by complaints of widespread corruption and police abuse.

Many Egyptians believe that Mubarak and some of his regime’s much-hated faces have been removed but the pillars of his regime are still in place, including such key institutions as the judiciary, the police and civil service.

In a bid to defuse rising anger, the Interior Ministry announced Wednesday that hundreds of high-ranking police officers will be sacked for their role in the harsh crackdown on anti-government protests. Interior Minister Mansour el-Essawi said in a statement that it will be the largest shake-up in the history of his ministry.

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The big news these days is who isn’t running for president. Without Mike Huckabee and Donald Trump, the Republican contest will be less colorful, of course, but also even more unsettled than it has been for the last few months. That leaves room for another Mormon governor and businessman.

Last week I had a chat with Jon Huntsman, the former Utah governor who resigned as the Obama administration’s ambassador to China last month. It was one of only a couple of conversations he’s had with a reporter since he dipped his toe in the water. And it left me convinced that, though not yet registering in polls, he may be the big new Republican face of 2012.

Huckabee’s departure leaves a big “likeability gap” in the Republican field. It sure isn’t going to be filled by Newt Gingrich, whose smiles for David Gregory on “Meet the Press” last week hardly erased his “Gingrich who stole Christmas” impression with voters. The other candidate waiting offstage is Indiana governor Mitch Daniels, the latest crush of establishment Republicans and deficit hawks, despite his record presiding over the most profligate spending in the history of the Republic as George W. Bush’s budget director.

The two other plausible nominees, Mitt Romney and Tim Pawlenty, are hardly running away with the likeability primary. Huckabee memorably noted in 2008 that Romney would remind voters of the boss who laid them off. Pawlenty isn’t actively unlikeable, but his charm seems written in invisible ink. Discounting the nerd-chic of Ron Paul, Huntsman will be the coolest guy in the race.

Mormon Rock

Huntsman played the keyboard in a rock band as a teenager, speaks fluent Mandarin (learned while on his Mormon mission), loves Motocross and has adopted children from China and India. He wears his Mormonism lightly (a daughter is about to be married outside the faith), looks sharp in his bomber jacket and has an attractive wife. He has executive experience at his family’s chemical company. It doesn’t hurt that he seems smart, has millions in the bank (his father invented the “clamshell” container that Big Macs were once packaged in) and has already hired top-flight political operatives like John Weaver, who ran John McCain’s 2000 presidential campaign. Most important, from Huntsman’s perspective, is that he boasts a conservatism-that- works record in Utah.

Line of Attack

Huntsman intends to directly attack the health-care law that Romney passed in Massachusetts, which later became a model for President Obama’s efforts in Washington. He will try to sell the health-insurance plan he implemented in Utah, without any mandates, as the right plan at the right time for the American right. The idea is to use health care against Romney the way Obama used the Iraq war against Hillary Clinton in the 2008 Democratic primaries: as a way of convincing the base that he’s closer to them on their No. 1 issue. Repeal of Obamacare is the only stance that unites all Republicans, and the candidate who masters that message has an inside track to the nomination.

Huntsman’s liabilities are also considerable fast cash. As a Mormon, he won’t have much appeal among the evangelicals who make up about a third of Republican primary voters (whose support is likely to be split between Pawlenty and Michele Bachmann). He was receptive to federal stimulus dollars as governor, and once supported a cap-and-trade plan to reduce greenhouse gases in Western states (which he has since distanced himself from). Reporters haven’t yet begun to pore over his personal life in detail.

Working for Obama

Huntsman’s biggest stumbling block, of course, is that he served in the Obama administration, which for the birthers, haters and assorted nasties who make up a sizeable chunk of the Republican base will be a deal-breaker. When I asked Huntsman about the effusive letters of praise he wrote to Obama and to former President Bill Clinton — he called Obama “a remarkable leader” and praised Clinton’s “brilliant analysis of world events” — he dismissed them as “thank you notes.”

Aides say that Huntsman’s tie to the Obama administration is only a problem until people hear that he also served as an ambassador under George H. W. Bush (to Singapore) and worked for the second President Bush and for Ronald Reagan. They think that his foreign policy credentials will serve him well through the debates.

We’ll see. Huntsman will have to walk a fine line between criticizing Obama’s foreign policy and seeming ungrateful for his appointment (though that might not be a problem with primary voters). He will give a speech soon laying out his worldview, but he hinted to me that he didn’t think Obama had been tough enough in stressing “values” over “perceived interests.”

China Question

On the question of China’s rise, he thinks that while the Chinese will pass the U.S. in “sheer output” in the next couple of decades to become the largest economy in the world, it will be 75 to 100 years before they catch up technologically and beat the U.S. on what he considers the more relevant economic statistic of per-capita GDP.

My sense is that in the cattle calls to come Huntsman will get the blue ribbon from the press and from Republicans looking for the strongest candidate in a general election against Obama. In the past, neither of these factors have had much impact on Republican primary voters. But it’s worth remembering that just a few years before becoming the 2008 Republican nominee, John McCain had a voting record so Democratic that he nearly accepted entreaties to switch parties. And being the press’s darling certainly never hurt McCain.

Huntsman’s fate, then, may be less tied to his personal image than to how Republicans make sense of what may be the most wide-open field since Wendell Willkie won their nomination in 1940.

(Jonathan Alter, author of “The Promise: President Obama, Year One,” is a Bloomberg News columnist. The opinions expressed are his own.)

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