WSJ: How vulnerable is Hungary to the global financial turmoil?

SIMOR: This crisis has led to a reassessment of risk all over the world, and to tighter liquidity around the world. It affects every country, but it especially affects countries that have balance of payment needs and Hungary, as a growing economy, naturally has a financing need on the market.

If the U.S. and the European authorities are successful, that will have a positive impact on countries like Hungary as well. I believe it’s only a question of time until they prove to be successful.

That of course does not mean we can just sit back and wait until the authorities around the world solve the problem. Read more »

Statement by Secretary Henry M. Paulson, Jr.

Following Meeting of the G-7 Finance Ministers and Central Bank Governors

Washington, DC– At today’s meeting of the G-7 Finance Ministers and Central Bank Governors, we finalized an aggressive action plan to address the turmoil in global financial markets and the stresses on our financial institutions. This action plan provides a coherent framework that will direct our individual and collective policy steps to provide liquidity to markets, strengthen financial institutions, protect savers, and enforce investor protections. Read more »

When I ran into Steve Schwarzman at a charity dinner last month, I asked him whether his private-equity firm, Blackstone Group, was planning any “Richistan” plays–betting, for example, on the burgeoning demand for megayachts.

“The trouble with yachts,” he said, “is that when business is good, it’s really good. But when it falls, it really crashes.”

It is insight that few companies seem willing to accept right now. With the megayacht business filled with backlog orders from newly minted billionaires in Russia, the Middle East and India, all kinds of companies are jumping into business. Read more »

Wall Street Journal reporters Marcus Walker and Joellen Perry spoke with German Finance Minister Peer Steinbrück about the financial crisis, its fallout in Europe, and calls for a pan-European solution. 

German Finance Minister Peer Steinbrück, left, and Economics Minister Michael Glos take part in the weekly cabinet meeting in Berlin. (Reuters)

WSJ: What do you think of statements by France and others that Europe needs more than just ad-hoc bailouts, that it needs to find a systematic answer to the financial crisis?

Steinbrück: I don’t think the American package, which Congress will hopefully approve this week, can or should be applied to Europe. I don’t see any need for Germany to put 3 or 4% of its GDP in such a package without knowing what this German money which actually achieve and whether we’ll solve concrete problems with it.

The individual banking cases in Europe can have very different causes. In some cases we are dealing with a bank that has a solvency problem. In other cases like with Hypo RE we’re dealing with a liquidity problem. Such a supranational umbrella might not be helpful in these specific cases.
Read more »

When P. Diddy starts pinching pennies, you know we are in a recession.

On P. Diddy’s video blog on YouTube, the multimillionaire rapper-actor-fashion-designer-business-tycoon complains that gas prices are too high (he uses more colorful language, of course, but the point is the same).

He goes on in comic fashion to explain why rising fuel prices matter to even the richest of celebrities. “As you know,” he says, “I do own my own jet. But I?ve been having to fly back and forth to L.A. for my acting career. Now, if I’m flying back and forth like twice in a month, that’s like $200,000 or $250,000 a round trip. (Expletive deleted) I’m back on American Airlines right now, OK? Your boy Diddy is on American Airlines.”

He then makes a passionate plea to the oil-producing countries of the Middle East. “If y’all would please send me some oil for my jet I would appreciate it. But right now I’m actually flying commercial.”

Of course, Mr. Diddy is just joking around (the fuel bill for a N.Y.-LA round trip would be more like $30,000 on a G3). But the wealthy are starting to get more value-conscious when it comes to flying–mainly because of the economy, not because of gas prices. According to Justin Sullivan, a private jet broker and founder of Regent Jet, more and more celebrities and rich travelers are flying commercial on long-haul flights to Europe, rather than taking private jets.

Read more »

The world of global sourcing is even flatter and growing smaller by the day thanks to the advent of online marketplaces.

Since the global economic downturn set in, people have been asking me about its impact on e-commerce and Alibaba.com. While it is true that some businesses have become wary and have held back from international trade, it is equally true that many others are turning to more efficient and cost-effective ways of doing business—one of which is e-commerce.

Read more »

One of Shanghai’s luxury fairs with the most god-awful names is getting a makeover. And a name change. From now on, the Millionaire Fair will be known quite simply as — The Fair.

The name change, however, still doesn’t mean we’re going to be able to afford anything at the fair. The over-the-top luxury sports cars are still going to be there. The mobile phones on display will still continue to be dripping with diamonds. And wonderful members-only clubs such as the, er, Asian Elite Club, will still continue to be exhibiting.

Read more »

While China has been in the WTO since December 2001, it has only now had the first case (the background to which we reported here in September 2006) found against it, as PA reports:

“The World Trade Organization made public its first official condemnation of Chinese commercial practices on Friday, releasing a February ruling that sided with the United States, the European Union and Canada in a dispute over car parts.

…In the sweeping decision, the three-member WTO panel ruled against China on nearly every point of contention with the U.S., the 27-nation EU and Canada. The panel found that Chinese measures “accord imported auto parts less favorable treatment than like domestic auto parts” or “subject imported auto parts to an internal charge in excess of that applied to like domestic auto parts.”

And it is not expected to be the last case, not least because a host of international manufacturers will be looking to China for the growth that now looks unlikely at home – and they will fight to break down any barriers they find:

“…The dispute has likely been closely watched by makers of everything from batteries and brakes to seats and spark plugs on both sides of the Atlantic, including U.S.-based Delphi Corp., General Motors’ former parts supplier, and Robert Bosch GmbH in Germany.”

In terms of the auto market, it is clear why there is interest, as is indicated in a new report from Research and Markets (China Automobile Sector to 2010) which notes in its key findings that:

• “It is projected that China will add 33 Million automobiles during 2008-2010.
• Passenger car production in China is expected to cross 7 Million Units in 2008.
• Passenger car stock per 1000 population is likely to increase at a CAGR of 19.8% from 2008 to 2012 in China.
• Sales of commercial vehicle in the country are forecasted to grow at a CAGR of around 5.5% during 2008-2010.
• Based on the past performance, it is projected that passenger car sales will cross 11 Million Units in 2010.
• Sedan will be the preferred segment among the Chinese consumers during the forecasted period”.

However the auto case develops, it seems that China will continue to open up its markets as its more sensitive local industries become stronger and more internationally competitive. But, whatever WTO rules, foreign domination is still not part of The Plan.

See new sources:

WTO publishes trade ruling against China
The Associated Press -
The verdict — findings of which were obtained by The Associated Press five months ago — found that China was breaking trade rules by taxing imports of auto …

China Must Revamp Auto Component Tax Rules, WTO Says (Update1)
Bloomberg - USA
By Mark Drajem July 18 (Bloomberg) — China violates global trade rules by requiring automakers operating there to buy components from local suppliers or …

Now Available - China Automobile Sector to 2010
MarketWatch - USA
“In the past few years, precisely after its accession to the World Trade Organization (WTO) in 2001, China has seen a phenomenal