Four top bank chief executives told a panel probing the financial crisis Wednesday that they made mistakes but didn’t realize how bad they were at the time.
In a heated exchange in Washington with the head of the Financial Crisis Inquiry Commission, Lloyd Blankfein, Goldman Sachs’ CEO, agreed the banks had assumed too much exposure to risk at the height of the crisis, and he wished he could go back and change things.
"Anyone who says I wouldn’t change a thing, I think, is crazy," Blankfein said. "Knowing now what happened, whatever we did, whatever what the standards of the time were — It didn’t work out well."
"Of course, I’d go back and wish we had done whatever it took not to find ourselves in the position we found ourselves in," he added.
The remarks came during a hearing of the Financial Crisis Inquiry Commission, a 10-member panel appointed last summer by Congress. Testifying were chiefs of some of the best-known and largest banks: Goldman Sachs (GS, Fortune 500), Morgan Stanley (MS, Fortune 500), J.P. Morgan Chase (JPM, Fortune 500) and Bank of America (BAC, Fortune 500).
The panel’s chairman, Philip Angelides, said he wanted to hear about the banks’ role in creating the crisis and benefiting from the Troubled Asset Relief Program, which was set up to provide them with liquidity.
During the hearing, Angelides cast doubt on Blankfein’s defense of Goldman Sachs’ actions in the mortgage markets — such as buying parts of risky mortgages and then placing bets against such morgages — as part of their job as a "market maker."
"It sounds to me a little like selling a car with faulty brakes and then buying an insurance policy on the buyers of those cars," Angelides said. "It doesn’t seem to me that that’s a practice that inspires confidence."
Blankfein responded that Goldman was just selling what investors wanted.
"These are the professional investors who want this exposure," he said. "Even today, people are coming for exposure to these very products. .. That’s what a market is."
The chief executives — Blankfein, John Mack of Morgan Stanley, Jamie Dimon of JPMorgan Chase, and Brian Moynihan of Bank of America — testified under oath, standing up for a swearing-in during the public session.
The hearing lasted more than three hours and most of the testimony revolved around bad lending in the housing market.
Dimon said that one of the the banks’ "big misses" was failing to "stress test" the housing market.
"We didn’t stress test housing prices going down by 40%," Dimon said.
It has been suggested that this lack of accountability could be remedied if all of the firms and individuals involved in the creation of financial instruments had to "eat their own cooking." That would, for example, require that the bulk of their fees not be taken in cash, but in the securities they created, which they would be required to hold unhedged until maturity.
One commissioner asked Morgan Stanley’s Mack if investment banks could have remediated the volume of illiquid toxic securities by eating "their own cooking," and taking fees for financial transactions via toxic securities, instead of cash. Mack said his firm did hold some of those securities.
"We did eat our own cooking and we choked on it," Mack said. " We kept positions and it did not work out."
‘Sound’ regulatory changes
Blankfein, Dimon and Mack all talked about the need for "sound" regulatory changes to help ward off future crises bad credit unsecured personal loans.
"I want to be clear that I do not blame the regulators … however, it is important to examine how the system could have functioned better," Dimon said. "The current regulatory system is poorly organized with overlapping responsibilities, and many regulators did not have the statuatory resolution authority needed to address the failure of large, global financial companies."
In written testimony, the bank chiefs laid out their banks’ mistakes that led to the crisis, detailing the housing bubble, with "new and poorly underwritten mortgage products," "excessive speculation," and mortgage securitization that allowed people to duck responsibility for poorly underwritten loans.
However, they added they didn’t expect the financial crisis and especially its magnitude.
"After the fact, it is easy to be convinced that the signs were visible and compelling," Blankfein said. "In hindsight, events not only look predictable, but look like they were obvious or known. But none of us know what is going to happen."
In the past several weeks, the commission has talked to Treasury Secretary Tim Geithner and Federal Reserve Board Chairman Ben Bernanke, but that testimony isn’t being made public yet.
Lawmakers say the commission was modeled after the Pecora Commission, a panel that was convened after the 1929 Wall Street crash and other events leading to the Great Depression.
The Pecora panel’s findings led to an overhaul of federal banking laws, including the creation of the Glass-Steagall Act of 1933. Glass-Steagall divided investment banking from government-insured commercial banking; ending that separation in the 1990s was seen by some critics as contributing to the current crisis.
Slow start
The Financial Crisis Inquiry Commission has taken a while to get up on its feet.
The panel was appointed last July and held its first meeting in September. It has only started getting staffed up over the past few months.
It has new offices in downtown Washington, a few blocks northwest of the White House. Funded to the tune of $8 million, it aims to employ between 40 and 50 investigators and other staffers.
The crisis panel’s one big goal is to complete a final report, sort of like the final 9/11 Commission report that found federal agencies missed signs of the impending terrorist attacks in 2001. The financial crisis report is due Dec. 15.
Critics have noted the panel’s impact may be blunted by timing, as the House has already passed a bill to overhaul regulations and the Senate is deep in negotiations on similar proposals.
But panel members have consistently pledged their work will serve as more than window dressing for politicians worried about the appearance that they allowed the financial crisis to happen.
The panel, which has subpoena power, plans to issue interim reports as it collects data, Angelides has said.
The panel’s second-in-command is Bill Thomas, a retired California Republican congressman described as strong-willed during his tenure running the powerful Ways and Means Committee.
Other key panel members include: Keith Hennessey, an economic adviser under President George W. Bush; former Sen. Bob Graham, a Florida Democrat; and Brooksley Born, a past chairwoman of the Commodities Futures Trading Commission, who called for stronger regulation of complex financial products such as derivatives in the 1990s.
Midtown Manhattan office rents fell 33 percent in 2009 as New York’s financial industry cut staff and relinquished space, commercial property broker FirstService Williams said in a report.
Rents in the nation’s most expensive office district dropped to $59.31 a square foot in the fourth quarter and are down almost 50 percent when concessions including temporary free rent are included, the New York-based broker said today.
Financial companies occupy more New York office space than any other non-governmental employer. They cut 25,200 local jobs in the 12 months through November, helping push the city’s unemployment rate to 10 percent, according to the New York State Department of Labor.
“Employment is not going to trend up with any alacrity,” FirstService Williams Executive Chairman Robert Freedman said in an interview. “We’re going to see a very, very modest uptick in demand” for offices.
The percentage of available space in Midtown climbed to 14.9 percent from 11.9 percent a year ago, FirstService Williams said. The rate applies to office space between 34th Street and Central Park in Manhattan.
The decline in neighborhood rents showed signs of leveling off as more than 1 million square feet along Park Avenue, Fifth Avenue and Avenue of the Americas were leased in the fourth quarter, FirstService said. Landlords stopped increasing incentives to lure tenants, the broker said.
Wall Street Area
Downtown rents declined 22 percent in 2009 to $38.60 a square foot and availability jumped to 13 percent from 10.5 percent at the end of 2008. Most of the available space downtown was added in the fourth quarter.
Between 8 percent and 10 percent of downtown leases signed in 2009 were for financial tenants, according to FirstService’s preliminary numbers. About 30 percent of the New York City office market is already occupied by the industry.
“With the financial sector still a major driving force in the downtown market, recovery in lower Manhattan may be slower than expected,” Freedman said.
In Manhattan’s Midtown South area, roughly located between 34th and Canal streets, office availability climb to 11.7 percent from 8.5 percent at the end of last year. Asking rents averaged $39.73 a square foot, down 28 percent from a year ago.
Thirteen of Arizona’s 21 billion-dollar public companies saw their stock prices move up during the fourth quarter.
Seven of the companies posted double-digit gains, with Clear Channel Outdoor leading the pack at 58 percent, according to the Phoenix Business Journal’s analysis of prices from Sept. 30 through 30 through Dec. 18.
Penny stock Mesa Air Group mirrored that performance with a 58 percent decline to lead the group of eight companies with a drop in price per share over the quarter.
Over the same period the Dow Jones Industrial Average gained 6.4 percent and the Nasdaq Composite moved up 4.2 percent.
The Arizona group did better when price changed is measured over all of 2009, but all but four of the stocks still lag from the end of 2007. Click here for the 2009 wrapup and here for a two-year look at local stocks.
European Central Bank President Jean- Claude Trichet is withdrawing stimulus measures faster than economists anticipated, clearing obstacles to higher interest rates next year.
The ECB’s decision yesterday to end long-term emergency loans and tighten the terms of its final 12-month tender will give greater traction to any rate increases in 2010 should policy makers deem them necessary.
“The ECB chose a quicker exit path,” said Laurent Bilke, a former ECB economist now at Nomura International Plc in London. “It’s very difficult not to think it’s the beginning of a tightening process.”
The move to tie the rate on the 12-month loans to the ECB’s key rate rather than setting a fixed rate of 1 percent means any increase in the benchmark will also affect banks’ funding costs. While Trichet said the move doesn’t signal the ECB intends to raise rates, some officials are concerned that leaving borrowing costs at a record low for too long will fuel asset bubbles and faster inflation.
Trichet spoke as Federal Reserve Chairman Ben S. Bernanke promised a “smooth” withdrawal of stimulus in the U.S. as the world’s two biggest economies pull out of recession.
Yesterday’s announcements “put the ECB in a position where it can choose to raise rates if it wants to further down the line,” said David Page, an economist at Investec Securities in London. “We’re penciling in a rate rise in the second half of next year.”
Economic Recovery
The risk for the ECB is that any indication it could raise rates sooner than the Fed may fuel further gains in the euro and undermine the region’s economic recovery.
Economists had expected the ECB to leave the rate on its 12-month tender fixed at 1 percent, according to a Bloomberg News survey. That would have made any increase in the benchmark rate next year less effective because banks would have had money at 1 percent through the end of 2010.
By setting the rate on the loans to the average of the benchmark rate over the year, “the ECB has made sure that future movements in interest rates will be reflected in banks’ funding costs,” said Colin Ellis, an economist at Daiwa Securities SMBC Ltd. in London.
Some members of the ECB’s Governing Council were against indexing the rate, fearing it would fuel market expectations of policy tightening, people familiar with the discussions told Bloomberg last week. Trichet said today the decision was not unanimous, rather reached “by consensus.”
‘Strong’ Dollar
The euro traded at $1.5081 at 7:30 p.m. in Frankfurt last night, down from $1.5123 before Trichet spoke. It fell to $1.5061 after Trichet said it’s “very important” for Europe that the U.S. has a “strong” dollar.
The euro has gained 20 percent against the greenback since mid-February, threatening to slow the region’s recovery by hurting exports same day payday loans. Daimler AG, the world’s second-largest maker of luxury cars, said yesterday it will shift some production to Alabama from Germany as it seeks to benefit from the cheaper dollar.
While the ECB raised its economic outlook, forecasting growth of 0.8 percent next year and 1.2 percent in 2011, it said price pressures remain “subdued.” Inflation is expected to average 1.3 percent next year and 1.4 percent in 2011, below the bank’s medium-term goal of just less than 2 percent.
‘No Compelling Argument’
“The new staff growth and inflation forecasts confirm that there is still no compelling argument for hiking rates,” said Marco Annunziata, an economist at UniCredit Group in London. “Trichet was emphatic in noting that the decisions on liquidity simply reflect improving market conditions and in no way signal a prospective hardening of the monetary policy stance.”
Still, the ECB is withdrawing its non-standard operations “at a somewhat quicker pace than we had expected,” said Julian Callow, an economist at Barclays Capital in London. “In our view, today’s decisions are on the hawkish side.”
ECB council member Axel Weber said yesterday it’s a “balancing act” for central banks to withdraw stimulus measures without threatening their economic recoveries.
“We’ve made it clear that we’ll gradually withdraw unconventional measures in the future,” Weber, who is also head of Germany’s Bundesbank, told ARD television. “But that doesn’t mean that we won’t use the necessary caution. There’s no need to send a signal on interest rates at the moment.”
Normal Refinancing
The changes announced by the ECB nevertheless pave the way for a return to normal refinancing operations, in which the interest rate on its loans is determined by market demand. After the collapse of Lehman Brothers Holdings Inc. in September last year made banks reluctant to lend to each other, the ECB said it would lend them as much cash as they wanted at its benchmark rate.
Money-market rates have dropped, suggesting banks have become less wary of lending to each other. The Eonia overnight rate, the rate European banks charge each other for overnight loans, has declined to 0.34 percent from 2.2 percent at the start of the year.
“Once liquidity conditions normalize in the third quarter of next year, the Eonia rate is likely to move back to the refinancing rate,” said Nick Kounis, chief European economist at Fortis Bank Nederland NV in Amsterdam.
“This would pave the way for conventional monetary tightening from the autumn of next year, and we expect 50 basis points of rate hikes by the end of 2010.”
LONDON–In a move that could help improve relations between Google Inc. and the media industry, the Internet search company is offering publishers a way to build more solid "pay walls" around their online stories while still appearing in search results.
In an official blog post Tuesday, Google said it will let publishers limit the number of restricted articles that readers can get for free through its search engine.
The change could remove one significant hurdle publishers face as they contemplate charging readers online. Many newspapers are considering such fees because online advertising on free sites hasn't offset the precipitous decline in print ad revenue that has come with the recession and competition from the Web.
The Wall Street Journal is perhaps the best example of how the new tool could help.
The newspaper charges for access to most articles on its Web site, but its pay wall is "leaky." Readers can grab the first sentence from a preview of the story, punch it in to Google and access the full story in the search results.
The Journal could simply block Google from indexing its stories, but that would cut traffic to its site significantly. Less traffic means less ad revenue.
The problem has infuriated executives at News Corp., which owns the Journal.
News Corp. Chairman Rupert Murdoch told a conference organized by the U.S. Federal Trade Commission on Tuesday that media companies should charge for content and stop news aggregators such as Google from "feeding off the hard-earned efforts and investments of others.''
The change to Google's "First Click Free" program would allow publishers to limit the number of paid articles a reader could access through its search engine to five per day.
That could assuage the anger of media titans like Murdoch, allowing news outlets to stay relevant by appearing in search results while still trying to wring fees from readers.
A News Corp. spokesman declined comment Wednesday.
In Google's blog post, Josh Cohen, senior business product manager, stressed that publishers and Google could coexist.
"After all, whether you're offering your content for free or selling it, it's crucial that people find it." he said. "Google can help with that.''
Cohen said that Google will also begin indexing and treating as “free" any preview pages – usually the headline and first few paragraphs of a story – from subscription Web sites. People using Google would then see the same content that would be shown free to a user of the media site. The stories would be labeled as “subscription" in Google News.
"The ranking of these articles will be subject to the same criteria as all sites in Google, whether paid or free," Cohen said. "Paid content may not do as well as free options, but that is not a decision we make based on whether or not it's free. It's simply based on the popularity of the content with users and other sites that link to it.''
Gulf markets dropped again on Tuesday, taking little comfort from Dubai World’s plan to restructure about $26 billion of debt and despite reassurances on economic resilience from the rulers of Abu Dhabi and Dubai.
Dubai stocks fell a further 5.6 percent and the Abu Dhabi bourse lost 3.6 percent on their second trading day since Dubai last week asked creditors of Dubai World and its property arm Nakheel for a six-month delay on debt repayments. Qatar’s bourse was also more than 8 percent lower.
State-controlled Dubai World, which led the emirate’s transformation into a regional hub for finance, investment and tourism, unveiled details late on Monday of the restructuring and which parts of its empire were affected. The process will focus on $26 billion of debt owed by its main property firms, Nakheel and Limitless.
Dubai World said it had appointed Moelis & Co, the investment bank created by former UBS president Ken Moelis, to advise on the restructuring while Rothschild would continue to be its investment adviser.
Global markets took a pounding when news broke last week that Dubai World was unable to pay its debts, although on Tuesday, Asian and European stocks were up, following the lead from Wall Street overnight as fears of contagion eased.
Dubai’s ruler Sheikh Mohammed bin Rashid al-Maktoum, who is also the United Arab Emirates’ vice president, prime minister and defense minister, said the global reaction had shown “a lack of understanding.”
“We have the determination and will power to face all challenges, including the ill-intentioned media challenges,” Sheikh Mohammed said, according to a statement from his office.
John Sfakianakis, chief economist at Banque Saudi Fransi-Credit Agricole Group in Riyadh, said the Dubai ruler’s remarks “although very broad, should be welcomed by global markets at a time when they are thirsty for clarity, reassurance and information.”
Sheikh Khalifa bin Zayed al-Nahayan, president of the UAE and ruler of Abu Dhabi, said the UAE economy was showing signs of gradual growth in the fourth quarter.
Dubai’s troubles could shift political power in the UAE, a seven-emirate federation celebrating 38 years of unity on Wednesday, toward oil-producing Abu Dhabi and away from its exuberant neighbor.
The Dubai World group, whose total liabilities are estimated at nearly $60 billion, said the restructuring would exclude “financially stable” units such as Infinity World Holding, Istithmar World and Ports & Free Zone World, which includes DP World, Economic Zones World, P&O Ferries and Jebel Ali Free Zone.
Dubai World would look at options for cutting its debt, including asset sales, it added.
But the group may not be able to keep revenue-generating assets such as port operator DP World and Istithmar’s 2.7 percent stake in Standard Chartered, while selling its battered property firms.
“I don’t think they’re in a position to choose,” Khuram Maqsood, managing director of Emirates Capital and a former director at Istithmar.
“Dubai World desperately needs cash. Everything is for sale. I don’t think anything is sacred in the current environment.”
Russian consumers are benefiting from a stronger ruble that’s boosted incomes and offset tight credit while a lack of investment is hampering a rebound in manufacturing, a series of economic reports showed today.
Real disposable incomes posted the biggest jump in more than a year last month and retail sales rose from September, signaling consumer demand is returning following October’s 3.4 percent gain in the ruble against the dollar.
The economy of the world’s biggest energy producer is showing signs of recovery as a return of global demand for commodities supported exporters and domestic demand rebounded after the ruble gained to the strongest level this year. Russia’s record 10.9 percent economic contraction in the second quarter eased to an 8.9 percent decline last quarter.
“Household consumption is stabilizing after lagging behind the rest of the economy,” said Olga Naydenova, an economist at Otkritie Financial Corp. in Moscow. She expected a broader improvement in indicators last month as “people have learned to adapt to the changing situation, and budget spending on social needs also helped.”
The ruble lost 0.8 percent to 29.0506 per dollar at 4:22 p.m. in Moscow, paring its weekly gain against the U.S. currency to 0.6 percent. The ruble slid 0.5 percent to 35.3348 against the central bank’s target currency basket.
Retailer Gains
OAO Dixy Group, Russia’s third-largest publicly traded food retailer, added 4.62 rubles, or 2.1 percent, to 219.99 rubles in Moscow. The stock has gained 323 percent so far this year. The shares of X5 Retail Group NV and OAO Magnit, Russia’s two biggest food retailers, are up 234 percent and 274 percent in 2009, outperforming the 30-stock Micex Index, which has jumped 114 percent this year.
Disposable incomes climbed a monthly 6 percent in October and rose 3.9 percent compared with the same period last year, the biggest annual jump since September 2008, the Federal Statistics Service said. Retail sales rose 3.2 percent from September and declined 8.5 percent on an annual basis compared with a 9.9 percent drop the month before.
The government has made spending on social needs, including benefits and pensions, a priority of its stimulus program, which deployed 2.5 trillion rubles ($86.4 billion) to bolster the economy with tax breaks, loan guarantees and subsidies.
‘Too Early’
Service industries, which account for about 40 percent of the economy, rose for a third month in October, advancing to the highest since September 2008, VTB Capital said on Nov. 5, citing its Purchasing Managers’ Index.
“Although the economy is no longer declining, it is too early to speak of a recovery,” Alfa Bank analysts led by Ekaterina Leonova said in a Nov. 18 report. “Signs of improvement are still very fragile and do not constitute a trend.”
The ruble appreciated 3.4 percent against the dollar for its second consecutive monthly gain in October. Imports account for about 49 percent of the consumer goods sold in Russia, the government estimated last year.
A stronger currency has increased spending power for the domestic market as “it transfers incomes into people’s pockets,” said Clemens Grafe, chief economist at UBS in Moscow.
Wage declines also eased last month as exporters returned to profitability. Wages fell an annual 4.5 percent in October, compared with a 4.9 percent decline the previous month. Retail sales have fallen for nine consecutive months, the longest period of declines on record.
Manufacturing Slump
Rebounding consumer demand isn’t reflected in the country’s manufacturing sector. Russia’s industrial slump deepened in October as companies failed to build up inventories and credit remained tight even after eight central bank interest rate cuts since April.
Output in October fell 11.2 percent from a year earlier after the decline eased to 9.5 percent in September. Manufacturers are struggling to stay profitable as banks rein in credit, hampering investment even as demand picks up for commodities, Russia’s chief export.
“High interest rates and sharp ruble appreciation may have added pressure to the competitiveness of Russian goods,” said Anton Nikitin, an analyst at Renaissance Capital in Moscow. “In this environment, fourth-quarter GDP growth might be weaker than we previously thought.”
Shrinking output may spur the central bank to further loosen monetary policy, Nikitin said.
Bank Rossii is scheduled to hold a board meeting on Nov. 24 where a rate decision may be discussed, First Deputy Chairman Alexei Ulyukayev said yesterday.
A spate of attacks in Pakistan’s Punjab as Islamic militants work more closely with the Taliban has raised business concern in the province that generates more than half of the country’s economic growth.
Forty-two people were killed last month in Punjab, home to Pakistan’s largest bank and companies producing clothing for retailers Levi Strauss & Co. and Gap Inc. Recent increases in surveillance and arrests are unlikely to reverse the violence that killed more than 220 people in the province in the first 10 months of this year, 20 percent more than 2008, said Ayesha Siddiqa, a Punjabi researcher on military and security issues.
The Karachi Stock Exchange 100 Index fell 2 percent last month, the most since January and only the third negative month this year, as bombings and militant assaults in major cities nationwide hurt investor confidence.
“The implications of this war spreading to Punjab are pretty severe,” said Standard Chartered Plc economist Sayem Ali in Karachi. Punjab represents 55 percent of Pakistan’s gross domestic product, he said. With foreign direct investment down by 60 percent in the three months to September, “our domestic security problems cloud companies’ strategies for coming back into Pakistan any time soon.”
Since the army began its biggest anti-Taliban offensive on Oct. 17 near the border with Afghanistan, bombings have killed about 350 people nationwide, mostly civilians.
Cricket Ambush
While Punjab has seen fewer terrorist attacks than Pakistan’s ethnic Pashtun northwest, guerrillas in Lahore attacked three police headquarters last month and ambushed the Sri Lankan national cricket team’s bus in March. Militants last month raided the army headquarters in Rawalpindi, also in Punjab. The province is home to about half of the country’s 180 million people.
The government must continue to stand up to the guerrillas or “the violence will continue to spread and investors will not feel safe anywhere” in Pakistan, said Habib-ur-Rehman, who manages $48 million of stocks and bonds at Karachi-based Atlas Asset Management Ltd.
Punjab is home to much of Pakistan’s textile sector and the nation’s largest bank by market value, MCB Bank Ltd. Textiles account for two-thirds of the country’s exports in a $165- billion economy.
Pakistan’s overseas direct investment fell 58 percent to $463 million in the three months ended Sept. 30, from $1.1 billion a year ago, according to data from the central bank.
Surveillance Cameras
“We have to keep so many security guards, set up surveillance cameras at the factories,” said Raza Mansha, chief executive of D.G. Khan Cement Ltd., Pakistan’s second-biggest cement maker, based in Lahore, Punjab’s capital and the country’s second-largest city. It “adds to our non-productive expenses and gives foreign visitors a bad impression guaranteed online payday loans.”
D.G. Khan Cement and MCB Bank are part of the Nishat Group, Pakistan’s largest industrial group. D.G. Khan shares fell 16 percent in October and have risen 4.3 percent this month. MCB was down 4 percent in October and is up 7 percent this month.
The benchmark share index has gained 56 percent this year after losing 59 percent in 2008. It rose 2.6 percent yesterday.
Interior Minister Rehman Malik told reporters last month that at least two Punjab-based groups — Jaish-e-Muhammad (Soldiers of Muhammad) and Lashkar-e-Jhangvi (the Army of Jhang, a southern Punjab city) — were operating jointly with the Taliban and al-Qaeda to attack the Pakistani state.
Limited Crackdown
Still, Pakistan’s crackdown on jihadist groups in the province has been limited, and won’t reverse the decades of growth that have made the militant groups a durable part of the political landscape, said Siddiqa.
“The state’s response really has been business-as-usual — selective pressure” rather than a systematic campaign against Islamic radicalism, Islamabad-based Siddiqa said in a phone interview.
For Umer Mansha, chief executive officer of Lahore-based Nishat Mills Ltd., that’s a worrying message. His company produces garments for San Francisco-based Levi-Strauss, the closely held maker of blue jeans and Dockers pants, and Gap, based in the same U.S. city and operator of the Old Navy and Banana Republic chains.
“Textile buyers like to come, see and feel the product,” Mansha, whose company is also part of the Nishat Group, said in an interview Nov. 12. “Buyers are simply not willing to come here. It’s very hard to get new clients.”
More Than Last Year
More than 10,000 Pakistanis — civilians, security forces and militants — have died in the country’s violence this year, a rate 75 percent higher than last year’s record, according to the New Delhi-based Institute for Conflict Management.
“The tactics used in recent attacks in Punjab, plus the literature recovered by police in making arrests, shows that there is more coordination and contact now between Punjab militants and the Arabs of al-Qaeda,” said Muhammad Amir Rana, director of the Islamabad-based Pak Institute for Peace Studies.
Punjab Home Ministry and police officials didn’t respond to phone calls and e-mail messages asking how many alleged perpetrators have been detained in the province.
The “poverty of southern Punjab in particular, and the covert support and funds that militants have had” from Arab donors and Pakistan’s military, “have let them build durable organizations,” said security researcher Siddiqa. “Militancy in Punjab is now a fixture.”
eBay Inc. may be trying to unload its Skype Internet phone business, but the division’s 29% revenue growth helped bolster the company’s third quarter results.
Overall, the company said revenue grew 6% to $2.24 billion, which trounced analysts’ expectations of $2.14 billion.
"The year-over-year revenue growth was driven primarily by the continued growth in PayPal, Skype, the company’s classifieds business as well as growth in eBay’s fixed-price format," the company said. .
Shares of eBay (EBAY, Fortune 500) fell more than 5% in after-hours trading, however, as the commerce company also announced that its profits for the quarter fell 29% from last year to $350 million.
eBay said it earned 27 cents per share in the quarter ended Sept. 30, lackluster compared to the 37 center per share that analysts polled by Thomson Reuters expected.
The company said the drop was due to a decrease in operating margins for the quarter caused primarily by the recently acquired payment system Bill Me Later.
But eBay’s chief executive John Donahoe remained optimistic. "These are strong results for a strong company getting stronger," Donahoe said during a conference call with investors. "And our eBay strategies are beginning to work."
The positive results were the outcome of changes eBay has been implementing since 2008, said Sandeep Aggarwal, a senior Internet research analyst at Collins Stewart. The modifications include altered fees for merchants to encourage fixed-price sales and an improved search engine.
The marketplace unit, which includes eBay’s core auction business, posted $1.4 billion in revenue, down 1% since last year. But the total amount of goods that eBay sold, excluding vehicles, also known as GMV, rose 7% to $12.2 billion in the quarter.
"The single biggest thing we found most positive was that GMV is showing signs of growth acceleration. Even if you include auto sales, it was still up 2% on a year-to-year basis," said Aggarwal, who expected the figure to decline by 1%.
The company’s PayPal business also grew, and the company’s efforts to expand the online payment unit to merchant stores has been successful, according to Aggarwal.
The PayPal business reported $668.1 million in revenue, up 15% compared to last year, and the number of active registered accounts grew 19% in the quarter.
In September, eBay announced that it will sell 65% of its Skype Internet phone business to a group of private investors for $2.75 billion, but the deal is pending a lawsuit against Skype’s founders.
The exiting segment added 40.3 million users in the quarter and contributed $185.2 million in revenue, representing 29% growth compared to last year.
eBay is forecasting fourth-quarter revenues between $2.20 billion and $2.30 billion, in line with analysts’ expectations of $2.26 billion, but higher than the $2.04 billion revenue posted in the fourth quarter of 2008.
But the revenue outlook assumes the sales of Skype in the middle of the fourth-quarter.
OPEC Secretary-General Abdullah al-Badri said on Monday he knew of no plans to shift international oil trade away from its dollar denomination.
When asked if he was aware of any such moves, Badri said: “No, no, this is a 100 percent member country policy.”
Reiterating that oil trade denomination issues were the concerns of individual OPEC members rather than group policy, Badri also said dollar weakness was a concern for exporters.
“This is a member country policy but it is a concern for us,” Badri said.
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