All That Glitters...

OF ALL THE MANY MISERIES that man faces on his journey from cradle to grave, few of them can be eased by enlightened central banking, writes Bill Bonner in his Daily Reckoning – and a credit contraction is not one of them.

Japan proved it. After the Japanese market collapsed in 1990, public officials went to work with their characteristic energy and incompetence. They lowered the cost of borrowing to nearly zero. But did consumers take up the money and add to the demand for bread and bicycles? No. They didn't want to borrow. They wanted to save. They had speculated during the previous bubble years and lost money. Then, with retirement approaching, a penny saved was worth even more to them than a penny earned. They saved more than ever...and the consumer economy sank.

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Jobless Reaches 70 Year High In California

California’s unemployment rate in August hit its highest point in nearly 70 years, starkly underscoring how the nation’s incipient economic recovery continues to elude millions of Americans looking for work.

While job losses continue to fall, the state’s new unemployment rate — 12.2 percent, according to the Bureau of Labor Statistics — is far above the national average of 9.7 percent and places California, the nation’s most-populous state, fourth behind Michigan, Nevada and Rhode Island. Statistics kept by the state show California’s unemployment rate was 14.7 percent in 1940, said Kevin Callori, a spokesman for the California Employment Development Department.While California has convulsed under the same blows as the rest of the country over the last two years, its exposure to both the foreclosure crisis and the slowdown in construction — an industry that has fueled growth in much of the state over the last decade — has been outsized.

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China bank regulator warns of loan risks

China's bank regulator has called on the nation's banking sector to step up risk management and strengthen compliance as explosive credit growth is leading to greater risks.

"With bank loans growing rapidly, all kinds of risks are rising in the banking industry," Liu Mingkang, chairman of China Banking Regulatory Commission, said in the statement posted on the commission's website Friday.

"Financial institutes in the banking industry must do their upmost to uphold the standard management limits and strike a solid basis for risk management."

In an effort to counter the global financial crisis, Chinese banks issued 8.15 trillion yuan (1.2 trillion dollars) in new loans in the first eight months of the year, exceeding a five trillion yuan target set for 2009.

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Shareholder Row Over Ttianium Project

Russian and Indian shareholders in a $260 million titanium project have announced a split amid mutual accusations of contract violations, but will continue building a factory in east India each on their own, the Russian partner said on Saturday.
Yury Medvedev, deputy head of Russia's State Property Management Agency that holds 51% in the joint venture, said the agency made a decision to end cooperation with India's Saraf after visiting the Orissa State, where the factory is planned to be built, on Thursday and meeting the local industry minister.

"The Russian side has received the Indian partner's notification that it wants to withdraw from the project and gave its consent," Medvedev said.

"The Orissa government has reaffirmed its interest in the project and pledged its support," he added.

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Sberbank to sell unpaid loan assets

Sberbank (SBER03.MM) is happy to remain Russia's largest lender and hopes to sell assets acquired through unpaid loans during the crisis -- from shops to oil fields -- within three years, its head said on Saturday.

Russia slipped into its first recession in a decade this year and the resulting rise in non-performing loans has seen a wide range of collateral pass into the hands of banks.

"Our job is finance ... We must, as quickly as possible, get rid of these assets," Sberbank chief executive German Gref said at an economic forum in the Black Sea resort of Sochi.

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Asian Shares Rally

Asian stocks hit their highest level in 13 months on Thursday on signs the global economic recovery could be strengthening, while the dollar slid to a fresh one-year low as investor optimism eroded its safe haven appeal.

Shares in Japan rose 1.7 percent as the Bank of Japan upgraded its view on the economy and a Reuters Tankan survey showed the mood among Japanese manufacturers this month at a one-year high.

China shares also rallied, with Shanghai stocks jumping 2 percent, as a senior Chinese government economist said China's economy may regain double-digit annual growth in the fourth quarter. Stronger-than-expected growth though could also bring monetary tightening closer to the horizon.

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Record Fall In UK Lending

The flow of net lending to British firms fell in July by the biggest amount on record, the Bank of England said on Friday, in a further sign that more may need to be done to get credit flowing in the economy again.

However, mortgage approvals by major lenders rose in August for the seventh consecutive month to 57,000 from 53,000 in July, the BoE's monthly Trends in Lending report showed.

The net flow of lending to businesses fell 15.5 billion pounds in July after a 3.6 billion pounds fall in June -- the biggest decline since the series began in 1998.

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Nigerian Investments Hit $20Billion

The United Nations Conference on Trade and Development (UNCTAD) annual study of worldwide investments report 2009 released yesterday ranks Nigeria in the 19th position among the first 20 countries in the world that attracted more Foreign Direct Investment (FDI) in 2008.

Releasing the report for the Sub-Saharan Africa, the Executive Secretary of Nigerian Investment Promotion Commission (NIPC), Engr. Mustafa Bello, said the total Foreign Direct Investment that came into the country increased from $12 billion in 2007 to $20 billion (N3 trillion) in 2008 which shot the country into the league of first 20 in the world.

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Aiful Seeks Debt Reprieve

Ailing Japanese consumer finance company Aiful said Friday it will ask creditors to let it delay repayments of 280 billion yen ($3.1 billion) in debt, triggering massive sell orders of its stock and pressuring other financial shares.

Aiful shares were untraded Friday due to a glut of sell orders. The announcement rattled investors and contributed to the decline in the Japanese stock market. Aiful closed at 184 yen Thursday, down 5.6 percent from a day earlier.

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Tough Economic Road Ahead For Japan

Faced with the daunting task of reinvigorating the world's second-biggest economy, Japan's freshly installed prime minister turned to one of his party's most experienced hands as finance chief.

Delivering change may well depend on veterans like Hirohisa Fujii who know how to work the system.

At 77, Fujii is the new Cabinet's oldest member whose lengthy resume includes a previous stint as finance minister in the early 1990s. Earlier in his career, he spent more than two decades working in the Ministry of Finance.

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Tesco Property Finance sells £565 Million

Bluechip retailer Tesco ( TESO - news - people ) tapped a further 565 million pounds from Europe's recovering asset-backed securities (ABS) market on Wednesday after selling a second batch of bonds secured on a portfolio of real estate.

Sole arranger Goldman Sachs ( GS - news - people ) said it had received about 1.3 billion pounds of orders for the bonds, more than twice the size of the proposed offer.

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Ultimate Finance Shares Up

Shares in Ultimate Finance (UFG.L), which provides financial services to small businesses, leap 52.2 percent after the firm reports above-expectation full-year results and joins the dividend list.

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Increase In London Finance Jobs

Job openings in London’s financial- services industry rose by 18 percent in August compared with the previous month, the biggest gain in job vacancies this year, according to a survey by recruitment firm Morgan McKinley.

The number of openings climbed to 4,158 in August compared with 3,528 vacancies in July, the London-based company said today. That’s the largest pool of jobs available since October 2008. Still, the figure was 39 percent lower than August 2008.

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Irish Stock Market Revived By 'Bad Bank' Plan

The battered Irish economy enjoyed a mini-revival on Thursday as banking shares soared after the government unveiled its “bad bank” plans.

Allied Irish Bank gained 30pc and Bank of Ireland rose 18pc as the overall market rose 4pc.

On Wednesday, the Dáil confirmed that its controversial National Asset Management Agency (NAMA) will spend €54bn (£48bn) buying bad debts from the country’s beleaguered banks.

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