The Pfizer-Wyeth merger isn't mainly about cost-cutting, says Pfizer's Kindler. Nevertheless, he intends to eliminate about 20,000 jobs
Pfizer's (PFE) announcement on Jan. 26 that it will buy Wyeth (WYE) for $68 billion in cash and stock called up visions of past Pfizer acquisitions for many pharmaceutical executives—and some of those visions resembled nightmares. But Pfizer CEO Jeffrey Kindler, who took the top job in 2006, insists the Wyeth deal is different from its earlier mega-mergers with Warner-Lambert in 2000 and Pharmacia in 2003.
Kindler told a news conference that the Wyeth merger is not about "a single product or cost-cutting," as with past deals. Instead, "it's about creating a broad, diversified portfolio."
Nevertheless, cost-cutting there will be. Pfizer expects to achieve about $4 billion in "synergies" by 2012, enabling it to reduce the combined workforce of the two companies by 15%, or some 20,000 jobs. As part of those synergies, Pfizer announced Monday that it will eliminate 8,000 jobs, 10% of its workforce. It is closing five of its 46 manufacturing plants.
The company went through similar rounds of cost-cutting when it acquired Warner-Lambert in a deal worth $90 billion, and when it bought Pharmacia for $60 billion. Those acquisitions sparked criticism in the pharmaceutical industry because of the brutal staff cutbacks and—at least in the case of Pharmacia—because there was no big performance gain. Pfizer acquired Warner-Lambert mainly for the cholesterol-lowering drug Lipitor, which went on to become the world's best-selling drug. The company targeted Pharmacia primarily to acquire Celebrex, a top-selling pain pill. But Celebrex was in the same drug class as Merck's (MRK) troubled Vioxx, and when that drug was pulled from the market in 2004 for safety reasons, Celebrex sales fell off a cliff. Pfizer's stock has slid more than 50% since the Warner-Lambert deal.
Protecting Morale and Productivity
The two earlier mergers were done on former CEO Hank McKinnell's watch. Kindler said the company "has obviously learned a lot from our prior acquisitions" and believes it can do layoffs this time without harming morale and productivity. He emphasized that the combined company will have a strong edge in research and science, although Pfizer announced in early December that it will lay off 800 of its own scientists.
The deal was generally applauded on Wall Street because Pfizer desperately needs a diversified portfolio of new drugs and has been unable to create enough of them on its own. Currently 25% of its revenues come from Lipitor, but the drug is due to lose patent protection in November 2011. In fact, other looming patent expirations mean Pfizer could lose 70% of its 2007 revenues by 2015, and there are no potential blockbusters in its near-term development pipeline to make up the difference.
Wyeth has been struggling with similar problems. Its two biggest drugs, Effexor for depression and Protonix for heartburn, are coming off patent in 2010 and 2011, respectively. Kindler says Pfizer doesn't want Wyeth for those blockbusters but for its strong position in vaccines, biologic drugs, veterinary medicine, and consumer products—areas where Pfizer has little presence (it sold its consumer-products business to Johnson & Johnson (JNJ) for $16.6 billion in 2006). Kindler also praised Wyeth's promising development portfolio of Alzheimer's disease drugs, any one of which could become a blockbuster upon reaching the market.
Together, the two companies will have 17 different prescription drugs on the market this year that each bring in $1 billion a year or more. No one product, however, will account for more than 10% of the combined company's revenue in 2012, Pfizer said. That distribution softens the damage from individual patent expirations.
Staying No. 1
The combined operation, Kindler said, will produce a company "with a distinct blend of diversification, flexibility, and scale." It will also ensure Pfizer's position as the world's largest pharmaceutical company. Still, says Datamonitor analyst Simon King, the deal "will not resolve the company's negative pharma sales outlook." He estimates that prescription drug sales for the combined company exceeded $70 billion in 2008, and will drop to $54 billion in 2013.
Kindler warned that the merger will also result in flat earnings for the next three years. And, to help finance the deal, Pfizer cut its quarterly dividend by half, to 16¢ a share. The deal is expected to close at the end of the third quarter this year. Pfizer is paying $50.19 a share for Wyeth, a premium of about 30% over the price of Wyeth's stock before news of the merger leaked out on Jan 23. Wyeth's stock closed Friday at 43.74 a share, up 4.91, while Pfizer rose 24¢, to 17.45.
Pfizer will pay for the acquisition with $22.5 billion in cash, $23 billion in stock, and $22.5 billion in debt raised from five banks: Bank of America Merrill Lynch (BAC), Barclays (BCS), Citigroup (C), Goldman Sachs (GS), and JPMorgan Chase (JPM).
The merged company will still be named Pfizer, and Wyeth CEO Bernard Poussot, who took over the company one year ago, said only that he would stay on "through the closing." The boards of both companies have approved the merger, but Wyeth's shareholders must still vote on the deal.
There is already one loser from this merger. Just two weeks ago, Dutch vaccine maker Crucell (CRXL) announced that Wyeth was in preliminary discussions to buy it for $1.4 billion. On Monday it announced the deal has been canceled.
From BusinessWeek
Friday, April 17, 2009
Thursday, April 2, 2009
G-20: $1 Trillion and a Plan
The IMF is the big winner at the summit, getting a huge cash infusion and a key role in a new world financial system designed to closely monitor risk
By Kerry Capell and Stanley Reed
The Group of 20 Summit of the world's top leaders, held Apr. 2 at a windowless exhibition hall in London's eastside docklands, did not achieve everything its organizers originally hoped for, but it was not without substance. Clearly, the most important accomplishment is the trebling of the resources available to the International Monetary Fund to $750 billion. That will make it easier to fight financial fires that may break out in the next few months, especially in emerging economies. All told, some $1.1 trillion in new money will come on tap for the IMF, the Worl Bank, and to support trade finance. "That's about the size the world may need," said the IMF's director, Dominique Strauss-Kahn, who noted with satisfaction that "the IMF is back."
But perhaps more important, the G-20 leaders agreed on a set of principles that may mark the beginning of a new global financial architecture that will exercise more control over hedge funds, derivatives, and even traders' bonuses, while at the same time turning the screws on tax havens. This G-20 meeting by definition also represented an effort to broaden participation in global financial leadership beyond just the U.S., Western Europe, and Japan to include big emerging market economies such as China, India, Russia, Brazil, and Saudi Arabia. "This kind of cooperation really is historic," U.S. President Barack Obama told reporters at the end of the conference.
World stock markets were cheered by the leaders' ability to reach a harmonious conclusion. There had been some doubt the day before, when French President Nicolas Sarkozy and German Chancellor Angela Merkel held their own press conference demanding a regulatory crackdown, in what seemed like an effort to counter the impact of the apparent lovefest between Obama and Britain's Prime Minister Gordon Brown. Continuing the recent bull run, London's FTSE closed up 4.28% on Apr. 2, while in New York the S&P 500 was up more than 3.4% in afternoon trading.
Regulatory Reach
Indeed, Sarkozy and Merkel seemed to have largely got their way in terms of the tough language of the final communiqué—though toughening up financial regulation is hardly controversial in the current political climate. "The conclusions are more than we could have hoped for," a delighted Sarkozy told reporters at the end of the summit.
The final communiqué says that regulation and oversight are to be extended to all systemically important "financial institutions, instruments, and markets." Large hedge funds also will be regulated for the first time, though how many funds will fall into the net and what sort of oversight they will have isn't spelled out. "The big unknown is what they mean by regulation," says Simon Gleeson, a partner at the law firm Clifford Chance in London.
In the coming weeks, lobbying groups will maneuver to shape whatever regulation is on the way. "Regulatory reform should strengthen the overall financial system without impeding hedge funds' ability to contribute to the global economic recovery that the leaders of the G-20 hope to advance," says Richard H. Baker, CEO of the Washington-based Managed Funds Assn., which represents hedge funds.
Pressure on Tax Havens
Tax havens—which have buckled under pressure in the last few weeks—continued to draw fire. The G-20 leaders threatened "sanctions" against "non-cooperative jurisdictions." Again, what exactly this will mean in practice is hard to say, but tax havens such as Andorra, Liechtenstein, and even Switzerland are clearly on the defensive. "The moral pressure that has built up in the last few weeks has had an effect," says Andrew Watt, managing director of tax disputes and investigations at London tax advisers Alvarez & Marsal.
With governments unable to agree on a new big bang of fiscal stimulus, beefing up the IMF and regulation were the logical directions to turn. U.S. Treasury Secretary Timothy Geithner's experience with the IMF also may have helped boost the agency's fortunes.
At any rate, the IMF is clearly the big winner from the G-20. It will not only get more money, but it also will have a much easier time deploying it. Until now, countries that turned to the IMF usually were required to agree to tough and painful austerity regimes. Now, applicants considered basically stable will be able to borrow large quantities of money through a new facility called a Flexible Credit Line to stave off possible financial emergencies. Mexico has already requested such an arrangement, and its decision has eased concerns that countries would be wary of such borrowing because of the possible stigma attached. "Once you get the first client, the second is easier," says Kaan Nazli, an emerging markets analyst at consultants Medley Global Advisors.
A Boost for the IMF
The IMF also will become the pillar in a new world financial system designed to more closely monitor risk, as well as to give the so-called BRIC countries (Brazil, Russia, India, and China) and other big players a role at the table. "The highlight of the G-20 meeting is the agreement to boost both the resources and structure of the IMF. It allows for more effective governance of the world economy," says Jim O'Neill, chief economist of Goldman Sachs (GS) in London.
The IMF, along with a new Financial Stability Board headed by Italian central bank head Mario Draghi, will be given the role of providing "early warning of macroeconomic and financial risks and the actions needed to address them." The IMF and the World Bank also may be revamped to make them less the creatures of the U.S. and Western Europe. For instance, the chiefs of these institutions now will be appointed on merit, according the communiqué, perhaps meaning that they will no longer come under the political patronage of Washington and Western Europe. "Emerging markets and developing countries will be given a greater voice and representation," said Britain's Prime Minister Brown, the conference's host.
All of this sounds good, but whether it will actually happen is another question. These decisions only amount to a small additional boost at best for the troubled world economy and will do little to clean up the mess on the balance sheets of the world's big banks. "The experience of the IMF is that you never recover until you complete the cleansing the financial sector," said Strauss-Kahn. By that measure, recovery is still a long way off.
From BusinessWeek
By Kerry Capell and Stanley Reed
The Group of 20 Summit of the world's top leaders, held Apr. 2 at a windowless exhibition hall in London's eastside docklands, did not achieve everything its organizers originally hoped for, but it was not without substance. Clearly, the most important accomplishment is the trebling of the resources available to the International Monetary Fund to $750 billion. That will make it easier to fight financial fires that may break out in the next few months, especially in emerging economies. All told, some $1.1 trillion in new money will come on tap for the IMF, the Worl Bank, and to support trade finance. "That's about the size the world may need," said the IMF's director, Dominique Strauss-Kahn, who noted with satisfaction that "the IMF is back."
But perhaps more important, the G-20 leaders agreed on a set of principles that may mark the beginning of a new global financial architecture that will exercise more control over hedge funds, derivatives, and even traders' bonuses, while at the same time turning the screws on tax havens. This G-20 meeting by definition also represented an effort to broaden participation in global financial leadership beyond just the U.S., Western Europe, and Japan to include big emerging market economies such as China, India, Russia, Brazil, and Saudi Arabia. "This kind of cooperation really is historic," U.S. President Barack Obama told reporters at the end of the conference.
World stock markets were cheered by the leaders' ability to reach a harmonious conclusion. There had been some doubt the day before, when French President Nicolas Sarkozy and German Chancellor Angela Merkel held their own press conference demanding a regulatory crackdown, in what seemed like an effort to counter the impact of the apparent lovefest between Obama and Britain's Prime Minister Gordon Brown. Continuing the recent bull run, London's FTSE closed up 4.28% on Apr. 2, while in New York the S&P 500 was up more than 3.4% in afternoon trading.
Regulatory Reach
Indeed, Sarkozy and Merkel seemed to have largely got their way in terms of the tough language of the final communiqué—though toughening up financial regulation is hardly controversial in the current political climate. "The conclusions are more than we could have hoped for," a delighted Sarkozy told reporters at the end of the summit.
The final communiqué says that regulation and oversight are to be extended to all systemically important "financial institutions, instruments, and markets." Large hedge funds also will be regulated for the first time, though how many funds will fall into the net and what sort of oversight they will have isn't spelled out. "The big unknown is what they mean by regulation," says Simon Gleeson, a partner at the law firm Clifford Chance in London.
In the coming weeks, lobbying groups will maneuver to shape whatever regulation is on the way. "Regulatory reform should strengthen the overall financial system without impeding hedge funds' ability to contribute to the global economic recovery that the leaders of the G-20 hope to advance," says Richard H. Baker, CEO of the Washington-based Managed Funds Assn., which represents hedge funds.
Pressure on Tax Havens
Tax havens—which have buckled under pressure in the last few weeks—continued to draw fire. The G-20 leaders threatened "sanctions" against "non-cooperative jurisdictions." Again, what exactly this will mean in practice is hard to say, but tax havens such as Andorra, Liechtenstein, and even Switzerland are clearly on the defensive. "The moral pressure that has built up in the last few weeks has had an effect," says Andrew Watt, managing director of tax disputes and investigations at London tax advisers Alvarez & Marsal.
With governments unable to agree on a new big bang of fiscal stimulus, beefing up the IMF and regulation were the logical directions to turn. U.S. Treasury Secretary Timothy Geithner's experience with the IMF also may have helped boost the agency's fortunes.
At any rate, the IMF is clearly the big winner from the G-20. It will not only get more money, but it also will have a much easier time deploying it. Until now, countries that turned to the IMF usually were required to agree to tough and painful austerity regimes. Now, applicants considered basically stable will be able to borrow large quantities of money through a new facility called a Flexible Credit Line to stave off possible financial emergencies. Mexico has already requested such an arrangement, and its decision has eased concerns that countries would be wary of such borrowing because of the possible stigma attached. "Once you get the first client, the second is easier," says Kaan Nazli, an emerging markets analyst at consultants Medley Global Advisors.
A Boost for the IMF
The IMF also will become the pillar in a new world financial system designed to more closely monitor risk, as well as to give the so-called BRIC countries (Brazil, Russia, India, and China) and other big players a role at the table. "The highlight of the G-20 meeting is the agreement to boost both the resources and structure of the IMF. It allows for more effective governance of the world economy," says Jim O'Neill, chief economist of Goldman Sachs (GS) in London.
The IMF, along with a new Financial Stability Board headed by Italian central bank head Mario Draghi, will be given the role of providing "early warning of macroeconomic and financial risks and the actions needed to address them." The IMF and the World Bank also may be revamped to make them less the creatures of the U.S. and Western Europe. For instance, the chiefs of these institutions now will be appointed on merit, according the communiqué, perhaps meaning that they will no longer come under the political patronage of Washington and Western Europe. "Emerging markets and developing countries will be given a greater voice and representation," said Britain's Prime Minister Brown, the conference's host.
All of this sounds good, but whether it will actually happen is another question. These decisions only amount to a small additional boost at best for the troubled world economy and will do little to clean up the mess on the balance sheets of the world's big banks. "The experience of the IMF is that you never recover until you complete the cleansing the financial sector," said Strauss-Kahn. By that measure, recovery is still a long way off.
From BusinessWeek
Saturday, March 28, 2009
GM and Chrysler Will Get More Help, With Tighter Strings
Even though the automakers haven't delivered promised debt restructuring, they appear set to get billions more in taxpayer dollars
By David Welch
President Barack Obama will likely throw General Motors (GM) and a lifeline on Monday, Mar. 30. But it won't be carte blanche for either carmaker.
The Treasury Dept. previously set a deadline of Mar. 31 for Chrysler and GM to get needed concessions from the United Auto Workers union and their creditors, and show that they have strong business plans. The reasoning was that if they sufficiently cut factory costs, retiree obligations, they would be viable and worthy of more cash to get through the recession.
Neither company has met its targets. So the President and his Auto Task Force will likely promise the two companies enough cash to keep going for the next few weeks or months, but the Administration will set a firm deadline to get all restructuring done, say people familiar with the matter. GM needs—at a bare minimum—to reduce its $20 billion debt to the UAW by $10 billion, and to cut bond debt from $28 billion to about $9 billion. Chrysler also has to reduce its debts.
No Specifics Available
"There won't be any grand commitments," says David E. Cole, chairman of the Ann Arbor (Mich.)-based Center for Automotive Research, which has advised the task force. "I think they will give the company, union, and bondholders a firm deadline to get everything done or they go to Plan B. They won't like Plan B."
The Treasury Dept. isn't giving specifics on what it wants or how much assistance the government would give, but the President and his team will announce what kinds of restructuring moves and changes the carmakers need to take to continue getting the funds they have requested and avoid bankruptcy. While pushing GM and Chrysler into bankruptcy is an option if the UAW and creditors don't budge, Auto Task Force lead adviser Steven Rattner has said it's not the preferred option. "All indications are that they will provide support," says John McEleney, chairman of the National Auto Dealers Assn., who has met with the task force. "There doesn't seem to be any appetite for bankruptcy."
GM has already received $13.4 billion and wants $16.6 billion more. Chrysler has borrowed $4 billion and has asked for another $5 billion in loans. A GM spokesman declined comment and a Treasury Dept. official said only that details are coming Monday.
GM Bondholders Have Balked
GM has been negotiating with its bondholders to slash its unsecured debt by two-thirds. But bondholders have balked, asking for a bit more than one-third cash and the rest stock. They have also asked the government to guarantee the debt. In the last week, the bondholders also claimed that they hadn't had enough time at the table with GM or the Auto Task Force.
But talks have resumed recently. CNBC said Friday that GM offered bondholders 8¢ in cash, 16¢ in new unsecured debt, and new stock in GM. The bonds have traded for around 20¢ on the dollar.
Bondholders have argued that even though GM is offering more than the 20¢ that some bondholders paid, GM isn't offering to cash them out. So the company is only reducing the face value of the bonds and giving those investors equity.
GM Needs $30 billion From Uncle Sam
At the same time, GM owes the UAW $20 billion to create a union-led health-care trust for retiree medical benefits. The UAW already accepted half of a similar debt from rival Ford Motor (F) in cash. GM could get a similar deal and be compliant with the original request from the Treasury Dept., but one source familiar with the talks said that GM wants the UAW to take less than half the $20 billion in cash and the rest in stock.
GM may need to get the UAW and bondholders to accept more stock than cash than the original plan asked for. The car market has deteriorated since last year, when the Bush Administration set up the parameters for restructuring the company's balance sheet. With sales in the tank, GM needs $30 billion in government money—about the same amount of debt the company must negotiate away.
Even if the union and bondholders agree to the terms set last year, GM would still end up with well over $60 billion in debt, which is right where the company was before borrowing any government money. GM pays more than $3 billion a year in interest, and the cash payments are draining money that could go to designing and marketing new models and developing technology.
Stock Would be Wiped Out in Bankruptcy
Bondholders have been leery of taking too much stock, since its value would be wiped out in bankruptcy. But Cole notes that Chrysler stock went as low as $2 a share in 1979. That's when the government gave Chrysler a $1.5 billion loan guarantee in exchange for stock warrants. The company bought the shares back from Treasury at $21.50 in 1983, giving Uncle Sam a nice profit. If GM and Chrysler make it, Cole says, the union, bondholders and government could make out quite nicely once the car market rebounds.
The Treasury Dept. may also weigh in on whether Chrysler is a stand-alone carmaker or needs a partner. Members of the task force have met with Chrysler CEO Robert Nardelli and, reportedly, with Fiat CEO Sergio Marchionne. Chrysler has a deal to give Fiat 35% ownership of the U.S. automaker if it can restructure its debt. "The government will probably encourage a partner, whether it's Fiat or someone else," Cole says.
Beyond restructuring moves, the automakers and their dealers are hoping the Obama Administration will push greater incentives to sell cars. A "Cash-for-Clunkers" introduced by Senator Dianne Feinstein (D-Calif.), would give buyers up to $4,500 for trading in an old car for a new and more fuel-efficient one. The legislation is gaining momentum, said McEleney, chairman of the National Auto Dealers Assn. The bill has been tied up as some lawmakers want the bill to give the incentive only for American-made cars while others want it to be agnostic as to whether the cars are made in the U.S. or imported.
Junk Car Plan Worked in Germany
McEleney said he met with the Auto Task Force in early March and told its members that the current sales levels—which are running at an annualized rate of about 9 million cars, compared with 16 million or more in recent years—isn't sustainable for any car company.
A similar junked-car incentive did well for workers in Germany last month. The German government gave consumers about $3,200 if they traded in an old model for a new one. Sales in Germany rose 22% in February, while they plummeted elsewhere around Europe. That may not be part of Obama's auto industry plan that is coming Monday, but the idea "seems to have life with Congress," McEleney says. And it suits two of Obama's goals: It would help the carmakers and get old cars—which spew the dirtiest emissions—off the road.
From:Businessweek
By David Welch
President Barack Obama will likely throw General Motors (GM) and a lifeline on Monday, Mar. 30. But it won't be carte blanche for either carmaker.
The Treasury Dept. previously set a deadline of Mar. 31 for Chrysler and GM to get needed concessions from the United Auto Workers union and their creditors, and show that they have strong business plans. The reasoning was that if they sufficiently cut factory costs, retiree obligations, they would be viable and worthy of more cash to get through the recession.
Neither company has met its targets. So the President and his Auto Task Force will likely promise the two companies enough cash to keep going for the next few weeks or months, but the Administration will set a firm deadline to get all restructuring done, say people familiar with the matter. GM needs—at a bare minimum—to reduce its $20 billion debt to the UAW by $10 billion, and to cut bond debt from $28 billion to about $9 billion. Chrysler also has to reduce its debts.
No Specifics Available
"There won't be any grand commitments," says David E. Cole, chairman of the Ann Arbor (Mich.)-based Center for Automotive Research, which has advised the task force. "I think they will give the company, union, and bondholders a firm deadline to get everything done or they go to Plan B. They won't like Plan B."
The Treasury Dept. isn't giving specifics on what it wants or how much assistance the government would give, but the President and his team will announce what kinds of restructuring moves and changes the carmakers need to take to continue getting the funds they have requested and avoid bankruptcy. While pushing GM and Chrysler into bankruptcy is an option if the UAW and creditors don't budge, Auto Task Force lead adviser Steven Rattner has said it's not the preferred option. "All indications are that they will provide support," says John McEleney, chairman of the National Auto Dealers Assn., who has met with the task force. "There doesn't seem to be any appetite for bankruptcy."
GM has already received $13.4 billion and wants $16.6 billion more. Chrysler has borrowed $4 billion and has asked for another $5 billion in loans. A GM spokesman declined comment and a Treasury Dept. official said only that details are coming Monday.
GM Bondholders Have Balked
GM has been negotiating with its bondholders to slash its unsecured debt by two-thirds. But bondholders have balked, asking for a bit more than one-third cash and the rest stock. They have also asked the government to guarantee the debt. In the last week, the bondholders also claimed that they hadn't had enough time at the table with GM or the Auto Task Force.
But talks have resumed recently. CNBC said Friday that GM offered bondholders 8¢ in cash, 16¢ in new unsecured debt, and new stock in GM. The bonds have traded for around 20¢ on the dollar.
Bondholders have argued that even though GM is offering more than the 20¢ that some bondholders paid, GM isn't offering to cash them out. So the company is only reducing the face value of the bonds and giving those investors equity.
GM Needs $30 billion From Uncle Sam
At the same time, GM owes the UAW $20 billion to create a union-led health-care trust for retiree medical benefits. The UAW already accepted half of a similar debt from rival Ford Motor (F) in cash. GM could get a similar deal and be compliant with the original request from the Treasury Dept., but one source familiar with the talks said that GM wants the UAW to take less than half the $20 billion in cash and the rest in stock.
GM may need to get the UAW and bondholders to accept more stock than cash than the original plan asked for. The car market has deteriorated since last year, when the Bush Administration set up the parameters for restructuring the company's balance sheet. With sales in the tank, GM needs $30 billion in government money—about the same amount of debt the company must negotiate away.
Even if the union and bondholders agree to the terms set last year, GM would still end up with well over $60 billion in debt, which is right where the company was before borrowing any government money. GM pays more than $3 billion a year in interest, and the cash payments are draining money that could go to designing and marketing new models and developing technology.
Stock Would be Wiped Out in Bankruptcy
Bondholders have been leery of taking too much stock, since its value would be wiped out in bankruptcy. But Cole notes that Chrysler stock went as low as $2 a share in 1979. That's when the government gave Chrysler a $1.5 billion loan guarantee in exchange for stock warrants. The company bought the shares back from Treasury at $21.50 in 1983, giving Uncle Sam a nice profit. If GM and Chrysler make it, Cole says, the union, bondholders and government could make out quite nicely once the car market rebounds.
The Treasury Dept. may also weigh in on whether Chrysler is a stand-alone carmaker or needs a partner. Members of the task force have met with Chrysler CEO Robert Nardelli and, reportedly, with Fiat CEO Sergio Marchionne. Chrysler has a deal to give Fiat 35% ownership of the U.S. automaker if it can restructure its debt. "The government will probably encourage a partner, whether it's Fiat or someone else," Cole says.
Beyond restructuring moves, the automakers and their dealers are hoping the Obama Administration will push greater incentives to sell cars. A "Cash-for-Clunkers" introduced by Senator Dianne Feinstein (D-Calif.), would give buyers up to $4,500 for trading in an old car for a new and more fuel-efficient one. The legislation is gaining momentum, said McEleney, chairman of the National Auto Dealers Assn. The bill has been tied up as some lawmakers want the bill to give the incentive only for American-made cars while others want it to be agnostic as to whether the cars are made in the U.S. or imported.
Junk Car Plan Worked in Germany
McEleney said he met with the Auto Task Force in early March and told its members that the current sales levels—which are running at an annualized rate of about 9 million cars, compared with 16 million or more in recent years—isn't sustainable for any car company.
A similar junked-car incentive did well for workers in Germany last month. The German government gave consumers about $3,200 if they traded in an old model for a new one. Sales in Germany rose 22% in February, while they plummeted elsewhere around Europe. That may not be part of Obama's auto industry plan that is coming Monday, but the idea "seems to have life with Congress," McEleney says. And it suits two of Obama's goals: It would help the carmakers and get old cars—which spew the dirtiest emissions—off the road.
From:Businessweek
Friday, March 27, 2009
Obama tells banks 'work together'
President Barack Obama has met with top US bankers to discuss his latest plans to stabilise the US financial system and boost the US economy.
Mr Obama called the bosses of the biggest US banks to the White House and told them: "We are in this together."
The president said that his message to the bankers was "show some restraint."
The boss of Goldman Sachs said after the meeting "the problems will be solved" and "we are at the end of beginning, the hard works starts now."
He said the money spent on stimulating the economy would be money well spent.
Mr Obama said that he had asked the bankers to "show some restraint. Show that you get that this is a crisis and everybody has to make sacrifices.
They agreed and they recognized it," he said. "Now, the proof of the pudding is in the eating."
The meeting was a bridge-building exercise by the Obama administration after coming under fire last week for allowing huge bonuses to be paid to AIG executives.
Far-reaching plans
There are three measures needed to turn the economy around, said Lloyd Blankfein, chief executive of Goldman Sachs: "Stimulating the economy, arresting the fall in asset prices and fixing the financial system."
All three were now in place, he added.
"The capital markets are recovering and the stimulus [package] is just starting to get into people's pockets," said Jamie Dimon, chief executive of JP Morgan Chase.
Richard Davis, chief executive of Bancorp, was equally upbeat following the meeting. He said he could see the "beginning of a turn [in the economy], we can start to see a bottom."
He also said the 13 bankers present at the meeting understood the public's anger at bonuses paid to executives of banks that have received government aid.
However, he said that the money Bancorp took from the government "was a good investment, it was not a bail-out."
The government is getting a good rate of interest and it will get its money back, he said.
Despite the optimism of the leading bankers, John Mack, chief executive of Morgan Stanley, sounded a more cautionary note about the time needed for the government measures to take effect.
"Nothing is going to be instantaneous, it's going to take time," he said.
Toxic assets
The US government announced a plan earlier this week to work together with banks and private investors to heThe "Public-Private Investment Programme" is designed to buy up to $1 trillion (£686bn) worth of toxic assets to help repair banks' balance sheets.
Specifically, it will purchase the troubled mortgages and securities that have been at the root of the credit crunch.
And on Thursday US Treasury Secretary Timothy Geithner outlined on Thursday far-reaching plans to strengthen government authority over the US financial system.
Mr Geithner told a US House Committee that a simpler, more effective regulatory system was needed.
The measures are designed to prevent the kind of systemic risk-taking among banks that contributed to the current financial crisis.
The Obama administration has made it clear that it sees the banks as essential to an economic recovery.
The chairman of the Federal Reserve, Ben Bernanke, recently told Congress that while the recession may end in 2009, that would happen "only if" financial stability was restored.
From BBC
Mr Obama called the bosses of the biggest US banks to the White House and told them: "We are in this together."
The president said that his message to the bankers was "show some restraint."
The boss of Goldman Sachs said after the meeting "the problems will be solved" and "we are at the end of beginning, the hard works starts now."
He said the money spent on stimulating the economy would be money well spent.
Mr Obama said that he had asked the bankers to "show some restraint. Show that you get that this is a crisis and everybody has to make sacrifices.
They agreed and they recognized it," he said. "Now, the proof of the pudding is in the eating."
The meeting was a bridge-building exercise by the Obama administration after coming under fire last week for allowing huge bonuses to be paid to AIG executives.
Far-reaching plans
There are three measures needed to turn the economy around, said Lloyd Blankfein, chief executive of Goldman Sachs: "Stimulating the economy, arresting the fall in asset prices and fixing the financial system."
All three were now in place, he added.
"The capital markets are recovering and the stimulus [package] is just starting to get into people's pockets," said Jamie Dimon, chief executive of JP Morgan Chase.
Richard Davis, chief executive of Bancorp, was equally upbeat following the meeting. He said he could see the "beginning of a turn [in the economy], we can start to see a bottom."
He also said the 13 bankers present at the meeting understood the public's anger at bonuses paid to executives of banks that have received government aid.
However, he said that the money Bancorp took from the government "was a good investment, it was not a bail-out."
The government is getting a good rate of interest and it will get its money back, he said.
Despite the optimism of the leading bankers, John Mack, chief executive of Morgan Stanley, sounded a more cautionary note about the time needed for the government measures to take effect.
"Nothing is going to be instantaneous, it's going to take time," he said.
Toxic assets
The US government announced a plan earlier this week to work together with banks and private investors to heThe "Public-Private Investment Programme" is designed to buy up to $1 trillion (£686bn) worth of toxic assets to help repair banks' balance sheets.
Specifically, it will purchase the troubled mortgages and securities that have been at the root of the credit crunch.
And on Thursday US Treasury Secretary Timothy Geithner outlined on Thursday far-reaching plans to strengthen government authority over the US financial system.
Mr Geithner told a US House Committee that a simpler, more effective regulatory system was needed.
The measures are designed to prevent the kind of systemic risk-taking among banks that contributed to the current financial crisis.
The Obama administration has made it clear that it sees the banks as essential to an economic recovery.
The chairman of the Federal Reserve, Ben Bernanke, recently told Congress that while the recession may end in 2009, that would happen "only if" financial stability was restored.
From BBC
Saturday, March 14, 2009
Seven power steps to accomplish your goals in 2009
Have you observed strange something about “new” that keeps our mind occupied with new solutions, new ambitions, new dreams, new projects and new wishes? New Year gives an ideal outset for leading up the next chapter of our life and making it happier and cheerier than the previous one.
However not every ambition and wish becomes reality. Going on your initial zeal and enthusiasm over the long period of time is often difficult. If you have planned something last year you obviously know how hard it is to stay committed to them.
Uncovering the motive why so many people abandon their New Year’s plans, mostly as fast as they make them, is simple.
While plans for the New Year provide us a fantastic sense of positive meaning, they are really tough to stick with unless we turn them into obvious, clear and well-defined objectives.
Here are a few goal setting tips that will help you to stay on track with your plans and make the upcoming year more fabulous:
1. Get It Right!
Before attempting to devise any actual long-term objective for the next year have a ‘mind dump’. It’s fantastic yet easy to get a lot of ideas out of your head, clear your mind and get a positive view of your plans, resolutions, and desires.
Dedicate at least 20 minutes of your committed time to brainstorm. Just sit down, deep-breath and relax. Take a pencil and paper and write down whatever plans come to your mind. You don’t need to analyze anything. Just note it down. Big or small. Little desires or big life changes. Everything you hope you had gotten to, but didn’t. Anything you desired for a long time, but never had enough time, determination, or diligence to go through.
2. Pick Your Goal!
Take a look at the plans that you have penned down… Are any of your goals out of reach? What is the most crucial goal for you just now?
I’m pretty sure that there are many goals that you would like to achieve, but only few of them will have the most expectant affect on your life this year.
Which goal is that? Is it something that can be accomplished in a single year? Or will it need you more time? If it is a long-standing goal that will take several years to accomplish, you might want to break it down into smaller goals that you can achieve in less that a year. Or else, there is a great chance of losing passion and initial drive.
3. One Love; One Goal!
Don’t set a large number of different goals at the same time. While it may seem like a good idea to divide your focus, time and energy between multiple goals, in reality it is counter-productive.
When you define a goal - you make a promise to stay dedicated to it. If you are acting on a lot of goals at the same time, you aren’t devoted to any of them. You’re just going with the flow, anticipating that you’ll get time to grip everything into your already busy schedule. But what you do in reality is lose control of your time and let outside circumstances prescribe your life.
One goal allows you clarity and focus. Ten goals create disorder and perplexity.
If you want to do well in achieving your goal next year, focus on just one goal at a time and stick to it until it is achieved 100%. Then decide on the next one.
I admit that we wish to have the whole thing right this moment. Human is impatient by nature. But take some time to reflect on this: It is far better to accomplish one major goal than set 10 goals and fail to achieve any of them!
4. Create Your Mantra
Once you’ve determined your goal, turn it into a personal statement. And then turn it into something more than a statement - make it your own mantra or a verbal formula that is continuously repeated in your mind.
Ensure that you make your goal as detailed and clear as possible. There is a great way to check if your goal is stated correctly. Look at your goal “from the distance”. Forget that you have written these words just a few hours ago. Imagine that you see this statement for the first time, because your friend wants to know your opinion on it. Do you have any questions? Or maybe you would like to clarify a few things? If so, make adjustments to your goal, until it is 100% clear to everyone who reads it for the first time.
After that put copies of your goal on an index card, make it your desktop wallpaper, post it in the car or right next to your bathroom mirror or next to your computer at work.
Ensure that your goal is always at a forefront of your mind. Repeat it out loud every single day. Make your goal a center of your focus.This will help you to keep your motivation and excitement high throughout the day.
5. Decide On an Action Plan
Many people fail to achieve their goals not because they lack desire or enthusiasm, but because they fail to plan their success out.
Goals are not simple items on your to-do list. They can’t be done overnight. Any worthwhile goal requires sustained effort and energy over the long period of time. Without a well-thought action plan it is almost impossible to carry big goals out.
If you want to noticeably improve your chances of success - plan specific actions that will lead you to the desired result. Your goal should be your compass that will point you into the right direction.
Your action plan is a detailed map that with the baby steps will take you to your destination point. Action plan also helps you to monitor your progress, while giving you a sense of accomplishment and making the whole process seem a lot easier.
6. Make Your Success Inevitable
Even if the goal that we have chosen sounds really appealing, it doesn’t mean that we will stick to it. When it comes to doing actual work, our motivation disappears with a speed of light.
Here is a quick example. Having a beautiful, toned and slim body is a very inspirational goal. We all want to be healthy and look great. However, getting up early in the morning to run 1 mile, denying ourselves things we love to eat, changing our lifestyle sounds much less appealing. At this point we have to consciously force ourselves into doing all these things to get the end result that we want.Of course, if you have an iron will and unbending self-discipline, you will achieve your goal anyways. But if you are like me, you probably won’t torture yourself for a long period of time. Fortunately, there is a way how you can accomplish anything you desire, without having to force yourself into doing something.
All you have to do is set up the right conditions and let things happen for themselves.
For example, if you want to get more exercise, you can find a friend who wants to get back in shape and offer him/her to exercise together. Or set up an appointment with a personal trainer at the gym. He will stay by your side the whole time and you will more likely do your best. Or you can make a deal with your spouse that every workout that you’ll skip, you’ll give him/her $40.
Leave yourself no escape from achieving your goal. What conditions can you set up to make your success inevitable? With a little imagination and support of your friends and family you can accomplish any goal!
7. Build on Your Success
No matter what goal you have decided to pursue, there is only one way to achieve it - take a first step and build on your success gradually.
There is no way around it. You can’t become a multi-millionaire without making your first million. You can’t get in shape and have a gorgeous looking body, without doing the first workout. You can’t write a book, without writing the first chapter.
Whatever you want to accomplish you must do something every single day towards making your wish reality.
Even if you do just a little bit. Something that doesn’t require a lot of your time of effort, but you do it DAILY; you will achieve even your most daring goals.
Don’t let a single day go by without “incrementally” adding to an accomplishment of your goal. Consistency is the most important factor of success. Not motivation, not knowledge, not your skills - but consistency.
When we are first faced with everything we must do in order to achieve our goal it is easy to feel overwhelmed. When a goal seems too difficult to accomplish we often procrastinate, preferring to postpone hard work for later. The problem with it is that “later” may never come.
The only moment when you can change or do something is NOW. Don’t delude yourself with self-justifications that it is ok to skip today, if you do twice the work the next day. Deep down you know that it is just another story that you are telling yourself.
January 1st is a great starting point to change your life for the better. Make no excuses next year! Do something that will take you closer to your goal every single day. Even a tiny step towards your goal creates momentum and boosts motivation. And it is a step that you will never have to take again.
However not every ambition and wish becomes reality. Going on your initial zeal and enthusiasm over the long period of time is often difficult. If you have planned something last year you obviously know how hard it is to stay committed to them.
Uncovering the motive why so many people abandon their New Year’s plans, mostly as fast as they make them, is simple.
While plans for the New Year provide us a fantastic sense of positive meaning, they are really tough to stick with unless we turn them into obvious, clear and well-defined objectives.
Here are a few goal setting tips that will help you to stay on track with your plans and make the upcoming year more fabulous:
1. Get It Right!
Before attempting to devise any actual long-term objective for the next year have a ‘mind dump’. It’s fantastic yet easy to get a lot of ideas out of your head, clear your mind and get a positive view of your plans, resolutions, and desires.
Dedicate at least 20 minutes of your committed time to brainstorm. Just sit down, deep-breath and relax. Take a pencil and paper and write down whatever plans come to your mind. You don’t need to analyze anything. Just note it down. Big or small. Little desires or big life changes. Everything you hope you had gotten to, but didn’t. Anything you desired for a long time, but never had enough time, determination, or diligence to go through.
2. Pick Your Goal!
Take a look at the plans that you have penned down… Are any of your goals out of reach? What is the most crucial goal for you just now?
I’m pretty sure that there are many goals that you would like to achieve, but only few of them will have the most expectant affect on your life this year.
Which goal is that? Is it something that can be accomplished in a single year? Or will it need you more time? If it is a long-standing goal that will take several years to accomplish, you might want to break it down into smaller goals that you can achieve in less that a year. Or else, there is a great chance of losing passion and initial drive.
3. One Love; One Goal!
Don’t set a large number of different goals at the same time. While it may seem like a good idea to divide your focus, time and energy between multiple goals, in reality it is counter-productive.
When you define a goal - you make a promise to stay dedicated to it. If you are acting on a lot of goals at the same time, you aren’t devoted to any of them. You’re just going with the flow, anticipating that you’ll get time to grip everything into your already busy schedule. But what you do in reality is lose control of your time and let outside circumstances prescribe your life.
One goal allows you clarity and focus. Ten goals create disorder and perplexity.
If you want to do well in achieving your goal next year, focus on just one goal at a time and stick to it until it is achieved 100%. Then decide on the next one.
I admit that we wish to have the whole thing right this moment. Human is impatient by nature. But take some time to reflect on this: It is far better to accomplish one major goal than set 10 goals and fail to achieve any of them!
4. Create Your Mantra
Once you’ve determined your goal, turn it into a personal statement. And then turn it into something more than a statement - make it your own mantra or a verbal formula that is continuously repeated in your mind.
Ensure that you make your goal as detailed and clear as possible. There is a great way to check if your goal is stated correctly. Look at your goal “from the distance”. Forget that you have written these words just a few hours ago. Imagine that you see this statement for the first time, because your friend wants to know your opinion on it. Do you have any questions? Or maybe you would like to clarify a few things? If so, make adjustments to your goal, until it is 100% clear to everyone who reads it for the first time.
After that put copies of your goal on an index card, make it your desktop wallpaper, post it in the car or right next to your bathroom mirror or next to your computer at work.
Ensure that your goal is always at a forefront of your mind. Repeat it out loud every single day. Make your goal a center of your focus.This will help you to keep your motivation and excitement high throughout the day.
5. Decide On an Action Plan
Many people fail to achieve their goals not because they lack desire or enthusiasm, but because they fail to plan their success out.
Goals are not simple items on your to-do list. They can’t be done overnight. Any worthwhile goal requires sustained effort and energy over the long period of time. Without a well-thought action plan it is almost impossible to carry big goals out.
If you want to noticeably improve your chances of success - plan specific actions that will lead you to the desired result. Your goal should be your compass that will point you into the right direction.
Your action plan is a detailed map that with the baby steps will take you to your destination point. Action plan also helps you to monitor your progress, while giving you a sense of accomplishment and making the whole process seem a lot easier.
6. Make Your Success Inevitable
Even if the goal that we have chosen sounds really appealing, it doesn’t mean that we will stick to it. When it comes to doing actual work, our motivation disappears with a speed of light.
Here is a quick example. Having a beautiful, toned and slim body is a very inspirational goal. We all want to be healthy and look great. However, getting up early in the morning to run 1 mile, denying ourselves things we love to eat, changing our lifestyle sounds much less appealing. At this point we have to consciously force ourselves into doing all these things to get the end result that we want.Of course, if you have an iron will and unbending self-discipline, you will achieve your goal anyways. But if you are like me, you probably won’t torture yourself for a long period of time. Fortunately, there is a way how you can accomplish anything you desire, without having to force yourself into doing something.
All you have to do is set up the right conditions and let things happen for themselves.
For example, if you want to get more exercise, you can find a friend who wants to get back in shape and offer him/her to exercise together. Or set up an appointment with a personal trainer at the gym. He will stay by your side the whole time and you will more likely do your best. Or you can make a deal with your spouse that every workout that you’ll skip, you’ll give him/her $40.
Leave yourself no escape from achieving your goal. What conditions can you set up to make your success inevitable? With a little imagination and support of your friends and family you can accomplish any goal!
7. Build on Your Success
No matter what goal you have decided to pursue, there is only one way to achieve it - take a first step and build on your success gradually.
There is no way around it. You can’t become a multi-millionaire without making your first million. You can’t get in shape and have a gorgeous looking body, without doing the first workout. You can’t write a book, without writing the first chapter.
Whatever you want to accomplish you must do something every single day towards making your wish reality.
Even if you do just a little bit. Something that doesn’t require a lot of your time of effort, but you do it DAILY; you will achieve even your most daring goals.
Don’t let a single day go by without “incrementally” adding to an accomplishment of your goal. Consistency is the most important factor of success. Not motivation, not knowledge, not your skills - but consistency.
When we are first faced with everything we must do in order to achieve our goal it is easy to feel overwhelmed. When a goal seems too difficult to accomplish we often procrastinate, preferring to postpone hard work for later. The problem with it is that “later” may never come.
The only moment when you can change or do something is NOW. Don’t delude yourself with self-justifications that it is ok to skip today, if you do twice the work the next day. Deep down you know that it is just another story that you are telling yourself.
January 1st is a great starting point to change your life for the better. Make no excuses next year! Do something that will take you closer to your goal every single day. Even a tiny step towards your goal creates momentum and boosts motivation. And it is a step that you will never have to take again.
Friday, March 13, 2009
5 things you should never put on your resume
Job searching can be a lonely, frustrating place. It’s time consuming and it rarely comes without rejection. In most cases, your years of hard work are represented on one or two pages and evaluated by someone who has probably never worked in your position. And it’s that step that determines if you are in the “in” interview pile or the “out” pile.
Those two pages of finely tuned words ARE you, until you have the chance to let your personality shine through in the interview. Here are my top five things to avoid putting on your resume.
1.Giving personal data. Your resume should be a business representation of you. Avoid listing your marital status, age, family data, hobbies, etc. You should have hobbies and a life outside of work, but it’s not necessary to include them on your resume UNLESS the hobby or information is relevant to the job itself. Your prospective employer will find this all out anyways on your Facebook or Myspace page (so make sure it’s representative of what you want them to know). Your age, sexual preference, martial status or family information (children, ages, etc.) are irrelevant. The unfortunate truth is that hiring managers may base their decisions on whether or not to interview and hire you based on the information you provide, discriminatory or not. Don’t let them make that judgment.
2.Listing every job since adolescence. The Starbucks Barista job that got you through college isn’t for the resume. If it’s not relevant to your current job search, drop it. Think: Did this job prepare me to be a PR pro? If not, don’t list it. That goes for internships too. If you have more than five years experience your internships are no longer relevant.
3.Going more than two pages. This is a tough one, especially for candidates with lots of experience. You may have the temptation of wanting to list all of your relevant experience, but nobody reads more than two pages. So don’t give in, no matter how much experience you have. Find a way to cut it down. A good way to start is by focusing on accomplishments for each position rather than a long list of responsibilities.
4.Personal pronouns. Writing your resume in the first person detracts from your accomplishments. It adds unnecessary work and wastes space. The same goes for referring to yourself in the third person. Examples: “I pitched business and trade publications such as…” or “Jane has 15 years of experience…”
5.Providing references or stating “references upon request.” You need references, but not on your resume. You don’t want your valued references being called before you have a chance to let them know. If a company requires references, it will ask you for them when you are seriously being considered for the position. Listing “references upon request” at the bottom of your resume is a given and wastes valuable space.
Those two pages of finely tuned words ARE you, until you have the chance to let your personality shine through in the interview. Here are my top five things to avoid putting on your resume.
1.Giving personal data. Your resume should be a business representation of you. Avoid listing your marital status, age, family data, hobbies, etc. You should have hobbies and a life outside of work, but it’s not necessary to include them on your resume UNLESS the hobby or information is relevant to the job itself. Your prospective employer will find this all out anyways on your Facebook or Myspace page (so make sure it’s representative of what you want them to know). Your age, sexual preference, martial status or family information (children, ages, etc.) are irrelevant. The unfortunate truth is that hiring managers may base their decisions on whether or not to interview and hire you based on the information you provide, discriminatory or not. Don’t let them make that judgment.
2.Listing every job since adolescence. The Starbucks Barista job that got you through college isn’t for the resume. If it’s not relevant to your current job search, drop it. Think: Did this job prepare me to be a PR pro? If not, don’t list it. That goes for internships too. If you have more than five years experience your internships are no longer relevant.
3.Going more than two pages. This is a tough one, especially for candidates with lots of experience. You may have the temptation of wanting to list all of your relevant experience, but nobody reads more than two pages. So don’t give in, no matter how much experience you have. Find a way to cut it down. A good way to start is by focusing on accomplishments for each position rather than a long list of responsibilities.
4.Personal pronouns. Writing your resume in the first person detracts from your accomplishments. It adds unnecessary work and wastes space. The same goes for referring to yourself in the third person. Examples: “I pitched business and trade publications such as…” or “Jane has 15 years of experience…”
5.Providing references or stating “references upon request.” You need references, but not on your resume. You don’t want your valued references being called before you have a chance to let them know. If a company requires references, it will ask you for them when you are seriously being considered for the position. Listing “references upon request” at the bottom of your resume is a given and wastes valuable space.
Wen Voices Concern Over China's U.S. Treasuries
Chinese Premier Wen Jiabao expressed concern over the outlook for the U.S. government debt China holds, urging Washington to take effective policies to restore the American economy to health. He also said China can do more to boost its economy if that becomes necessary.
Speaking at his annual press conference, Mr. Wen voiced confidence in the Chinese government's ability to keep its own economy growing, and said it has the resources to roll out additional stimulus measures if needed.
"We have reserved adequate ammunition. We can at any time introduce new stimulus policies," he said.
Mr. Wen reaffirmed that China can meet its traditional target of economic growth of around 8%. He said market expectations last week of another stimulus package were based on "rumors and misunderstandings," and that China's existing four trillion yuan investment program addresses "both short term and long term needs."
But he noted that the U.S. remains the world's largest economy, and said that China is closely watching the effects of policies taken by U.S. President Barack Obama.
"We have lent a huge amount of money to the U.S., so of course we are concerned about the safety of our assets. I do in fact have some worries," Mr. Wen said in response to a question. He called on the U.S. to "maintain its credibility, honor its commitments and guarantee the safety of Chinese assets."
China holds the world's largest foreign-exchange reserves, reported at $1.946 trillion at the end of 2008, and about two-thirds of that sum is believed to be held in U.S. dollar assets, primarily Treasury bonds. Mr. Wen repeated China's position that the foreign reserves are managed with a view to "safety, liquidity and profitability" – in that order. He said that while China's first priority is to protect its own interests, it will "at the same time also take international financial stability into consideration, because the two are inter-related."
The generally mild-mannered Mr. Wen, who holds a press conference every year at the close of the National People's Congress, China's legislative session, spoke in an unusually forceful tone in addressing concerns about the effect of China's own policies on the global economy.
He noted that China has not pushed down the value of the yuan, and repeated the government's commitment to currency stability "at a reasonable and balanced level." The yuan has hovered around 6.84 to the dollar since July 2008, but Mr. Wen noted that because the dollar has strengthened against other Asian and European currencies, the yuan has actually been stronger overall, which he said has pressured Chinese exports.
Mr. Wen said China alone would decide where the yuan goes from here. "No country can pressure us to appreciate or depreciate" the currency, he said.
Mr. Wen said China has maintained social stability overall, despite an increase in job losses.
He said the most important way for the country to address unemployment is to support the development of small- and medium-sized enterprises, which employ 90% of workers.
His comments underscore how such smaller companies have been hurt badly by the global financial crisis, but also show the difficulties the government will likely face in creating jobs, since a big part of the government investment plan targets infrastructure projects likely to help bigger companies.
"We will make boosting employment a key task in economic and social development, and will continue to take forceful measures" to support employment, he said.
Mr. Wen also said China hopes to reach an agreement on closer economic cooperation with Taiwan as soon as possible and said both sides need to cooperate to deal with the global financial crisis. He also said China will make "reasonable arrangements" for the island's participation in certain international groups, such as the World Health Assembly, the decision-making body of the World Health Organization. The Chinese government has long opposed Taiwan's participation in international organizations.
China will resolutely support the economic development of Hong Kong and Macau, and introduce a yuan-settlement trial involving both territories as soon as possible, Mr. Wen said.
Using the yuan to settle trade is an important step toward the eventual full convertibility of the yuan. It also allows Chinese traders to know exactly how much they will receive in their local currency, a way to bypass the currency risk that has buffeted the export sector over the last 12 months.
Responding to a question whether China is willing to increase its contribution to the International Monetary Fund, Mr. Wen said that increasing the IMF's capital isn't a matter for just one country, but a burden that should be shared by all IMF members in line with their quotas. He repeated China's stance that the IMF should take into account the interests of developing countries.
The European Union this week called for a doubling of IMF resources and U.S. Treasury Secretary Timothy Geithner has laid out several proposals to increase funding for the Fund.
China has been at pains to show it is being a responsible global citizen amid the financial crisis, speaking out frequently against protectionism and taking some measures to open its own markets. Mr. Wen's comments came a day after China said it had begun to allow local authorities to approve certain foreign investments, in a move to ease foreign investment at a time when it has been declining sharply. Foreign investment has been vital for providing jobs and introducing new technology and management practices.
Mr. Wen was speaking on the eve of a meeting of finance ministers and central bankers of the Group of 20 nations in London, which will lay the groundwork for the summit of G20 leaders on April 2.
The G20 should continue to pay attention to helping developing economies, especially the least developed ones, at its upcoming meetings, Mr. Wen said.
Speaking at his annual press conference, Mr. Wen voiced confidence in the Chinese government's ability to keep its own economy growing, and said it has the resources to roll out additional stimulus measures if needed.
"We have reserved adequate ammunition. We can at any time introduce new stimulus policies," he said.
Mr. Wen reaffirmed that China can meet its traditional target of economic growth of around 8%. He said market expectations last week of another stimulus package were based on "rumors and misunderstandings," and that China's existing four trillion yuan investment program addresses "both short term and long term needs."
But he noted that the U.S. remains the world's largest economy, and said that China is closely watching the effects of policies taken by U.S. President Barack Obama.
"We have lent a huge amount of money to the U.S., so of course we are concerned about the safety of our assets. I do in fact have some worries," Mr. Wen said in response to a question. He called on the U.S. to "maintain its credibility, honor its commitments and guarantee the safety of Chinese assets."
China holds the world's largest foreign-exchange reserves, reported at $1.946 trillion at the end of 2008, and about two-thirds of that sum is believed to be held in U.S. dollar assets, primarily Treasury bonds. Mr. Wen repeated China's position that the foreign reserves are managed with a view to "safety, liquidity and profitability" – in that order. He said that while China's first priority is to protect its own interests, it will "at the same time also take international financial stability into consideration, because the two are inter-related."
The generally mild-mannered Mr. Wen, who holds a press conference every year at the close of the National People's Congress, China's legislative session, spoke in an unusually forceful tone in addressing concerns about the effect of China's own policies on the global economy.
He noted that China has not pushed down the value of the yuan, and repeated the government's commitment to currency stability "at a reasonable and balanced level." The yuan has hovered around 6.84 to the dollar since July 2008, but Mr. Wen noted that because the dollar has strengthened against other Asian and European currencies, the yuan has actually been stronger overall, which he said has pressured Chinese exports.
Mr. Wen said China alone would decide where the yuan goes from here. "No country can pressure us to appreciate or depreciate" the currency, he said.
Mr. Wen said China has maintained social stability overall, despite an increase in job losses.
He said the most important way for the country to address unemployment is to support the development of small- and medium-sized enterprises, which employ 90% of workers.
His comments underscore how such smaller companies have been hurt badly by the global financial crisis, but also show the difficulties the government will likely face in creating jobs, since a big part of the government investment plan targets infrastructure projects likely to help bigger companies.
"We will make boosting employment a key task in economic and social development, and will continue to take forceful measures" to support employment, he said.
Mr. Wen also said China hopes to reach an agreement on closer economic cooperation with Taiwan as soon as possible and said both sides need to cooperate to deal with the global financial crisis. He also said China will make "reasonable arrangements" for the island's participation in certain international groups, such as the World Health Assembly, the decision-making body of the World Health Organization. The Chinese government has long opposed Taiwan's participation in international organizations.
China will resolutely support the economic development of Hong Kong and Macau, and introduce a yuan-settlement trial involving both territories as soon as possible, Mr. Wen said.
Using the yuan to settle trade is an important step toward the eventual full convertibility of the yuan. It also allows Chinese traders to know exactly how much they will receive in their local currency, a way to bypass the currency risk that has buffeted the export sector over the last 12 months.
Responding to a question whether China is willing to increase its contribution to the International Monetary Fund, Mr. Wen said that increasing the IMF's capital isn't a matter for just one country, but a burden that should be shared by all IMF members in line with their quotas. He repeated China's stance that the IMF should take into account the interests of developing countries.
The European Union this week called for a doubling of IMF resources and U.S. Treasury Secretary Timothy Geithner has laid out several proposals to increase funding for the Fund.
China has been at pains to show it is being a responsible global citizen amid the financial crisis, speaking out frequently against protectionism and taking some measures to open its own markets. Mr. Wen's comments came a day after China said it had begun to allow local authorities to approve certain foreign investments, in a move to ease foreign investment at a time when it has been declining sharply. Foreign investment has been vital for providing jobs and introducing new technology and management practices.
Mr. Wen was speaking on the eve of a meeting of finance ministers and central bankers of the Group of 20 nations in London, which will lay the groundwork for the summit of G20 leaders on April 2.
The G20 should continue to pay attention to helping developing economies, especially the least developed ones, at its upcoming meetings, Mr. Wen said.
—Victoria Ruan and Terence Poon contributed to this article.
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