Japan's Core Inflation Rises,
Jobless Rate Worsens
DOW JONES NEWSWIRES
March 27, 2008 11:52 p.m.
TOKYO -- Japan's inflation rate climbed at its fastest rate in a decade in February and the jobless rate worsened to 3.9% under data released Friday, raising concerns about the health of the world's second-largest economy.
The core consumer price index, which excludes volatile fresh food prices, rose 1.0% in February from a year ago -- the fastest reading since March 1998, the Ministry of Internal Affairs and Communications said.
Japan has long struggled with deflation, or falling prices, but Friday's data, which also marked the fifth straight month of gains, show that higher prices for imported oil and commodities are adding pressure on living costs.
Separate data released by the ministry said household spending was flat in February from a year earlier, an indication that the economy was getting less support from domestic demand, while exports that have long driven the nation's growth are also losing steam.
The result fell short of the 2.5% rise expected in surveys by Dow Jones Newswires and Nikkei.
Economy Minister Hiroko Ota voiced concerns that recent sharp rises in consumer prices could have a negative impact on consumption growth.
"With economic growth pausing and workers' wages not increasing, I cannot say that recent rises in consumer prices are good," Mr. Ota told a news conference. "I'm concerned about how such price rises -- mostly stemming from rises in gasoline and food prices -- will affect consumers."
Separately, Japan's unemployment rate stood at a worse-than-expected 3.9% in February, the Ministry of Public Management said. The results reflected slowing domestic and overseas growth, which has made business less willing to hire workers.
Japan's unemployment rate was 3.8% in January.
The ministry said the total number of jobless was down by 40,000 on year, marking the 27th consecutive month of decline.
The jobless rate registered to 4.0% in September and October before dropping to 3.8% in November and staying flat for three months.
The core CPI for the Tokyo metropolitan area for March rose a preliminary 0.6% on year, the data showed. The number is considered a leading indicator for nationwide consumer prices.
Friday, March 28, 2008
Thursday, March 27, 2008
Central Banks-soothe or Stoke?!?!?!
COUNTRY BRIEFING
FROM FINANCIAL TIMES
By Chris Giles in London and James Politi in Washington
Central banks' efforts to ease strains in the money markets are failing to stop financial institutions from hoarding cash, stoking fears that the recent respite in equity markets may not signal the end of the credit crisis.
Banks' borrowing costs - a sign of their willingness to lend to each other - in the US, eurozone and the UK rose again even after the Federal Reserve's unprecedented activity in lending to retail and investment banks against weaker than usual collateral and similar action in Europe.
The continued friction in the money markets came even as stock markets were showing new signs of optimism in spite of fresh data from the US showing consumers at their most pessimistic for 35 years and house prices falling at the fastest rate on record.
In London, where the Bank of England has faced criticism for not being as proactive as other central banks, the three-month Libor rate was set on Tuesday at 5.995 per cent, its highest of the year. This is nearly 0.9 percentage points above the level investors demand for risk-free money, a spread nearly as high as that which led to central bank interventions in September and December.
The European Central Bank allocated €216bn ($337bn) in seven-day funds in its regular weekly operation on Tuesday - some €50bn higher than the amount it estimated would have normally been needed - at an average rate of 4.28 per cent, which was the highest since late September.
The Fed's latest lending to banks under its Term Auction Facility was also in heavy demand, receiving bids for $88.9bn compared with the $50bn on offer, an excess of demand almost as great as the previous auction two weeks ago, before the collapse of Bear Stearns.
But equity markets ignored the continued stresses in the plumbing of the financial system, partly in the hope that they were driven by liquidity hoarding at the end of the financial quarter.
In Europe, the FTSE 100 gained 3.5 per cent, closing 193.9 points higher at 5,689.1, while the FTSE Eurofirst 300 rose 3.1 per cent to close at 1,266. In Asia, Japan's Nikkei 225 closed up 2.1 per cent while the Hang Seng in Hong Kong rose 6.4 per cent.
The rises followed strong gains on Monday in the US after the revised JPMorgan offer for Bear Stearns. At the close, the S&P index was also up 0.23 per cent - its earlier gains pared by further evidence the credit crisis risks sending the US economy into a deep recession.
Consumer confidence crumbled to a five-year low in March, and US home prices experienced a record slide in January.
The Conference Board's confidence index fell from 76.4 in February to a reading of 64.5 this month.
"Consumers' outlook for business conditions, the job market and their income prospects is quite pessimistic and suggests further weakening may be on the horizon," said Lynn Franco of the Conference Board. Except for a brief period in 2003 when the Iraq war began, the index is at its lowest level since the early 1990s.
The expectations index, which tracks consumers' assessments of future conditions, fell from 58 last month to 47.9 in March, its worst reading since December 1973.
The collapse in US consumer confidence came as the S&P/Case-Shiller Index of US home prices showed a sharp decline in January. Home prices in 20 large cities fell by 10.7 per cent in January compared with the same period last year, a drop that was slightly worse than expected but marked an acceleration compared with a 9.1 per cent fall in December.
The slide in home prices - the biggest monthly drop on record - could damp hopes that the US housing market may be close to a bottom. Those hopes were raised on Monday when data showed that sales of previously owned homes rose for the first time in seven months in February.
FROM FINANCIAL TIMES
By Chris Giles in London and James Politi in Washington
Central banks' efforts to ease strains in the money markets are failing to stop financial institutions from hoarding cash, stoking fears that the recent respite in equity markets may not signal the end of the credit crisis.
Banks' borrowing costs - a sign of their willingness to lend to each other - in the US, eurozone and the UK rose again even after the Federal Reserve's unprecedented activity in lending to retail and investment banks against weaker than usual collateral and similar action in Europe.
The continued friction in the money markets came even as stock markets were showing new signs of optimism in spite of fresh data from the US showing consumers at their most pessimistic for 35 years and house prices falling at the fastest rate on record.
In London, where the Bank of England has faced criticism for not being as proactive as other central banks, the three-month Libor rate was set on Tuesday at 5.995 per cent, its highest of the year. This is nearly 0.9 percentage points above the level investors demand for risk-free money, a spread nearly as high as that which led to central bank interventions in September and December.
The European Central Bank allocated €216bn ($337bn) in seven-day funds in its regular weekly operation on Tuesday - some €50bn higher than the amount it estimated would have normally been needed - at an average rate of 4.28 per cent, which was the highest since late September.
The Fed's latest lending to banks under its Term Auction Facility was also in heavy demand, receiving bids for $88.9bn compared with the $50bn on offer, an excess of demand almost as great as the previous auction two weeks ago, before the collapse of Bear Stearns.
But equity markets ignored the continued stresses in the plumbing of the financial system, partly in the hope that they were driven by liquidity hoarding at the end of the financial quarter.
In Europe, the FTSE 100 gained 3.5 per cent, closing 193.9 points higher at 5,689.1, while the FTSE Eurofirst 300 rose 3.1 per cent to close at 1,266. In Asia, Japan's Nikkei 225 closed up 2.1 per cent while the Hang Seng in Hong Kong rose 6.4 per cent.
The rises followed strong gains on Monday in the US after the revised JPMorgan offer for Bear Stearns. At the close, the S&P index was also up 0.23 per cent - its earlier gains pared by further evidence the credit crisis risks sending the US economy into a deep recession.
Consumer confidence crumbled to a five-year low in March, and US home prices experienced a record slide in January.
The Conference Board's confidence index fell from 76.4 in February to a reading of 64.5 this month.
"Consumers' outlook for business conditions, the job market and their income prospects is quite pessimistic and suggests further weakening may be on the horizon," said Lynn Franco of the Conference Board. Except for a brief period in 2003 when the Iraq war began, the index is at its lowest level since the early 1990s.
The expectations index, which tracks consumers' assessments of future conditions, fell from 58 last month to 47.9 in March, its worst reading since December 1973.
The collapse in US consumer confidence came as the S&P/Case-Shiller Index of US home prices showed a sharp decline in January. Home prices in 20 large cities fell by 10.7 per cent in January compared with the same period last year, a drop that was slightly worse than expected but marked an acceleration compared with a 9.1 per cent fall in December.
The slide in home prices - the biggest monthly drop on record - could damp hopes that the US housing market may be close to a bottom. Those hopes were raised on Monday when data showed that sales of previously owned homes rose for the first time in seven months in February.
A new Arthur Anderson?!?!?!
Is KPMG heading the same way as did THE AA firm?!?!Surely not because of the belowmentioned New Century Financial Corp..but the way the firm is directing its capabilities..could well be heading the same way as the erstwhile AA....
KPMG Aided New Century Missteps, Report Says
By PEG BRICKLEY and AMIR EFRATIMarch 27, 2008; Page A6
A court-appointed investigator looking into the collapse of New Century Financial Corp. said in a report that its auditor, KPMG LLP, devised some of the improper accounting strategies that allowed the company to hide its financial problems for years.
The investigator, Michael J. Missal, said the company might be able to recover money for its creditors by suing KPMG for professional negligence and negligent misrepresentation. He also recommended the company sue several of its former top executives to recover millions of dollars in bonuses and other compensation paid to them.
KPMG "contributed to certain of these accounting and financial reporting deficiencies by enabling them to persist and, in some instances, precipitating the company's departure from applicable accounting standards," Mr. Missal said in a 550-page report filed with the U.S. Bankruptcy Court in Wilmington, Del., and released Wednesday.
Dan Ginsburg, a spokesman for KPMG, said, "We strongly disagree with the report's conclusion concerning KPMG. We believe that an objective review of the facts and circumstances will affirm our position."
The Justice Department, as part of its investigation into New Century's collapse, is looking at individuals at KPMG who audited the company, according to people familiar with the case. But these individuals are not currently a target of the investigation, according to a person familiar with the matter. The Justice Department inquiry is being handled out of the Santa Ana office of the U.S. attorney for California's central district, based in Los Angeles. A spokesman for KPMG declined to comment.
A spokesperson for New Century said in a statement: "The Company is pleased that the Examiner's report is finally completed and that we can take the next steps of confirming the plan of liquidation, therefore substantially concluding the bankruptcy process."
In his report, Mr. Missal said that in one instance, a KPMG partner who led the New Century audit team castigated a subordinate who had questioned one of the company's accounting practices as it prepared to file its 2005 annual report with the Securities and Exchange Commission.
According to Mr. Missal, the KPMG partner told the subordinate in an email: "I am very disappointed we are still discussing this. As far as I am concerned, we are done. The client thinks we are done. All we are going to do is p- everybody off."
New Century, based in Irvine, Calif., was once one of the country's biggest providers of mortgages to people with poor credit histories. In 2006, it originated nearly $60 billion in subprime mortgages. It collapsed in April 2007 after its accounting problems came to light, accelerating the meltdown in the subprime-mortgage market. That meltdown precipitated the biggest credit crunch in at least a decade.
In his report, Mr. Missal said New Century had "a brazen obsession with increasing loan originations, without due regard to the risks associated with that business strategy." Its loan-production department, he said, was "the dominant force in the company," which trained mortgage brokers in sessions it referred to as "CloseMore University."
The company had low standards for originating loans, Mr. Missal said. "The predominant standard for loan quality was whether the loans New Century originated could be initially sold or securitized in the secondary market," he said. "The increasingly risky nature of New Century's loan originations created a ticking time bomb that detonated in 2007."
New Century owes its creditors more than $1 billion, but it has said in court papers that they are likely to recover no more than 17 cents of every dollar they are owed. Because the company has few assets left, much of that funding is likely to come from lawsuits against parties responsible for the company's collapse.
In an interview Wednesday, Mr. Missal said KPMG "didn't have the healthy skepticism that you would expect from your outside independent auditors." One of the accounting errors Mr. Missal identified involved a decision not to account for a "growing backlog" of troubled loans New Century was obligated to repurchase.
Senior New Century executives knew as far back as 2004 that the subprime-mortgage boom was doomed to go bust, Mr. Missal said. But he said its accounting practices allowed those dangers to be disguised.
KPMG Aided New Century Missteps, Report Says
By PEG BRICKLEY and AMIR EFRATIMarch 27, 2008; Page A6
A court-appointed investigator looking into the collapse of New Century Financial Corp. said in a report that its auditor, KPMG LLP, devised some of the improper accounting strategies that allowed the company to hide its financial problems for years.
The investigator, Michael J. Missal, said the company might be able to recover money for its creditors by suing KPMG for professional negligence and negligent misrepresentation. He also recommended the company sue several of its former top executives to recover millions of dollars in bonuses and other compensation paid to them.
KPMG "contributed to certain of these accounting and financial reporting deficiencies by enabling them to persist and, in some instances, precipitating the company's departure from applicable accounting standards," Mr. Missal said in a 550-page report filed with the U.S. Bankruptcy Court in Wilmington, Del., and released Wednesday.
Dan Ginsburg, a spokesman for KPMG, said, "We strongly disagree with the report's conclusion concerning KPMG. We believe that an objective review of the facts and circumstances will affirm our position."
The Justice Department, as part of its investigation into New Century's collapse, is looking at individuals at KPMG who audited the company, according to people familiar with the case. But these individuals are not currently a target of the investigation, according to a person familiar with the matter. The Justice Department inquiry is being handled out of the Santa Ana office of the U.S. attorney for California's central district, based in Los Angeles. A spokesman for KPMG declined to comment.
A spokesperson for New Century said in a statement: "The Company is pleased that the Examiner's report is finally completed and that we can take the next steps of confirming the plan of liquidation, therefore substantially concluding the bankruptcy process."
In his report, Mr. Missal said that in one instance, a KPMG partner who led the New Century audit team castigated a subordinate who had questioned one of the company's accounting practices as it prepared to file its 2005 annual report with the Securities and Exchange Commission.
According to Mr. Missal, the KPMG partner told the subordinate in an email: "I am very disappointed we are still discussing this. As far as I am concerned, we are done. The client thinks we are done. All we are going to do is p- everybody off."
New Century, based in Irvine, Calif., was once one of the country's biggest providers of mortgages to people with poor credit histories. In 2006, it originated nearly $60 billion in subprime mortgages. It collapsed in April 2007 after its accounting problems came to light, accelerating the meltdown in the subprime-mortgage market. That meltdown precipitated the biggest credit crunch in at least a decade.
In his report, Mr. Missal said New Century had "a brazen obsession with increasing loan originations, without due regard to the risks associated with that business strategy." Its loan-production department, he said, was "the dominant force in the company," which trained mortgage brokers in sessions it referred to as "CloseMore University."
The company had low standards for originating loans, Mr. Missal said. "The predominant standard for loan quality was whether the loans New Century originated could be initially sold or securitized in the secondary market," he said. "The increasingly risky nature of New Century's loan originations created a ticking time bomb that detonated in 2007."
New Century owes its creditors more than $1 billion, but it has said in court papers that they are likely to recover no more than 17 cents of every dollar they are owed. Because the company has few assets left, much of that funding is likely to come from lawsuits against parties responsible for the company's collapse.
In an interview Wednesday, Mr. Missal said KPMG "didn't have the healthy skepticism that you would expect from your outside independent auditors." One of the accounting errors Mr. Missal identified involved a decision not to account for a "growing backlog" of troubled loans New Century was obligated to repurchase.
Senior New Century executives knew as far back as 2004 that the subprime-mortgage boom was doomed to go bust, Mr. Missal said. But he said its accounting practices allowed those dangers to be disguised.
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