India's Tata rolls out world's cheapest car

 India's Tata Motors on Monday launched the world's cheapest car, the Nano, hoping to revolutionise travel for millions and buck a slump in auto sales caused by the global economic crisis.

Company boss Ratan Tata said the no-frills vehicle, slated to cost just 100,000 rupees (2,000 dollars) for the basic model, will get India's middle-class urban population off motorcycles and into safer, affordable cars.

"I think we are at the gates of offering a new form of transport to the people of India and later, I hope, other markets elsewhere in the world," he said, describing the launch as a "milestone."

"The present economic situation makes it somewhat... more attractive to the buying public," he told reporters in Mumbai ahead of a glitzy official unveiling ceremony at 7:30 pm (1400 GMT).

Potential owners of the car -- which is just over three metres (10 feet) long and has a top speed of 105 kilometres (65 miles) per hour -- can apply between April 9 and 25, Tata managing director Ravi Kant said.

A ballot will then select 100,000 people to be the first to get the keys to the vehicle and deliveries will start in early July 2009, he added.

Even affluent Indians are eyeing up the Nano, which has a two-cylinder engine and four-speed manual transmission but no air conditioning, electric windows or power steering, although deluxe versions will be available.

"This is a value-for-money car," said Hasmukh Kakadia, 39, a Mumbai investment analyst.

Shares in Tata Motors on India's 30-share Sensex index jumped eight percent in early trade but finally closed 2.8 percent up on profit-taking.

Car dealers say they have been flooded with queries about the Nano, whose debut was delayed after violent protests over the acquisition of farmland to build the plant, forcing Tata Motors to shift from West Bengal state.

But the new plant in Gujarat in western India will not be ready until late this year or early 2010, Tata said, meaning production must come from existing factories, reducing output and increasing waiting times for deliveries.

Kant said 250,000 to 500,000 cars could be produced from the Gujarat plant from next year but admitted some customers may have to wait more than 12 months in the meantime to take possession of their Nano. AP

 

 

 

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Obama economic plan now tops $900 billion

WASHINGTON – The cost of President Barack Obama's economic recovery plan is now above $900 billion after the Senate added money for medical research and tax breaks for car purchases.

It could go higher Wednesday if a tax break for homebuyers is made more generous, even as centrists in both parties promise to clear away spending items that won't jump-start the economy right away.

In an interview on CNN, Obama signaled a willingness to drop items that "may not really stimulate the economy right now." He also signaled he'll try to remove "buy American" provisions in the legislation to avoid a possible trade war.

In a victory for auto manufacturers and dealers, Sen. Barbara Mikulski, D-Md., won a 71-26 vote to allow most car buyers to claim an income tax deduction for sales taxes paid on new autos and interest payments on car loans. The break would cost $11 billion over the coming decade but could mean savings of $1,500 on a $25,000 car.

"Just as we need to get the housing market going, we need to get auto sales going," said Sen. Debbie Stabenow, D-Mich.

Wednesday's session could produce even more generous savings for homebuyers.

Sen. Johnny Isakson, R-Ga., is pressing for a tax credit of up to $15,000 for everyone who buys a home this year, at a cost of $18.5 billion. The pending measure would award a $7,500 tax credit only to first-time homebuyers.

At the same time, centrist senators, including Ben Nelson, D-Neb., and Susan Collins, R-Maine, are seeking to cut tens of billions of dollars from the legislation. They're operating with the blessing of Democratic leaders, who hope a successful effort could attract some GOP votes for Obama's plan.

Democratic leaders conceded they may soon be obliged to cut billions of dollars from the measure. "It goes without saying if it's going to pass in the Senate, it has to be bipartisan," said Sen. Dick Durbin of Illinois, the second-ranking Democratic leader, adding that rank-and-file lawmakers in both parties want to reduce the cost of the bill.

In a series of skirmishes Tuesday, the Senate turned back a proposal to add $25 billion for public works projects and voted to remove a $246 million tax break for movie producers. Both moves were engineered by Republicans who are critical of the bill's size and voice skepticism of its ability to create jobs.

But several hours later, GOP conservatives didn't contest approval of a $6.5 billion increase in research funding for the politically popular National Institutes of Health. That amendment, by Tom Harkin, D-Iowa, drove the price tag of Obama's plan just above $900 billion.

Democratic leaders have pledged to have the bill ready for Obama's signature by mid-month, and in a round of network television interviews Tuesday, the president underscored the urgency. He told CNN that even three months ago, most economists would not have predicted the economy was "in as bad of a situation as we are in right now."

He also spoke out against efforts to require the use of domestic steel in construction projects envisioned in the bill, telling Fox News, "We can't send a protectionist message."

Mikulski's office put the cost of the automobile tax break she sponsored at $11 billion over 10 years. It would apply to the first $49,500 in the price of a new car purchased between last Nov. 12 and Dec. 31, 2009. Individuals with incomes of up to $125,000 and couples earnings as much as $250,000 could qualify, including those who do not itemize their deductions.

Republicans are expected to seek a vote later in the week on a plan to inject the government into the mortgage industry in an attempt to drive down interest rates on mortgages to as low as 4 percent. Democrats treaded carefully on the proposal, saying they would consider it but also claiming the $300 billion Republicans allocated would not come close to accommodating the demand.

Source : AP 

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Brown Warns Global Economy Is Slipping into Financial Protectionism

British Prime Minister Gordon Brown on Saturday warned that the global economy is slipping into a dangerous form of financial protectionism that could lead to serious problems for emerging markets that are dependent on lending from foreign banks.

Mr. Brown, attending the annual World Economic Forum, also said in an interview that the U.K. government hasn't ruled out the use of a so-called bad bank if that is what is required to help banks shed souring assets and resume lending to struggling homeowners and companies.

Increasingly, banks hurt by a financial crisis that dates to the fall of 2007 are taking steps to decrease the assets on their balance sheets in an effort to shore up capital. Today, banks are fighting a two-front battle against volatility in the capital markets that can lead to write-downs and against a massive recession sweeping through Western economies.

But steps taken by the banks to reduce their risk -- and by regulators seeking to stabilize banks at home -- are leading to new and unexpected forms of imbalance.

"As large international banks have come under pressure there has been a retreat to domestic home-based banks," Mr. Brown said. "The combined loss of capacity in the world as a result of that is creating real dangers. Eastern Europe is one very good example. But every country is affected by this.".

In the interview Saturday, Mr. Brown said that if the so-called financial protectionism increases, it will spill into the broader economy and negatively impact global trading.

"What you've got then is a form of financial mercantilism," Mr. Brown said. "What you've got is people retreating to their home-based banking systems. It's the first stage of a financial protectionism that will lead eventually to the kind of trade protectionism that we've seen in the past if we are not prepared to do anything about it."

Mr. Brown appears to be setting the stage for the agenda for the April summit in London of the Group of 20 developed and developing economies, saying that the worsening form of trade protectionism was something "the G20 has got to address." "If you're seeing a destruction of capacity in countries that are left vulnerable as a result of it, and your only mechanism for dealing with them is a bailout by the IMF at the last possible moment, than that's really not a good way of operating a system," Mr. Brown said.

Earlier this week, Stephen Green, the chairman of HSBC Holdings PLC, the largest U.K. bank in terms of market value, expressed a similar concern that world trade could suffer if banks ceased lending in emerging markets.

The problem of banks retreating is being felt back home in Britain. Mr. Brown said that Royal Bank of Scotland Group PLC, which received a state bailout and is now majority owned by taxpayers, along with other British banks are stepping up lending and yet there remain significant lending gaps. The U.K. has been hurt by the exit of Irish and Icelandic banks that had been aggressive lenders.

"Because of the loss of capacity in the British banking system because foreign banks have moved out and non-bank investors have also moved out, then you've lost a very significant amount of your capacity," Mr. Brown said. Mr. Brown separately said the U.K. government remains open to other ideas to help the British banks. Earlier this month, the government unveiled a multi-pronged effort to shore up lending including the use of an insurance scheme that would cover bank losses from souring assets. The British government stopped short of setting up a so-called "bad bank" that could be used to allow banks to slough off assets to a separate vehicle. The U.S. is considering a bad bank.

"We have said that we favor looking at a number of different ways of dealing with this," Mr. Brown said. "The protection through insurance but we've also said our scheme is sufficiently flexible to deal with the bad bank-good bank if necessary."

Wall Street Journal 

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Japan's Panasonic to cut 15,000 jobs, shut plants

TOKYO – Panasonic Corp. said Wednesday it will slash 15,000 jobs and shut down 27 plants worldwide to cope with plunging demand for its TVs, semiconductors and other electronics products.

The world's largest maker of plasma display TVs also announced a net loss for the October-December quarter and lowered its forecast for the fiscal year through March to a net loss of 380 billion yen ($4.2 billion), its first annual loss in six years.

Panasonic joins a slew of other major Japanese companies, including Sony Corp. and Toshiba Corp., in announcing job cuts and forecasting a full-year loss as the global slowdown batters the world's second-largest economy.

The Osaka-based manufacturer plans to cut the jobs — half of which will come in Japan — by the end of March 2010. They amount to about 5 percent of its 300,000-strong global work force.

Panasonic also will shutter 14 overseas plants and 13 plants in Japan by the end of March to adjust production and cut costs, company spokesman Akira Kadota said.

Panasonic blamed the dismal earnings results on the global slowdown set off by the U.S. financial crisis, the rapid surge of the yen and sudden price drops. Sales slid in a wide range of products, including flat-panel TVs, DVD recorders, microwaves, lamps and semiconductors, it said.

"The company's business conditions have worsened particularly since last October, due mainly to the rapid appreciation of the yen, sluggish consumer spending worldwide and ever intensified price competition," it said in a statement.

Panasonic reported a 63.1 billion yen ($709 million) loss for the fiscal third quarter, down from a 115.2 billion yen profit the same quarter the previous year.

Quarterly sales dropped 20 percent to 1.880 trillion yen from 2.345 trillion, with overseas sales decreasing 29 percent, and Japanese sales down 10 percent.

The last time Panasonic reported an annual loss was for the fiscal year ended March 2002, when a global electronics slump and massive restructuring costs contributed to 431 billion yen in red ink.

Since then, the company has been shedding money-losing businesses and focusing on key products such as plasma display TVs to turn itself around.

The company, formerly named Matsushita Electric Industrial Co., for its founder, also lowered its sales forecast for the fiscal year ending March 31, to 7.75 trillion yen from an earlier 8.5 trillion yen.

Panasonic will delay by a half year starting production at two Japan plants — one for plasma panel TVs to July 2010, and another for liquid crystal display TVs until January 2010, in response to slipping demand for flat-panel TVs, it said.

The latest restructuring measures will cost an additional 190 billion yen on top of the 155 billion yen Panasonic has already announced for the fiscal year through March.

Rival Japanese manufacturer Sony is forecasting a 150 billion yen net loss for the fiscal year through March. The last and only time Sony reported a loss — the fiscal year ending March 1995 — the red ink came from one-time losses in its movie division, marred by box office flops and lax cost controls.

Hitachi Ltd., NEC Corp. and Toshiba are also all forecasting big losses for the fiscal year.

Panasonic shares rose 1 percent to 1,092 yen. Earnings were announced after trading ended.

 

Source : Associated Press

 

 

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Obama to outline economic strategic soon

WASHINGTON – President Barack Obama said Saturday his administration will outline a new strategy in the coming days for spending billions of federal dollars to pull the nation out of an economic crisis he described as "devastating."

Obama and his top advisers are weighing how to structure the remaining $350 billion that Congress approved last year to save financial institutions and lenders from collapse. The new president also warned there is no single action that would allow his administration to fix the struggling U.S. economy, a stark statement at the end of a week that saw hundreds of thousands of Americans lose their jobs.

"No one bill, no matter how comprehensive, can cure what ails our economy," Obama said in his weekly radio and Internet address. "So just as we jump-start job creation, we must also ensure that markets are stable, credit is flowing and families can stay in their homes."

Obama and his aides spent his first two weeks in power working on the nation's economic troubles. The final three months of last year sent the economy into its worst downhill slide in a quarter-century. The economy stumbled backward at a 3.8 percent pace, government economists said Friday; that rate could accelerate to 5 percent or more this quarter.

Treasury Secretary Timothy Geithner met with the administration's top officials and advisers in recent days, trying to finish a plan to overhaul the $700 billion bailout program that is already half gone. Geithner previously said the administration is weighing the possibility of using a government-run "bad bank" to buy up toxic assets that are weighing on the books of financial institutions, but some officials now say that option is gone because of potential costs.

Many of the measures under consideration could end up costing taxpayers hundreds of billions of dollars beyond the original $700 billion price tag. Aides would not rule out the possibility of the administration's asking for more than the $350 billion already allocated.

Obama didn't commit his administration to any decision Saturday but broadly described his ideal final package.

"Soon my treasury secretary, Tim Geithner, will announce a new strategy for reviving our financial system that gets credit flowing to businesses and families," Obama said. "We'll help lower mortgage costs and extend loans to small businesses so they can create jobs. We'll ensure that CEOs are not draining funds that should be advancing our recovery."

"And we will insist on unprecedented transparency, rigorous oversight and clear accountability so taxpayers know how their money is being spent and whether it is achieving results."

Obama's message — largely repackaged from a week of White House statements — was as much for the country as it was for lawmakers: Pass the separate American Recovery and Reinvestment Plan or things are going to get worse.

"Rarely in history has our country faced economic problems as devastating as this crisis," the president said. "Now is the time for those of us in Washington to live up to our responsibilities."

Obama last week won passage of a separate $825 billion economic stimulus plan in the House — without a single Republican vote. It now heads to the Senate, where Vice President Joe Biden predicts the measure will fare better among GOP lawmakers.

Republicans pledged on Saturday to work with Obama, although leaders cautioned against treating government spending like a "trillion-dollar Christmas list" and renewed their opposition to much of the bill's spending.

"A problem that started on Wall Street is reaching deeper and deeper into Main Street. And the president is counting on members of Congress to come together in a spirit of bipartisanship to act," Senate Minority Leader Mitch McConnell, R-Ky., said in the GOP radio address. "Unfortunately, the plan that Democrats in Congress put forward this week falls far short of the president's vision for a bill that creates jobs and puts us on a path to long-term economic health."

Obama has signaled his willingness to compromise on the bill; his chief spokesman said the president hoped to "strengthen" the bill as it headed toward a Senate vote late this week.

Republicans said they hope the administration takes into account their wishes.

"Every day brings more news of layoffs, home foreclosures and shuttered businesses," McConnell said. "And across the country, employers are cutting to the bone even at businesses that most Americans never thought were vulnerable."

Republicans, however, kept putting forward their own plans. McConnell promoted a mortgage program for creditworthy borrowers, offering fixed-rate 4 percent loans designed to increase housing demands and lending.

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