Subprime Crisis

Germany’s finance minister said to ministers from the Group of Seven financial leaders that total financial losses from subprime mortgages could top $400 billion and that central banks may need to make more emergency cash injections.

The comments come amid speculation that the European Central Bank may be increasingly willing to cut rates. Thus far it has stood pat as the U.S. Fed and the Bank of England have made cuts.

Big U.S-China Mining Venture

China’s Chinalco and the U.S. company Alcoa have teamed up to buy a 12 percent stake in Rio Tinto, a global mining company.

The Financial Times calls it “the largest ever Chinese outbound investment and the largest ever cross-border deal involving a Chinese company.”

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APEC makes plans for free-trade zone excluding India

President George W. Bush will attend today’s meetings of the Asia-Pacific Economic Cooperation (APEC) forum in Sydney.

Bloomberg says the talks will include efforts to launch a free-trade zone across the region, but notes that a number of Asian countries are keen to exclude India from such a project initially.

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World Markets Tsunami

Miscalculation and poor regulation combined to create a rather large mountain out of the mole hill of sub-prime housing loans in the United States, and the collapse of that mountain has produced a tsunami of reaction around the globe.

Among the far flung results, a threat to Australia’s treasurer, a warning from British Land that commercial property, too, may be at risk, the collapse of a Canadian financial services firm.

Only Asia, so far, appears largely unaffected, but whether that will last is anyone’s guess. SeekingAlpha, an excellent blog founded by a former Morgan Stanley trader, sees Asia’s exposure as limited.

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ADDENDUM: Only because it’s Friday would we dare to say: HIRAM7 REVIEW told you so, in March 2007.

The European Union and China

In a Lowy Institute for International Policy report, Roberto Menotti of the Aspen Institute examines the European Union’s policy responses to the rise of China.

The EU is a newcomer to East Asian affairs, but its stake in the region is growing rapidly in light of China’s economic clout. The European approach to China’s rise differs profoundly from that of the US, due to geopolitical realities and a general belief in the benign effects of economic interdependence.

Roberto Menotti argues, however, that the EU has so far failed to pursue a coherent common policy, as seen in the debate in 2004-2005 over Europe’s decision to revoke the arms ban on China. He suggests that one problem of the European approach has been the fuzzy distinction between multilateralism (an international methodology) and multipolarity (a particular type of international system).

Download the report.

Dow-Jones-Konzern ist käuflich

In der Frankfurter Rundschau schreibt Henrik Schmitz zum Verkauf des ehrwürdigen New Yorker Wall Street Journals.

“Mit dem Dow-Jones-Verlag kauft sich Murdoch Wirtschaftskompetenz ein, die er unter anderem für den Aufbau eines Wirtschaftssenders unter dem Dach der Senderkette Fox nutzen könnte. Das WSJ ist dabei nicht nur die US-Zeitung mit der zweithöchsten Auflage, sie verfügt auch über einen Kundenstamm von rund 730.000 zahlenden Online-Abonnenten aus Kreisen betuchter Manager. Das Internet ist Murdochs neuestes Hobby, hier sieht er die Zukunft. Unternehmen, die eine glorreiche Vergangenheit als Schutzschild gegen die Kräfte der Veränderung betrachteten, würden untergehen, hatte Murdoch unlängst gesagt. Andere sehen gerade in Murdoch den Untergang für das Wall Street Journal.”

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Murdoch’s strategy for the Wall Street Journal

Rupert Murdoch’s NewsCorp won its $5.6 billion bid for Dow Jones, the company that owns the Wall Street Journal. The Wall Street Journal’s publisher said in a letter to readers that little will change at the paper. An International Herald Tribune (IHT) news analysis says a major indicator of Murdoch’s leadership will be his approach to spreading the paper’s brand internationally.

“His strategy will probably include aggressively undercutting advertising and investing heavily in editorial content - particularly in Washington and international news - absorbing losses at first to win the longer-term war.

“At its most ambitious, Murdoch’s vision for Dow Jones would establish The Journal as the rival to The Times in setting the daily news agenda of the country.”

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Dow Jones board mulls deal

The board of Dow Jones & Company, which owns the US-American daily newspaper The Wall Street Journal, will tonight vote on a $5 billion bid for the company by Rupert Murdoch’s News Corporation, despite lingering misgivings from the Bancroft dynasty, which currently owns a controlling stake of the company.

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Mega-Mining Deal for Canada

Australian mining giant Rio Tinto Group outbid Alcoa of the United States in a takeover deal for Canada’s biggest mining company - Alcan Inc. If finalized, the deal would create the world’s largest aluminum company.

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