Barroso backs euro for Britain

Those who matter in Britain are considering a renewed drive to abandon the pound, European Commission president Jose Manuel Barroso has hinted.

His comments have sparked speculation that senior politicians including prime minister Gordon Brown may now be mulling the option over.

"I'm not going to break the confidentiality of certain conversations, but some British politicians have already told me: 'If we had the euro, we would have been better off'," the AFP news agency quoted Mr Barroso as saying on French radio.

"The British have an enormous quality, one of many, that is they are pragmatic," he added. "This crisis has emphasised the importance of the euro, in Britain as well."

Sterling has suffered in recent months because of the credit crunch. Many analysts believe its declining fortunes could reinvigorate the dormant argument over whether Britain should join the eurozone.

Downing Street has refused to comment on the issue. It maintains the five economic tests outlined when Mr Brown was in No 11 still stand – that a referendum will only be held when five economic tests are met.

These include the euro's impact on foreign investment, jobs and financial services, in addition to flexibility and convergence criteria.

Opinion polls have in the past suggested Britons remain opposed to abandoning sterling, as Mr Barroso freely admitted.

He added: "I don't mean this will happen tomorrow, I know that the majority are still opposed, but there is a period of consideration underway and the people who matter in Britain are currently thinking about it."

It's the restive season

Massive discounts are on the cards this festive season as South African retailers across the board brace themselves for the bleakest Christmas sales season in nearly two decades, experts say.

"Retailers will have to go all out this Christmas to entice consumers. I would not rule out big discounts from durables, semi-durables and non- durables retailers," Luke Doig, senior economist at Credit Guarantee Insurance Corporation, told I-Net Bridge in a phone interview in Friday.

Black Friday

Today, known as Black Friday in the US, marks the beginning of the traditional Christmas shopping season - putting retailers "in the black" - but sales forecasts for the season are gloomy, with Doig saying his initial forecast of a two percent real decline "looks optimistic" at this stage.

Supporting this forecast is this week's survey by the Bureau for Economic Research (BER) and Ernst & Young, which showed that 13 percent of the retailers expect lower sales volumes in Q4 2008, the weakest result since the 1992 festive season.

Retail sales, as released by the Statistics SA, have dropped every month since May, highlighting the distress faced by consumers given the lagged effects of interest rates hikes between June 2006 and June 2008 and uncomfortably high debt levels.

Meanwhile, earnings reports from several listed retailers show a common theme – slowing top line growth. This raises concerns about retailers' ability to implement steep price markdowns without affecting the quality of earnings.

Better volumes

"What are they going to do? Better volumes at the expense of margin? I think there is still room to give up some margin, otherwise they'd be sitting with high stock levels in January," said Doig.

According to BER/Ernst & Young survey, while more than three-quarters of the respondents raised prices in the third quarter, this came down to 61 percent in Q4, and less than 50 percent expect to increase prices in the first quarter of 2009.

"The combination of weak sales growth and reduced ability to raise prices amid falling commodity prices and weak consumer demand have seen retailer profitability decline to levels last seen in 2001/02," said Derek Engelbrecht, retail and consumer products director at Ernst & Young.

Fuel price declining

But with fuel prices declining, with the latest cut being a substantial R1.61 per litre, both the retailer and the consumer will have a little bit of extra cash this festive season.

Doig estimates that the fuel price cut in December will add an extra R2- billion, easing production costs for retailers and adding more muscle to fight for a slice of R10.3-billion estimated to be spent this holidays.

A snap website glance-through of major retailers showed that they are on furious promotional campaigns, with retail chains from Woolworths and Edgars to Game running massive shopping competitions.

Berkshire Hathaway Q3 profit down 77pc

Warren Buffett's Berkshire Hathaway has reported a third-quarter profit fall of 77 percent, the fourth straight quarterly decline, hurt by weaker results from insurance underwriting and a big loss on derivatives contracts.


Net income for the Omaha, Nebraska-based insurance and investment company fell to US$1.06 billion (NZ$1.83 billion), or US$682 for an A share, from US$4.55 billion, or US$2942 a share, a year earlier.

Operating profit fell 18 percent to US$2.07 billion, or US$1335 a share, from US$2.56 billion, or US$1655.

It fell short of analysts' average expectation of US$1429 a share. Revenue fell 7 percent to US$27.93 billion.

Buffett, an economic adviser to president-elect Barack Obama, has committed more than US$27 billion of Berkshire's money this year to make acquisitions, finance takeovers and invest in blue-chip companies such as General Electric and Goldman Sachs Group as the credit crisis drives asset values down and makes it harder to borrow.

The investments give Berkshire new ways to grow as insurance operations, which generate about half its business, come under pressure. Last month, Buffett pledged to move all his personal holdings apart from Berkshire stock, which is pledged to charity, into United States stocks from government bonds, citing long- term optimism in corporate America.

Profit from insurance underwriting fell 83 percent to US$81 million, hurt by increased price competition and about US$1.05 billion of losses tied to Hurricanes Gustav and Ike. Berkshire had boosted insurance premiums after Hurricane Katrina in 2005, but prices and profit margins have since fallen.

Insurance investment income declined 12 percent in the quarter to US$809 million, and profit from other businesses declined 8 percent to US$1.08 billion. Berkshire also had US$1.01 billion of net losses from investments and derivatives.

The company has disclosed many derivative contracts tied to the performance of the Standard & Poor's 500 and three foreign stock indexes, and to the credit quality of high-yield bonds. Accounting rules require Berkshire to regularly report unrealised gains and losses on those contracts.

Central bank gets $60 mln for technology upgrade

The World Bank said Friday it is lending US$60 million for a project that will provide better training and technology to the State Bank of Vietnam, helping it modernize to international standards.


The credit would help the central bank, the Credit Information Center (CIC), and the Deposit Insurance of Vietnam (DIV) “to reform and modernize the financial sector by improving delivery of their main functions in line with international standards,” the bank said in a press release.

Much of the loan would be used to build a modern, centralized information and communications technology platform to support the State Bank of Vietnam's evolving role as a central bank.

The project would also help the Credit Information Center and the Deposit Insurance of Vietnam with funding from the International Development Association, the Washington-based World Bank's concessional arm.

“The project is aimed at contributing to the achievement of the government's strategic goal of a stable and sound financial sector in Vietnam,” said Xiaofeng Hua of the bank’s East Asia and Pacific Region.

“This effort is critical in ensuring Vietnam's sustainable economic growth and continued progress in poverty reduction, especially at a time of global financial turbulence.”

Source: Thanh Nien

Obama vs. McCain: healthcare smackdown

Those who don't navigate over to our other Health pages are missing out, especially this week. Staff writer Susan Brink has put together a comprehensive roundup of differences between the healthcare plans of Sens. Barack Obama and John McCain, and, not surprisingly, a lively discussion has broken out. You can read the full thread at this link, but for those who prefer (or only have time for) an abridged debate, here are several unedited samples:

From "Joan Walthers:"

"John McCain's plan would be the best. It isn't perfect but at least the insurance would not be handled by the government. We have medicare ins. It is very difficult to get a doctor to accept our insurance even with a supplement because the government is so slow at paying bills and then will pay such a small amount. Doctors can't wait until some gov. office decides to pay the bill. And what sick person can afford to wait for some politician to decide whether the illness should be covered or not and to what extent. No Thanks. Government needs to stay out of people's business. It needs to enable people to make choices, not make them for them."

From "Laura Remson Mitchell:"

"The McCain approach would be a disaster for anybody who has--or ever gets--a major health problem. If you want health care to remain essentially a private rather than a public good, we need *more* regulation, not less. The tax credit promised by McCain would be meaningless without *significant* regulation of private insurance underwriting practices, among other things. What good is the McCain health-care credit if you can't buy the coverage you need at *any* price, much less an affordable one?"

From "Strauss:"

"Obamas Healthcare Plan? McCain's Healtcare Plan ? None of the above will win. Just another campaign promise that will never happen. It never ceases to amaze me that people continue to believe candidates who make promises to get elected and then never keep them. You have a better chance of winning the lottery than getting a national health care plan. Here's a better idea. Start exercising and loose weight and quit taking blood pressure medication. Quit eating junk food and stop tsking cholesterol pills. The US is currently 45 in the world in life expectancy."

There's plenty more of that, and you are welcome to add your comments over there (or here).

-- Martin Beck