The Financial Crisis

German FM says US could lose financial superpower status

BERLIN: The financial meltdown on Wall Street could reorder the world economy and cost the US its status as the world8217;s financial superpower, Germany8217;s finance minister said on Thursday. Finance minister Peer Steinbrueck told federal lawmakers that the collapse of storied US banks and financial firms such as Lehman Brothers would leave 8220;deep marks8221; on the world economy. 8220;The US will lose its status as the superpower in the world financial system,8221; Steinbrueck said. 8220;The world financial system will become more multipolar.8221; Steinbrueck made his critique, among the harshest yet from an economic leader abroad, just hours after US president Bush painted a portrait of dire US economic prospects in a television address from Washington on Wednesday night. Steinbrueck told members of Germany8217;s lower house of parliament that the US will cede financial credibility and clout in the wake of the current crisis, opening room for European banks as well as sovereign wealth funds and investment banks in Asia and the Middle East to exert more influence on the world economy

8216;Celtic Tiger8217; is first eurozone nation to fall prey to recession

DUBLIN: Ireland on Thursday became the first eurozone member to fall into a recession since the US subprime home loan crisis sparked a global economic slowdown, official data showed. Ireland8217;s economy, rocked by a domestic property market meltdown, entered recession for the first time in 25 years after shrinking in the second quarter of 2008, the Central Statistics Office said in a statement. European neighbours Britain, France, Germany, Italy and Spain sit on the brink of recession amid global economic turmoil. Denmark, which is not in the eurozone, fell into recession 8212; two successive quarters of negative growth 8212; earlier this year. Irish GDP shrank 0.5 per cent in the second quarter of 2008 compared with the previous three-month period when the economy contracted 0.3 per cent, according to the CSO. The 8220;Celtic Tiger8221; economy has not experienced a recession since 1983.

SEC to investigate movement of over two dozen hedge funds

New York: US regulator Securities and Exchange Commission SEC has ordered more than two dozen hedge funds to hand over trading information, in a bid to crack down on rumour mongering and short-selling, a Wall Street Journal report said. Quoting people familiar with the matter, the Journal said: 8220;the SEC ordered more than two dozen hedge funds to turn over trading information as it ramps up its investigation into whether traders were spreading rumours to manipulate shares.8221; Hedge funds maximise absolute returns using a broad range of strategies including unconventional and liquid investments. In an order dated September 22, SEC said, six financial institutions 8212; American International Group, Goldman Sachs, Lehman Brothers, Morgan Stanley, Washington Mutual and Merrill Lynch 8212; may have been subject to such manipulation, the Journal said.

GE cuts third-quarter forecast, citing financial market woes

HARTFORD: General Electric, whose shares have been battered by anxiety over the health of its big loan and lease business, lowered its earnings forecast on Thursday, saying the unit8217;s profits were falling and that it was taking action to bolster its reserves. GE Capital, the company8217;s financial business that provides consumer and real estate financing, and corporate lending and leasing, has been caught in the downdraft hurting financial stocks in recent weeks. The unit provides nearly half of GE8217;s profit. Shares of the Dow Jones industrial component and industrial bellwether sank 1.04, or 4.2 per cent, to 23.55 in premarket trading. 8220;Given the recent dramatic developments in the financial markets, we have made some tough decisions to further reduce risk and strengthen our balance sheet while maintaining our dividend,8221; said GE chairman and CEO Jeff Immelt. GE said it expects its financial services businesses will earn about 2 billion in the third quarter. In the second quarter, the GE Money and Commercial Finance segments made a combined profit of 2.45 billion.

Buffett makes 783 mn within hours of Goldman buy

London: Warren Buffett8217;s decision to salvage troubled Goldman Sachs by pumping in 5 billion yielded immediate dividends to the legendary Wall Street investor who raked a notional profit of 783 million over Rs 3,621 crore within hours of the deal8217;s announcement. According to The Times, within hours of revealing his investment desire in Goldman Sachs on Wednesday, Buffett had made a theoretical profit of 783 million . The Wall Street investment bank astounded its rivals by raising 10 billion in fresh capital 8212; 5 billion from Berkshire Hathaway, Buffett8217;s main listed company, and 5 billion through a public share offering. 8220;Shares in Goldman rose six per cent to 133, giving Berkshire an instant theoretical profit on a side deal, under which it has warrants to buy up to 5 billion of new Goldman shares at 115 a share at any time in the next five years,8221; the newspaper said. The publication quoting analysts noted that Buffett8217;s decision to take the plunge in financial stocks 8220;might come to be seen as the turning point in the financial crisis8221;.