The Royal Bank of Scotland has the dubious honour of becoming the world’s largest bail-out. The UK government has agreed to give RBS and Lloyds a further £37bn, meaning the RBS bail-out is now significantly larger than that of Citigroup. In “an admirable feat of redescription,” the UK Treasury says the “likely costs to the taxpayers and the risks [to] the public finances have been reduced”. The news comes as EC competition commissioner Neelie Kroes outlines larger-than-expected divestments for RBS.
Orders for manufactured goods rose in September in the US, wiping out the previous month’s drop, as a not-too-bad datapoint emerges amid the bad news on commercial real estate. The World Bank has raised its growth forecast for Asia by 1.4 percentage points to 6.7 per cent but cautions that the rebound is not yet a recovery. The Bank also warns of asset bubbles, as sister organisation the IMF says global debt could force up interest rates by two per cent. Meanwhile, the ILO has warned of stagnant or falling wages that will limit household spending, saying the 2008 decline in real wages is likely to continue through 2009.
The market price of water in Yemen has quadrupled in the past four years as people increasingly drill illegally for water, putting further pressure on falling reserves. Desalination is difficult for geographical reasons.
There’s a slim possibility that reform of the four main US regulators will result in one super-regulator (the plan outlined in July planned a merger between just two: the Office of Thrift Supervision and the Office of the Comptroller of the Currency).
A jobs tax credit could work if properly designed. Two major perceived problems are the cost of the scheme, and the chance of paying an employer to hire someone they would have hired anyway. Suggested ways to get round this include crediting for hires above a baseline employee count as of September 30, 2009; the credit only applying to companies established before that date; and half the hired hands being on unemployment benefit at the point of hire.
In the world of energy, The Economist asks whether Buffett’s railway purchase is banking on an increase in demand for coal. Meanwhile China OGP, an oil industry newsletter issued by the state-owned Xinhua news agency, will no longer publish data on China’s stockpiles of crude oil, gasoline and diesel, removing the only public source of information on Chinese crude and fuel stockpiles.
And behind the trade wars are trade fairs: the US has finally secured a stand at the Shanghai expo, circumventing various domestic legal issues that make it difficult to spend taxpayers’ money on exhibitions. The Chinese had been offended at the American absence – the only other country without a stand is Andorra.