... Jai Puri
THE PORTS of Townsville, Mackay, Hay Point and Gladstone remain on high alert today as Tropical Cyclone Hamish continued to threaten north-eastern Australia
With plunging at a faster rate than Europe or the U.S., thousands of jobs lost, and failing politicians lapsing from one crisis to the next, it's been a miserable few months for Japan Inc. Yet amid mounting grim headlines, one deal stands out. On Feb. 13 the British government signaled that a consortium led by Tokyo-based Hitachi (HIT) had won preferred bidder status for a $10 billion contract to build and maintain rolling stock for train lines running along Britain's east and west coasts.
For Hitachi, a sprawling conglomerate that makes everything from flat-panel TVs to nuclear plants, the British contract could not come at a more important time. Hitachi expects to lose $7 billion in the financial year that ends later this month, marking it as one of Japan's worst-performing large companies. This year, despite the huge loss for the group, railway-related sales at the company are forecast to jump a healthy 17%, to $1.5 billion. The British deal, if finalized in October, should see Hitachi and its partners John Laing and Barclays Private Equity supply up to 1,400 train cars. The consortium will also service the trains over a 20-year period.
The federal government on Mar. 3 provided some long-awaited answers on how it plans to unlock consumer and small business credit markets, which have been frozen more solid than an icy tundra.
The $200 billion joint Federal Reserve Board and U.S. Treasury program, known as the Term Asset-Backed Securities Loan Facility, or TALF, is intended to get money flowing for small employers, student-loan providers, credit-card issuers, and auto lenders.
TALF was first announced late last year, but with only hazy parameters and few details. Whereas the better-known Troubled Asset Relief Program, or TARP, was created to bail out banks, TALF's purpose is to induce investors to buy up AAA-rated securities backed by new consumer and small business loans by offering $200 billion in low-interest loans to would-be investors. The idea is that these securities will spur enough investor interest to eventually generate up to $1 trillion of lending.
Since last year, the credit markets have been essentially at a standstill with no new investors willing to purchase securities backed by consumer loans.
NEW YORK (CNNMoney.com) -- What's the best way to fix the nation's banking system? Well, at least two senators making the rounds on the Sunday morning political TV gabfests think it's to let the megabanks fail.
Sen. Richard Shelby, R.-Ala., said on ABC's "This Week" that the most troubled banks are already dead and should be "buried."
Meanwhile, Sen. John McCain, R.-Ariz., added on "Fox News Sunday" that big banks had to fail even if it meant that shareholders will "take a beating." (Note to Sen. McCain: with the stocks of both Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500) down more than 90%, shareholders already have taken a beating.)
So is the solution really that simple? After already propping up two huge banks, Citi and BofA, with $90 billion in bailout funds and hundreds of billions of dollars in loan guarantees, should the government just shut them down the same way that the FDIC closes small, community banks?
There is some merit to the idea that Citi, which Shelby derisively referred to Sunday as a "problem child," and BofA have done so much damage to the economy already that they should no longer be allowed to survive -- at least in their current form.
"Letting more banks fail is something we should at least consider. Blanket capital injections for all banks no matter how healthy they appear to be seems to be counterintuitive," said J.W. Verret, senior scholar for the Mercatus Center at George Mason University. "Some banks need to go through FDIC receivership."
And the Federal Deposit Insurance Corp. does do a good job of taking over small banks and finding a buyer for them quickly -- often a purchaser is announced the same day that the bank fails.
But closing a bank the size of Citi or BofA -- which is what Shelby appeared to suggest Sunday -- is more complicated.
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