The Coming Challenge to US Economic Dominance

Late last month, leaders from Brazil, Russia, India, China and South Africa – the so-called BRICS – announced they were forming their own development bank to assist other emerging economies. The yet-to-be-named bank is expected to compete with the World Bank and the International Monetary fund, two institutions with power structures based firmly in the United States and Europe.
The announcement also serves as yet another sign that the world economy is quickly evolving to a place where United States global economic dominance is being challenged by regional interests.  Since the end of World War II, the United States was the driver of global monetary policy. When the Federal Reserve acted, the world listened and reacted.
Now, according to officials from the BRICS nations, emerging countries are trying to insulate themselves from the market shocks caused by the United States and Europe. They no longer trust the West to do the right thing. They’re forming their own “union” to create stability that the World Bank, the International Monetary Fund and the Fed have been unable to provide.

“If there were shocks to the global financial market, with credit running short, we'd have credit from our biggest international partner[s], so there would be no interruption of trade," Brazilian economic minister Guido Mantega said.

The bank, which is planning to raise $50 billion in capital, is expected to open next year, according to Indian finance minister P. Chidambaram. Other alliances around the world are also forming, portending the end of Western economic dominance.  

To be clear, these alliances are not monetary unions. They don’t share a currency and therefore do not share fiscal policy.  Yet they do share the common belief that together, their developing economies can foster and sustain growth. These alliances do more than simply hedge against Western financial calamities. They encourage investors to keep money in the region instead of sending it to western markets and promote trade between member nations.
Even though many of these alliances lack real teeth, their formation is important symbolically. They give emerging economies a forum to show their strength, as well as send a clear signal that in the future, the United States is not the only game in town.
Rise of the BRICS It did not take long for the BRICS to become a major force on world markets. The leaders of these countries first met in 2006, but a formal alliance wasn’t made until 2009. South Africa joined the group in 2010.
These countries now represent more than 3 billion people. They have a combined gross domestic product of $14.8 trillion, and hold $4 billion in foreign reserves.
The U.S. economy is still the world’s largest, although experts agree that the Chinese economy will grow larger by 2016. And while BRICS’ economic growth has slowed in recent years, they weathered the global economic slowdown far better than the United States and Europe.
In fact, the new BRICS bank is likely the direct result of the Western response to the crisis. The Fed, the European Central Bank, the World Bank and the IMF all acted repeatedly to soften the blow of the crisis. Yet strong growth, both here and in Europe, remains elusive.
According to a paper by Ritwik Banerjee and Pankaj Vashisht, published at the height of the financial crisis, the ability of the BRICS to sustain growth while Western economies were contracting convinced the emerging nations that a rebalancing of global economic power was necessary.
“The erstwhile engine of global growth, the USA, was weakening and the new growth poles were emerging,” they wrote. BRICS were “one of [the] emerging growth poles that caught the imagination of the world.”
BRICS Not Alone In the wake of the global financial crisis, other countries are seeking alliances that will make them less reliant on the West. During the financial crisis, Japan, China and South Korea created a $120 billion emergency loan fund to shore up Asian nations’ finances. The Association of Southeast Asian nations, comprised of 10 countries from that part of the world, is also experiencing a period of robust growth.
New partnerships are also emerging closer to home. Álvaro Uribe, former president of Colombia, recently told The Fiscal Times that his country is considering entering into a formal economic alliance with Mexico, Peru and Chile, creating a bloc with a GDP of $2.2 trillion. These countries have already agreed to eliminate trade tariffs on 90 percent of the goods exchanged between them.
But the biggest challenge to U.S. dominance remains in Asia. The Pentagon is shifting its strategy to confront potential rivals in that part of the world. And U.S. companies are gaining ground in huge consumer markets in China, Indonesia and Malaysia.
Even the National Basketball Association recognizes that the key to future success is breaking the Asian market. It has spent $1.5 billion on a sports and entertainment complex outside of Beijing, and has sent Chinese-American star Jeremy Lin on a tour of the country.
"We are at a critical juncture in human history, which could lead to widely contrasting futures," Christopher Kojm, National Intelligence Council chair wrote in a recent intelligence appraisal. "By 2030, Asia will be well on its way to returning to being the world's powerhouse, just as it was before 1500."

Read more at http://www.thefiscaltimes.com/Articles/2013/04/23/The-Coming-Challenge-to-US-Economic-Dominance.aspx#v1pzUXubwlllhf7h.99

EUROPE TURNS LEFT

The anti-austerity argument in Europe has quickly achieved respectability. Letta is a social democrat, hailing from Italy’s left-of-center Democratic Party. Add his voice to that of French President François Hollande, who is a Socialist, and you find that the eurozone’s second– and third-largest economies are now led by leftists. That is a measure of how Europe’s debt and economic crises are changing its political complexion.
With Letta’s appointment—replacing the technocrat Mario Monti (Letta was not elected)—he and Hollande are the people to watch in Europe now.
It is in Italy and France that the battle over growth vs. austerity, stimulus vs. contraction, will be waged. Either growth and jobs increase and debt and deficits are reduced—or unemployment continues to rise as the debt soars. One way or the other, the post-austerity policies so many have urged for so long are set to get their reality test.

The worry is not the politics of the piece. If social democrats on the scene prove anything, it is that nothing will get done successfully if electorates are excluded. Even Michael Higgins, president of Ireland, which is touted as the success story by the austerians, has taken European leaders to task for mismanaging the European debt crisis. No, the worry is how post-austerity will be paid for.   

Letta is right about the murderous nature of austerity alone. Until now, Europe’s crisis has been a center-right affair. Neoliberal austerians have prevailed in Brussels as well as in most national capitals. And look. The EU teeters on the edge of double-dip recession; unemployment in the euro zone, it was just announced, has reached a record 12.1 percent; debt levels have not markedly improved.
In Italy, Letta takes command of an economy 7 percent smaller than it was in 2007, the year before the crisis. Industrial output is down 25 percent and disposable incomes by nearly 10 percent. Unemployment—Letta’s top priority, he says—is roughly the EU’s average; for those between the age of 15 and 24 it is 36.3 percent. One more stat: Public debt is “nearing 130 percent of gross domestic product,” the OECD reported over the weekend.
Given that things are not a great deal better in France—growth will be negative this year, Brussels forecast. Friday, and unemployment is at a record—Letta and Hollande find themselves in the same position. Both support Keynesian growth policies. But both are also committed to fiscal responsibility and EU debt and deficit targets. How is this going to work?
Hollande, who was elected a year ago, has since come across like alimp-wristed ditherer.This weekend he got hell from voters in the streets of Paris for cutting spending and compromising too readily with austerians: At 27 percent, his approval ratings are a record low for the French. At the same time, investors and businesses say France is a tax-happy place best to avoid.
Letta will face the same left-shoulder, right-shoulder pressures. His government is Italy’s first “grand coalition,” and it is a rainbow of political stripes, from his own Democrats (which have several factions) to former Prime Minister Silvio Berlusconi’s rightist People of Liberty. It is anyone’s guess at this early moment whether Letta, who is noted for his political skills, will keep this ship afloat.
What do social dems who have earned their stripes do in these situations? The answer is interesting because it suggests strongly that Europe’s five years of crisis has changed its political climate.  It has also changed past notions of what the social democratic left—which was born in Europe, after all—should look like and do.
Example: It is not an option in the Europe of 2013 for a left leaning politician and his or her government to jack up public expenditure and balloon the national debt and call it a response to recession. Exhibits “A” and “B” are the core strategies of both Letta and Hollande. They are complex mixes.
Both leaders intend to increase employment, bank lending, and consumption through yet-to-be specified policies. That is the growth side of the formula.
Both Hollande and Letta also say they will reduce public expenditures in the year to come, too. Both have announced tax cuts in the past week, and both are committed to the fiscal targets Brussels has in place (although Hollande has accepted an extension on France’s budget goal).
Look at the list. Two questions arise. First, is it possible to make all of the people happy all of the time? Second, where is the money going to come from?
No is the answer to the first, strictly on principle. Europe’s way forward is not yet defined, austerity or post-austerity or what have you, and this question is a reminder that sustainable growth within the EU structure is not a given outcome. It has to be achieved by shared effort and fairly shared sacrifice.
As to the second question, it is a matter of sequence—the order in which things are done. At the top of the list by a long way must be the post-austerity measures needed to get businesses investing, banks lending, people working and consuming, and (not least) tax revenues rising. After that come structural reforms and EU obligations.
Letta was interesting on this point last week. After his parliamentary debut in Rome, he got on a plane for his first state visit: It was to German Chancellor Angela Merkel. “Our task is to continue with policies of fiscal consolidation,” he said—a direct contradiction of his stress in Rome the day before on jobs, growth, and aid to those of low income. As to where the dough was to come from, Letta appears to have stiffened at the thought. “The ways in which we will find the resources are up to us,” he said. “I don’t have to explain it to anyone.”
Maybe it was because this was an introductory meeting, but Merkel responded to all this with what sounds to me like unusual courtesy. “For us, budgetary consolidation and growth are not contradictory,” she said.
We are all going to see about that soon enough.

Lagos to Emerge 13th Largest Economy in Africa by 2014

The planned rebasing of Nigeria’s Gross Domestic Product (GDP) is expected to raise Lagos State to Africa's 13th biggest economy by 2014, a report assessing the respective economies of the 36 states of the federation has shown.

In its latest report titled, “Nigeria Unveiled: Thirty Six Shades of Nigeria” Renaissance Capital (RenCap), an investment and financial advisory firm, also said that with a per capita income of approximately $4,000, which is more than double the national average of $1,700, the wealthiest people in Nigeria reside in the Federal Capital Territory (FCT).

Abuja’s per capita income is equivalent to that of Tunisia and Ukraine.
With a per capita income of $2,900, Abuja is followed by Lagos with second wealthiest residents in the country, which puts it at par with Morocco and Sri Lanka.

The report showed that while much has been written in recent years about Nigeria’s rising economic significance, very little is known about the country’s 36 states.

It said Lagos State’s economy would be equivalent to the Ghanaian economy post-GDP rebasing, adding that the heart of Nigeria’s $284 billion GDP economy is clearly in Lagos.

Rencap said: “We base our analysis on states’ internally generated revenue, which make up 15 per cent of state government revenue, and consumption data, as proxies for state income.

“Lagos State produces about 12 per cent of Nigeria’s GDP, which is equivalent to $32 billion by 2013 ending. Post rebasing, which we now expect in early 2014, we estimate a 40 per cent upward revision in the country's national income.

“By our estimates, the Lagos State economy will become Africa's 13th biggest economy in 2014 at approximately $45 billion – equivalent to that of Ghana.”

According to the report, Nigeria’s second wealthiest state is in the north. “ Kano State is Nigeria’s second wealthiest economy, with an economy of $17 billion, by our estimates, which is equivalent in size to Botswana’s economy.

“Kano State is the anchor state of poorer northern Nigeria. Historically, Kano State has been a commercial and agricultural state. In pre-colonial times, Kano city, the state capital, served as the southernmost point of the famous trans-Sahara trade routes.

“Kano State has produced some of Nigeria’s most influential and wealthiest people, including Africa’s richest man, Aliko Dangote. Interestingly, Dangote’s great grandfather, Alhassan Dantata was the wealthiest man in West Africa during the colonial period.

“Central Bank of Nigeria (CBN) Governor Sanusi Lamido Sanusi’s grandfather held the influential position of Emir of Kano,” the report said.
The RenCap report further showed that Jigawa, which is bordered by the Republic of Niger to the north, is home to Nigeria’s poorest people, with average per capita income of $850, which puts it at par with that of Zimbabwe.

“We believe the state’s low per capita income partially reflects its very low rate of urbanisation. Nine out of 10 people in Jigawa State live in rural areas.”

In terms of demographics, the report stated that the populations of Kano and Lagos State – Nigeria’s most populous states – are equivalent to that of Portugal.

“Kano and Lagos are each home to 7 per cent of the country’s 170 million population, implying that each has a population of an estimated 10 million people,” the investment firm said in the report.

The report also delved into other areas of the north-south divide showing that there is a notable difference between both regions in terms of household sizes.

“Nigeria’s (richer) south-west states have smaller household sizes than its (poorer) northern counterparts. As is true globally, middle-class families tend to have fewer children, and invest more in each individual child.

“The states with the biggest household sizes are the two northern, neighbouring states of Bauchi and Gombi, where households are, on average, made up of over seven people.

“Lagos is among the states with the smallest household sizes – (4.9 people). Given that Lagos State is the most densely populated state in Nigeria, and its average household size is relatively small, the implication is that property prices (per square metre) must be expensive compared with those in other states,” the report stated.

The report also showed that Lagos has the highest net primary school completion ratio in Nigeria at 70.6 per cent, adding that the south-west population is more likely to have completed primary school than its counterparts in northern Nigeria.

“The most educated workforce in coming years will also be apparent in the south and south-west, where at least 60 per cent of the children complete secondary school.

“We think education levels in the south and south west are likely to spur even faster growth, as we have seen in emerging markets globally.”
Focusing on the middle class, the report said consumer companies are likely to find the greatest opportunities in states with the greatest purchasing power such as Lagos, Abuja, Oyo, Osun, Kaduna and Nassarawa, as well as the Niger Delta states.

It also stated that there are opportunities for banks to expand services and employees into states with a combination of high income and high population density, adding that this would provide the footfall required for branch expansion.

According to the report, states with such opportunities include Anambra, Imo, Abia, Akwa Ibom, Rivers and Osun.
Continuing, it said: “Consumers are more likely to buy branded goods in the FCT, Lagos, Delta and Rivers States. This, we infer from these states’ relatively low food spend/total consumption expenditure, which implies relatively high discretionary income.

“We think these states may also drive air travel, and may prove to be higher value-added customers for telecoms companies.
“We believe food retailers have expansion opportunities in states beyond the southern region that are characterised by relatively high food spend, such as Nassarawa, Niger and Kaduna.”

Indian origin Venkatakrishnan appointed CEO of world's 3rd-biggest gold producer

JOHANNESBURG: Indian-origin Srinivasan Venkatakrishnan was today appointed as the new chief executive of South Africa's AngloGold Ashanti to lead the world's third-biggest gold producer's next phase of development.

Venkatakrishnan, widely known as Venkat, has been with the Johannesburg headquartered company for nine years. Venkat, the company's current finance head, replaces Mark Cutifani who quit last month.

"We're extremely pleased to have an executive of Venkatakrishnan's calibre to lead AngloGold Ashanti through the next phase of its development," AngloGold Ashanti Chairman Tito Mboweni said in a statement.

"Venkat will enjoy my personal support and the full support of the board as he brings his extensive experience to complement the impressive depth of our operating and strategic talent."

Venkat was the Chief Financial Officer at Ashanti Goldfields until that company's merger with AngloGold Limited in May 2004, creating what is now AngloGold Ashanti.

Shortly after the merger, he became Chief Financial Officer of the combined entity and joined the board in 2005.

He holds Associate Chartered Accountant degree from Universidad Pontificia Comillas de Madrid.

"We will build on the good work done over the years in order to realise the value inherent in our portfolio, while placing a sharp focus on returns, margins and free cashflow," Venkat said.

Venkat will also remain CFO of AngloGold Ashanti until further notice, the company said.

AngloGold Ashanti is a global gold mining company and has 20 operations on four continents. AngloGold Ashanti produced 3.944 million ounces of gold in 2012, generating $ 6.35 billion in gold income, according to figuers

China Shipping Expands Fleet

One of China Shipping Container Lines Co's container ships docked at Qinzhou port in the Guangxi Zhuang autonomous region. [Photo by Huang Qin / Xinhua]

China Shipping Container Lines Co, the country's second-largest shipping company by capacity, has ordered what will become the world's biggest container ships from South Korea's Hyundai Heavy Industries Co.
The order, worth $700 million, consists of five container vessels, each with a carrying capacity of 18,400 20-foot containers, the company told China Daily on Monday.
Delivery of the vessels is expected to start in the second half of 2014.
The order will make the Chinese company the second shipping line to own container vessels of such a scale, after the Danish conglomerate AP Moller-Maersk placed an order for 20 such vessels in 2011. Five of those vessels are scheduled for delivery this year.
Market sources said China Shipping had bought its vessels at a "much lower" price than Maersk, as the global shipping downturn has dented shipbuilding prices, but the company declined to comment.
"The order will not put any strain on our finances," it said.
The new vessels will considerably reduce the shipping costs of each container, giving the company a competitive edge in the market, it added.
Hyundai Heavy Industries said the ships will use an engine that can automatically adjust fuel consumption to sailing speed and sea conditions.
This will help improve fuel efficiency, reduce noise and cut emissions, the South Korean shipyard said in a statement.
"We made the order to improve our fleet structure and competitiveness," China Shipping said.
Industry analysts agreed the order will help enhance the Chinese company's strength, but that the container sector as a whole would suffer, as more companies are adding bigger vessels.
"The race for larger container vessels will delay the recovery of the whole industry," said Han Yichao, an analyst with Changjiang Securities Co.
The global shipping industry has experienced rocky times in recent years.
The fragile global economic recovery since the 2008 financial crisis and a debt crisis in Europe have depressed demand.
At the same time, rising oil prices and a glut of vessels have put a drag on the shipping freight industry.
China Shipping narrowed its financial loss to 689 million yuan ($107 million) in the first quarter of this year from 1.45 billion yuan a year ago.
In 2012, the company delivered a profit of 523 million yuan, compared with a loss of 2.74 billion yuan the previous year.
Its shares remained unchanged at HK$1.89 (24 US cents) at the close of trading on Monday in Hong Kong. Hyundai Heavy shares also remained unchanged in Seoul, and have lost 19 percent of their value this year.

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Aliko Dangote is Just Getting Started

Six years ago, Aliko Dangote paid a visit to Tanzania, on Africa’s eastern coast, and shared his dream of having an African-run business empire that would manufacture products all over the continent. To assorted government and business leaders, he announced that he was prepared to make an investment of $600 million to build a cement factory in southern Tanzania, alleviating the shortage in that country’s domestic cement supply. The Tanzanians were skeptical. “They didn’t believe us at all. They thought I was one of these ‘Nigerian 4-1-9’ scammers who try to go and scheme people out of their money,” Dangote says. “Or just one of these clever Nigerians who would come and be lying to them.”
The Tanzania story is clearly one Dangote relishes telling—not least because of how it’s turning out. Not long after his visit, his name appeared on a list of the world’s wealthiest people, and the Tanzanians realized they had been negotiating with Africa’s richest man. As founder and chairman of Dangote Group, he’s worth an estimated $16.3 billion, according to the Bloomberg Billionaires Index. “They pieced the two together,” Dangote says, sitting in his expansive Lagos office in late January. The room is so gigantic it appears nearly empty, even with tall plants, a conference table, and a large-screen television. Three months ago, Dangote Cement signed a final agreement there, with plans to produce 3 million tons of cement a year.

Dangote Cement is Africa’s largest cement manufacturer; the Dangote Group employs 26,000 people in Nigeria alone. The company is constructing cement plants in Ethiopia, Zambia, South Africa, Senegal, Cameroon, the Republic of Congo, and several other African countries. “We want to be predominately in sub-Saharan Africa, and then we will move out of Africa,” he says. He announced plans last fall to construct plants in Iraq and Burma.

STORY:

Bankers and Dealmakers Set Their Sights on Africa

Dangote Group also mills flour, processes salt, produces fertilizer and pasta, and has big plans for sugar. The Nigerian sugar refinery, located at the port of Lagos, is the second-largest in the world. “The same revolution that we’ve had in cement, we want to replicate in sugar,” says Dangote, referring to his push to increase domestic production of a legacy import.
Despite being one of the world’s top producers, Nigeria has yet to refine its own oil. Dangote wants to build a $7 billion facility that would annually process 400,000 barrels of petroleum. “When you look at most of what we’re consuming today, these are things that are being imported,” Dangote says. “We want to make sure that our people are self-sufficient in terms of producing more. The market is there for us to take, but the production is not there.”
Because of his success and vision, his partners, friends, and admirers hold Dangote up as the face of the new Nigeria. With corruption on the wane and the economy liberalizing, Nigeria, they say, is safer than ever for foreign investment. And Dangote’s profile does appear to be contributing to greater confidence in the country. Goldman Sachs (GS) included Nigeria in its Next 11 list of the most promising 21st century economies, and Citigroup (C) called it a “3G,” one of its “global growth generators,” countries with growth potential and investment opportunities. Dangote’s critics—who are not hard to find, if reluctant to speak publicly—say he hasn’t created a model for the future but simply found a way to play a still-rigged game better than others.


Dangote, 55, is a household name in Nigeria and is seen as both a son of privilege who benefited from family connections and a striver who has earned his unprecedented wealth. A workaholic—other businessmen gossip that he rarely sleeps and never vacations—he spends about half his time in Nigeria and the rest traveling around the world. He’s married with three adult children.

BLOG:

What Africa Can Teach Us About the Future of Banking

“He’s charming and humble, but he’s hard to pin down,” says Theresa Okeke, the American director of Lagos’s Civic Centre, a recreational center for the well-to-do. He’s also a favorite among the moneyed set that circulates through the polo and boat clubs and extravagant mansions of Ikoyi and neighboring Victoria Island, enclaves separated by a bridge from the rest of Lagos. (Recently, the French liquor brand Veuve Clicquot said it plans to open an office in Lagos; some upper-class Nigerian families like to hand guests their very own yellow-labeled Champagne bottle at parties.)

STORY:

For IBM, Africa Is Risky and Rife With Opportunity

In Africa, Its Boom Time

Quite the juxtaposition of headlines to start May: Bloomberg reported that the world’s 200 richest people added $45 billion of collective net worth in the week, as the Dow Jones industrial average hit 15,000. At the same time, the capital markets of sub-Saharan Africa, which has some of the poorest nations on earth, are feeling a financing boom unlike anything they’ve ever experienced, according to Chris Kay, a Bloomberg News reporter in Nigeria.

Both phenomena can thank central banks in the developed world for keeping rates painfully low, forcing investors into risk assets in search of return.
The largely unintended consequence of sub-Saharan Africa’s large borrowing window could not come at a better time. Excluding more-developed South Africa, the countries of the region are placing $7 billion of debt this year, more than in the past five years combined, at yields double that of U.S. Treasuries but still lower than what these economies have ever paid. International investors are grabbing for yield and growth. The International Monetary Fund sees the subcontinent posting growth rates of 5.6 percent this year, vs. the developed world’s 1.2 percent. But the region is losing upwards of 2 percentage points of growth because of woefully inadequate infrastructure such as bridges, power generation, roads, and wastewater treatment.
So it helps greatly that these economies can now cash in their superior growth rates for some degree of financial autonomy—and better roads. According to JPMorgan Chase (JPM), average yields on African debt fell 88 basis points in the past 12 months, to 4.35 percent. Nigeria, Gabon, Ghana, Ivory Coast, Namibia, the Congo, Senegal, and the Seychelles have all seen their borrowing costs fall this year. Rwanda cannot sell enough of its bonds.
“Risk premia across the world are getting repriced,” says Larry Seruma, chief investment officer of Nile Capital Management, which invests in Africa. “You have too much money searching for yield, and as safe assets become scarce in the developed world the money has ultimately started to flow to Africa.”
Seruma also credits a broadening of political stability and better governance. For example, Kenya, East Africa’s largest economy, recently saw a peaceful transfer of power (unlike in 2007), despite the victor winning with only 50.6 percent of the vote. In March, Kenya’s finance minister said the country expects to sell sovereign bonds by September, raising as much as $1 billion.
Nigeria, the continent’s oil heavy, is looking to offer $1 billion in Eurobonds this year. Seruma notes that its debt is now part of the JPMorgan and Barclays (BCS) local bond indexes, mandatory benchmarks for many portfolio managers.
Neighboring Ghana, whose 10-year bonds issued in October 2007 have since fallen 3.43 percentage points in yield, to 4.82 percent, wants to sell more than $1 billion in dollar debt this year; it has a creditworthiness to parlay. Angola, Tanzania, and even Mozambique and Uganda are also exploring their debt options with bankers. (That sentence would have been impossible to write just a few years ago.)
Amid the debt frenzy, sub-Saharan stock markets—tiny, illiquid—have similarly been in clover, with Ghana’s up 47 percent, Nigeria’s up 24 percent, and Kenya’s All-Share Index up 30 percent year-to-date.
What will be fascinating to watch is how all these countries service so much easy-money debt when the credit cycle turns, or if commodities and political stability decline. At least for now, though, you get the impression that sub-Saharan Africa has turned a corner in global capital markets.

Obama and Park vow unity against DPRK

US President Barack Obama speaks at a news conference with Republic of Korea's President Park Geun-hye in the East Room of the White House in Washington on Tuesday. Jacquelyn Martin / AP


US President Barack Obama and Republic of Korea's President Park Geun-hye sent a unified message to the Democratic People's Republic of Korea while expressing hope that the crisis there can be resolved with Chinese input.
Also on Tuesday, Bank of China, which is one of the country's biggest banks and has growing operations in the United States, said it has stopped doing business with a DPRK bank that Washington accuses of financing missile and nuclear programs.
Obama, speaking at a joint White House news conference with Park, said the US is "fully prepared and capable of defending ourselves and our allies with the full range of capabilities available, including the deterrence provided by our conventional and nuclear forces".
"The days when North Korea can create a crisis, and enlist concessions, those days are over," he said.
Obama added, however, that both the US and the ROK are prepared to engage the DPRK diplomatically and, over time, build trust. "The burden is on Pyongyang to take meaningful steps to abide by its commitment and obligations, particularly the denuclearization of the Korean Peninsula," he said.
Park said her country and the US won't tolerate "North Korea's threats and provocations", but stressed that Seoul and Washington will work together to encourage Pyongyang to "make the right choice through multifaceted efforts, including the implementation of the Korean Peninsula trust-building process that I had spelled out".
"Should North Korea choose the path to becoming a responsible member of the community of nations, we are willing to provide assistance together with the international community," said Park, who in late February took office as ROK's first female president.
She said China has a role to play in achieving the ultimate goal of the DPRK abandoning its nuclear-weapon ambitions and joining the international community.
"China's role, China's influence, can be extensive," said Park, who speaks Mandarin. A report by the nonpartisan Congressional Research Service issued two weeks ago said the ROK leader appears to be prioritizing improved relations with China, which had cooled during the presidency of her immediate predecessor, Lee Myung-bak. The report also said the emergence of China now influences nearly all aspects of the ROK's foreign and economic policies.
On Tuesday, Park said she and Obama share the view that Beijing's participation in efforts to resolve problems with Pyongyang is important.
"China has taken an active part in adopting UN Security Council resolutions and is faithfully implementing the resolutions," she said, referring to sanctions imposed against the DPRK.
In Beijing, Bank of China said it had notified the Foreign Trade Bank of the DPRK- the country's main foreign-exchange bank - that its accounts were being closed and all transactions suspended. BOC's brief statement didn't include details such as the number of accounts being closed.
In March, the US Treasury Department singled out the Foreign Trade Bank over its alleged role in financing Pyongyang's nuclear program and announced sanctions to cut off the bank and several DPRK officials from the US financial system.
Diplomats have been busy in trying to find a resolution to the crisis that has unfolded since mid-February when the DPRK conducted its third nuclear test and went on to display belligerent behavior that has only recently appeared to subside.
US Secretary of State John Kerry and General Martin Dempsey, chairman of the Joint Chiefs of Staff, visited China, and Wu Dawei, China's special envoy for the Korean Peninsula and chairman of the suspended Six-Party Talks, came to Washington. (The talks involve the ROK, the DPRK, China, the US, Japan and Russia.)
Zbigniew Brzezinski, a former US national security adviser, recently said the DPRK's recent lowering of tensions could be the result of back-channel communication between Pyongyang and Beijing.
On Monday, Western media outlets reported that the DPRK had withdrawn two mobile ballistic missiles from a launch pad on the country's east coast after weeks of speculation that it was planning another missile or nuclear test.
However, on Tuesday, the DPRK issued a warning over this week's joint naval exercises by US and South Korean forces in the Yellow Sea. A statement carried by the official Korean Central News Agency vowed that the country would strike back if "even a single shell drops" onto its territory during the five-day drill, which ends on Friday.
James Schoff, a senior Asia program associate at the Carnegie Endowment for International Peace, said the Korean Peninsula problem cannot be managed effectively without policy coordination with China.
The US and the ROK, he said, "want to see China apply more economic, financial and diplomatic pressure on North Korea and they want China to support tougher sanctions if North Korea continues to violate UN Security Council resolutions".
Scott Snyder, a senior fellow in Korean studies at the Council on Foreign Relations, said it's unclear whether Beijing has taken special measures to try to defuse tensions on the peninsula.
"But the promised midrange-missile exercises that North Korea seemed to be planning as of the second week of April did not materialize, and there's a possibility that they could be postponed for an indefinite period of time," he said.
chenweihua@chinadailyusa.com

55 Killed as Boko Haram Sacks Bama in Borno State

The ancient city of Bama in Borno State has been turned into a ghost town following daring multiple attacks on police, military and prison installations in the town in the wee hours of Tuesday  by suspected members of the Boko Haram sect.

The attack, which led to the death of at least 55 people, forced residents of Bama to either flee the town or lock up their homes and businesses for fear of their lives.

The Joint Task Force (JTF), which took journalists to the town to assess the damage caused by the terrorists, said at least 22 policemen; 14 prison officials, including the commander and prison doctor; 13 suspected members of the sect; three children; two soldiers; and one woman, were killed during the multiple attacks on the town.

The attack on Bama occurred a few hours before the federal government arraigned four suspected terrorists believed to have been involved in the bombing of the United Nations (UN) headquarters in Abuja almost two years ago before a Federal High Court, Abuja.

According to sources, 300 suspected members of Boko Haram were said to have laid siege on Bama at 5 am Tuesday by first attacking an army barracks – 200 Tank Battallion - in the town with the intention of seizing the military facility.

Also attacked were the magistrates’ court in front of the Shehu of Bama’s palace and the prison beside the palace.
However, as the terrorists attacked the barracks, they were repelled by the eagle-eyed soldiers who matched them fire for fire and killed several insurgents who were forced to retreat with the corpses of their members.

But they were unable to take away 13 of their members whose bodies lay lifeless, and one other member who was injured and tied to the stake when the JTF and journalists visited.

As the sect members were attacking the army barracks, which is on the outskirts of the town, other members were simultaneously attacking other facilities in Bama.

Other buildings that were attacked included the police station, police barracks, mobile police station, the prison and magistrates’ court.
The sect members stationed in the town, who were assisted by their colleagues retreating from the army barracks, took out their rage on the government buildings by totally razing them to ashes and killing any uniformed officer in sight.

One sorry sight was at the prison where 105 inmates were alleged to have escaped during the attack.
It was gathered that the insurgents forcefully gained entrance into the prison and slaughtered its commander and the chief superintendent. Other officials of the prison, upon seeing the onslaught, ran for cover in the prison yard.

However, they were flushed out and killed, 12 of them in total, after the freed inmates revealed their hiding place to the invading sect members.

Also, a newly wedded woman, the wife of a police corporal, was burnt to ashes at the police barracks by the rampaging insurgents. There wasn’t a single soul in the barracks when JTF and the journalists visited.
The mobile police barracks was also totally destroyed as well as the police station housing the offices of the area commander and DPO.

A security source said the insurgents moved swiftly around the town between the destroyed facilities with the aid of vehicles with the inscription “Bama Local Government Mass Transit Assisted Scheme”.

When the town was visited, some of the vehicles, which had conveyed the insurgents, had been destroyed.
Speaking on the multiple attacks last night, spokesman of the JTF, Lt. Col. Sagir Musa, confirmed that 55 persons were killed in Bama.
He said the terrorists had first started with the attack on the army barracks where over 300 insurgents that lay siege on the facility were repelled and went into town to wreak further havoc.

He said most of the insurgents were dressed in army camouflage and went about setting ablaze security formations, the health care centre and magistrates’ court.

However, the federal government remained committed to bringing members of Boko Haram to book, as it yesterday arraigned four suspected terrorists believed to have been involved in the suicide bombing of the UN headquarters in Abuja almost two years ago, before a Federal High Court sitting in Abuja.

The suspected terrorists, Mr. Salisu Mohammed, Inusa Mukailu, Danzumi Haruna and Abdulsalami Adamu, were charged with four count charge wherein they were accused of agreeing among themselves and with others still at large, on or about August 20, 2011, to engage in an illegal act which resulted in the death of 23 persons thereby committing an offence contrary to Section 96(a) of the Penal Code Law.

They were alleged to have knowingly assisted and facilitated the activities of persons engaged in an act of terrorism and thereby committed a punishable offence.

On count three of the charge, the suspected terrorists were alleged to have deliberately and maliciously engaged in an act that seriously damaged an international organisation, thereby running foul of the Terrorism Prevention Act, 2011.

They were also accused of being involved in the release of dangerous substances that caused an explosion endangering 23 human lives at the UN building. This offence also runs contrary to the provisions of the Terrorism Prevention Act, 2011.

At the trial, the prosecutor, Mrs. I. Ideva, a chief state counsel, said that the charges be read to the suspected terrorists but the suspects claimed that they did not understand the English language.

One of the court's interpreters had to be invited to interpret the proceedings to the suspects in Hausa language before their pleas were taken. All the accused persons pleaded not guilty to the charges.

The bomb explosion, which caused massive devastation to the building's lower floors, also destroyed the offices of 26 humanitarian and development agencies of the UN which are housed there.

More than 73 persons including staff of the UN, visitors and staff of private businesses operating from the building received non-fatal injuries while scores of others lost their lives.

In September 2011, the State Security Service (SSS) had identified one Mr. Astrid Mantuk as the mastermind behind the attack and offered a huge sum as reward to anyone with useful information that would lead to his arrest.

The suspects, who were docked yesterday were arrested in September 2011 and dragged before an Abuja magistrates’ court where they were charged with organising the bombing. They have been in custody since then.

Following their not guilty pleas, the prosecutor, Mrs. Ideva applied for a date for the trial, noting that the prosecution witnesses were all ready to give evidence at the trial.

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NY to sue Bank of America

New York Attorney General Eric Schneiderman on Monday said he plans to sue Bank of America Corp (BAC.N) and Wells Fargo and Co (WFC.N) for violating the National Mortgage Settlement brokered last year between the country's biggest banks and 49 state attorneys general.
Schneiderman said that since last October he has documented 339 violations of standards dictating the timeline for banks to process mortgage modification applications.
"Wells Fargo and Bank of America have flagrantly violated those obligations, putting hundreds of homeowners across New York at greater risk of foreclosure," the attorney general said in a statement.
Representatives of the banks did not immediately return calls seeking comment.
Schneiderman said he sent a letter to monitors for the National Mortgage Settlement informing them of his intent to sue the banks.

Japan tried to buy isles before Soviet collapse: Ozawa

Japan tried to buy the four disputed islands off Hokkaido from the former Soviet Union as proposed by an aide to then-President Mikhail Gorbachev, opposition leader Ichiro Ozawa said Saturday.
On an Internet program, Ozawa said that when he was secretary general of the Liberal Democratic Party, then in power at the time, he was approached by an aide to the Soviet leader with an offer to return the islands to Japan for money.
Ozawa, now leader of Seikatsu no To (People’s Life Party), said that he got the Finance Ministry to disburse “some trillion yen” and later visited Moscow.
However, Gorbachev ultimately ruled out the sale, saying that although somebody may have made such a proposal, he could not approve it, Ozawa said.
Ozawa did not reveal any further details but is believed to have attempted to close the deal before Gorbachev made his landmark visit to Japan in April 1991.
After the Soviet Union collapsed in December 1991, Russian officials stated that it was in fact Ozawa who offered to buy the islands.
The Russian-held islands — Kunashiri, Etorofu, Shikotan and the Habomai islet group — were seized from Japan by Soviet troops in the closing days of World War II.
The wrangling over their ownership has prevented Japan and Russia from signing a peace treaty to formally end wartime hostilities.

WARREN BUFFET PREPARES HIS EXIT

WARREN Buffett has given the most extensive comments to date about the future of Berkshire Hathaway Inc after he is gone, saying he still expects the conglomerate to be a partner of choice for distressed companies.

Buffett, 82, also defended his plan to install his son, Howard, who has little investing experience, as non-executive chairman, saying the younger man's role would be to ensure that Berkshire had the right CEO in place.

During the financial crisis and its immediate aftermath, Berkshire helped prop up a number of companies, among them blue chips such as General Electric and Goldman Sachs. Buffett's investments were viewed by many shareholders as a seal of approval from one of the world's most respected businessmen.

Short-seller Doug Kass, invited by Buffett to Berkshire's annual meeting on Saturday to offer contrarian points of view, asked whether a successor would have the same heft. Buffett said it would not matter.

"Berkshire is the 800 number when there is really some panic in the markets, and people really need significant capital," Buffett said.

"If you come to a day when the Dow has fallen 1,000 points a day for a few days and the tide has gone out and you find some naked swimmers, those naked swimmers ... will call Berkshire," he added.

Whoever ultimately takes over Berkshire will run a conglomerate that employs more than 280,000 people in dozens of businesses worldwide, covering everything from ice cream to insurance and retail to railroads.

Kass later asked what qualified Howard Buffett, a 58-year-old farmer and philanthropist, to step in as Berkshire's non-executive chairman when his father is gone. The elder Buffett insisted his son was ideal for the task at hand.

"He has no illusions at all of running the business. He won't get paid for running the business," Warren Buffett said. "He'll only have to think about whether the board ... needs to change the CEO."

As in the past, Buffett talked about his successor as CEO without actually identifying him. Speculation usually focuses on a small group of top Berkshire executives, among them insurance boss Ajit Jain and railroad leader Matt Rose.

One long-time Buffett-watcher said the legendary investor seemed to handle the pressure from Kass and others well.

"Buffett hasn't broken much new ground, but he's handled Doug's question well ... and, as always, reinforced the Berkshire culture every chance he's had," said Jeff Matthews, founder of hedge fund Ram Partners LP and a Buffett biographer.

Berkshire's breadth means that its performance is seen as a barometer for the broader economy. On Saturday, Buffett said he still stands by the actions taken by the US Federal Reserve to stimulate the economy, even as he cautioned that the program could be "very inflationary."

"This is like watching a good movie, and I do not know the end," he said. "We have benefited significantly, and the country has benefited significantly, by what the Fed has done."

Buffett also endorsed the last four years of deficit spending by US President Barack Obama's administration, saying it is a problem to get off that program but much less of a problem than if the government had followed a strict austerity program instead.

"We are seeing some recovery in housing prices which has psychological effects," he said. By the next annual meeting, "I think we will have moved forward ... I don't think there will be a surge of any sort, but I don't think we will stall."

Israel to Assad: air strikes did not aim to help Syria rebels

Officials say Israel is reluctant to take sides in Syria's civil war for fear its actions would boost Islamists who are even more hostile to Israel than the Assad family, which has maintained a stable stand off with the Jewish state for decades.
But Israel has repeatedly warned it will not let Assad's ally Hezbollah receive hi-tech weaponry. Intelligence sources said Israel attacked Iranian-supplied missiles stored near the Syrian capital on Friday and Sunday that were awaiting transfer to Hezbollah guerrilla group in neighboring Lebanon.
Syria accused Israel of belligerence meant to shore up the outgunned anti-Assad rebels - drawing a denial on Monday from veteran Israeli lawmaker Tzachi Hanegbi, a confidant of Prime Minister Benjamin Netanyahu.
Interviewed on Israel Radio, Hanegbi said the Netanyahu government aimed to avoid "an increase in tension with Syria by making clear that if there is activity, it is only against Hezbollah, not against the Syrian regime".
Hanegbi noted Israel had not formally acknowledged carrying out the raids in an effort to allow Assad to save face, adding that Netanyahu began a scheduled visit to China on Sunday to signal the sense of business as usual.
"DIPLOMATIC CHANNELS"
The Assad government has condemned the air strikes as tantamount to a "declaration of war" and threatened unspecified retaliation.
But Hanegbi said Israel was ready for any development if the Syrians misinterpreted its messages and was ready "to respond harshly if indeed there is aggression against us".
As a precaution, Israel deployed two of its five Iron Dome rocket interceptors near the Syrian and Lebanese fronts and grounded civilian aircraft in the area, although an Israeli military spokesman said the airspace would reopen on Monday.
Yedioth Ahronoth, Israel's biggest-selling newspaper, said the Netanyahu government had informed Assad through diplomatic channels that it did not intend to meddle in Syria's civil war.
Israeli officials did not immediately confirm the report, but one suggested that such indirect contacts were not required.
"Given the public remarks being made by senior Israeli figures to reassure Assad, it's pretty clear what the message is," the official told Reuters on condition of anonymity.
Military analysts say Syria would be no match for Israel, a U.S. defense ally, in any confrontation. But Damascus, with its leverage over Hezbollah, could still consider proxy attacks through Lebanon, where Israel's conventional forces fought an inconclusive war against the Iranian-backed guerrillas in 2006.
Tehran, which has long backed Assad, whose Alawite minority has religious ties to Shi'ite Islam, denied Israel's attack was on arms. Shi'ite Hezbollah did not comment.

Syria: The War within

Is the war within Syria misreported by the western media?? Is the revolution a genuine aspiration of the Syrian people? Has Bashir Assad really lost credibility to govern? This are the poser as I watch a report on Iran's propaganda machine, PressTV, earlier this morning. Local residents in an area of  Damascus were attacking a BBC correspondent, accussing the media organisation of  misleading the world. Could these assertions be true? What do you think?

What are the implications of the buffet of controversies bedevilling the PDP for Nigeria??

The recent developments in the escalating row between President Goodluck Jonathan of Nigeria and Rt. Hon Amaechi, Governor of a state in the oil rich Niger Delta of southern Nigeria, analysts say only portends only one thing-- The beginning of the end  for The PDP. The PDP has been in government since 1999 with little or nothing to show for it. Majority of the citizenry are disillusioned with the present state of both economic and physical insecurity and think the leadership is grossly incompetent. Within the PDP itself, all doesn't seem to well. The agitation of the Northern Governors elected within under its umbrella is already threatening its electoral fortunes in the next election due 2015. What are the implications of this present dissensions and agitation within the PDP for Nigeria?? Join the debate.