OPENING SALVO

Next week is a job interview for Russel Norman.

The Green Party co-leader has his eye on being minister of finance in two and a half years and he wouldnt be the first Australian or ex-communist to achieve high political office in New Zealand.

Dr Norman is very conscious that achieving his goal requires the Green s to stay well above 10% in the polls and for David Shearer, David Cunliffe and David Parker, Shane Jones and Andrew Little or Grant Robertson to have confidence that making him finance minister would not cause an immediate crash in business and economic confidence.

Although Dr Norman has no expectation of winning votes from the business community, he knows that earning Mr Shearers trust (or Mssrs Cunliffes, Parkers Jones or Littles) depends on him mitigating public concerns that the Greens have wacky ideas about the economy.

His response to Bill Englishs fourth budget will therefore be crucial.

Partnership of equals
The alternative to a John Key/Winston Peters government, which remains the most likely after 2014, is unlike any New Zealand has seen before.

Previous coalition governments have tended to consist of one overwhelmingly dominant party backed by ministerial minnows.

The closest to an equal partnership was the National/NZ First coalition of 1996 to 1998. Even in that case, though, the bigger party still contributed three quarters of government MPs.

In contrast, a Labour/Green/NZ First government post-2014 would see Labour providing only around 60% of the personnel.

Despite concerns about tails wagging dogs, New Zealand small parties have in fact been relatively temperate in their demands, making them commensurate with their popular support.

Mr Peter demanded to be made deputy prime minister and treasurer in 1996 but the size of his voting bloc arguably justified it. Similarly, Jim Anderton demanded the deputy prime ministership in 1999 but relinquished it in 2002 when his support crashed.

Based on current forecasts and polls, nobody not even Mr Peters has ever had as much right to demand genuine political power from their coalition partner as Dr Norman is likely to have in 2014.

After its poor treatment of the Greens over the years, shunning them whenever possible in favour of Mr Peters and Peter Dunne, Labour will have to acquiesce to their demands in 2014 or create a permanent, embittered rival on the left.

Warming to business
The proximity of real power and the overshadowing of environmental fantasies by hard economic times have moderated the Greens political positioning.

Back in 1996, former co-leader Jeanette Fitzsimons declared trade should be discouraged for the sake of the environment. Today, Dr Norman talks about narrowing the balance of payments deficit by rebalancing the economy from consumption toward exports.

He sees particular scope for growth in exports of services, talking of Mighty River Power becoming a leading global supplier of renewable energy technology and know-how.

There is a realisation that hippy organic wineries are all very well but New Zealand needs exporters and international businesses with the scale to have global market power.

Despite leading a party of vegans, animal rights activists and foes of corporate power, Dr Norman is prepared to talk about consolidation of the meat industry.

His stance on oil exploration is to vigorously oppose it in deep water but he is softening on projects closer to shore.

On tax, Dr Norman obviously wants to sock it to the so-called rich but his emphasis will be on rebalancing the tax base away from things the Greens say they support, like wages and profits, toward things they say they opposite, including house-price inflation, carbon and oil.

Dialogue has begun with Federated Farmers, employer groups and other business networks.

Make no mistake the Greens remain a party of the hard left whose agenda is anathema to the business community.

But if he can get messages like these out to the public next week, and over-shadow Labours effort in critiquing Mr Englishs budget, businesspeople may need o t get themselves used to the prospect of finance minister Norman.

The eurozone bailout fund should be increased to 1 trillion euros to provide the mother of all firewalls, the head of a leading international development body said today.

Angel Gurria, the secretary general of the Organization for Economic Co-operation and Development (OECD), said eurozone finance ministers need to impress finance markets with the size of their rescue fund for indebted countries when they meet later this week.

Mr Gurria said an impressive firewall
was crucial because the eurozones public debt crisis was not over
despite calmer financial markets this year, warning that the blocs
banks remain weak, debt levels are still rising and fiscal targets are
far from assured.

(The following statement was released by the rating agency)Q4)
March 26 – The operating performance of Standard Poors Ratings Services
rated US finance companies strengthened in fourth-quarter 2011, said an
article published today by Standard Poors titled, US Finance Companies
Reported Improved Operating Performance In Fourth-Quarter 2011.

Although it is difficult to generalize trends for this diverse group of
companies, profitability improved in almost every subsector, said Standard
Poors credit analyst Adom Rosengarten. The commercial and residential real
estate sectors remained the outliers, with mixed results. But even these
struggling sectors had some bright spots.

Despite this, the best performing subsectors are now facing risks from
increasing competition, especially in auto originations because banks have
shown increased lending activity, and in distressed debt purchasing because of
purchase portfolio price increases, said Mr. Rosengarten. Finance companies
are also contending with increasing regulation as the Consumer Financial
Protection Bureau (CFPB), which has authority over most of our rated finance
companies, develops its regulatory processes. The CFPB has specifically named
some finance company subsectors, including debt collecting, payday lending,
mortgage servicing, and student lending, as its initial focus. The industry
also remains vulnerable to a potential slowing of the US economic recovery
and continued high unemployment rates.

The report is available to subscribers of RatingsDirect on the Global Credit
Portal at www.globalcreditportal.com. If you are not a RatingsDirect
subscriber, you may purchase a copy of the report by calling (1) 212-438-7280
or sending an e-mail to research_request@standardandpoors.com. Ratings
information can also be found on Standard Poors public Web site by using
the Ratings search box located in the left column at www.standardandpoors.com.
Members of the media may request a copy of this report by contacting the media
representative provided.

FOX Business: The Power to Prosper

The markets skidded into the red on Tuesday after downward pressure heated up on energy and financial names in afternoon action.

Todays Markets

The Dow Jones Industrial Average fell 43.9 points, or 0.33%, to 13198, the SP 500 dipped 4 points, or 0.28%, to 1413 and the Nasdaq Composite slumped 2.2 points, or 0.07%, to 3120.

Energy stocks like Halliburton (HAL) and Schlumberger (SLB) and financials such as Bank of America (BAC) came under pressure on the day. Helping to counteract that negative momentum, was strength among utilities and health-care names.

The broad SP 500 zoomed to its highest level since May 2008 on Monday as traders cheered commentary from Federal Reserve Chairman Ben Bernanke hinting that the central bank will continue on its pro-growth monetary policy regime until the labor market begins improving at a much quicker rate.

Despite the weakness on the day, many market participants remained upbeat on Wall Streets trajectory.

It may be a quiet day,but its definitely not a dead market, New York Stock Exchange floor trader Teddy Weisberg said in an interview with FOX Business. The bulls are in the drivers seat at the moment.

Indeed, a slew of big-name companies notched all-time highs on the day. The list included technology titans Apple (AAPL) and IBM (IBM), coffee giant Starbucks (SBUX) and retailer Costco Wholesale (COST).

The focus remained squarely on the US economy on Tuesday.

The SP/Case-Shiller composite index of 20 metropolitan areas shows home prices fell 0.8% on a non-seasonally adjusted basis in January, a slightly bigger decline than the 0.6% drop expected. Home prices were down 3.8% from a year ago, in line with estimates.

Home prices that were pummeled during the financial crisis have remained depressed and data have shown demand still remains weak while supplies have been running high.

Meanwhile, the Conference Board’s reading on consumer confidence came in at 70.2 in March, lower than an upwardly revised 71.6 in February. The reading was slightly under expectations of 70.3. Analysts have been paying especially close attention to the important consumer sectoras quickly rising gasoline prices have begun cutting into budgets.

On the corporate front, Abu Dhabis ruling family has been involved in talks about acquiring a stake in British state-owned Royal Bank of Scotland (RBS), according to a report by Reuters. The report said the deal was not yet closed and that it could take months before it is finalized.

Commodities were little changed. The benchmark crude oil contract traded in New York gained 30 cents, or 0.28%, to $107.33 a barrel. Wholesale RBOB gasoline slipped 0.32% to $3.406 a gallon.

In metals, gold ticked lower by 50 cents, or 0.03%, to $1,688 a troy ounce. US Treasuries advanced, pushing yields slightly lower. The 10-year yield fell 0.01-percentage point to 2.241%.

Foreign Markets

European blue chips dipped 0.58%, the English FTSE 100 edged lower by 0.56% to 5870 and the German DAX was unchanged at 7079.

In Asia, the Japanese Nikkei 225 soared 2.4% to 10255 and the Chinese Hang Seng rallied 1.8% to 21047.

A tough Ontario budget will be delivered Tuesday. Finance Minister Dwight Duncan has signalled that Ontarians can expect a budget that will make difficult choices to keep the province on track to balance the books by 2017-18. And tough, it should be.

Coping with the deficit while at the same time trying to foster economic growth in Ontario will be no easy feat. Doing both will require that the Ontario government responds quickly to a series of short-and long-term recommendations designed to restore Ontarios place as Canadas economic engine.

As part of a provincewide set of recommendations, the London Chamber and our counterparts from the Ontario Chamber of Commerce are urging the government to concentrate its short-term efforts on returning to fiscal balance by eliminating its $16-billion deficit. We also urge the government to capitalize on new areas of growth.

In the short term, we believe the governments plan should be a measured one thats fiscally responsible and doesnt hinder economic growth. As such, the government should not retreat from moving ahead with scheduled corporate income tax rate reductions.

They should begin to eliminate the deficit by implementing a broad, long-term public sector compensation restraint strategy and reforming Ontarios labour arbitration system.

We have also recommended that freezing transfers to those municipalities that do not reduce or limit spending should be part of that short-term plan. London has fared well in this regard but many communities have not. The province should also use alternative service delivery when it is efficient and effective to do so.

Further advances could be made if the province would cut red tape by streamlining and harmonizing regulations between governments and by adopting co-regulation and self-regulation models.

In the longer term, we believe that the governments long-term plan must recognize that future economic growth depends on the provinces ability to meet the needs of a 21st century economy. The government should promote an export culture in Ontario by encouraging trade with emerging, growing markets.

The province should spur innovation and productivity by streamlining innovation supports and promoting top growth sectors by maximizing resource development and making strategic investments in infrastructure.

The Drummond Report was quick to point out the dire situation our health-care sector finds itself in. The province must reform the health-care system by adjusting compensation models for some workers and management and by allowing more specialized private clinics to operate.

As we scan our members greatest concerns heading into this budget, we should not be surprised that they include:

• addressing the deficit;

The real test for this government will be the courage required to make these tough decisions and to make significant cuts to low-performing or unnecessary programs while again, not stifling much-needed economic growth and job creation. Time will tell how well they can juggle the two. In the meantime, the term shared pain comes to mind!

Gerry Macartney is chief executive of the London Chamber of Commerce. His e-mail address is gerry@londonchamber.com

SIMON CARSWELL, Finance Correspondent

Central Bank governor Patrick Honohan warned today the payments on the Anglo Irish Bank and Irish Nationwide promissory notes have become a source of risk to financial stability to Ireland.

Mr Honohan told the Oireachtas Joint Committee on Finance, Public Expenditure and Reform a deal on the next 3.06 billion payment on March 31st was likely to be successful.

He said the Central Bank has been working vigorously with the European Central Bank and other parties to come up with a mechanism to reduce the annual cost of the notes ahead the next payment.

The sequence of annual cash payments by the Government of 3.06 billion envisaged for the coming years in the promissory notes has become a source of risk to financial stability, Mr Honohan told the committee. A way of funding this cash payment over a much longer period would clearly help reduce this risk.

Speaking this afternoon in Brussels, Luxembourgs prime minister Jean-Claude Juncker, head of the group
of euro zone finance ministers, said there were good reasons for reducing Irelands debt burden.

There are good reasons for easing the burden, which has been put on Ireland, as far as the debt service, he said.

Mr Honohan said that the Central Bank, the ECB and other parties were working on a mechanism that was at an acceptable cost to Ireland and whose design is beyond criticism from the perspective of European Union treaty rules.

While some technicalities still need to be resolved, it now seems likely that this effort will be successful, he told the committee.

Mr Honohan said the banking debt does hang over the economic and financial recovery of Ireland and needs to be set on a more secure basis.

The Government provided promissory notes – State IOUs which promised to make annual payments over a long period – to Anglo and Irish Nationwide in 2010 to cover 31 billion of the 35 billion bailout costs to the public of the two failed institutions.

Irish Bank Resolution Corporation, which was formerly Anglo and is winding down the two institutions, uses the promissory notes as collateral to borrow emergency loans from the Irish Central Bank in a transaction approved by the ECB.

The Government authorities – together with the troika of the ECB, the EU Commission and the International Monetary Fund – are in technical discussions on changing the promissory notes in a wider restructuring of the banks.

The Central Bank is actively studying ways of enhancing the security of the arrangements surrounding the provision of liquidity to IBRC and ensure that avoidable deleveraging costs to the system as a whole are not incurred in the disposal of non-core assets, Mr Honohan said.

This is a large ambition, and the design of a full solution that would achieve the objectives and respect the constraints of all the parties has not yet been finalised, he said.

Mr Honohan said that the settlement of the 3.1 billion payment on March 31st with a long-term Government bond instead of cash, expected within days, was a very considerable step forward and a very definite gain on the ability of the State to repay its debts.

It puts off for a long number of years the actual need to refinance those payments, he said, but relative to the bigger amount due on the 31 billion promissory notes was a considerable improvement.

The cost would be at quite a low valuation to other sources of funding available and lower than the interest paid on the bailout loans advanced by the troika, he said.

Mr Honohan said that there would be no net cash outlay to the State under the terms of the deal being worked for the March 31st payment to settle the 3.06 billion instalment by issuing a Government bond instead of paying in cash.

The Central Bank governor repeatedly refused to divulge information during the public hearing of the committee, telling TDs and senators he would say more once they went into closed session.

The Government planned to issue debt to IBRC on an existing bond rather than issuing a new Government bond to cover the next instalment due this Saturday.

It is understood the Government is planning to avoid the cash payment using a bond due in 2025. There is a Government bond in issue due for repayment on March 13th, 2025, according to the National Treasury Management Agency.

By Colleen Jenkins

GREENSBORO, North Carolina |
Thu Mar 1, 2012 6:59pm EST

Posted at 04:35 PM ET, 02/29/2012
Finance Secretary Ric Brown: Virginia in uncharted waters on budget
By Anita Kumar

Secretary of Finance Ric Brown said Wednesday that the Virginia General Assembly has never quite been in the situation it is right now following the failure of the Senate to pass a state budget.

Brown said legislators have never reached July 1 without a budget in
Virginia Gov. Bob McDonnell (left), Lt. Gov. Bill Bolling( right) and Secretary of Finance Ric Brown (center).
(Steve Helber – AP)
place. “There is no real provision for spending after June 30,’’ he told reporters.

But there’s still plenty of time for the General Assembly to get a budget completed before it is scheduled to adjourn on March 10, or later in a special session.

Gov. Bob McDonnell (R), who is none too pleased about Democrats voting en masse against the two-year, $85 billion budget, has been speaking to legislators and his staff about the impasse, his aides say.

In 2006, as attorney general, McDonnell wrote an opinion for the Republican-led General Assembly that essentially said that absent a legislature -approved budget, the governor could not do much.

“While the governor does have certain implied executive power, such implied authority cannot overcome the sole and specific express grant of spending authority to the legislature,’’ he wrote.

In 2001, when legislators disagreed on what to do about the car tax repeal, then-Gov. Jim Gilmore (R) was able to keep the state running because the state was in the second year of an existing two-year budget.

In the two other years when legislators disagreed on issues in the bill in 2004 and 2006, they were eventually resolved in a special session.

Virginia has had its current budget system in place since 1920, Brown said. The legislature began revisiting the budget annually in 1970.

Brown said the General Assembly now has three options: The Senate can reconsider the bill, both chambers can introduce a new bill by unanimous consent or McDonnell can send down another budget.

By Anita Kumar
 | 
04:35 PM ET, 02/29/2012

Personal Post

• Tumblr
• Reddit
• Stumbleupon
• Digg
• Delicious

Next:
Meet Virginia’s Twitter-savvy legislators

Charles Dallara, head of the Institute of International Finance which led the
negotiations, said at the weekend that some investors were holding out for a
better deal. I personally dont know what deal is emerging around the
corner, if one thinks there is a better deal out there, he was
reported to have said.

However, he remained optimistic that a deal, which he described as the
largest debt restructuring in history, could still be reached this
week.

As they study the deal and look at the real choices they face, taking in
the exchange offer and the alternatives, I think there will be growing
recognition of the benefits, he said.

The prospects of a sovereign default this week are real, Open Europe, the
London-based think tank has said.

In an interview with The Sunday Telegraph, Raoul Ruparel of Open Europe
said: Greece is likely to struggle to reach the targets for a
voluntary agreement so the credit rating agencies are almost certainly going
to see this as a default.

Eurozone finance ministers are expected to meet on Friday to assess the debt
swap take-up and review progress made by Athens on promised reforms.

Pension cuts totalling euro;300bn, a 22pc reduction in the minimum wage and the
loss of 150,000 public sector jobs by 2015 are promised, but will hit almost
every Greek household.

Prime minister Lucas Papademos has said resistance of the austerity measures
in Greece would set the country on a disastrous adventure and create
conditions of uncontrolled economic chaos and social explosion.

Greece needs the bail-out to be approved in order to repay a euro;14.5bn bond due
on
March 20.

Contingency plans for a return to the drachma have been drawn up in Athens,
Berlin and Brussels.

However a poll of more than 1,000 Greeks for the Kathimerini newspaper
yesterday found that 67pc said a return of the drachma would make the
countrys situation worse compared with 13pc who believed the country would
be better off with its own currency.

March 2 – Fitch Ratings has affirmed the following ratings for Pemex
Finance Ltd. with a Stable Rating Outlook:

–Series 1998 9.15% Notes due 2018 at A;
–Series 1999 10.61% Notes due 2017 at A;
–Series 1999 LIBOR+ 3.50% Notes due 2014 at A;
–Series 1999 LIBOR+ 3.25% notes due 2014 at A.

PEMEX Finance Ltd. is a Cayman Islands special purpose company wholly owned by
Petroleos Mexicanos (PEMEX) SA de CV The program is backed by the sale of
future sales of Maya crude oil to designated US, Canadian and Aruban
customers. The total outstanding balance of the program is approximately $615
million, the equivalent to 1.14% of PEMEXs total debt.

The rating affirmation reflects PEMEXs ability to produce and export crude oil;
the strong legal structure that guarantees oil export payments will be made
offshore, mitigating diversion risk; the low likelihood that the sovereign would
impose material or permanent restrictions on crude oil exports; and the high
quarterly debt-service coverage ratios (averaged 198.87 times during 2011) that
should offer protection to investors from declines in both price and production
volumes.

Over the course of 2011 the designated customers monthly collections were over
$2 billion and the outstanding balance of the program decreased by $65 million,
which is reflected in the increased debt-service coverage ratios. Collections
increased during 2011 mainly as a result of an increase in Maya crude oil
prices, which have been increasing at a rate of approximately 25% over the last
two years, returning to pre-crisis levels.

PEMEX, Mexicos state oil and natural gas Company, has sole responsibility for
owing and managing the oil and gas industry in Mexico. Its the nation largest
company and ranks among the worlds largest vertically integrated petroleum
enterprises. A sovereign report regarding the credit rating of Mexico, as well
as a full rating report on PEMEX is available on Fitchs website at
www.fitchratings.com.

Additional information is available at www.fitchratings.com. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.

Applicable Criteria and Related Research:
–Future Flow Securitization Rating Criteria (June 24, 2011);
–Global Structured Finance Rating Criteria (Aug. 4, 2011);
–Petroleos Mexicanos (Pemex) (June 14, 2010);
–Mexico (Jan. 12, 2012);
–Updating Fitchs Oil and Gas Price Deck (Feb. 6, 2012).

Applicable Criteria and Related Research:
Future Flow Securitization Rating Criteria
Global Structured Finance Rating Criteria
Petroleos Mexicanos (PEMEX)
Updating Fitchs Oil and Gas Price Deck