Top Business Stories: G20 guide: Debt scorecard, who’s pushing for bank tax

Top Business Stories

G20 guide: Debt scorecard, who’s pushing for bank tax

Papier mache models

Update: Public Mobile strikes China deal. And, lineups greet launch of iPhone as RIM shareholders await earnings

Michael Babad

Michael Babad

Globe and Mail Update

These are stories Report on Business is following today. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.

Stocks falter
Overseas markets are falling today, pointing the way to a lower open in New York. While trading in Asia was mixed, European stocks fell at the open, with London’s FTSE 100, Germany’s DAX and the Paris CAC-40 all down in the 1-per-cent range. Dow Jones industrial average (YM-FT10,204.00-35.00-0.34%) and S&P 500 (ES-FT1,083.00-4.50-0.41%) futures were also down.

Public Mobile strikes China deal
Public Mobile, one of the upstart wireless companies, said today it reached a financing deal with the Export-Import Bank of China, worth $350-million, to help build out a wireless network in Ontario and Quebec. Public Mobile and its partner, China’s ZTE Corp., said the deal will mean it can build a network that stretches its licensed area from Windsor, Ont., to Quebec City. “This arrangement, combined with hundreds of millions of dollars in equity commitments from its shareholders, means Public Mobile has a fully funded business plan,” the companies said. Read the story

BP reportedly relied on U.S. data
BP PLC (BP-N29.67–%) and other major oil concerns relied on poor data from the U.S. government in building their response plans to an oil spill, The Wall Street Journal reports. The plans were based on 2004 projections by the Mineral Management Service of the U.S. Interior Department that indicated most oil from a spill would evaporate or be broken up before hitting shore, the newspaper said. That, of course, has been proven incorrect as the oil from the disaster, sparked by the explosion of the Deepwater Horizon drilling rig in April, has reached more than 170 miles of coastline.

Related: Gulf spill effects worsening for BP

Investors await RIM results
As long lineups greeted the launch of the iPhone 4 from Apple Inc. (AAPL-Q270.97–%) around the world today, shareholders of Research In Motion Ltd. (RIM-T62.01–%) were awaiting quarterly results later in the day. As Globe and Mail investment writer Simon Avery notes today, RIM is expected to hit first-quarter targets but satisfaction could be dimmed by the growing fight between the BlackBerry and the iPhone. Read the story

Hasbro shares climb

Shares of Hasbro Inc. (HAS-N41.12–%) are rising today after a Wall Street Journal report that the well known toymaker is talks to be acquired by Providence Equity Partners. Hasbro, known for its Nerf brand and other products, has been discussing deal over the past few weeks, the newspaper said, though the talks may not lead to a deal. With a market value of some $6-billion (U.S.), the Journal reported, a deal would mark the biggest leveraged buyout this year.

G20: Where they stand
As world leaders head for Toronto for what will be a historic summit given the turmoil in markets and the struggle to rebound from the recession, BMO Nesbitt Burns has released a look at where countries stand, and what they’re looking for this weekend. Among the main themes are economic growth, financial industry reforms, trade and global imbalances, and reform of global bodies such as the International Monetary Fund and World Bank.

“Sweet serendipity has yielded a curious backdrop with which many of the arriving leaders have little in common,” said Scotia Capital economists Gorica Djeric and Derek Holt. “While the rest of the industrialized world addresses fiscal and banking pains, Canada sits in a different league. There’s almost a smugness over it all that is out of place. Canada, after all, has outperformed simply because it went through deleveraging far earlier than anyone else.


A country-by-country glance from BMO



Fiscal: The federal deficit will be less than 3 per cent of GDP this year and the government aims to balance the books by 2014-2015. The ending of its stimulus measures will cut the deficit by half by 2012-2011.

Priorities: The government sees “sustainable global growth” as its top priority, and wants major countries to get their fiscal houses in order. Prime Minister Stephen Harper is urging world leaders to cut their deficits by half by 2013. Canada also opposes a push for a new global bank tax.

Related: Harper, Obama differ on path to same goal


United States

Fiscal: The U.S. faces a budget deficit of more than $1.3-billion (U.S.) or 9 per cent of GDP this year, though it still has large borrowing capacity. Winding down stimulus spending will slash the deficit next year, but a large structural deficit will grow without action. The government has yet to put forth a plan to ensure long-term stability.

Priorities: Ensure that governments don’t kill the recovery through austerity measures. The government supports a bank tax, but it is not a key priority.

Related: Fed strikes worried tone on housing, Europe



Fiscal: Measures to fight the slump boosted the deficit to 3 per cent of GDP last year, and it is expected to remain at about that level in 2010. Debt appears “moderate” at about 20 per cent of GDP, but it’s hard to tell with China.

Priorities: China made a pre-emptive move to head off a fight over its currency, allowing the yuan to appreciate. China has a “clear interest” to prevent protectionist measures. Like Canada, it opposes a bank tax.

Related: China heads into G20 with moral authority



Fiscal: Japan’s huge debts and marked deficit are of “increasing concern,” and the government is expected to announce a three-year plan by mid-2010.

Priorities: Japan opposes a bank tax and will act as a “forceful proponent” of free trade. It also wants a bigger role for the IMF and Asian Development Bank in the global recovery. It will also promote fiscal prudence.

Related: Japan warns of Greece-like debt crisis


South Korea

Fiscal: Notable surpluses before the crisis resulted in moderate debt, and while its “swift and co-ordinate” response to the slump included hefty spending, its quick rebound kept its budget balance. Surpluses are expected again, largely through cuts to spending.

Priorities: Dependent on trade, it will guard against protectionist measures, and could also seek reforms to the IMF to boost the voting powers of emerging economies. Given its economic and fiscal standing, it will be seen as “pulling its weight on sustainable and balanced global growth.”

Related: South Korea’s great escape



Fiscal: Europe’s biggest economy will post a deficit of about 5 per cent of GDP this year, though it has unveiled plans to slash spending by €80-billion by 2014. It aims to cut its deficit to 3 per cent of GDP by 2013.

Priorities: Already having announced hefty cuts and as a big trading nation, it will want to ensure Europe’s “fiscal sustainability” and seek trade liberalization. It has, along with Britain and France, already announced plans for a new bank levy.




Fiscal: Its finances are not in as poor shape as many of its neighbours, but it still faces a deficit of 8 per cent of GDP this year, though its goal is to reduce that to 3 per cent by 2013, and new measures are expected to be announced next month.

Priorities: Its goals are similar to those of Germany, including ensuring Europe’s fiscal position. It, too, plans a new bank tax.

Related: France balks at austerity



Fiscal: Its projected deficit this year is a “reasonable” 5 per cent of GDP, and cutbacks already announced will cut that to 2.7 per cent by 2012. But its debt stands at more than 100 per cent of GDP, and the cost of servicing that is marked.

Priorities: Like its neighbours, its priority is fiscal sustainability but it is “not yet convinced” that a bank tax is the way to go.

Related: Why Italy has so far escaped Greece’s fate



Fiscal: A new government has announced plans to cut the deficit to 1.1 per cent of GDP by 2015-2016, from 10.1 per cent this year, through austerity measures. Markets applauded its emergency budget “but it will be a major headwind to growth.”

Priorities: It stands side-by-side with Germany and France on a bank tax, and has already unveiled a levy estimated to bring in £2-billion a year.

Related: Britain ignores pleas, slashes spending



Fiscal: The ‘R’ in the emerging BRIC countries that also include Brazil, India and China, its general government deficit is forecast to fall to 2.9 per cent of GDP this year from 6.2 per cent as its recession-fighting measures unwind.

Priorities: Like Canada, it opposes a bank levy, but wants to ensure Europe’s fiscal sustainability while supporting the recovery. Strong global growth is a key issues given that it would boost energy prices. Russia relies on both energy exports and exports to Europe in particular.

Related: Russian president seeks Silicon Valley help



Fiscal: The ‘B’ in BRIC was “generally prudent” before the crisis but debt stands at almost 70 per cent of GDP. A strong rebound held the deficit to 3.3 per cent of GDP last year, but spending on its election may put its 2010 target of 1.5 per cent out of reach.

Priorities: More power at the IMF is also a key issue for Brazil. Its economy is growing sharply and its banks are healthy. It opposes a bank tax.

Related: Why Brazil stands out



Fiscal: Its deficit rose last year to 3.9 per cent of GDP, and it has announced no exit strategy.

Priorities: It seeks measures to reform the global financial system and, in the past, has questioned the U.S. dollar’s status as the world’s reserve currency.

Related: Argentina fights inflation with discount fish



Fiscal: A deep slump last year pushed fiscal prudence to the sidelines and drove the deficit sharply higher. “With about 1/3 of revenues dependent on (declining) oil resources, major fiscal reforms are needed, but political will is lacking.”

Priorities: Its top priority is to fight protectionist measures.

Related: Mexico sides with Canada on bank tax



Fiscal: Like Canada, it is in a strong position. It has almost no net government debt and it expected to see a budget surplus by 2012-2013 given the strength of its economy.

Priorities: “With an eye on its neighbours,” it, too, will push for more heft for China within the IMF. Like Canada, it opposes a bank levy.

Related: PM ousted, Australia gets first female leader


South Africa

Fiscal: The lone country from Africa, its deficit surged to more than 6 per cent this year, and is expected to remain there this year. Government debt rose last year but remains “moderate” at about 30 per cent of GDP. It plans a gradual reduction in the shortfall as it pushes ahead with infrastructure projects.

Priorities: It will “speak for the whole continent” as it urges increased development funding and better access to financing.

Related: Will the World Cup lure investment capital to South Africa?



Fiscal: Progress, interrupted. It had been making headway in bringing down its perennially big deficits until the global slump. A deficit of 10.5 per cent of GDP in 2009 may trim “modestly” this year, but little movement is expected at bringing down a debt level of about 80 per cent of GDP.

Priorities: It, too, wants increased representation at the IMF, and opposes a bank levy.

Related: India’s market beckons – for the patient investor



Fiscal: Prudence has trimmed its debts. It posted a deficit last year, though of just 1.6 per cent of GDP, and its debt level has fallen to 28.6 per cent of GDP.

Priorities: It wants a “new global economic order” to come out of the G20, pressing for financial reforms that would see a “fairer economic system” for developing countries. That includes more funds, given that it is vulnerable should loans from European and U.S. banks dry up.

Related: Kesterton’s look at India



Fiscal: Its 2009 deficit of 5.4 per cent of GDP is projected to fall to less than 4 per cent this year, and prudence is expected to bring a primary surplus from 2011.

Priorities: It wants to keep Europe strong given that 46 per cent of its exports head to the EU.

Related: Kesterton’s look at Turkey


Saudi Arabia

Fiscal: The sole OPEC country at the table posted a deficit last year because of falling oil revenues and hefty spending. But the shortfall was small and debt last year stood at 16 per cent of GDP. Large surpluses are expected to return.

Priorities: It wants a strong global recovery that will buoy oil prices. And “with some of its oil receipts priced in euros, they are quietly supportive of pan-European efforts to stabilize the euro.”

Related: Brian Mulroney on Saudi Arabia


European Union

Fiscal: The fiscal standings of its 27 members vary, while the 16-member euro zone is under extreme pressure given the debt troubles of several countries.

Priorities: It seeks European fiscal strength, but wants to maintain economic growth. Reforms to financial regulations and the IMF are also on its agenda.

Related: EU to push for bank tax at G20

From today’s Report on Business

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RBC to vacate its cathedral of commerce in Old Montreal

Stronach wouldn’t accept lower Magna offer, Harris tells OSC

Posted via email from Toronto Real Estate News, Blog

About Tariq Sultan
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