April 16th, 2010
01:55 PM GMT
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He is simply known within market circles as Dr. Doom, since he precisely called the credit crisis and subsequent downturn in global financial markets. Today, Roubini is sharing the same concerns about asset bubbles as a result of continued low interest rates and the flood of capital pouring into equity markets and commodities. He is also not convinced about what many have defined as “V” shaped or sharp recovery.

But in my time with the economist, who is of Iranian decent and grew up in Istanbul, I decided to link our conversation to the key issues surrounding the region - notably the durability of the dollar as a reserve currency, Gulf monetary union, oil prices and Dubai’s debt crisis.

Roubini suggested that central bankers of the region look carefully at the European model when constructing the framework for Gulf monetary union saying, “One of the lessons is, monetary union can be successful if the member countries are relatively homogenous” and are prepared to set up a structure for burden sharing.

This has not been the case in Europe, where cracks in the convergence process were papered over and took a decade to emerge. That is what the Greek debt crisis is telling us today and wealthier states - notably Germany - have expressed displeasure at exactly the kind of burden-sharing Roubini is talking about.

As a result of the Greek crisis, Roubini believes the dollar’s role as the world's reserve currency is not under threat.

“There is no clear alternative," he said. "The Euro may not survive and the British pound is weak.” “Not survive?” I quickly responded. “It is a possibility … " he said. "You could have weaker states of the Eurozone like Portugal or Greece eventually exit the union and that will weaken the Euro.”

Dollar weakness over the past year has been one contributing factor behind the rise of oil, with the region’s most precious commodity priced in the greenback. Nevertheless, the NYU economist does not feel that fundamentals are supporting the recent 18 month high of $87 a barrel.

“Part of it is this wall of liquidity chasing assets because of easy money,” said Roubini. As a result he believes "oil at $60 is justified, but oil at $80 I don’t think is justified.”

That demand concern was reflected in both OPEC’s monthly oil market report (which shows demand growth of just 1.1 percent from a low level in 2009) and the International Energy Agency, which talks similarly about tepid recovery in the industrialized world.

Dubai’s recovery after its own debt crisis drew parallels to the real estate bubble in America’s Sun Belt - in particular Florida, Arizona, Nevada and California.

Roubini called Dubai’s bubble unique because of the lack of clarity about what is a private or state-owned entity. The state feels “they have to takeover the liabilities and bail them out because the consequences of a disorderly collapse would be even more damaging.”

As a result, Roubini says Dubai sent out mixed signals by indicating initially that the state would not have a role, only to have neighboring Abu Dhabi step in on two separate occasions.

Dr. Doom bluntly said that may have established the wrong precedent, "If we keep on socializing all the private losses the build up of the debt implies that you have to raise taxes, cut spending or eventually even default.”

April 16th, 2010
12:05 PM GMT
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April 16th, 2010
11:21 AM GMT
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April 16th, 2010
11:20 AM GMT
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April 14th, 2010
04:37 PM GMT
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London, England - Until I moved to London 20 years ago, a manifesto to me was something issued behind the Iron Curtain by an authoritarian government which laid out a five-year plan to show free marketeers how wrong they were.

But in Britain, all the political parties used the term "manifesto" to lay out their stalls (another British term lost on me at first) in order for the electorate to decide where to put an X.

Some of the manifestos have nothing to do with the economy, so I will bypass those sections, but much of it is economic and business-focused this time around, given this is being touted as the "Economic Election."

Read the full blog here

April 14th, 2010
02:33 PM GMT
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Where will the FIFA football World Cup take place in two months time? For most football fans, it will take place in FIFA-land and not South Africa.

Twenty six BILLION people will watch the World Cup on their television over the month-long tournament, say FIFA. South Africa Tourism estimates that between 300,000 and 350, 000 people will physically travel to South Africa to watch the games. Others say South Africa will be lucky in the current economic climate to get anywhere close to 300,000 visitors in June and July 2010

So how does the South African tourism industry impress those billions of people, as well as the estimated hundreds of thousands planning to travel here over the winter?

It’s a difficult task because, as the South Africans quickly figured out, working with the Swiss-based FIFA organization is quite a challenging experience. FIFA, understandably, likes to standardize.

Their aim is to ensure the same level of quality at all levels of the tournament – from the color and texture of the grass on the football pitches to the type of advertising displayed for kilometers around all 11 stadiums.

For many in South Africa, that means ‘whitewashing.’ Critics here complain that the billions of people who watch the World Cup football on television will probably not really see any difference between this year’s World Cup in Africa and the tournament that was played in Germany. The televised games will all be a sanitized, FIFA-endorsed football la-la land, they say.

So how does South Africa capitalize on this very narrow margin of opportunity? The World Cup has been billed as the ultimate marketing opportunity for the country – but is it really? Are the billions of dollars spent on selling South Africa to first-time visiting sports fans worth it? These are all questions South Africans are wondering out aloud.

The real measure for South Africa is not how many people get on a plane, wearing their brightly coloured football shirts. Instead, it is how the country manages to sell itself - within the tightly controlled parameters of FIFA’s restrictions -  to the 26 billion viewers sitting at home watching the games on their televisions.

April 14th, 2010
12:32 PM GMT
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After a series of safety recalls, the Japanese automaker has been trying to move on, pledging better safety to its customers.

Now Toyota's luxury sports utility vehicle, the Lexus GX 460, has been slapped with a rare "Don't Buy" warning from influential magazine Consumer Reports.

The magazine's testers believe that the SUV has a handling problem around sharp turns. During the tests, the testers found the vehicle slid nearly sideways before the electronics stability controls kicked in.

Their verdict? They wouldn't want to drive it with their families in the car.

The safety warning is the latest blow to Toyota's battered image. However, the carmaker's attitude appears to have changed. Toyota moved swiftly to address the issue. It suspended the sale of the GX460, is offering loaner vehicles to concerned customers, and says its engineers are already working hard to correct any problem.

Toyota certainly wants to salvage its reputation as a maker of safe, reliable cars.

Would you buy a Toyota car today?

April 12th, 2010
04:08 PM GMT
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Jim Boulden

Everyday brings a new twist in the Greece saga and with it comes market reaction.

Monday was positive for Greek bonds and the euro after euroland finance ministers said they would provide up to $40bn over three years at a fixed rate just under five percent - if Greece asks for help, that is.

For now, Greece has to still sell its bonds in the markets and hope that the interest rate comes down closer to six than to seven.

The deal could make it easier for Greece to sell debt and at a lower rate, but it does nothing to help Greece cut its budget deficit in the short run, or help public sector workers accept pay and pension cuts or worse job cuts.

But at least Europe has realized that it can't just promise vague help without putting up the cash.

Will this really help Greece? Will it have to tap this money, or is the Greek government correct when it says just having this backstop could be enough to give the market some confidence in Greece?

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Filed under: BusinessQuest Means Business

April 12th, 2010
08:34 AM GMT
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Hong Kong, China – The leadership of the world's largest aluminum producer believes metals prices are making a comeback in 2010.

"We are bullish," Vladislav Soloviev, first deputy CEO of Rusal, told me in Hong Kong.

Demand, he believes, is strong, especially in China. The recovery in prices helped turn around his company's fortunes in 2009.

China's demand for commodities has been all over the news as of late. The country posted its first trade deficit in six years in March mainly because of the surge in imports of raw materials. Exports dropped because Chinese factories were slow to reopen after the Lunar New Year holiday.

The trade deficit is complicating the debate over the Chinese currency. Beijing has been under pressure to loosen its controls on the yuan, which many in Washington believe is set too low and contributes to the big U.S. trade deficit with China.

Soloviev believes Beijing will make a move this year. But unlike those in the manufacturing sector, he thinks a more flexible currency will give him a competitive edge.

Do you anticipate China will ease its currency controls soon?  If so, what does that mean for your business?

April 9th, 2010
09:00 PM GMT
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