Archive for March, 2010

Iceland’s premier pressing IMF on bailout review (AP)

Friday, March 26th, 2010 | Finance News

REYKJAVIK, Iceland – Iceland's prime minister said Friday she was pressing the International Monetary Fund to hasten a review to determine the next batch of bailout funding for the nation's struggling economy.

The IMF had been putting off a decision on whether to release the second tranche of its $2.1 billion bailout funds since last year. Iceland is worried that the money could be held up until it settles wrangling with Britain and the Netherlands over a dispute about debt repayments, but the IMF has insisted this wasn't the case.

Prime Minister Johanna Sigurdardottir said she wrote IMF director Dominique Strauss-Kahn to demand that a review on Iceland's economy take place as soon as possible.

"It is highly unusual that the Icesave dispute and the review of the IMF be tied together, and that two nations (the U.K. and the Netherlands) can prevent it from taking place," Sigurdardottir told national broadcaster RUV.

Iceland has not resolved a dispute with Britain and the Netherlands over the repayment of $5.3 billion to the two countries to pay off debts spawned by the collapse of Icesave, an Icelandic Internet bank that collapsed during the international financial crisis.

Talks between the three sides broke down earlier this month, and Sigurdardottir said the British and Dutch governments have not answered calls for new negotiations on Icesave to commence.

The IMF has disbursed about $1 billion to Iceland and said discussions on a second review are ongoing.

Although the body has never explicitly linked delivery of the funds to the reaching of an Icesave deal, it is committed to Iceland repaying its international debt — the months taken to reach the original Icesave deal were responsible for holding up the first tranche of IMF funds last year.

Finland, Norway and Denmark agreed to provide a further $2.5 billion to help the country recover from a deep recession.

Iceland's Finance Minister Steingrimur J. Sigfusson and Gylfi Magnusson, minister for business and economic affairs, were in Washington on Friday for talks with Strauss-Kahn. Their offices did not immediately respond to calls seeking comment on the progress of the discussions.

Iceland was an early victim of the credit crunch, which sent its debt-fueled economy into free fall. The value of Iceland's currency collapsed, growth dropped dramatically and unemployment shot up.


Sylvia Hui reported from London.


Summary Box: Gold above $1,100 on weaker dollar (AP)

Friday, March 26th, 2010 | Finance News

GOLDEN GAIN: Gold prices rose Friday as the dollar weakened against the euro. Gold and other metals also benefited from a government report that showed manufacturing helped the economy grow late last year.

EURO FACTOR: Investors have been worried that debt problems in European countries like Greece could slow the global economic recovery. Those concerns were eased with a bailout program for Greece, which strengthened the euro.

MIXED ENERGY: Plentiful supplies weighed on oil and natural gas while heating oil rose.


State jobless rates stabilize as layoffs slow (AP)

Friday, March 26th, 2010 | Finance News

WASHINGTON – State unemployment rates stabilized last month, reflecting a broader nationwide trend, according to a Labor Department report Friday. Sixteen states said their jobless rate was unchanged in February, seven reported declines and 27 reported increases.

That's an improvement from January, when 30 states saw their rates rise, and much better than December, when joblessness rose in 43 states.

The nationwide unemployment rate was 9.7 percent in February, the same as the previous month. Layoffs are slowing as the economy is recovering and there are signs that employers are stepping up hiring.

The economy is likely to generate more than 150,000 new jobs this month, according to a survey of economists by Thomson Reuters. The national figures for March will be released next Friday. The jobless rate is forecast to remain at 9.7 percent.

These "readings are consistent with labor markets beginning to show some stability," said Donald Schunk, an economist at Coastal Carolina University near Myrtle Beach, South Carolina.

But Schunk and other economists said there are still few signs of widespread, consistent job growth. Twenty-seven states reported a decline in total jobs, the Labor Department said, while 23 said jobs increased.

The biggest drops in employment were in Virginia, which lost 32,600 jobs; California, which shed 20,400; and Michigan and Pennsylvania, which each lost 16,000.

Virginia officials blamed at least part of the drop on the huge snowstorms that hit the East Coast last month. The Virginia Employment Commission noted that the construction industry shed 9,000 jobs in February, much more than in February 2009.

Four states, meanwhile, reached record-high unemployment rates: Nevada at 13.2 percent; Florida, at 12.2 percent; North Carolina at 11.2 percent and Georgia at 10.5 percent.

Florida, however, also posted the largest gain in jobs of any state, with an increase of 26,300.

Most of that gain was in professional and business services, which includes temporary hires. Many economists see increased temp hiring as a positive sign that permanent hiring will follow soon.

The report is "evidence that we're approaching a turning point," said Sean Snaith, an economics professor at the University of Central Florida.

But the turnaround will likely take a long time, Snaith said, as many of Florida's traditional economic engines — construction and leisure and tourism, for example — remain weak.

"Florida's recovery is going to be long and slow, unfortunately," he said. The state may not generate consistent job gains until the second half of this year, he added.