Saturday, January 30, 2010

DTN News: Financial News TODAY January 30, 2010 ~ FACTBOX - Five Political Risks To Watch In Japan

DTN News: Financial News TODAY January 30, 2010 ~ FACTBOX - Five Political Risks To Watch In Japan *Source: DTN News / Reuters By Linda Sieg (NSI News Source Info) TOKYO, Japan - January 30, 2010: Japan's ballooning public debt is stoking market concern as the government of Prime Minister Yukio Hatoyama struggles to give the economy the stimulus it needs without compromising the need for fiscal prudence. Standard and Poor's cut its outlook for Japan's sovereign credit rating to negative this week, and with some foreign hedge funds betting that the country's debt burden will cause more problems in years to come, spreads on sovereign credit default swaps JPGV5YUSAC=R widened to 90 basis points -- the most in 10 months -- before falling back a bit. Following is a summary of key political risks to watch: * FISCAL DILEMMA The government is trapped between the need to prevent the economy from slipping back into recession and Japan's huge public debt, already nearing 200 percent of GDP. Sliding tax revenues mean government income now covers less than half of spending. Efforts to cut budget waste to find funds for new programmes have so far fallen short of target despite the Democrats' pledge to boost growth without issuing much more debt. The appointment of Naoto Kan as finance minister this month raised doubts about government resolve to hold down spending given his concern about deflation and the recovery, but Kan has also said fiscal discipline is needed. Standard Poor's on Tuesday cut its outlook on Japan's AA long-term sovereign debt rating to negative, saying the policy bind could lead to a downgrade unless measures were taken to stem fiscal and deflationary pressure. The sovereign credit default swap spread widened on the news, but the impact on JGBs <0#jpbmk=> was limited because the vast majority are held by domestic investors. By making JGBs less attractive to foreigners, the downgrade will be a long-term drag on JGB prices, however, analysts said. What to watch: -- The government aims to release a mid-term fiscal reform plan by May or June and to unveil a growth strategy in June. -- Data showing a risk of persistent deflation could prompt calls for extra stimulus ahead of the upper house poll, although the government would be sensitive to any rises in bond yields. -- A political funding scandal embroiling Democratic Party Secretary-General Ichiro Ozawa could also tempt the government to spend more to woo voters turned off by the affair. * PRESSURE ON CENTRAL BANK? The Bank of Japan said this week deflation would be milder than previously forecast but left the door open to further easing to support a fragile economic recovery. December data showed the biggest drop in consumer prices on record. Kan, a vocal BOJ critic, said this week the BOJ could do more to fight deflation. The central bank could face extra pressure if the economy falters ahead of the mid-year upper house poll. The government criticised the BOJ for being too rosy on the economy when the bank upgraded its assessment in November. The BOJ later caved in to pressure and last month adopted a new fund supply operation at which it offers 10 trillion yen ($111 billion) in three-months loans to banks at 0.1 percent. It then declared that it wouldn't tolerate deflation. The BOJ is independent by law but is required to work closely with the government to align policy. Tension over strategy raise the risks for markets, making policy harder to forecast. What to watch: -- Persistent deflation could pressure the BOJ to buy more government bonds or expand the new fund supply operation. Increased JGB purchases would push up bond prices and so bring down long-term interest rates. -- Government rhetoric on the role of the central bank will give clues on how much influence the Democrats will seek to have. * YEN INTERVENTION Finance Minister Kan's early comments have led some analysts to argue the government will be less tolerant of a rising yen, although others say intervention is highly unlikely for now. Kan jolted markets in his first news briefing as finance chief, saying he hoped the yen would weaken further and that many Japanese firms were in favour of dollar/yen around 95 yen JPY=. He later toned down those comments, saying currency levels should be determined by markets, but many market participants still see Kan as favouring a weaker yen in contrast with his predecessor. What to watch: -- Attention will be on comments by government officials regarding possible currency intervention. Picking a level that would trigger intervention is tricky. Intervening could also be difficult at a time when the Group of Seven is encouraging flexibility in foreign exchange rates, particularly in China. -- Another way of countering a surge in yen strength could be for the Bank of Japan to take more easing steps as it did in December after the yen hit a 14-year high on the dollar. Possible steps could be increasing the amount of a new fixed-rate funding operation or extending its maturity; or increasing JGB issuance. * FUNDING SCANDALS The funding scandal ensnaring Ozawa is threatening the Democratic Party's chances of a mid-year election win that would clear the way for smoother policymaking. [ID:nTOE60L015] Ozawa is credited by many with engineering the Democrats' big election win last August and his skills are thought vital to winning the mid-year poll, passing laws and deciding policies. The Democrats need to win an outright majority in the upper house election to reduce the clout of two small parties whose cooperation is currently needed to enact legislation smoothly. A ruling bloc loss would create a parliamentary deadlock. Hatoyama is beset by criticism over his own funding scandal, though fewer voters think he should resign, in contrast to the majority who want Ozawa to step down. [ID:nTOE60J03B] What to watch: -- Further falls in voter support for the Democrats could pressure Ozawa to resign; Hatoyama could also face calls to quit. -- The scandal could delay passage of a $1 trillion budget for the year from April 1, though opposition parties risk a public backlash if they stall amid the weak economy. * U.S. BASE DISPUTE Hatoyama is in an increasingly tight spot over a dispute with Washington over a plan to relocate a U.S. Marine base to a less crowded part of Okinawa after an anti-base candidate's win in a local mayoral election on Jan. 24. The dispute, which Hatoyama has vowed to settle by the end of May, has frayed ties with ally Washington and fanned doubts among voters about Hatoyama's leadership skills.
Some analysts say he may have to quit if he fails to resolve the row. What to watch: -- U.S. Assistant Secretary of State Kurt Campbell is expected to raise the issue when he visits next week. -- Attention will be on comments by Hatoyama and other cabinet ministers in the run-up to May, when the prime minister may travel to Washington to meet U.S. President Barack Obama. (Additional reporting by Charlotte Cooper; Editing by Andrew Marshall)

DTN News: Afghanistan TODAY January 30, 2010 ~ NATO Troops Clash With Afghan Allies

DTN News: Afghanistan TODAY January 30, 2010 ~ NATO Troops Clash With Afghan Allies *Source: DTN News / Reuters Asif Andalib (NSI News Source Info) SALAR, Afghanistan - January 30, 2010: NATO troops clashed with their Afghan allies in a so-called "friendly fire" incident on Saturday, calling in air strikes that killed four Afghan soldiers and stoked anger among villagers. The clashes took place hours after an apparently disgruntled interpreter shot dead two U.S. soldiers at a nearby base. The incidents, although not apparently linked, highlighted the fraught relationship between Western forces and their Afghan hosts. NATO and Afghan officials tried to head off tension by announcing a joint investigation into how their troops ended up battling each other in Wardak province, southwest of Kabul. "Four army soldiers were killed and six wounded when a foreign forces air strike hit their post," said Shahedullah Shahed, spokesman for Wardak's governor. "We don't know why it happened, but it is deeply regrettable." He said the strike had targeted an Afghan Army outpost that had been newly established. Foreign forces and Afghan troops were both separately conducting overnight operations when they started shooting at each other, he said. The NATO-led International Security Assistance Force (ISAF) said its troops had come under fire and called in air strikes, without realizing they were engaging Afghan security forces. "Initial post-operational reports indicate the small arms fire originated from an Afghan National Army (ANA) combat outpost and the subsequent air support called in by the joint force likely killed at least four ANA soldiers," a statement said. "We work extremely hard to coordinate and synchronize our operations," said Canadian Brigadier-General Eric Tremblay, the force's main spokesman. "This is a regrettable incident and our thoughts go out to the families of those killed and wounded." Hours earlier, an interpreter opened fire at a base in the same province, shooting dead two U.S. soldiers before he was killed, two U.S. military officials said, under condition they not be named because details had yet to be officially released. "Initial indications are this was a case of a disgruntled employee" rather than an insurgent attack, one of the U.S. officials said. An Afghan provincial official confirmed the account, saying the interpreter had argued with troops over pay. In a separate incident in nearby Ghazni province, ISAF said on Saturday its troops had shot dead two Afghan civilians and wounded a third when they failed to heed warnings to stop the vehicle in which they were traveling. Similar shootings have led to demonstrations against Western troops in recent weeks. COURT MARTIAL "Friendly fire" incidents between Afghan and foreign forces and killing of Afghan civilians are among the biggest sources of tension between the Afghan government and the Western troops fighting to protect it. "As you can see, they dropped bombs on the outpost. It was the Americans of course. Who else can bomb us?" an angry village elder told Reuters television in the town of Salar, gesturing toward the sky above the site of the "friendly fire" incident. The NATO-led force, which is about two-thirds American, did not identify the nationality of the troops involved. The Afghan Defense Ministry called for a court martial for any troops found responsible for the clash. "The soldiers involved in the horrific incident must be dealt with according to martial law, without any hesitation, so that they receive punishment for their action," the ministry said. Western forces are also concerned about increasing numbers of attacks from the Afghans they work with. In November, an Afghan policeman killed five British soldiers at a checkpoint in southern Afghanistan. In December, an Afghan soldier killed a U.S. service member and wounded two Italian soldiers when he opened fire at an army base in the west. Later that month, a Jordanian double agent wearing a suicide vest killed five CIA staff, two CIA contractors and a Jordanian intelligence officer, the deadliest attack on the CIA in decades. The United Nations says ISAF has managed to reduce the number of civilians killed since its commander, U.S. General Stanley McChrystal, issued guidelines last year to curb such deaths. (Additional reporting by Sher Ahmad in GHAZNI and Hamid Shalizi and Peter Graff in KABUL; writing by Peter Graff; editing by Janet Lawrence) (For more Reuters coverage of Afghanistan and Pakistan, see: here)

DTN News: China Angry At $6.4 Billion US-Taiwan Arms Deal

DTN News: China Angry At $6.4 Billion US-Taiwan Arms Deal *Source: DTN News / Int'l Media (NSI News Source Info) BEIJING, China - January 30, 2010: China has suspended military exchange visits with the United States in protest over $6.4 billion in planned US arms sales to Taiwan and warned the US ambassador that the sales would harm already strained ties. The state-run Xinhua News Agency cited the Defence Ministry as saying the suspension is because of the “bad impact” of the arms sales on the two countries’ military relations. Army soldiers demonstrate anti-air weaponry to Taiwan's Defence Minister Kao Hua-chu during a military exercise in Penghu in this handout picture taken January 29, 2010. The Obama administration notified Congress on Friday of its first proposed arms sales to Taiwan, a potential $6.4 billion package bound to add to rising U.S.-China strains over trade and cyber security. China warned on Saturday that Washington's announcement of arms sales to Taiwan would badly hurt ties between the two global powers, widening rifts in their far-reaching relationship. Picture taken January 29, 2010. China took a similar step in 2008 after the former Bush administration announced a multibillion-dollar arms sale to Taiwan. The latest arms sales could complicate the cooperation the US seeks on issues ranging from Iran’s nuclear program to the loosening of Internet controls, including a Google-China stand-off over censorship. Details of the arms sale were posted Friday on a Pentagon Web site. It would include 60 UH-60M Black Hawk helicopters, 114 Patriot Advanced Capability-3 missiles, mine-hunting ships and information technology. US lawmakers have 30 days to comment on the proposed sale. Without objections, it would proceed. Taiwan is the most sensitive issue in US-China relations. China claims the self-governing island as its own, while the United States is Taiwan’s most important ally and largest arms supplier. Although Taiwan’s ties with China have warmed considerably since the Taiwanese president Ma Ying-jeou took office 20 months ago, Beijing has threatened to invade if the island ever formalises its de facto independence. Both the US and China have previously said they want to improve military ties, which have been frosty. Earlier today, the vice foreign minister He Yafei warned the US Ambassador Jon Huntsman that the sale would “cause consequences that both sides are unwilling to see”. The vice minister urged that the sale be immediately cancelled, it said. The US is “obstinately making the wrong decision”, China’s Foreign Ministry said in a statement.

DTN News: U.S. Announces $6.4 Billion Arms Deal With Taiwan

DTN News: U.S. Announces $6.4 Billion Arms Deal With Taiwan STORY HIGHLIGHTS *Sale includes 60 Black Hawk helicopters, 114 air defense missiles, mine-hunting ships *China says it "is strongly dissatisfied" with arms sales to Taiwan by the United States *Deals do not include F-16 fighter jets, which China has vehemently opposed *State Department says arms sales guarantee security and stability "across Taiwan strait"
*Source: From Charley Keyes, CNN (NSI News Source Info) WASHINGTON - January 30, 2010: Overriding objections from China, the Obama administration unveiled a $6.4 billion arms deal with Taiwan on Friday -- including about $2.85 billion in missiles. The sale includes 60 Black Hawk helicopters (totaling $3.1 billion), 114 advanced Patriot air defense missiles; a pair of Osprey mine-hunting ships; and dozens of advanced communications systems. China has complained to the United States about the sale of Patriot missiles and other weapons to Taiwan, which neither Beijing nor Washington recognize as a sovereign nation. The deals do not include F-16 fighter jets, which China has vehemently opposed. China's Vice Foreign Minister He Yafei issued a statement in response to Friday's announcement, saying the arms deal was a "rude interference in China's internal affairs, severely endangering China's national security." He added, "China expresses its strong indignation." The State Department described the latest round of arms sales to Taiwan as a way to guarantee security and stability, despite China's objections. "This is a clear demonstration of the commitment this administration has to provide Taiwan with defensive weapons it needs and as provided for in the Taiwan Relations Act," State Department spokesman P.J. Crowley said at his regular Friday briefing. "We think this action is consistent with the U.S. one-China policy ... and contributes to maintaining stability and security across the Taiwan Strait." He said the State Department had informed the U.S. Congress as well as China and Taiwan about the arms package. Crowley would not speak directly about the timing of the announcement of the sales, and about the fact that the arms package does not include F-16s. The arms sales come as the United States is hoping to persuade China to sign on to harsher sanctions against Iran and just after Secretary of State Hillary Clinton criticized China for its policies relating to the Internet. A senior U.S. official said later that the United States expected Chinese criticism of the arms deal, but does not expect permanent damage. "We've worked through these issues before. We will do so again," the U.S. official said, seeking anonymity on such an important policy issue. "What is important here is the stability in the region. And we do think our ongoing sales of arms to Taiwan is fully consistent with everyone's long-term interest in stability in the region." The official said he believed Clinton had discussed the sale in London with her Chinese counterpart on the sidelines of Thursday's international conference on Afghanistan. "This relationship between the United States and China is broad, it's deep. There are a large number of issues. We don't see eye to eye with them and we have to have and do have the ability to speak honestly," the official said. The arms deal is the latest chapter in a decades-long uneasy standoff; China claims Taiwan is its own territory and has threatened to invade if Taiwan ever declares independence. The United States has said it will defend Taiwan if China ever attacks. The government in Taiwan began as the remnant of the government that ruled over mainland China until a Communist insurrection proved victorious in 1949. With the Communist takeover of mainland China, the losing faction fled to the island of Taiwan. Taiwan is formally known as the Republic of China, while Communist China's official name is People's Republic of China. Many Western nations and the United Nations recognized Taiwan as the legitimate Chinese government until the 1970s.

DTN News: Afghanistan In Pictures Of The Day January 30, 2010

DTN News: Afghanistan In Pictures Of The Day January 30, 2010 *Source: DTN News By Roger Smith (NSI News Source Info) TORONTO, Canada - January 30, 2010: Following the 11 September 2001 terrorist attacks in New York City, a US, Allied, and anti-Taliban Northern Alliance military action toppled the Taliban for sheltering Osama BIN LADIN.
The UN-sponsored Bonn Conference in 2001 established a process for political reconstruction that included the adoption of a new constitution, a presidential election in 2004, and National Assembly elections in 2005.
In December 2004, Hamid KARZAI became the first democratically elected president of Afghanistan and the National Assembly was inaugurated the following December. Despite gains toward building a stable central government, a resurgent Taliban and continuing provincial instability - particularly in the south and the east - remain serious challenges for the Afghan Government. An injured Afghan National Army soldier is helped by his colleagues to safety during a fierce gunbattle in Helmand province, Afghanistan, on Friday, Jan. 29, 2010. A fierce gunbattle broke out between security forces and a team of Taliban fighters targeting U.N. and government buildings on Friday in the provincial capital of Lashkar Gah. The fighting came nearly two weeks after a similar assault in the Afghan capital of Kabul, once again showing the ability of insurgents to penetrate heavily secured areas.The body of a suspected Taliban fighter lies on the ground asurrounded by security forces soon at the end of a fierce gun battle in Helmand province, Afghanistan, on Friday, Jan. 29, 2010. Afghan National Army soldiers stand in front a building damaged during a fierce gun battle in Helmand province, Afghanistan, Friday, Jan. 29, 2010. A British soldier stands by the shattered windows of a building damaged during a fierce gun battle in Helmand province, Afghanistan, Friday, Jan. 29, 2010. British soldiers take rest during a fierce gunbattle in Helmand province, Afghanistan, Friday, Jan. 29, 2010. A fierce gun battle broke out between security forces and a team of Taliban fighters targeting U.N. and government building in the provincial capital of Lashkar Gah. The fighting came nearly two weeks after a similar assault in the Afghan capital of Kabul, once again showing the ability of insurgents to penetrate heavily secured areas.

DTN News: Somalia TODAY January 30, 2010 ~ Islamic Insurgents Attack Troops in the Somali Capital

DTN News: Somalia TODAY January 30, 2010 ~ Islamic Insurgents Attack Troops in the Somali Capital *Source: DTN News / NY Times By MOHAMMED IBRAHIM January 29, 2010 (NSI News Source Info) MOGADISHU, Somalia - January 30, 2010: Islamic insurgents who control much of rural Somalia launched an early-morning attack on international peacekeepers and government soldiers in this battered capital on Friday, trading fire for hours in a street battle. Militants from the Hizbul Islam patrol the streets of Somalia's capital Mogadishu, January 27, 2010. Fighting killed at least 18 people in two towns in central Somalia where rebels battled a pro-government militia and each other, according to witnesses. Reports that 14 people had been killed and 35 wounded could not be independently verified. Medical officials said most of the casualties had been civilians whose houses were hit by mortar fire. Some of the fire appeared to have come from African Union peacekeepers and government troops. Ali Musa, head of a volunteer ambulance service in the capital, said those victims included a mother and her two children who died in the shelling. The attack came as the transitional government prepared to mark its first anniversary with a parade, poetry readings and celebrations at Villa Somalia, the presidential palace. It was not clear whether the assault was timed to coincide with the anniversary festivities, but the attack offered another reminder of the government’s weakening grip on security. The militants began their attack about 2 a.m. Friday. Residents, jolted awake by mortar blasts, cowered in their homes or fled for sturdier concrete structures as explosions and gunshots echoed through the north and south ends of Mogadishu for hours. Residents described it as the most serious fighting in months. “I thought I was dreaming when I heard the sound of the artillery,” said Asha Abdulle, a mother of four. Militants from the rebel group Shabab and an allied group, Hizbul Islam, claimed responsibility in a statement, saying that they had assaulted “the strongholds of the enemies of Allah.” The Shabab, some branches of which have ties to Al Qaeda, have seized control of much of southern Somalia and have carried out suicide bombings and frontal attacks against Somali officials and peacekeeping troops as they seek to unseat the country’s fragile government. A police spokesman, Col. Abdullahi Barisse, said that government forces had pushed back the rebels. He declined to say whether any government troops had been hurt or killed. The Shabab said that two of their fighters had been killed. The United States and other Western countries are trying to support the moderate Islamic government of the president, Sheik Sharif Sheik Ahmed, fearful that Somalia could become the next haven for Al Qaeda and other terrorist groups. But Mr. Ahmed’s year-old government controls only a few city blocks in an impoverished nation plagued by drought, famine and years of fighting between warlords and rival Islamic factions. In addition to attacks on government forces, militants have launched mortar assaults on the country’s main airport and bombed a college graduation ceremony, and fighters lurk just a few hundred yards outside the walls of the presidential palace. Western powers have spent millions of dollars on weapons and training for the Somali defense forces, but rampant defections and military victories by Shabab rebels and their allies — who control some two-thirds of the country — have sharply limited the Somali government’s power, and displaced hundreds of thousands of Somali civilians.

DTN News: Boeing Helicopter Support Program To Provide Lift For Canadian Industry

DTN News: Boeing Helicopter Support Program To Provide Lift For Canadian Industry *Source: DTN News / Boeing (NSI News Source Info) OTTAWA, Canada - January 30, 2010: At a supplier conference today in Ottawa, Boeing [NYSE: BA] outlined its proposed subcontracting plan for in-service support (ISS) of 15 Boeing CH-47 Chinook Medium-to-Heavy Lift Helicopters (MHLH), designated CH-147 for the Canadian Forces. Through the performance-based ISS program for the CH-147 fleet, Boeing could provide industry benefits of approximately $2 billion over 20 years. The program provides work packages in areas including engineering support; logistics support analysis; supply chain support; aircraft maintenance training systems and services; technical publications; ground support equipment; and maintenance site operations. “Boeing has single-point accountability to manage the MHLH fleet’s overall performance while reducing overall life-cycle cost,” said Barry Wolff, MHLH ISS program manager for Boeing. “Ultimately, we are responsible for flawless execution of the MHLH ISS Program to meet or exceed the Canadian government’s Performance Based Accountability metrics and to ensure the level of readiness that Canadian Forces deserve.” At today’s conference, Boeing reviewed the initial ISS structure and the company’s transition plan for the 20-year ISS phase, including the schedule and process to competitively bid work packages. “Today’s conference is one of the first steps for the MHLH ISS Program,” said H.W. “Pete” Peterson, country director and vice president in Canada for Boeing Defense, Space & Security. “This is a chance for us to meet with potential suppliers to explain our proposed approach to compete and award long-term support work for the Canadian Chinook, and to give them the opportunity to ask questions and provide input. Our final plan for the ISS competition will reflect improvements based on industry feedback.” Through Canada’s Industrial and Regional Benefits (IRB) Policy, Boeing’s IRB commitments on the MHLH ISS Program will allow Boeing to continue its long-standing relationship with the aerospace and defense industry in Canada. “The Chinook fleet, operated or selected by nearly 20 international defense forces around the world, is in high demand,” Peterson said. “Canadian suppliers who offer the best value will have an opportunity to be part of the global support network that ensures these workhorses are ready to meet transport, humanitarian and supply needs in a variety of operational environments.” Boeing has been a major contributor to the Canadian economy since 1919, generating approximately $1 billion in business annually. The company employs highly skilled workers in Nova Scotia, Quebec, Ontario, Manitoba, Alberta and British Columbia in support of its commercial and defense business units. Canada also is home to one of Boeing’s largest international supplier bases, with more than 200 suppliers in every region of the country, providing a diverse mix of high-value goods and services to Boeing and its customers. A unit of The Boeing Company, Boeing Defense, Space & Security is one of the world’s largest defense, space and security businesses specializing in innovative and capabilities-driven customer solutions, and the world’s largest and most versatile manufacturer of military aircraft. Headquartered in St. Louis, Boeing Defense, Space & Security is a $34 billion business with 68,000 employees worldwide.