Chinese Growth Plunges, with Global Aftershocks Nt Policies

28 FRIDAY - SUNDAY, JANUARY 23 - 25, 2009 THE WALL STREET JOURNAL. HEARD ON THE STREET Financial Analysis and Commentary more at WSJ.com/heard VOL. XXVI NO. 250 FRIDAY - SUNDAY, JANUARY 23 - 25, 2009 Uninjectable Time’s a wastin’ for U.K. Œ2.70 U.K.’s Barclays bind Barclays’s daily share Œ2.90 Is Mexico City the world’s price in London So far, the U.K. govern- The lesson of the credit As if Barclays sharehold- vestment Authority, which tar’s stake would increase ment’s latest bailout plan crunch so far is that, when - France greatest food town? 800 pence - Slovenia ers didn’t have enough to lost billions on Citigroup. from 32% to 41%. The gov- has had exactly the opposite offered promises rather WEEKEND JOURNAL | PAGES W8-W9 Chinese growth plunges, worry about already. Like Singapore’s Temasek ernment would get 20% effect of what was intended. than details, investors as- Œ3.20 Shares in the U.K. bank with its Merrill Lynch invest- rather than 37%. Other 600 Instead of rescuing the sume the worst. The lack of Sk 100/Œ3.32 have slumped nearly 70% in ment, Qatar demanded an shareholders go from 68% banks and restoring confi- detail on the asset-protec- - Finland Ten fundamental questions just eight trading days anti-dilution clause—if the to 31%. 400 dence in the U.K., the moves tion scheme—including, cru- Dkr 22 amid fears it may need to bank were to raise more capi- That makes it harder for sent bank shares tumbling cially, any sense of the - Slovakia for the U.S. car industry Œ3 with global aftershocks this week, while sterling is losses the taxpayer might access state capital. tal at a lower price before the U.K. to inject capital 200 NEWS IN DEPTH | PAGES 14-15 June 30, 2009, its shares at its lowest level against bear—meant the positive el- But thanks to fine print into Barclays—only to hand - Denmark in the £4 billion ($5.5 bil- would convert into Barclays upside to a foreign investor. the dollar in 27 years. There ements of the package were - Portugal Slowing demand hits 0 is still time for Prime Minis- overshadowed by the Royal lion) of mandatory convert- stock at the new lower price. Of course, Qatar itself could 2007 '08 '09 Kc 110 ible notes issued to Qatar At Thursday’s 59 pence put in the capital, thereby ter Gordon Brown to reverse Bank of Scotland’s profit Zl 10.50 region’s exporters; Source: Thomson Reuters Datastream this self-inflicted crisis of warning issued Monday last year, injecting capital a share, Qatar would re- taking control of the bank, confidence, but he is run- morning. - Poland would leave both sharehold- ceive nearly three times the if allowed. Or perhaps the Korea, Japan wilt ning out of time—and It is too late for - Czech Republic ers and the government shares originally agreed Qataris could be persuaded tors are skeptical, after this Nkr 27 What’s News— options. Mr. Brown to correct the heavily diluted. and its percentage stake waive their rights. week’s profit warning by By Andrew Batson Mr. Brown made two big first mistake. But he can 7 7 HRK 22 Business&Finance World-Wide would increase. How much RBS. Besides this crisis has - Norway Qatar saw how other sov- Barclays argues this is mistakes. First, he opted for still do something about the ereign-wealth funds got depends on the new price academic, saying its core shown often enough how Fiat’s industrial debt soared The ECB is likely to move cau- BEIJING—Three of Asia’s power- an insurance scheme rather second. The Treasury says Œ2.90 - Croatia to $7.67 billion at the end of tiously in lowering its key rate burned investing in western and the sum to be raised. Tier 1 capital ratio at the quickly the seemingly un- than creating a fund to ab- it may take until the end of house economies—China, Japan banks as subsequent capital But if Barclays raised £3 bil- end of 2008 is likely to be thinkable can become only last year and sales tumbled, un- closer to zero, a top policy maker and South Korea—are stalling as de- sorb bad bank assets, which February to work out de- Œ2.90 raisings diluted them—most lion at 60 pence, J.P. Mor- 6.5%—enough to satisfy the too real. derscoring the tough condi- there suggested, because it mand for their goods from the U.S. Press Associated might have drawn a line un- tails of the asset-protection - Netherlands doesn’t see deflation threaten- Japanese products at a supermarket in Shanghai notably the Abu Dhabi In- gan Cazenove estimates Qa- U.K. regulators. But inves- —Simon Nixon der the crisis once and for scheme. That is far too tions the Italian auto maker and Europe wilts, and there are few - Belgium Dh 24 faces as it tries to take a 35% ing the euro zone and is con- signs of a hoped-for increase in Chi- Slowing growth all. He seems to have long. The longer the uncer- Œ3 stake in Chrysler under a broad cerned about creating another nese consumption that might help China GDP South Korea GDP Japan GDP ducked the bad-bank choice tainty continues, the £1.40 strategic alliance. Page 1 credit-fueled bubble. Cutting Year-to-year change Year-to-year change Year-to-year change because he was worried greater the risk of both a - Morocco keep the global economy afloat. Destruction of trust will hurt Wall Street for years - Austria rates sharply now makes it about the impact on ster- run on the U.K. banks by de- n Bank of America CEO Ken- The financial crisis has slashed 15% 10% 3% Another reputation bites power struggles, huge losses the money-making magic. stroyed, clients lost fortunes Œ2.90 harder to raise them back to China’s growth almost in half within ling of issuing large quanti- positors and bondholders neth Lewis dismissed former 8 2 the dust. John Thain is the and increased regulation, In addition, any belief in and taxpayers stepped in to the right level later, Lorenzo a single year: gross domestic prod- Lk 370.00 ties of gilts to fund the pur- and a run on sterling by for- – United Kingdom Merrill Lynch chief John Thain, Bini Smaghi said. Page 3 10 latest banking grandee to there is a more fundamental Wall Street’s willingness to prop up the industry. chase of toxic assets. But eign investors. Mr. Brown $2 angered by Thain’s handling of uct expanded just 6.8% from a year 6 1 exit ignominiously . His threat to the industry that do the right thing has been Politicians and regulators - Luxembourg n when one considers what must spell out the scale of Merrill’s losses. Page 1 Obama began overhauling earlier in the fourth quarter of 4 0 forced sale of Merrill Lynch will take years to overcome: hammered. It is no secret will tighten the leash. But 2008, and 9% for the full year, the 5 has happened since, it is toxic assets the government n U.S. treatment of terror suspects, L£ 4000 Russia’s central bank said it to Bank of America ended the destruction of trust. that people enter finance to even though investors and hard to argue this wasn’t a is willing to insure, the signing orders to close the Guan- government said Thursday. That 2 -1 will end the ruble’s slide, setting Estimate in a government bailout and Each new revelation pulls make money. But the indus- companies will one day re- risk worth taking. The U.K. losses it is willing to bear, tanamo detention center, review compares to annual growth of 13% 0 0 -2 - U.S. Military (Eur) a floor about 10% below current controversy over bonus pay- back the curtain on Wall try continued enriching it- gain an appetite for risk, the has ended up with the same and how it intends to pay - Lebanon military trials and ban some in- in 2007. 2000 ’05 ’08 2000 ’05 ’08 FY2000 ’05 ’08 ments. Ken Lewis, BofA’s Street’s machinery, like a 21st self as it went off a cliff. destruction of trust will stifle levels that it expects will hold for Page 8 Efforts to stimulate consump- pain for less gain. for them, including long- TL 4.25 terrogation methods. Œ2.90 Note: Japan’s fiscal year ends March 31 of the following year chief executive, is left look- century rerun of “The Wizard Firms paid huge bonuses the Street’s profitability for at least a few months. Page 17 n A Senate committee Mr. Brown’s second mis- term cuts in public spend- approved tion in China are running up against Sources: National statistical authorities ing increasingly vulnerable. of Oz.” Regulators and clients even as losses mounted, in- years to come. - Italy n take was to come up with a ing. And he must do it fast. - Turkey The SEC settled a complaint Geithner’s nomination as U.S. a gloomy economic climate that is But beyond the individual are no longer bamboozled by vestors saw stock prices de- —Thorold Barker with GM related to accounting Treasury secretary, clearing the making consumers more cautious, plan rather than a solution. —Simon Nixon Œ2.90 S£ 210 missteps the auto company way for the full Senate to con- as well as a government legacy of en- hoped China’s government can help been accelerating since.

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