My finance view

The Federal Reserve’s “highly accommodative” monetary policy is partly to blame for rapidly increasing global commodity prices, said Kansas City Fed President Thomas Hoenig, who called on colleagues to raise the benchmark interest rate toward 1 percent soon.

“Once again, there are signs that the world is building new economic imbalances and inflationary impulses,” Hoenig, the central bank’s longest-serving policy maker and lone dissenter at meetings last year, said in a speech today in London. “The longer policy remains as it is, the greater the likelihood these pressures will build and ultimately undermine world growth.”

Fed policy makers, who affirmed plans on March 15 to buy $600 billion in Treasury securities through June, disagreed this week over whether to curtail the purchases, end them early or keep the program in place. St. Louis Fed President James Bullard said the plan may need to be cut by about $100 billion. The Boston Fed’s Eric Rosengren said that high unemployment and low core inflation mean it’s still too soon to withdraw record monetary support for the economy.

The Federal Open Market Committee “should gradually allow its $3 trillion balance sheet to shrink toward its pre-crisis level of $1 trillion,” Hoenig, 64, said in his remarks at the London School of Economics and Political Science. “It should move the U.S. federal funds rate off of zero and toward 1 percent within a fairly short period of time.”

Improving Trends

“Policy should acknowledge the improving economic trends and begin to withdraw some degree of accommodation,” he said. “If this is not done, then the risk of introducing new imbalances and long-term inflationary pressures into an already fragile recovery increase significantly.”

Other Fed officials, including Chairman Ben S. Bernanke, have rejected the idea that their policies fueled gains in commodity prices, pointing instead to rising demand among emerging-market economies and disruptions in supplies.

Bernanke, in testimony to Congress on March 1, said commodity prices “have risen significantly in terms of all major currencies,” and not just the dollar.

As of yesterday, crude oil jumped 35 percent over six months as turmoil in the Middle East threatened to disrupt supplies. Corn rose 38 percent, and cotton climbed 89 percent.

In its March 15 statement, the FOMC said the economic recovery “is on a firmer footing.” It said the effects of higher fuel and commodity costs on inflation will be “transitory,” and officials “will pay close attention to the evolution of inflation and inflation expectations business card.”

Adding Workers

Companies in the U.S. added more workers in March, a sign the labor market may be strengthening, data from a private report based on payrolls showed today. Employment increased by 201,000 workers, according to figures from ADP Employer Services.

Other data released this week point to challenges for the recovery. Confidence among U.S. consumers dropped more than forecast this month as fuel costs surged to the highest level in more than two years, according to the Conference Board’s confidence index yesterday. Another report showed home prices in 20 cities fell in January by the most in more than a year, raising the risk that sales will keep slowing.

Fed officials have purchased $1.7 trillion of mortgage debt and Treasuries through March 2010 to pull the U.S. out of the recession. The Fed’s second round of purchases, announced in November, has come under fire from Republican leaders in Congress who say it risks inflating asset-price bubbles and stoking inflation.

Eight Dissents

As a voting member of the FOMC last year, Hoenig dissented against the Fed’s pledge to keep rates “exceptionally low” for “an extended period,” the decision to reinvest proceeds from maturing mortgage-backed securities, and the current round of bond purchases. His eight straight dissents tied former Governor Henry Wallich’s record in 1980 for most dissents in a single year.

“You have to remember I’m not advocating tight monetary policy,” the regional bank president said in response to audience questions after his speech. “I’m advocating a non- crisis policy. Zero is a crisis policy that by itself should be temporary.”

A neutral level for the fed funds rate in the long run is likely more than 2 percent, Hoenig said. Neutral refers to a level for the Fed’s interest-rate target for overnight loans between banks that neither over-stimulates nor unnecessarily slows the pace of the economy.

“You can’t measure precisely neutral any more than you can precisely measure the long-term sustainable unemployment level, but you can estimate it over a long period,” he said. “I don’t know exactly what that is. Probably above 2 percent.”

Hoenig is retiring on Oct. 1 after a 20-year career as leader of the Kansas City Fed, one of the Fed’s 12 regional banks. The Kansas City Fed has begun a search for his successor.

Source

The vote next month on St. Louis’ 1 percent earnings tax is shaping up to be a rather unusual exercise.

City leaders and much of the region’s business community have launched a campaign to keep the tax in place, at least for now. Rex Sinquefield, the anti-tax advocate who spent nearly $12 million to put it on the ballot, is keeping quiet on it. And those with the most to gain from ending the tax

The World Bank said it may take five years for Japan to rebuild after this month’s earthquake and tsunami, which killed at least 8,450 and destroyed thousands of buildings.

“If history is any guide, real gross domestic product growth will be negatively affected through mid-2011,” the Washington-based lender’s staff said in a report today. “Growth should though pick up in subsequent quarters as reconstruction efforts, which could last five years, accelerate.”

Japanese Prime Minister Naoto Kan’s government plans to compile a supplementary budget to pay for reconstruction, which the finance minister said is unlikely to be unveiled by month- end. The central bank last week injected record one-day liquidity to maintain stability in the nation’s money markets, and authorities also led coordinated sales of yen with Group of Seven counterparts on March 18.

World Bank staff cited private estimates for the damage wrought that range from $122 billion to $235 billion. The damper on the economy will have a “modest short-term impact on the region,” with trade and investment flows disrupted, according to the report. The automotive and electronics industries are likely to be most affected, it added.

Bond Yields

The World Bank said that the 1995 Kobe earthquake and its aftermath may help gauge events following the March 11 magnitude-9 temblor and the ensuing tsunami. Liquidity injections by the Bank of Japan and appreciation in the yen, as traders abandon the so-called carry trade amid speculation overseas funds will be repatriated for reconstruction, are “combining to create downward pressure on bond yields,” according to the report.

The carry trade refers to investors borrowing in yen and shifting the funds into higher-yielding currencies. Japan’s benchmark government bond yields are the world’s lowest.

The yen appreciated to 76.36 per dollar on March 17, surpassing its post-World War II peak of 79.75 reached in April 1995. Yields on benchmark 10-year bonds touched a two-month low last week as the central bank said it will buy more government debt to lower borrowing costs.

“A temporary growth slowdown in Japan will have a modest short-term impact on the region,” according to the World Bank report. “Disruption to production networks, especially in automotive and electronics industries, could continue to pose problems. At this stage, it is unclear how the disaster will affect Japanese outward foreign direct investment, but it may dent the pace of overseas investment as the country’s focus turns inward on reconstruction.”

Global Impact

The impact of Japan’s strongest earthquake on record may hurt global economic growth, Singapore’s Finance Minister Tharman Shanmugaratnam said in the city-state today.

Japan’s financial systems are functioning without disruption and the impact of this month’s earthquake may not be as big as imagined, Naoko Ishii, the country’s deputy vice minister of finance for international affairs, said in a conference in Singapore today. Japan is “deeply committed” to its international financing programs, she said.

“The actual damage to the actual economic activities in the region is severe,” Ishii said. “When it comes to the overall economic impact of Japan, however, it may not be as large as we imagined. GDP share of the three most-affected regions is 4 percent of the Japanese total GDP and that region is not necessarily sitting in the industrial heartland.”

Fragile Sentiment

Police said more than 8,400 people died and about 13,000 are still missing after the disaster, which triggered a nuclear crisis in Japan.

Reconstruction activities will offset the effects of the March 11 temblor, Ishii said. Business and consumer sentiment is understandably fragile, as the threat of radiation leak from a damaged nuclear plant could affect the way of life, she said guaranteed high risk personal loans.

“Private insurers are likely to bear a relatively small portion of the cost, leaving a substantial part to be borne by households and the government,” World Bank staff said in the report. The cost to the insurers range from $14 billion to $33 billion, they said, citing an estimate by AIR World.

A power shortage after the quake forced companies such as Sony Corp. (6758) and Toyota Motor Corp. (7203) to halt production. South Korean firms are facing higher prices for memory chips, in part because Japan accounts for up to 36 percent of global production and that production is now disrupted, while Thai exporters of cars report that current supplies of components imported from Japan will last through April, the World Bank said.

Debt Costs

A rising yen may increase debt-servicing costs for East Asian nations, the lender said in the report, adding that about one-quarter of developing East Asia’s long-term debt is denominated in the Japanese currency, ranging from about 8 percent in China to about 60 percent in Thailand.

“A one percent appreciation in the Japanese yen translates into a $250 million increase in annual debt servicing on yen- denominated liabilities held by East Asia’s developing countries,” the lender said.

Developing East Asia, which excludes Japan, Hong Kong, Taiwan, South Korea, Singapore and India, will expand 8.2 percent this year, World Bank staff said in the semiannual East Asia and Pacific Economic Update report today. The region grew 9.6 percent in 2010, it estimated.

Policy makers across the East Asian region need to tighten monetary policy to keep inflation expectations from escalating, according to the report. Governments should also let their discretionary fiscal stimulus packages lapse, it said.

Monetary Policy

Asian central banks from China to Thailand and South Korea have raised interest rates this year as a jump in crude oil prices escalates the danger of inflation in a region that’s led the global economic rebound. Policy makers are juggling containing inflation and protecting growth as higher energy prices reduce consumers’ purchasing power and increase the costs of doing business.

“Evidence that price shocks are not temporary is now plentiful,” the World Bank staff said in the report. “Inflation has become the key short-run challenge for the authorities in the region, complicated by a surge in portfolio capital inflows and rapidly increasing food and commodity prices. Price shocks are affecting core inflation that could trigger a wage-price spiral.”

Some Asian currencies and stock markets have surged in the past year as the U.S. Federal Reserve’s quantitative easing helped spur investments into the region’s assets, forcing policy makers to battle capital flows that risk creating asset bubbles.

“Currency appreciation — especially with the pause since late 2010 — has not hampered the recovery, although exporters’ margins have been affected,” the World Bank said. “Exchange market intervention has limited the extent to which nominal exchange rates across the region have strengthened, but that has been largely offset by higher inflation.”

Source

Cisco Systems Inc., the world’s largest maker of computer networking gear, on Friday said its first-ever cash dividend will amount to 6 cents per share and will be paid on April 20.

The company has said since last year that it would start paying a dividend equating to an annual yield of 1 percent to 2 percent, but had not specified the amount or precise timing.

The dividend amounts to an annual yield of 1.4 percent at Thursday’s closing price of $17. The shares hit a 52-week low of $16.97 in Thursday trading.

In afternoon trading Friday, the shares were up 15 cents to $17.15.

The dividend will be paid to shareholders of record as of March 31.

Technology companies like to hold on to their cash, investing it in their own growth rather than paying dividends. But several of them have started paying small dividends as they find their business maturing. Microsoft Corp. introduced a dividend in 2003 and now carries a 2.6 percent annual yield. Hewlett-Packard Co., which competes with Cisco in many fields, has a yield of 0.8 percent.

Among the holdouts that don’t pay a dividend are Apple Inc., Dell Inc. and eBay Inc.

San Jose, Calif.-based Cisco said its “leadership position in the markets we serve is strong,” making this the time to reward shareholders.

The dividend amounts to $1.3 billion annually. Cisco has already been transferring cash to shareholders through stock buybacks, at a rate of about $8 billion per year, according to analyst Brian White at Ticonderoga Securities. Most recently, Cisco authorized a $10 billion buyback program in November.

Cisco had $40.2 billion in cash in February, but only $3.1 billion of that was in the U.S. The rest sits at overseas subsidiaries.

Cisco has been reluctant to repatriate that money, because it will then be taxed at the 35 percent U.S. corporate tax rate. It’s lobbying Washington for a tax amnesty on overseas earnings, and CEO John Chambers has linked that effort to the size of the dividend.

White said buybacks at the current rate plus the dividend will cost Cisco $6.5 billion to $7 billion more than its U.S. business generates in cash flow. Absent a tax amnesty, Cisco might have to repatriate money at the higher tax rate, borrow money or reduce its buybacks, White said.

Source

Nuclear plant operators trying to avoid complete reactor meltdowns said Thursday that they were close to completing a new power line that might end Japan’s crisis, but several ominous signs have also emerged: a surge in radiation levels, unexplained white smoke and spent fuel rods that U.S. officials said could be on the verge of spewing radioactive material.

U.S. Nuclear Regulatory Commission Chairman Gregory Jaczko said in Washington on Wednesday that all the water was gone from the spent fuel pools at Unit 4 of the Fukushima Dai-ichi complex, but Japanese officials denied it. Hajime Motojuku, spokesman for plant operator Tokyo Electric Power Co., said the “condition is stable” at Unit 4.

If Jaczko is correct, it would mean there’s nothing to stop the fuel rods from getting hotter and ultimately melting down. The outer shells of the rods could also ignite with enough force to propel the radioactive fuel inside over a wide area.

Jaczko did not say how the information was obtained, but the NRC and U.S. Department of Energy both have experts at the complex of six reactors along Japan’s northeastern coast, which was ravaged by last week’s magnitude-9.0 earthquake and subsequent tsunami.

The conditions at the plant appeared to worsen, with white smoke pouring from the complex and a surge in radiation levels forcing workers to retreat for hours Wednesday from their struggle to cool the overheating reactors.

As international concern mounted, the chief of the U.N. nuclear agency said he would go to Japan to assess what he called a “serious” situation and urged Tokyo to provide better information to his organization.

Japanese officials raised hopes of easing the crisis, saying early Thursday that they were close to completing a new power line that could restore the reactors’ cooling systems.

Naoki Tsunoda, a spokesman for Tokyo Electric Power Co., or TEPCO, said the new power line to the Fukushima Dai-ichi plant was almost finished and that officials planned to try it “as soon as possible,” but he could not say exactly when.

The new line could revive electric-powered pumps, allowing the company to maintain a steady water supply to troubled reactors and spent fuel storage ponds, keeping them cool. The company is also trying to repair its existing disabled power line.

Late Wednesday, government officials said they’d asked special police units to bring in water cannons _ normally used to quell rioters _ to spray water onto the spent fuel storage pool at Unit 4.

The cannons are thought to be strong enough to allow emergency workers to remain a safe distance from the complex while still able to get water into the pool, said Minoru Ogoda of Japan’s nuclear safety agency.

TEPCO said it was also considering using military helicopters to douse the reactors with water, after giving up on such a plan because of high radiation levels in the atmosphere.

Wednesday’s pullback by workers who have been pumping seawater into the reactors cost valuable time in the fight to prevent a nuclear meltdown, a nightmare scenario following the horrific earthquake and tsunami. The disasters last Friday pulverized Japan’s northeastern coast and are feared to have killed more than 10,000 people.

The tsunami destroyed the complex’s backup power system and left operators unable to properly cool nuclear fuel. The 180 emergency workers have been working in shifts to manually pump seawater into the reactors.

Japan’s emperor, in an unprecedented made-for-TV speech, called on the country to work together.

“It is important that each of us shares the difficult days that lie ahead,” said Akihito, 77. “I pray that we will all take care of each other and overcome this tragedy.”

He also expressed his worries over the nuclear crisis, saying: “With the help of those involved I hope things will not get worse.”

But officials are also taking increasing criticism for poor communication about efforts at the complex. There has been growing unease at the U.N.’s International Atomic Energy Agency’s 35 board member nations, who have complained that information coming from Japan on the rapidly evolving nuclear disaster is too slow and vague.

IAEA head Yukiya Amano spoke of a “very serious” situation and said he would leave for Tokyo within a day.

He said it was “difficult to say” if events were out of control, but added, “I will certainly have contact with those people who are working there who tackled the accident, and I will be able to have firsthand information.”

The nuclear crisis has partly overshadowed the human tragedy caused by Friday’s 9.0-magnitude earthquake, one of the strongest recorded in history.

Millions of Japanese have been with little food and water in heavy snow and rain since Friday. In some towns, long lines of cars waited outside the few open gas stations, with others lined up at rice-vending machines.

National broadcaster NHK showed mammoth military helicopters lifting off Friday afternoon to survey radiation levels above the nuclear complex, preparing to dump water onto the most troubled reactors in an effort to cool them down.

The defense ministry later said those flights were a drill _ then later said it had decided against making an airborne drop because of the high radiation levels.

“The anxiety and anger being felt by people in Fukushima have reached a boiling point,” the governor of Fukushima prefecture, Yuhei Sato, fumed in an interview with NHK. He criticized preparations for an evacuation if conditions worsen, and said centers do not have enough hot meals and basic necessities.

More than 4,300 people are officially listed as dead, but officials believe the toll will climb to well over 10,000. Police say more than 452,000 people are staying in temporary shelters such as school gymnasiums.

Wednesday’s radiation spike was believed to have come from the complex’s Unit 3. But officials also acknowledged that they were far from sure what was going on at the four most troubled reactors, including Unit 3, in part because high radiation levels made it difficult to get very close.

While white smoke was seen rising Wednesday above Unit 3, officials could not ascertain the source. They said it could be spewing from the reactor’s spent fuel pool _ cooling tanks for used nuclear rods _ or may have been from damage to the reactor’s containment vessel, the protective shell of thick concrete.

Masahisa Otsuki, an official with TEPCO, said officials are most concerned about the spent fuel pools, which are not encased in protective shells.

“We haven’t been able to get any of the latest data at any spent fuel pools. We don’t have the latest water levels, temperatures, none of the latest information for any of the four reactors,” he said.

In the city of Fukushima, meanwhile, about 40 miles (60 kilometers) inland from the nuclear complex, hundreds of harried government workers, police officers and others struggled to stay on top of the situation in a makeshift command center.

An entire floor of one of the prefecture’s office buildings had been taken over by people tracking evacuations, power needs, death tolls and food supplies.

Elevated levels of radiation were detected well outside the 20-mile (30-kilometer) emergency area around the plants. In Ibaraki prefecture, just south of Fukushima, officials said radiation levels were about 300 times normal levels by late morning. It would take three years of constant exposure to these higher levels to raise a person’s risk of cancer.

A little radiation was also detected in Tokyo, triggering panic buying of food and water.

Given the reported radiation levels, John Price, an Australian-based nuclear safety expert, said he saw few health risks for the general public so far. But he said he was surprised by how little information the Japanese were sharing.

“We don’t know even the fundamentals of what’s happening, what’s wrong, what isn’t working. We’re all guessing,” he said. “I would have thought they would put on a panel of experts every two hours.”

Chief Cabinet Secretary Yukio Edano said the government expects to ask the U.S. military for help, though he did not elaborate. He said the government is still considering whether to accept offers of help from other countries.

There are six reactors at the plant. Units 1, 2 and 3, which were operating last week, shut down automatically when the quake hit. Since then, all three have been rocked by explosions. Compounding the problems, on Tuesday a fire broke out in Unit 4’s fuel storage pond, an area where used nuclear fuel is kept cool, causing radioactivity to be released into the atmosphere.

Units 4, 5 and 6 were shut at the time of the quake, but even offline reactors have nuclear fuel _ either inside the reactors or in storage ponds _ that need to be kept cool.

Meanwhile, Japan’s Nuclear and Industrial Safety Agency estimated that 70 percent of the rods have been damaged at the No. 1 reactor.

Japan’s national news agency, Kyodo, said that 33 percent of the fuel rods at the No. 2 reactor were damaged and that the cores of both reactors were believed to have partially melted.

Source

Japanese stocks rebounded Wednesday, recovering some of the massive losses sustained over the last two days following a devastating earthquake and tsunami. Markets around the world also bounced back even as the human and economic toll from the disasters, including an escalating nuclear crisis, remained unclear.

Oil prices rose above $98 a barrel as fears that clashes in Bahrain and Libya could further disrupt crude supplies outweighed concern Japan’s crises will crimp demand. In currencies, the dollar was little against the yen and up against the euro.

In early trading, European shares and U.S. futures carefully gathered momentum after a strong day in Asia.

Germany’s DAX rose 0.9 percent to 6,704.84 and France’s CAC-40 rose 0.2 percent to 3,788.21. Britain’s FTSE 100 was up narrowly at 5,698.33. Meanwhile, Wall Street was preparing for gains ahead of the opening bell. Dow Jones industrial futures rose 0.2 percent to 11,810, and S&P 500 futures were 0.2 percent higher to 1,278.20.

Japan’s benchmark Nikkei 225 index briefly surged more than 6 percent Wednesday. It softened slightly after Japan temporarily suspended operations to prevent a stricken nuclear plant from melting down after a surge in radiation made it too dangerous for workers to remain at the facility. The workers had been dousing reactors at the crippled Fukushima Dai-ichi nuclear complex with seawater in a frantic effort to cool them.

“It is very early days for calculation of any impact on the economy and the stock and bond markets,” according to Sarah Williams, head of Japanese equities at London-based Threadneedle, which manages about $65 billion in assets. “Until the safety of these plants is assured, investors will remain cautious.”

The Nikkei closed up 5.7 percent at 9,093.72 as investors snapped up bargains after a panic selling sent the index spiraling down nearly 11 percent the day before. The Nikkei on Tuesday closed at its lowest level in almost two years after shedding more than 1,600 points, or 16 percent, over two days.

The plunge prompted Tokyo Stock Exchange President Atsushi Saito to release a statement calling for calm. He noted that foreign investors were net buyers the last two days.

“I also believe that Japan’s experience, knowledge and technologies in the area of recovering from earthquakes should not be underestimated and that the stock market will calm down soon,” Saito said.

Meanwhile, the Bank of Japan conducted emergency operations for the third day in a row, bringing its total liquidity injection to 55.6 trillion yen ($688.3 billion) since Monday.

That helped banking shares perk up: Mitsubishi UFJ Financial Group, the country’s biggest bank, was up 2.2 percent, and Mizuho Financial Group Inc. gained 5.4 percent.

Japan’s powerhouse exporters also caught their breath after suffering staggering losses. Toyota Motor Corp., the world’s No. 1 auto maker, shot up 9.1 percent, Sony Corp. rose 8.8 percent, and truck-maker Isuzu Motors was 10.5 percent higher.

Heavy industry shares rose as the shock of the disaster gave way to thoughts of rebuilding payday loans. Kobe Steel soared 15 percent, and Nishimatsu Construction Co. Ltd. jumped 5.8 percent higher.

Markets elsewhere in Asia advanced. South Korea’s Kospi added 1.8 percent to 1,957.97. Hong Kong’s Hang Seng rose 0.1 percent to 22,700.88. Australia’s S&P/ASX 200 rose 0.7 percent to 4,558.20.

Mainland Chinese stocks rose Wednesday as traders shopped for good deals.

The Shanghai Composite Index gained 1.2 percent to 2,930.80 while the Shenzhen Composite Index rose 1.1 percent to 1,307.96. Gains were led by nonferrous mental and rare earth companies due to huge anticipated demands once rebuilding gets under way in Japan.

“The market will be unstable in the short term and it will relate to the nuclear leak in Japan,” said Liu Kan, an analyst at Guoyuan Securities in Shanghai.

Shares in home appliances also gained after Sony, Panasonic, Canon and Nikon closed some factories in Japan. Sichuan Changhong Electric Co. Ltd. hit the daily limit after rising 10 percent.

Benchmarks in Taiwan, Singapore and New Zealand were also higher.

However, markets in Indonesia and the Philippines _ which count on Japan for a relatively large share of their exports _ were down. Vietnam and Malaysia also slumped.

Taiwan’s TAIEX index recovered some lost ground _ up 1.1 percent _ after losing 3.4 percent Tuesday. But the index’s near-term outlook remained shaky due to extensive trade ties between Taipei and Tokyo.

“Taiwan’s trade exposure to Japan is among the highest in the Asia region,” DBS Bank Ltd. in Singapore said in a report.

The nuclear crisis overtook financial markets around the world Tuesday. The Dow Jones industrial average closed down 137.74 points, or 1.1 percent, at 11,855.42. The broader S&P fell 14.52 points to 1,281.87.

Investors sold stocks primarily because of fear that the disaster in Japan would slow down the global economy. Japan is the world’s third-largest economy, manufacturing goods from computer chips to automobiles, and buys 10 percent of U.S. exports.

In currencies, the dollar was unchanged against the yen from Tuesday, at 80.83. The euro fell to $1.3964 from $1.40 late Tuesday.

The dollar had fallen against the Japanese currency in the aftermath of the earthquake as investors bet that Japanese investors would close down overseas bets and bring their money home.

Demand for the yen may keep up as Japan seeks to fund the country’s rebuilding. After a huge Japanese earthquake in 1995, the yen gained about 20 percent against the dollar in three months.

Benchmark crude for April delivery was up $1.32 at $98.50 a barrel in electronic trading on the New York Mercantile Exchange. The contract tumbled $4 to $97.18 on Tuesday as the prospect of falling oil demand from Japan sent crude prices down.

Source

Soldiers and officials along a stretch of Japan’s northeastern coast warned residents that the area could be hit by another tsunami Monday and ordered them to higher ground. But the Meteorological Agency said there was no risk of another deadly wave.

The warning came as an explosion rocked the nearby Fukushima Dai-ichi nuclear power plant. The blast was felt 30 miles (50 kilometers) away by Associated Press journalists in the coastal town of Soma, where residents fled the town for safety after being herded quickly through muddy, debris-strewn streets.

TV footage showed a massive column of smoke belching from the Fukushima Dai-ichi nuclear plant’s No. 3 unit, about 125 miles (190 kilometers) north of Tokyo. Japanese officials said they believe it was a hydrogen explosion similar to an earlier one at a different unit in the facility. The problems at the plant stem from failed cooling systems caused by damage from Friday’s earthquake and tsunami.

More than 180,000 people have evacuated the area, and up to 160 may have been exposed to radiation.

Before the power plant blast, sirens around Soma, which was battered by Friday’s tsunami, went off and public address systems ordered residents to safety.

Farther south along the coast, helicopters flew over coastal communities warning residents to head to higher ground. In Sendai, the biggest city in the area, police announced warnings on a public address system.

In Tokyo and elsewhere, authorities began rolling blackouts to conserve power as they tried desperately to stabilize the nuclear reactors at risk of meltdown in the aftermath of the earthquake and tsunami. The disasters sent Tokyo’s stock market plunging as it opened, raising fears of a steep economic toll on top of the already overwhelming human suffering.

The planned blackouts of about three hours each in Tokyo and other cities are meant to help make up for the loss of power from key nuclear plants. Trade Minister Banri Kaieda said Sunday that the power utility expects a 25 percent shortfall payday loans guaranteed no fax.

Some 1.9 million households were without electricity, but many people were without even more basic necessities. At least 1.4 million households had gone without water since the quake struck, and food aid was slow in reaching many areas.

Friday’s quake and tsunami, which swallowed towns and tossed large ships like game-board pieces, caused tens of billions of dollars in losses, according to preliminary estimates. And the first day of stock trading since the disasters opening underlined the challenges Japan’s already fragile economy will have in bouncing back.

The benchmark Nikkei 225 stock average shed 494 points, or 4.8 percent, to 9,760.45 just after the market opened Monday. Japan’s central bank quickly responded by injecting 7 trillion yen (US$85.5 billion) into money markets.

The most urgent crisis remained at a nuclear plant along the ravaged northeastern coast, where operators worked frantically to try to lower temperatures of crippled reactors. Four nuclear plants had at least some damage, but two reactors at the Fukushima Dai-ichi nuclear complex were at the greatest risk of meltdown.

Operators dumped seawater into the two reactors in a last-ditch cooling effort. More than 180,000 people have evacuated the area, and up to 160 may have been exposed to radiation.

Officials have confirmed about 1,800 deaths from the earthquake and tsunami _ including 200 people whose bodies were found Sunday along the coast _ and said more than 1,700 were missing and 1,900 injured.

The death toll seemed certain to get much higher after a report from Miyagi, one of the three hardest hit states. The police chief estimated that more than 10,000 people were killed there, police spokesman Go Sugawara told The Associated Press. Only about 400 people in the state of 2.3 million have been confirmed dead so far.

Source

WASHINGTON

Spot the difference:

Economists wonder how Greece will ever pay off its enormous bills. Borrowing costs for Europe’s weakest states are at record highs. Credit downgrades come thick and fast while big question marks loom over the health of the region’s banks.

And the Germans are blocking any requests for more help.

Spring 2011 in Europe looks eerily like spring 2010 _ except that the stakes are now higher and markets’ patience appears to be reaching a breaking point.

The continent, especially the 17-nation eurozone, is still struggling to find its way out of a debt crisis that has already pushed Greece and Ireland to take massive bailouts. Investors are looking to the EU for a convincing plan that will keep the crisis from taking down Portugal and much bigger Spain _ a scenario that could threaten the future of the common currency.

Europe’s leaders have promised such a “comprehensive response” by the end of the month. The grand bargain was supposed to create closer coordination to boost economic growth and completely overhaul the region’s bailout fund, its main crisis tool.

But the mounting, uneasy feeling in markets is that the EU will fail to deliver.

“On every single occasion they have overpromised and underdelivered,” Sony Kapoor, managing director of the think tank Re-Define, said of Europe’s policymakers.

When the eurozone’s heads of state and government gather in Brussels Friday for a key stopover ahead of the decisive summit on March 24-25, they will commit to keeping labor costs and public deficits in check to make their economies more competitive and their government finances more sustainable. They will also discuss lowering the interest rates on Ireland’s euro67.5 billion ($93 billion) bailout and giving Greece more time to pay back its euro110 billion ($152 billion) rescue loan.

But the measures that markets have been waiting for the most _ namely giving the eurozone’s euro750 billion ($1 trillion) bailout fund powers that go beyond big national loan packages _ already appear to be off the table.

European Commission President Jose Manuel Barroso and his Monetary Affairs Chief Olli Rehn set the stakes high in January, when they called on EU leaders to not only boost the size of the fund, but also to widen “the scope of its activity.”

That scope, it soon emerged, could include buying the bonds of vulnerable governments to stabilize financial markets, giving countries short-term liquidity lines if they faced huge unexpected costs such as bank bailouts, or even lending governments money to buy back their own bonds and thereby cut down their debts.

The result was a period of relative calm on financial markets, which, policymakers said, should give Europe’s leaders the necessary time to rethink their crisis strategy. Until now it has largely been cobbled together in Sunday emergency meetings with the Monday opening of jittery stock markets in mind paydayloans.

But Barroso and Rehn may have promised too much.

Using the bailout money just to stabilize markets or buy up government bonds is “out of question,” a German government official said Thursday. Any help to troubled countries can only come as a last resort and in exchange for strict conditions such as budget cuts and structural reforms, the official told journalists.

About the jitters in financial markets following this week’s ratings downgrades of Spanish and Greek debt, the official said “I don’t think it can be about reacting to singular events.” He declined to be named in line with department policy.

The comments, in many ways, sum up what has happened in the eurozone over the past year.

On the one hand, much has been achieved. Governments bailed out Greece, set up the bailout fund that has since rescued Ireland, and even agreed to change the European Union’s treaty to create a permanent rescue mechanism. Record highs for bond yields and ratings downgrades are now received with a certain stoicism.

But on the other hand, the underlying clash of interest _ with the haves on the one side and the have-nots on the other _ remains.

“In the core countries the electorate is simply not happy to provide more help and funding to the periphery,” said Juergen Michels, an economist at Citigroup in London.

German Chancellor Angela Merkel faces an important election in the state of Baden-Wuerttemberg on March 27, just two days after the decisive summit. Elections in Finland, another fiscally strong country in the eurozone, are on April 17.

Together with the Netherlands, those two countries have formed a “coalition of no,” that looks set to block any expansion of the bailout fund’s powers, said Kapoor.

In some way, finding common ground is even harder now that voters in strong countries feel like they have already put up too much money, while citizens in weak states are reeling from the consequences of steep budget cuts and economic recession.

“The positions are more entrenched than they were last year, so the scope for action (for politicians) was much wider one year ago,” said Kapoor.

But most analysts nevertheless think that the euro will survive even if the “comprehensive solution” disappoints. “The lock-in of being part of the eurozone is so strong and the exit costs are so high,” said Kapoor.

And what might happen if the “comprehensive solution” fails to convince financial markets on March 25? The same as last year, a hastily called emergency meeting on a Sunday night, said Michels, possibly already on the first weekend of April.

Source

An elaborate sideshow got underway in New York Tuesday, breathlessly described by prosecutors as the biggest U.S. insider trading case ever involving a hedge fund.

The defendant is Raj Rajaratnam, 53, cofounder of hedge fund Galleon Group LLC, whose assets peaked at about $7 billion (U.S.) before the roof fell in on global financial markets in 2008.

Rajaratnam is accused of reaping about $45 million in ill-gotten gains from tips provided to him by corporate insiders, 19 of whom have been convicted of securities-law violations.

Rajaratnam himself faces as much as 20 years