-Maria Sheahan is a Reuters senior correspondent in Frankfurt.-
So far, Europe has left it up to the United States, Russia and China to send people into space. But almost 50 years after Russiaâs Yuri Gagarin made his first orbit around the earth, itâs about time that Europe finally enter the playing field, some say.
âEurope cannot stay out of manned (space) flight forever,â EADS unit Astrium Space Transportationâs CEO Alain Charmeau said at the Paris Air Show. Europe has its own space agency, ESA; it has its own module on the International Space Station; and it has sent its astronauts into space as passengers on the spacecraft of others.
Launching its own manned spaceflight mission âis not a budgetary issue, it is a matter of political willingness,â Charmeau said. His company, which makes space launchers that carry satellites or other items into space and could make a lunar lander, would be one of many that would benefit from the additional business.
Even outside the sphere of government-funded space programs, Charmeau said he expects to see more people going up into space, as paying tourists.
âI am really a supporter of space tourism,â Charmeau said.
Astrium is building its own space plane for that market, but Charmeau cautioned that space tourism projects would have to wait until the financial crisis ends and investments are more readily available again. And Virgin Galactic has been eyeing space tourism as a major future market for a while as well.
So the call is clear: Europe, send your rocket men to space already!
* China growth data, French rating threat weigh* Government bonds, dollar riseLONDON/NEW YORK, Oct 18 (Reuters) - World stocks dipped on
Tuesday and government bonds rose as slower-than-expected
Chinese growth and a credit warning on France added to a
cautious outlook for investors.The warning compounded investor jitters already unsettled
this week by comments from Germany’s finance minister, who said
he saw no imminent definitive solution on the euro zone debt
crisis.The MSCI world equity index was down 0.8
percent, although the world index is still up more than 11
percent after hitting a 15-month low earlier this month.U.S. stocks opened little changed, with investors eyeing
earnings from Apple later in the day. European stocks dipped 0.2 percent while emerging stocks
lost 2.3 percent.”Growth concerns in China along with renewed euro debt
concerns are bringing some hesitation into” the market, said
Andre Bakhos, director of market analytics at Lek Securities in
New York.China’s annual gross domestic product growth eased to 9.1
percent in July-September, slightly below forecasts of 9.2
percent, indicating the world’s second-largest economy expanded
at its slowest pace since the second quarter of 2009.Moody’s cautioned it may slap a negative outlook on
France’s Aaa credit rating in the next three months if costs
from helping to bail out banks and other euro zone members
stretch its budget too thin.Optimism over a key European Union summit on Oct. 23 waned
after German Finance Minister Wolfgang Schaeuble said on Monday
that even though European governments would adopt a five-point
platform to address the crisis, a definitive solution would not
be reached at the summit.U.S. Treasuries edged higher, pushing benchmark yields to
their lowest in two weeks.Benchmark 10-year Treasury prices rose 5/32 in
price to yield 2.14 percent, from 2.18 percent late on Monday.
Yields fell as low as 2.08 percent, their lowest since Oct 7.The French/German 10-year government bond yield spread widened to a euro era record of 101 basis points.
French debt also underperformed its triple-A rated peer the
Netherlands.Brent crude oil prices were lower, while the dollar
gained 0.4 percent against a basket of major currencies. The
euro fell 0.3 percent to $1.3701.Shares of Apple were down 0.5 percent at $417.80. Earlier
in the day, International Business Machines Corp’s quarterly
results failed to impress investors used to a robust showing
from the technology bellwether. That added to worries over
lackluster corporate information technology spending. IBM shares fell 4.7 percent to $177.88.
* Run on not-for-profit basisBy Rachel ArmstrongSINGAPORE, Oct 14 (Reuters) - In a small lab, tucked away in
the depths of a Singapore university campus, a team of
researchers and their computers calculate the credit ratings of
about 50,000 companies.Relying just on public data and stock price movements for
their analysis, the project’s founder, professor Jin-Chuan Duan,
is confident their system can provide a more reliable guide to a
company’s credit risks than the commercial rating agencies.A confident claim, but a growing number of the system’s 800
users are banks and fund managers, utilizing it to help guide
their own internal credit risk systems.”It offers a very transparent and objective approach to
estimating the credit rating of companies,” said Benjamin Wong,
a senior risk analyst at a UK bank.”I’m not sure a single bank could do what they’ve done in
terms of collecting the data, assembling the research
capabilities, and having the technology to do the calculations
on such a large volume of companies.”BORN OUT OF FRUSTRATIONThe idea was born in March 2009, out of frustration at the
debate surrounding credit rating agencies in the wake of the
financial crisis.”It occurred to me that just criticizing the rating industry
and going about the conventional way of regulatory reform is
never going to go anywhere, so I was asking myself is there
something more constructive I could do?,” said Duan, the
director of the National University of Singapore’s Risk
Management Institute.An evangelist for revolutionising the way credit rating
agencies operate, Duan believes the private sector model, where
agencies are paid by the issuers to rate their products, is
flawed.”Credit ratings should be viewed as a public good and part
of infrastructure,” he said.”The natural way to achieve this is for a knowledge
enterprise to do it.”So that’s what Duan did, allocating S$7 million ($5.5
million), part of a grant provided to his institute by
Singapore’s central bank, to fund a free-to-use credit rating
service for four years.He and his team of around 30 researchers built the system
using data from Reuters and Bloomberg terminals on companies
listed across Asia, Europe and America.They designed models to calculate the probability of a
company reneging on its debts, shaped by analysis of previous
corporate defaults.NO MORE AAAsRather than issuing the well known alphabetic ratings like
AAA, the system produces a numerical probability instead. For
example it estimates that the recently rescued Franco-Belgian
lender Dexia SA has a 3.4 percent probability of
defaulting in the next two years — low but still five times the
European financial sector’s average probability of 0.7 percent.The big-three credit rating agencies — Moody’s ,
Standard & Poor’s and Fitch Ratings — have defended their
lettering system as a useful shorthand understood across the
finance industry.But Duan is among the many critics who believe debt should
be assigned a more precise credit rating.”In the political polling sphere during election time we
tell people the points and margin of error in a poll and TV
viewers don’t have a problem understanding, so it should be
possible in the financial sphere,” he said.COMPETITIONIt’s not the first time someone has tried to give the big
three agencies and several local players a run for their money.
Following the financial crisis, Wall Street analyst Meredith
Whitney, entrepreneur Jules Kroll and research firm Morningstar
Inc are among those who have ventured into the ratings
space.What distinguishes the university’s offering is it’s not out
to make money and welcomes outside contributions that will
improve its model.”As we are not for profit, we are happy to invite people to
participate with us in a Wikipedia-type spirit of development,”
said Duan, adding that they don’t register intellectual property
rights for the project, nor do they take corporate donations.It’s this approach that is one of the big winners with the
industry. With banks under more pressure than ever from the
regulators to provide a thorough explanation of their approach
to risk management, they need a credit rating system with a
public methodology they can test for themselves.”They (the institute) are transparent in their methodology
and in disclosing the performance of their ratings,” said Wong
at the UK bank.”For the credit rating agencies, a rating decision is made
based on a committee approach, so it can be quite subjective.”That’s not to say the system’s not got its limitations —
it can only rate publicly listed companies and lacks the access
to issuers that the big rating agencies have.But Duan believes their system, based as it is on
quantitative analysis of previous defaults, will provide a
scientific benchmark for banks and regulators to test other
credit rating systems against.Asked what the commercial players have made of their
offering, he says they have initially been rather defensive but
come round once they realise they are not facing financial
competitors.”Once we’ve made it clear we’re here to create scientific
competition, we’re not here to create business competition they
start to feel a bit more comfortable with it,” said Duan.
* Delay stokes anxiety about vulnerability to Europe* Investors embrace clearing in boon for CME, LCH, ICE* CFTC inundated with thousands of industry lettersBy Jonathan Spicer and Ann SaphirCHICAGO, Oct 12 (Reuters) - Europe’s debt problems are
increasing anxiety about the vulnerability of global markets as
too many new U.S. derivatives rules intended to prevent a
repeat of the 2008 crisis have yet to be defined.Investors have responded in recent months by embracing the
clearing of swaps, essentially beating regulators to the punch,
to protect themselves in volatile markets.Clearing allows investors to avoid the credit risk of
trading with banks that appear newly vulnerable amid Europe’s
debt crisis. In 2008-2009 banks’ worries about the health of
their trading partners resulted in a widespread freezing of
credit, which nearly sank the global economy.Executives at a futures industry conference here urged
regulators to speedily adopt rules for trading and clearing in
the over-the-counter swaps market. The longer we wait, they
said, the more dangerous it becomes.”If we were the five senior staff on the Titanic, I’d like
to think we wouldn’t be standing back, looking at the safety
boats and thinking about whether we can design them better,”
CME Group Inc chief executive Craig Donohue said at the
Futures Industry Association.”We’d be thinking about how to get people on the boats and
get them to safety, and maybe we can improve on that in the
future,” he said.It has been three years since a U.S. financial crisis sent
the global economy into a tailspin, and more than a year since
lawmakers passed a bill designed to prevent a new crisis from
taking down the financial system in similar fashion. Regulators
are scrambling to finish writing the rules.Now, with Europe’s debt crisis showing some of the same
signs as the United States’ meltdown, investors have rushed
into clearing credit and interest rate swaps, a boon in
volatile markets for companies like CME and Europe’s
LCH.Clearnet.The Commodity Futures Trading Commission, which must make
final about 50 new rules under the Dodd-Frank law, has
struggled to keep up with the rule-making process, having
finished only about a dozen of the rules.Several key rules, including capital and margin
requirements, will be pushed into the first quarter of 2012,
putting the agency well behind a July 2011 deadline Congress
had set.Regulators have benefited from public meetings that
provided input for the rules-writing, said CFTC Chairman Gary
Gensler. “But the American public needs us to move forward and
get the job done and finish these rules,” he told reporters.”The crisis emanating from Europe reminds us that the
public is still unprotected.“‘FISH OR CUT BAIT’Investor appetite for CME’s cleared swaps soared last
month, with trading in credit default and interest rate swaps
rising to $42 billion in September, from less than $1 billion
about a month earlier.CME’s futures business has also benefited, as swaps users
seek safer alternatives to their bilateral dealings with banks.
Asset managers are increasingly shifting their trades to CME,
doubling their use of CME’s short-term interest rate futures in
the past year for instance. Trading in currency futures rose to
records in September as investors sought safety through
clearing.”The trend is there,” said Jeffrey Sprecher, chief
executive of IntercontinentalExchange Inc , which began
clearing CDS in early 2009 and saw an 11 percent jump in
credit-related revenues from the second to the third quarter of
this year.”It’s obviously a very complicated global environment right
now for global exchange risk, and you are seeing a migration
towards futures more than the OTC market.”Despite delays by the CFTC and other agencies in defining
the Dodd-Frank rules, the expectation that they will eventually
come into force has allowed investors to begin clearing
products they never had before.In a global market of some $480 trillion in clearable
interest rate swaps, an estimated $180 trillion has yet to be
cleared.Yet some, including Donohue and Sprecher, cautioned in
interviews that it was important the CFTC takes the time to
sift through the thousands of comment letters and get the rules
right. “I think it’s well intentioned,” Sprecher said.There is also the real threat of lawsuits from the industry
once the rules — from limits on excessive speculation to
real-time reporting of trades to end-user exemptions — are
formally adopted.”You don’t have to read too closely between the lines to
see that people are laying the groundwork for legal
challenges,” said former CFTC chief economist James Overdahl,
who is now vice president at consulting firm Nera.But based on interviews with several traders and industry
executives, the euro zone crisis is giving a new urgency to the
need to define how exactly regulators want to safeguard the
market.”Let’s fish or cut bait,” said Chris Hehmeyer, chief
executive of Chicago-based proprietary trading firm HTG Capital
Partners. “It’s time for them to go ahead and get the
definitions out there so that we can get on with it.”
WASHINGTON Oct 11 (Reuters) - President Barack Obama must
clarify his position on a bill before Congress aimed at forcing
China to revalue the yuan, a top Republican said on Tuesday.House of Representatives Majority Leader Eric Cantor said
it was “critical” that the White House make clear its view of
the bill, which the Senate was expected to pass later in the
day.”What I would like to see is where the administration is.
Clearly they’ve got concerns as well,” Cantor, the number two
in the Republican-controlled House, told reporters.Last week, House Speaker John Boehner warned that the
legislation was “dangerous” and could start a trade war.Passage of the bill would create a dilemma for Obama, whose
re-election prospects next year could hinge on whether voters
believe he is doing enough to create American jobs.If he signed the bill, there could be a powerful backlash
from China; if he vetoed it, he could pay a political price —
particularly in battleground industrial states like Ohio and
Michigan.The Democratically-led Senate is expected to pass the bill
by a wide bipartisan margin, putting pressure on House leaders
to take up the popular bill or accept blame for its demise.Cantor’s comments appeared intended to make sure the White
House shares responsibility for the fate of the bill.”I think all of us are very concerned about the
competitiveness of our manufacturers in this country and the
unfair practices by China and others,” Cantor said.Many economists say China holds down the value of its yuan
currency to give its exporters an edge in global markets.”UNDERVALUED” YUANSome U.S. lawmakers contend the yuan is undervalued by as
much as 25 percent to 40 percent, making it hard for American
products to compete on price with Chinese-made goods.A key provision of the bill would require the Commerce
Department to consider whether undervalued currencies act as an
effective export subsidy that justify the United States
applying countervailing duties in response.Obama, who has preferred dialogue with China to punitive
measures, last week said China was “gaming” the international
trade system.But he has not taken a formal position on the bill and
cautioned that it must be compatible with World Trade
Organization rules. Obama has not said how the legislation
might run afoul of World Trade Organization rules.Senator Rob Portman, an Ohio Republican, told Reuters he
intended to vote for the currency legislation, even though he
preferred the Obama administration lead a multilateral effort
to pressure China to revalue the yuan.”I have some concerns about the legislation, which I’ve
expressed … But I think it’s time to send a strong message,”
said Portman, a former top U.S. trade official whose home state
is the same as Boehner’s.”This is an opportunity to raise the visibility of the
issue and to encourage the administration to address it more
vigorously,” Portman said.
MEXICO CITY Oct 11 (Reuters) - Coca-Cola FEMSA, the
largest bottler in Latin America, said it completed its
acquisition of smaller rival Tampico on Tuesday.Coke FEMSA, which announced it planned to buy family-owned
Tampico at the end of June, said the value of the deal was 9.3
billion pesos ($702 million) as it had announced in June.Tampico’s results will start to be included in Coke FEMSA’s
statements this month, Coke FEMSA said in a statement.The bottler, a joint venture between The Coca-Cola Co and Mexico’s FEMSA , has been on a buying
spree lately.Last month Coke FEMSA said it would buy another
family-owned bottler, Grupo CIMSA, and expects to complete that
deal before the end of the year.
