Thursday, May 7, 2009

[RED DEMOCRATICA] CFR.org Daily News Brief, May 7, 2009



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May 7, 2009

EXECUTIVE SUMMARY

- Stress tests leaks cheer investors.
- North Korea test site activity could signal new missile test.
- U.S., Pakistan, Afghanistan conclude trilateral summit; experts say meetings mostly "symbolic."
- DRC government cuts amnesty deal with rebels in Eastern Congo.

Top of the Agenda: Leaked Stress Test Results

Market watchers are eagerly awaiting today's release of the results of a series of stress tests the U.S. Treasury has performed to determine the health of the country's largest banks. The Financial Times reports financial stocks soared yesterday on leaked news that the capital needs of the largest U.S. banks, Bank of America and Citigroup, were not as big as some had previously feared. http://m1e.net/c?101077382-XtIePRZJf86FU%404225164-KhjSKwiD6q/W2

The FT reports Citi, B of A, and Morgan Stanley will be among the banks forced to raise equity following the tests, while JP Morgan Chase, Goldman Sachs, and American Express will not need additional capital. The Wall Streeet Journal reports at least seven U.S. banks will be required to raise additional equity and says the tests will effectively draw "a bold line between some of the nation's stronger and weaker banks." http://m1e.net/c?101077382-zaZ.spqWqXM8Y%404225165-.kdE7jtfOdm6I

The New York Times reports the release of the stress tests' findings could mark a "turning point" for markets. http://m1e.net/c?101077382-8Rt4q1GRpG0sY%404225166-uWnwTk11NsPY2 The Times adds that the fact that some banks need additional money does not necessarily mean that money will come from the government, implying that the period of big bailouts for banks may be over. This, the article says, is assuming the economy doesn't take another turn for the worse, which could potentially lead to further losses at the banks.

Background:

- This Backgrounder explains how stress tests fit into the Treasury's broader plan for creating financial stability. http://m1e.net/c?101077382-BIZp87e6GHv4.%404225167-AXrl5bhF8.eeg

MIDDLE EAST: Arabs and Mideast Peace

Arab foreign ministers meet today in Cairo in an attempt to formulate a coordinated approach to the Middle East peace process--their first such meeting since Benjamin Netanyahu's new government took power in Israel (BBC). http://m1e.net/c?101077382-1u57KWd89Za/o%404225168-2fZewV2WZXqtA

Speaking earlier this week at CFR, Israeli opposition leader Tzipi Livni said she sees signs some Arab leaders are siding with Israel in opposing Iranian influence in the region. http://m1e.net/c?101077382-A31P2UVIvZrnw%404225169-ReKj0hd.Ohzto

BAHRAIN: Al-Jazeera reports Bahrain will end a controversial labor practice of "sponsorship" that binds immigrant workers to their employers (al-Jazeera). http://m1e.net/c?101077382-cFFKRKUIaYm9.%404225170-cZkI529CuZ/HA

PACIFIC RIM: North Korea Test Site

The Chosun Ilbo reports North Korea has been speeding up construction of a long-range missile test site, perhaps indicating the country will soon conduct another test launch. http://m1e.net/c?101077382-A9RveIyjapPTE%404225171-R4HCsLghIWaHI

CHINA: Beijing announced some 5,335 students were dead or still missing following last year's massively destructive earthquake in Sichuan province (Xinhua). http://m1e.net/c?101077382-YT0Zn.TuNY5/Q%404225172-Tw4QUMFmUT0L2

SOUTH & CENTRAL ASIA: U.S. Meetings

U.S. Secretary of State Hillary Clinton hailed what she called a "breakthrough meeting" bringing together Afghan President Hamid Karzai and Pakistani President Asif Ali Zardari in Washington. http://m1e.net/c?101077382-qxuCtNIReOW76%404225173-LbEPDSnU.1aH6

CFR's Daniel Markey, appearing on World Focus, discusses the usefulness of the meeting, given the weakness of both Zardari and Karzai in their respective countries, and says the main purpose of the meeting was symbolic.
http://m1e.net/c?101077382-3Aqhz4yyFSh0s%404225174-HQ2XXu4GM2rCY

Meanwhile, Pakistan's military continued an intense campaign against Taliban militants in the Swat Valley as thousands of residents continued to flee the area (BBC). http://m1e.net/c?101077382-r8VOV0vZg9pnk%404225175-RBVyxy4cpQWvY Dawn reports the son of Pakistani cleric Sufi Mohammad was killed in a military operation in the adjacent Lower Dir district. http://m1e.net/c?101077382-OnqyL.RQDvEVo%404225176-/bLDBMYsuNx/g

AFGHANISTAN: Demonstrators marched in Afghanistan in protest against U.S. air strikes earlier this week that killed dozens of civilians in the western part of the country (Quqnoos). http://m1e.net/c?101077382-Fn3f6mkQX3U5M%404225177-bOWU8J8U8b6xA

AFRICA: DRC Amnesty Deal

The government of the Democratic Republic of Congo passed a law granting amnesty to militias in eastern Congo for "acts of war" committed since 2002. The BBC says the move is the latest in a series of efforts to bring peace to restive parts of eastern Congo. http://m1e.net/c?101077382-yEosVkRZ2HXng%404225178-glNwHD5F04h12

ZIMBABWE: The Mail & Guardian reports Zimbabwe has secured a $250 million credit line from the African Export-Import Bank. http://m1e.net/c?101077382-EEW7R.0SbZmfI%404225179-Ka5Y5IE1chra%2e

AMERICAS: Venezuela Oil Output

El Universal reports Venezuela's oil output is expected to drop by 8 percent this year. http://m1e.net/c?101077382-hjUvJiJXcFKBo%404225180-yb8BqahYjqHn%2e

- This Backgrounder profiles Venezuela's oil-based economy. http://m1e.net/c?101077382-NLCV8mXJuHnm.%404225181-7.2.KBrQ5viFQ

BRAZIL: The Miami Herald reports Brazil is struggling to funnel aid to areas severely affected by recent floods. http://m1e.net/c?101077382-ozNP23OnDebXo%404225182-CO9qhjujLnutw

CUBA: The Los Angeles Times explains why representatives from one southern U.S. state, Alabama, are pushing hard for the U.S. embargo on Cuba to be lifted. http://m1e.net/c?101077382-dd.N3QnX1PG9Y%404225183-ImTb8UkqF7LKs

EUROPE: Eurozone Rate Cuts

The European Central Bank cut interest rates a quarter point to 1 percent (WSJ). http://m1e.net/c?101077382-4p1OmLpvwa406%404225184-zvcqqxZs.Dhk%2e Meanwhile, the Bank of England moved aggressively to increase liquidity.

GEORGIA: Dozens were injured in clashes between protestors opposing the Georgian government and police (NYT). http://m1e.net/c?101077382-RYXUUm26EX3Zc%404225185-CxbCt5BCiNIVU

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