Namibian president urges West to lift sanctions on Zimbabwe

[XXPANTHAXX]

FOLLOWING the power-sharing deal signed by Zimbabwe's political leaders
in Harare on Monday, Namibian President Hifikepunye Pohamba has called
on Western countries to lift, with immediate effect, the sanctions they
imposed on the southern African country.

Pohamba, who attended the signing ceremony, according to the Pan-African
News Agency (PANA), said in Windhoek that peace and stability would soon
return to Zimbabwe.

The Namibian leader added that because of the unity deal, there was no
longer a reason for Western countries, led by Zimbabwe's former colonial
master Britain, to continue imposing sanctions.

Zimbabwe, which is battling deep economic problems, has been reeling
under targeted and financial sanctions from the European Union (EU) and
the United States (U.S.)

International lenders have cut off financial lifeline to the embattled
Harare regime 'until democracy and the rule of law is restored.'

Pohamba hailed the deal as "a success for the people of Zimbabwe, SADC
(Southern Africa Development Community) and Africa," saying "without the
assistance from outside, they have found a solution. It is now up to
Western countries to lift (the) sanctions they imposed on Zimbabwe with
immediate effect because the reasons they imposed those sanctions on are
no longer there."

The SWAPO-led Namibian government has been steadfast in its support of
the Zimbabwean government.

Meanwhile, Zimbabwe's new political partners yesterday, began talks to
allocate cabinet posts following the historic power-sharing deal.

President Robert Mugabe, opposition leader Morgan Tsvangirai and
opposition faction chief Arthur Mutambara signed the deal on Monday in a
bid to end the country's long-standing political crisis and economic
meltdown.

"The principals are going to meet to decide which ministries are going
to be run by the ZANU-PF, which ministries are going to be run by the
MDC-T and which by the MDC-M," ruling party chief negotiator Patrick
Chinamasa said on Monday, referring to two MDC's headed by Tsvangirai
and Mutambara.

"The other immediate matter is the issue of the amendment of the
constitution."

Zimbabwe's constitution has to be amended for the new government, which
will be led by Mugabe as president and Tsvangirai in a new post as Prime
Minister. Both offices will have two deputies, with Mutambara taking one
of the deputy prime minister posts.

A banner on the front page of the yesterday's The Herald announced the
"Dawn of a new era", with an editorial calling for leaders to "quickly
transform the talks into action."

A special edition of the private weekly Zimbabwe Independent also said
it was time "to get to work" to ease tensions among the former rivals.

"The event was feted as a success story but there remains evidence of
tension and uneasiness among the leaders, which has to wear off quickly
for them to achieve positive results quickly for Team Zimbabwe," the
newspaper's editorial said.

The parties on Monday committed themselves to free political activity, a
national healing process and the restoration of economic stability in
the former regional breadbasket.

"Let us be allies," said 84-year-old Mugabe, who has ruled the country
since independence from Britain in 1980.

The new political partners also agreed to call on former colonial power
Britain, a frequent target of Mugabe's sometimes fiery rhetoric, to pay
compensation for land acquired in Zimbabwe's land reform programmes.

While his rhetoric had cooled as power-sharing talks pushed ahead,
Mugabe lashed out at Britain and the United States in his lengthy speech
on Monday.

"Why is the hand of Britain and America here, Zimbabwe is a sovereign
country, only the people of Zimbabwe has the fundamental right to govern
it. They alone will set up government, they alone will change it."

Tsvangirai used his first platform as head of government to call on
Zimbabwe's rival parties to work together to "unite" the country. He
also called for the economically-shattered southern African country's
doors to be reopened to international aid.

"The international aid organisations came to help our country and found
our doors locked," Tsvangirai said. "We need to unlock our doors to aid,
we need medicine, food, and doctors back in our country.

"We need electricity, water, petrol for our vehicles, we need to access
our cash from banks."

Over the past decade, Zimbabwe's economy has collapsed with the world's
highest inflation rate, chronic shortages of foreign currency and food,
skyrocketing unemployment and widespread hunger.

In response to Monday's deal, the European Union left sanctions in place
saying it wants to see democratic improvements, while the United States
said it was waiting to see the details of the deal.

The International Monetary Fund said it was ready to hold talks with
Zimbabwe's new government.

The power-sharing deal was reached after protracted talks mediated by
South African President Thabo Mbeki with Zimbabwe's political crisis
having intensified after Mugabe's re-election as president in a widely
condemned one-man, second round poll in June.

Tsvangirai boycotted the vote despite finishing ahead of Mugabe in the
March first round, citing violence against his supporters.

Mugabe's party lost its majority in parliament in the March elections
for the first time since independence.

[XXPANTHAXX]

The panic in world credit markets reached historic intensity on
Wednesday, prompting a flight to safety of the kind not seen since the
second world war.

Barometers of financial stress hit record peaks across the world. Yields
on short-term US Treasuries hit their lowest level since the London
Blitz, while gold had its biggest one-day gain ever in dollar terms.
Lending between banks, in effect, stopped.

Speculation mounted that the Federal Reserve, which refused to cut rates
on Tuesday, could be forced into an embarrassing U-turn or might further
expand its market liquidity operations.

The $85bn emergency Fed loan for the troubled insurance group AIG,
announced on Tuesday night, failed to curb the surge in risk aversion.
Instead, markets were hit by a fresh wave of anxiety.

One cause for fear came when shares in a supposedly safe money market
mutual fund fell below par value – or “broke the buck” – owing to losses
on debt in Lehman Brothers, which filed for bankruptcy protection on
Monday. This raised the risk that retail investors in other such funds
could panic and pull out their money.

All thought of profit was abandoned as traders piled in to the safety of
short-term Treasuries, with the yield on three-month bills falling as
low as 0.02 per cent – rates that characterised the “lost decade” in
Japan. The last time US Treasuries were this low was January 1941.

Shares in the two largest independent US investment banks left standing
– Morgan Stanley and Goldman Sachs – fell 24 per cent and 14 per cent,
respectively, as the cost of insuring their debt soared, threatening
their ability to finance themselves .

Morgan Stanley was holding preliminary merger talks with Wachovia, a
troubled regional lender, and could approach other banks and look at
other options in the coming days, people familiar with the situation
said. Washington Mutual, another regional lender, has hired Goldman
Sachs to contact potential buyers.

HBOS, a leading UK mortgage lender pressed into sales talks by the
government after its share price halved this week, agreed to a £12bn
takeover by Lloyds TSB.

A key measure of fear in the fixed-income markets - the so-called Ted
spread, which tracks the difference between three-month Libor and
Treasury bill rates - moved above 3 per cent, higher than the record
close after the Black Monday stock market crash of 1987.

US authorities fired back with the Treasury announcing it was borrowing
$40bn to give to the Fed to use for its emergency lending – in essence
removing balance sheet constraints on the size of this assistance.

The Securities and Exchange Commission announced new curbs on short
selling.

Some analysts have criticised US authorities for adopting an arbitrary
approach to rescues - saving AIG, but not Lehman - that was impossible
for investors to predict and therefore did not boost confidence.

The S&P 500 fell 4.7 per cent, led by a 8.9 per cent slump in
financials. Equity volatility was near its highest level since March.
The dollar fell against other major currencies.

Gold benefited from safe-haven buying, with prices rising 11.2 per cent
to a three-week high of $866.47 a troy ounce.

Andrew Brenner, co-head of structured products and emerging markets at
MF Global, said: “It feels like no one wants to take anyone’s
credit...it feels like we are on a precipice.”

Copyright The Financial Times Limited 2008


US investor anxieties intensify

By Alistair Gray and Nicole Bullock in New York
September 17 2008 21:40

US stocks took scant comfort from the government’s historic rescue of
American International Group as investor anxiety intensified over near
unprecedented turmoil in the financial system.

Led by the financial sector, which fell 8.9 per cent, the market once
again slumped in what has emerged as one of the most extraordinary
series of developments in financial history.

The Chicago Board Options Exchange Volatility index, a measure of future
movements known as Wall Street’s fear gauge, shot up 19.2 per cent to
36.13, surpassing the level reached when Bear Stearns collapsed in
March.

The future of Morgan Stanley and Goldman Sachs – the two remaining
independent US investment banks after the collapse of Lehman Brothers
and forced sale of Merrill Lynch earlier this week – capped a long list
of worries.

As the cost to insure against default of their debt surged, their shares
lost 24.2 per cent to $21.75 and 13.9 per cent, to $114.50 respectively.

Still, more bullish observers argued such instruments unfairly inflicted
heavy losses on the share prices, especially given that Morgan’s
third-quarter results were not as bad as analysts had expected. Chris
Orndorff, head of equities at Payden & Rygel, noted credit default swaps
were relatively thinly traded and could be subject to manipulation.

Nevertheless, he added AIG alone had been “just a staggering chain of
events.” Traders were asking themselves “who else was close to the edge”
in its wake.

Washington Mutual shed 13.4 per cent to $2.01. Merrill Lynch said the
savings and loans institution would seriously consider a merger offer,
particularly given that credit rating agency Standard & Poor’s has
downgraded it to junk status.

Other financials to sustain heavy losses included Wachovia, which fell
20.8 per cent at $9.12, Genworth Financial which fell 25.8 per cent to
$3.42 and Citigroup, which was down 10.9 per cent at $1.72.

In recent sessions, concerns had mounted that a failure of AIG would
further convulse an already fragile financial sector. But in spite of
the government seizure of AIG, the market continued its slide.

AIG itself sank 45.3 per cent to $2.05. Under the terms of the rescue
package, the Federal Reserve will take control of 79.9 per cent of its
equity.

By the close in New York, the benchmark S&P 500 index had fallen by as
much as it had on Monday, itself the biggest one-day decline since the
September 2001 terrorist attacks. It fell 4.7 per cent at 1,1156.39. The
Nasdaq Composite was 4.9 per cent lower at 2,098.85, while the Dow Jones
Industrial Average fell 4.1 per cent at 10,609.66.

Yet Barclays Capital Research cautioned: “To put the 2007-08 move into
context, for the S&P decline to equal the average or median decline of a
historical bear market in terms of price and time, history suggests that
it would need to weaken another 10-15 per cent over the next 10-15
months.”

Meanwhile, in the wake of continued heavy losses in financial stocks,
the Securities and Exchange Commission announced measures designed to
stem selling a stock short without first borrowing the shares or
ensuring that the shares can be borrowed.

Financials now acccount for 15 per cent of the S&P 500’s total market
capitalisation. When the financial crisis surfaced in July last year, it
accounted for more than 20 per cent.

General Electric, the world’s third-biggest company, fell 6.7 per cent
to $23.00. GE last year garnered half of its profit from financial
activities last year, yet other industrials sustained heavy losses. The
sector was off 4.8 per cent.

Meanwhile, data showing that construction of homes fell to a 17½ year
low served to remind that the difficulties are not confined to the
financial sector.

Elsewhere, lower oil prices – which gave airlines a boost in the
previous session – rebounded, to above $94.

Delta pared most of Tuesday’s 11.9 per cent jump down 9.5 per cent to
$9.00. Northwest which gained 19.4 per cent in the previous session,
fell 9.8 per cent to $10.55.

The telecoms sector fell 2.2 per cent as Nortel lost 49.4 per cent to
$2.68,on renewed concerns. Sprint Nextel shed 11.9 per cent to $5.79.

Copyright The Financial Times Limited 2008


Morgan Stanley in talks with Wachovia

By Francesco Guerrera, Julie MacIntosh, Henny Sender and Saskia Scholtes
in New York
September 18 2008 01:44

Morgan Stanley is in preliminary merger talks with Wachovia, the
troubled regional lender, and is exploring other potential deals in an
effort to avoid becoming the next victim of the credit crunch.

Wachovia’s approach to Morgan Stanley came after the shares of Morgan
Stanley and Goldman Sachs plunged and the cost of insuring their debt
rose sharply – a sign of waning investor confidence in Wall Street’s
last two large investment banks.

Washington Mutual, the Seattle-based lender, is also looking to sell
itself and has hired Goldman to run an auction, according to people
close to the situation.

Goldman has approached a number of banks including Citigroup, JPMorgan
Chase and Wells Fargo but it is unclear whether rivals would bid for a
company that has billions of bad assets.

The banks declined to comment, but JPMorgan is believed to be unwilling
to bid for WaMu at this price, while San Francisco-based Wells generally
focuses on small acquisitions. Citi is also believed to be wary of
expanding its US retail operations during an economic slowdown.

The collapse of Lehman Brothers, which filed for bankruptcy protection
on Monday, has shifted investor attention to Morgan Stanley and Goldman
amid concerns about the viability of stand-alone investment banks.

Morgan Stanley declined to comment, but people familiar with the
situation said it had received a phone call from Charlotte-based
Wachovia on Wednesday and its executives were considering the approach.
They added that they were exploring other options including deals with
other banks.

John Mack, Morgan Stanley’s chief executive, was said to be livid at the
plunge in the share price. He contacted Hank Paulson, Teasury secretary,
and Christopher Cox, Securities and Exchange Commission chairman,
accusing short sellers of targeting Morgan Stanley and urging them to
take action.

The SEC on Wednesday night said it would subpoena hedge fund managers
who had traded in 19 financial institutions and require managers with
holdings of $100m or more in certain securities to report their short
positions every day.

In a memo, Mr Mack said: “There is no rational basis for the movement in
our stock or credit default spreads...We’re in the midst of a market
controlled by fear and rumours and short sellers are driving out stock
down.”

Morgan Stanley shares fell 24 per cent to $21.75. Goldman fell 14 per
cent to $114.50.

Additional reporting by Joanna Chung in Washington, Greg Farrell and
Justin Baer in New York