TIMELINE - Financial crisis since October

REUTERS - Here is a chronology of the global financial crisis since October:

Oct. 2 - Irish lawmakers vote to enact legislation guaranteeing Irish bank deposits and debts up to a total of 400 billion euros ($554 billion).

Oct. 3 - The U.S. House of Representatives passes a revised $700 billion U.S. bailout plan which will take toxic mortgage assets off financial companies.

-- Wells Fargo & Co says it has agreed to buy Wachovia Corp for about $16 billion, thwarting a planned Citigroup Inc deal announced on Sept. 29. However, Citigroup wins a court order on Oct. 4 blocking the deal until the court rules otherwise. The two remain locked in an intense battle.

Oct. 5 - Germany pledges to guarantee private deposit accounts. Germany also clinches a revised rescue deal for lender Hypo Real Estate after banks and insurers pulled out of a state-led 35 billion euros ($48.5 billion) rescue programme.

Oct. 8 - The U.S. Fed leads a coordinated, global round of emergency interest rate cuts.

Oct. 9 - Iceland, whose prime minister warned of "national bankruptcy," takes control of its biggest bank, Kaupthing, the third major Icelandic bank to be taken over by the state.

Oct. 10 - Japan's Nikkei tumbles nearly 10 percent, registering its biggest one-day drop since 1987.

-- Finance ministers and central bankers from the Group of Seven meet in Washington and pledge to prevent big banks from collapse and to work together to stem the crisis. The International Monetary Fund backs the G7 plan the next day.

Oct. 12 - European leaders meeting in Paris rush out plans to help banks through the crisis.

Oct. 13 - Britain wades in with 37 billion pounds ($64 billion) of taxpayers' cash for three major banks -- Royal Bank of Scotland, HBOS and Lloyds TSB to help them survive.

Oct. 14 - Japan joins the global push, saying it could inject public funds into regional banks. The Nikkei surges more than 14 percent -- the biggest one-day gain in its history.

-- Iceland's stock market plunges 76 percent as it resumes trading.

-- The U.S. offers to take $250 billion worth of stakes in nine top banks. Paulson says government part-ownership of banks was "objectionable" but vital to tackle the crisis.

Oct. 16 - UBS AG is to get a 6 billion Swiss franc ($5.30 billion) injection from the state in return for a 9.3 percent shareholding. Switzerland's other major bank, Credit Suisse Group, says it will raise 10 billion from outside investors to insulate themselves from the crisis.

Oct. 18 - U.S. President George W. Bush meets with French President Nicolas Sarkozy and European Commission President Jose Manuel Barroso. They agree to hold global summits on the crisis.

Oct. 19 - South Korea unveils rescue package worth over $130 billion, offering state guarantee on foreign debt and promising to recapitalise financial firms. Oct 24 - The British economy shrinks more than expected and for 16 years Q3 2008. GDP fell 0.5 percent in the biggest drop since Q4 1990 and the first contraction since Q2 1992.

Oct. 27 - Iceland raises interest rates by a massive 6 percentage points to 18 percent, a surprise move that aims to please the IMF and restore trust in a shattered currency.

Oct. 29 - The IMF and the EU agree to a $25.1 billion economic rescue package for Hungary. It is the biggest for an emerging market economy since the global crisis began.

-- The United States cuts interest rates by half a percentage point to 1.0 percent. China cuts its interest rate to 6.66 percent from 6.93 percent and Norway also cuts its rate.

Oct. 30 - Japan unveils a 5 trillion yen ($51 billion) package of spending measures to support its economy. -- Germany plans a range of steps worth up to 25 billion euros ($32 billion) to boost business. Oct. 31 - Barclays Bank saying it plans to raise 7.3 billion pounds ($12.06 billion) in additional capital from outside investors, including Gulf states Qatar and Abu Dhabi.

-- The Bank of Japan cuts its benchmark overnight call rate for the first time in seven years, to 0.30 percent from 0.50 percent.

Nov. 4 - Democratic candidate Barack Obama's convincing win in the U.S. presidential election ends a source of uncertainty for global investors.

Nov. 6 - The Bank of England cuts rates by 1.5 points to 3 percent, the lowest level in more than half a century. The ECB reduces its benchmark interest rate 0.5 percentage point to 3.25 percent.

Nov. 11 - British Prime Minister Gordon Brown says he is ready to borrow to provide a fiscal boost to the British economy.

Nov. 12 - Bank of England says that Britain's economy will shrink sharply in 2009 and inflation could be less than 1 percent.

Nov. 13 - Germany says its economy, Europe's largest, contracted by 0.5 percent in the third quarter, putting it in recession for the first time in five years.

Nov. 15 - World leaders pledge rapid action at a G20 summit to rescue a weakening global economy, setting out plans to toughen oversight for major global banks and to try for a breakthrough by year end in global trade talks.

GM lobbying hard for U.S. bailout - Wall St Journal

NEW YORK (Reuters) - General Motors Corp has been telling U.S. government officials that a bankruptcy filing by the automaker would set off a chain reaction hitting hundreds of its suppliers and dealers as well as its Detroit rivals, The Wall Street Journal reported on Saturday.

Citing people familiar with the situation, the Journal said on its website that GM's auto-industry bailout lobbying effort in Washington was reaching out to congressional leaders, the outgoing Bush White House and members of the transition team of President-elect Barack Obama, with meetings going on over the weekend.

Central to the campaign is the idea that a bankruptcy filing by GM would trigger a domino effect, potentially crippling the nation's industrial base, the newspaper said.

Detroit automakers have sought emergency assistance to help them survive a steep and worsening drop in sales that they blame on the global credit crisis and slumping economy. GM has said it could run out of cash by early next year.

Democrats are proposing a bailout of distressed automakers through $25 billion in loans from the Treasury Department's $700 billion corporate rescue program.

The White House opposes that move and says that $25 billion already appropriated for loans to make automobiles more fuel-efficient should be accelerated.

According to the newspaper, GM is arguing that bankruptcy would threaten jobs and the government's pension-benefit insurance arm, which covers millions of workers outside the auto industry, by swamping the fund and further burdening a strained federal budget.

"There is no Plan B being discussed beyond a government bailout," the Journal quoted one top GM adviser as saying on Friday. Another person close to the company said executives recently told the board they were "increasingly optimistic" GM would receive a liquidity infusion before December, it said.

GM is also flooding dealers, supplier executives, employees and union members with letters encouraging their participation in the effort, the newspaper said.

United Auto Workers President Ron Gettelfinger said in a rare news conference on Saturday that U.S. automakers urgently needed a federal loan to survive, but added their work force should not be blamed for the industry crisis.

Citigroup to slash 50,000 jobs

NEW YORK (Reuters) - Citigroup Inc said on Monday it plans to cut about 50,000 jobs as souring economies and global credit conditions cause the U.S. bank with the farthest reach worldwide to retrench.

The cuts are expected in the near-term and are on top of the roughly 23,000 jobs eliminated by the second-largest U.S. bank between January and September. This would leave Citigroup with about 300,000 jobs worldwide, down 20 percent from the end of 2007.

Cuts are expected from layoffs, the sale of units and attrition. Citigroup plans to slash expenses 20 percent from peak levels and spend $50 billion to $52 billion in 2009, compared with $59.8 billion in 2007.

The cuts are Chief Executive Vikram Pandit's most dramatic move yet to restore profitability and bolster a sagging share price. Last week, Citigroup stock fell into the single digits for the first time since Sanford "Sandy" Weill created the bank in 1998 from the merger of Travelers Group Inc and Citicorp.

Shares of Citigroup fell 18 cents to $9.34 in premarket trading.

Pandit became chief executive last December, and has faced much criticism from investors and others for failing to implement a workable turnaround plan for Citigroup.

The New York-based bank has lost more than $20 billion in the last year, hurt by bad bets on complex and risky debt, often tied to mortgages. Some analysts say the bank might not be profitable before 2010.

Through Friday, shares of Citigroup had fallen 68 percent this year, leaving the bank with a market value of only $51.9 billion, barely twice the $25 billion of capital it received from the U.S. Treasury Department's bank bailout plan.

Citigroup was built principally by Weill, who ceded control to Pandit's predecessor, Charles Prince, in 2003.

Analysts believe Citigroup never invested enough in technology or to make the bank's parts work well together.

Its geographic diversity, including operations in more than 100 countries, is now also working against it as customers in such countries as Brazil, India and Mexico find it harder to keep up with their bills.

At the same time, Citigroup's ability to grow at home is relatively limited. Last month, Wells Fargo & Co derailed Citigroup's attempt to buy Wachovia Corp and its $418.8 billion of deposits.

JPMorgan cuts India growth forecast, sees rate cuts

MUMBAI (Reuters) - JPMorgan has cut its forecast for India's economic growth in 2008/09 and 2009/10, it said in a note on Monday, adding that it expects aggressive rate cuts by the Reserve Bank to support the growth momentum.

The Indian economy may grow 6.7 percent in the year ending March 2009, JPMorgan said, down from its earlier forecast of 7 percent. The economy may grow 6.2 percent in 2009/10, down from its previous estimate of 6.8 percent, the bank said.

"The moderation in exports, small business output, and real estate related activity could crimp urban consumer spending as employment and household income growth slackens," JPMorgan said in the note.

India's economy grew at an annual rate of 9 percent or more in the past three years, second only to China among the major economies. Last month, the Reserve Bank cut its estimate for FY09 growth to 7.5-8.0 percent, but analysts expect it to be lower.

Other global financial groups like Citigroup, Goldman Sachs, Morgan Stanley and Nomura have also lowered their estimates for India's GDP growth over the past one month.

"As global and domestic financial conditions are likely to ease in the rest of this fiscal year and over the course of next year, some recovery is on the cards... but it is unlikely to completely reverse the trend," JPMorgan said.

"Consequently, investment growth - the major driver of activity growth in India over the past five years - will likely moderate." The Reserve Bank could lower rates again if liquidity conditions do not ease sufficiently or signs of further economic slowdown emerge, JPMorgan said, adding that the drop in inflation to single-digit levels allows for easier monetary policy.

It expects the Reserve Bank to cut its repo rate, at which it lends funds to banks, by another 50 basis points and along with an identical reduction in reserve requirement by its January policy review.

"Alternatively, the RBI could cut the repo rate by 100 basis points - in which case the reverse repo would also be reduced 50 basis points in order to keep the gap between the repo and the reverse repo rates at 100 basis points," it said.

Japan in recession, IMF needs money, autos stressed

LONDON (Reuters) - Japan became the latest major economy to fall into recession on Monday with France close behind, and the IMF said it needed at least $100 billion to fight an economic crisis enveloping the world.

Meanwhile, the battered auto industry came into focus. The U.S. Senate was to begin debating a bailout later in the day, Germany said it was ready to help General Motors unit Opel, and Japan's Toyota came under ratings scrutiny.

Wall Street looked set for a poor start to the week to follow sharp losses on Friday. CNBC reported that Citigroup Chief Executive Vikram Pandit would announce cuts of as many as 50,000 jobs.

Japan surprised markets with figures showing the world's second biggest economy was sliding into its first recession in seven years in the third quarter as financial crisis curbed demand for Japanese exports.

The 0.1 percent contraction in July-September was worse than consensus forecasts.

The euro zone is also in formal recession, with two consecutive quarters of contraction, Britain and the United States are on the brink and China is slowing sharply.

Britain's main employers group forecast on Monday that unemployment could rise to almost 3 million by 2010 while France's central bank said the French economy should contract 0.5 percent in the fourth quarter.

Policymakers have little doubt that their economies will continue to decline.

"We need to bear in mind that (our) economic conditions could worsen further as the U.S. and European financial crisis deepens, worries of economic downturn heighten and stock and foreign exchange markets make big swings," Japanese Economy Minister Kaoru Yosano told a news conference.

International Monetary Fund (IMF) Managing Director Dominique Strauss-Kahn told the BBC his organisation was likely to need at least $100 billion in extra funding over the next six months to help countries out of the mire.


G20 LAUNDRY LIST

Financial markets continued to shudder under the joint strain of declining economies and ructions in the financial system. Oil fell more than $1 to below $56 a barrel and MSCI's main world stock index was down three-quarters of a percent for a 46 percent year-to-date loss.

Leaders of the world's 20 largest economies, meeting in Washington over the weekend, agreed on a host of steps to rescue the global economy.

But they left it to individual governments to tailor their response to their own circumstances and troubled industries.

The post-meeting statement from the group of major industrialised and developing countries contained a laundry list of reform pledges aimed at soothing volatile markets and calming consumers' worries.

"This weekend's G20 summit failed to deliver any new stimulus measures to rescue the world economy from the current recession, but at least it avoided the knee-jerk responses (such as rushed regulation) that would have made things worse," Julian Jessop at Capital Economics said in a report.

U.S. in recession, jobless to peak at 7.5 pct - survey

WASHINGTON (Reuters) - The U.S. economy is in recession and will contract at a faster pace in the fourth quarter, extending the decline into early 2009 as high unemployment crimps consumer spending, a survey showed.

The National Association of Business Economists' poll of 50 professional forecasters released on Monday found that real gross domestic product was expected to fall 2.6 percent in the fourth quarter and slump 1.3 percent in the first three months of 2009.

Preliminary government estimates showed GDP contracted 0.3 percent in the third quarter. The results of the survey, which was conducted between Oct. 28 and Nov. 7 indicated growing pessimism among forecasters.

"Business economists became decidedly more negative on the economic outlook for the next several quarters as a result of the intensification of credit market stresses and evidence of spillover to the real economy," said NABE President Chris Varvares.

"Credit conditions continue to be tenuous. Despite the hefty liquidity injections by the Fed and the Treasury, the majority of NABE panelists believe that tight credit conditions will continue."

A month ago, forecasters expected the economy to expand 0.1 percent in the fourth quarter, with the growth pace accelerating

to 1.3 percent in the first quarter of 2009.

Troubles in the U.S. housing sector, emanating from the extension of loans to homeowners with poor credit history, have engulfed the broader economy, resulting in rising job losses and tight access to credit.

ECONOMY IN RECESSION

About 96 percent of the NABE forecasters believed that the world's economic power house was already in recession. Half of them estimated the downturn started in the fourth quarter of 2007 or in the first quarter of 2008.

More than a third reckoned the recession began in the third quarter of 2008, and nearly three-quarters believed it could persist beyond the first quarter of 2009. Over 60 percent expected the depth of the recession to be contained, with the decline in GDP bottoming below 1.5 percent.

Overall GDP growth in 2008 was expected to come in at around 0.2 percent and top 0.7 percent next year, according to the survey. This compares with predictions of 1.2 percent and 2.2 percent respectively in October's survey.

"With the recession continuing into 2009, GDP growth next year is expected to be a meager 0.7 percent. This would be the slowest growth over a two-year period since the early 1980s," said Varvares, who is also the president of Macroeconomic Advisers.

Despite the gloomy economic outlook, the Federal Reserve would probably keep its benchmark overnight lending rate steady at 1 percent, raising it by 25 basis points in the last quarter of 2009, according to the survey.

The unemployment rate was likely to peak at 7.5 percent by the third quarter of 2009, according to the survey. In the October poll, the jobless rate was seen topping out at 6.4 in the second quarter of next year.

The unemployment rate rose to a 14-year peak of 6.5 percent in October. With the unemployment situation expected to deteriorate, consumer spending, which accounts for about two-thirds of economic activity, would remain depressed.

Buy BHEL, target of Rs 1520: Emkay Global

Emkay Global Financial Services has maintained its buy rating on Bharat Heavy Electricals (BHEL) with a target of Rs 1520 in its November 12, 2008 research report. "Over the recent past BHEL stock has outperformed significantly. It outperformed Sensex by 22.1% over past 3 months and 12.3% over past 1 month. Similarly it has outperformed BSE Capital goods index by 20.2% over past 3 months and by 10.7% over past 1 month. Decent Q1 and Q2FY2009 numbers and significant drop in commodity prices can be attributed to this performance."

"Our earnings estimate for BHEL stands at Rs 73 for FY2009 and Rs 94 for FY2010. The stock trades at 18.7X its FY2009 and 14.6X its FY2010 earnings. Over a longer term we remain positive on BHEL and maintain our BUY with price target of Rs 1520. However we believe that near term order slowdown will impact stock performance," says Emkay Global Financial Services' research report.


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Source: Moneycontrol