World Economic News
Equity Fund Signals New Round of Housing Speculation
Warnings by insiders in March that the spectacular purchase of the entire Dresden municipal housing sector by the Fortress equity fund would be only the prelude to a "new big round of speculation" later this year, were on the mark: The fund has now announced it will sell on the stock market 40%, about 64,000, of the 160,000 flats it owns, beginning in October, the Financial Times reported July 24.
Other funds, like Cerberus, Terra Firma, Morgan Stanley, have not made similar announcements yet, but are widely expected to do so soon, using money from the sale of flats to pay off old debt on the one hand, and to buy more flats on the other hand. Prices of flats (and rents) can be expected to go up after this mass sale, because the buyers will have to refinance the money they needed to borrow to make the purchases.
Some 600,000 formerly publicly owned German flats are already in the hands of private funds, which are eyeing the other 2.1 million for takeover.
Voracious Hedge Fund Wants To Devour German Public Banking
The monster hedge fund Cerberus Capital Management wants a share of Nordbank as a foot in the door to the German public banking sector, according to wire reports July 25. The notorious U.S. hedge fund with the fitting name (in Greek mythology, Cerberus was the terrifying three-headed dog who guarded the gate to the Underworld) is prominently positioned, it seems, for the takeover of West LB's 27% share in HSH Nordbank. Other funds are rivals for that deal, for example, Christopher Flowers (U.S.)who failed in a takeover of the Bankgesellschaft Berlin three years ago, but is still interested in entering the public banking sector of Germany.
HSH (Hamburg/Schleswig-Holstein) Nordbank, if the West LB share were sold to a private hedge or equity fund, would be the first state-level bank in Germany to be partially privatized. The prospect of HSH Nordbank falling entirely into the hands of privateers, is increased, as the Schleswig-Holstein state government wants to sell its own share of about 20%, as well.
World Trade Talks Founder: Farm Subsidies Retained
Talks in Geneva on July 24 between six "key" nations and regions in the World Trade Organization collapsed over the issue of farm subsidies. Major finger-pointing among the sixJapan, Brazil, India, Australia, the U.S., and the EUhas now begun, but it was the U.S. which prevented the cuts in subsidies, which have been pushed by supporters of globalization, from going through. Dubbed the "Doha Round" after the "fourth Ministerial Conference of the WTO" in Doha, Qatar in 2001, the talks had the goal of producing a worldwide agreement on trade involving $800 billion in cuts to subsidies for agricultural products, by 2004. Three subsequent meetings at locations scattered around the world have failed to accomplish this.
Now, in the words of Indian Commerce Minister Kamal Nath, the Doha Round "is not dead, but it's definitely between intensive care and the crematorium."