REUTERS - The U.S. government spent a record $1.4 trillion more than it collected in the fiscal year ended Sept. 30, congressional analysts said on Wednesday, in their final estimate before the official numbers are issued.

Bank bailouts, stimulus spending and declining tax revenues due to a deep recession led the government to post a deficit that amounts to 9.9 percent of the U.S. Gross Domestic Product for the 2009 fiscal year, the Congressional Budget Office said.

The Treasury Department will report the actual deficit later this month. The deficit for fiscal 2008 was $459 billion.

The $1.4 trillion estimate is less than the budget office’s estimate of $1.58 trillion issued in August, but the discrepancy arises from differences in calculating the costs of bailing out mortgage giants Fannie Mae and Freddie Mac, not any sudden change in economic conditions, CBO said.

The government took in $2.1 trillion in fiscal 2009, a 16.6 percent drop from the previous year as the recession led to sharp declines in individual and corporate income taxes, CBO said.

On the other half of the ledger, outlays increased 17.8 percent to $3.5 trillion, CBO said.

Among the most expensive items were $154 billion for bailouts under the Troubled Asset Relief Program, $91 billion for the Fannie and Freddie bailouts, and $100 billion under the massive stimulus package approved in February.

Excluding items in the stimulus package, spending for unemployment benefits more than doubled to $120 billion, CBO said.

One bright spot: the government’s interest payments on its debt actually decreased 23 percent to $199 billion thanks to lower interest rates, CBO said.

AFP - Microsoft chief Steve Ballmer on Tuesday unveiled his company's line of Windows smartphones in an offensive against Apple's iPhone and Google's Android system.
   
Around 30 types of "Windows phones" with various designs will be available by the end of the year in more than 20 countries.
   
Seven phone-makers, including Sony, Samsung and Toshiba, and 16 operators including Orange, Vodafone and T-Mobile, are involved in the launch.
   
The phones, which combine the ability to make calls, surf the Internet and view videos, carry Microsoft's Windows Mobile 6.5 operating system.
   
"We have done a lot of work on the user interface, we simplified the user interface," Ballmer told a news conference at Microsoft's new French headquarters near Paris in Issy-les-Moulineaux.
   
"We have taken the Internet Explorer browser technologies, and we rebuilt them for the first time for these Windows phones. So you can get the same experience on these phones that you will get on your windows PC," he said.
   
The new mobile operating system was launched simultaneously in France and New York on Tuesday.
   
With Tuesday's launch Microsoft hopes to reassert itself on the smartphone market, where it has lost ground. The sector is considered especially promising, with 29 percent jump in sales expected this year.
   
But in the second quarter only 9.0 percent of all smartphones sold were equipped with Microsoft's operating system, against 12 percent a year earlier, according to the Gartner research group.
   
At the same time, Apple's iPhone has seen its share jump from 2.8 to 13.3 percent.
   
Google, which launched its Android system in early 2008 and is provided free to phone-makers, managed to secure a share of almost 2.0 percent in a few months and could gain further ground in the fourth quarter this year.

AFP - The price of gold struck an all-time high at 1,038.65 dollars an ounce here on Tuesday as the dollar fell on a reported plan by Gulf states to stop using the greenback for oil trading.

Gold reached the level in late afternoon trade on the London Bullion Market, beating the previous record high of 1,032.70 dollars an ounce struck in March, 2008.

"Gold prices hit an all-time high as the dollar weakens," said Barclays Capital precious metals analyst Suki Cooper.

"The dollar weakness appears to be related to ... (reported) secret talks about oil being priced in a basket of currencies including gold rather than the dollar, which has added to concerns about the future role of the dollar in international financial markets."

The dollar's future as the world's top currency was thrown into doubt on Tuesday as a report said Arab states had launched secret moves with China and Russia to stop using the greenback for oil trading.

Arab states have launched steps with China, Russia, Japan and France to stop using the dollar for oil trades, British daily The Independent reported on Tuesday, but the report was denied by Kuwait and Qatar and reportedly by other nations.

The United Nations meanwhile on Tuesday called for a new global reserve currency to end dollar supremacy, which has allowed the United States the "privilege" of building a huge trade deficit.

The Independent's Middle East correspondent Robert Fisk wrote in his paper: "In the most profound financial change in recent Middle East history, Gulf Arabs are planning -- along with China, Russia, Japan and France -- to end dollar dealings for oil."

They would instead switch "to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council (GCC), including Saudi Arabia, Abu Dhabi, Kuwait and Qatar," added Fisk.

Gold, viewed as a safe-haven investment, has won back favour in recent months as the global economy struggles out of its worst slump in decades.

The run-up in gold has been largely driven by weakness in the dollar, which makes dollar-priced commodities cheaper for holders of stronger currencies, boosting demand.

Gold also wins support from fears about higher inflation because the metal is widely regarded by investors as a safe store of value.

Precious metals consultancy GFMS last month warned that the current upward trend in gold may not be sustainable should global stimulus packages fail to boost flagging demand in the battered world economy and inflation fall as a result.

The Group of 20 leaders of emerging and developed nations recently agreed at a summit in Pittsburgh not to roll back massive stimulus measures that helped contain a severe global recession.

REUTERS - French energy players Total and GDF Suez will invest about $1 billion in a 25 percent stake in Kazakh gas field project Khvalynskoye, the head of Total said on Tuesday.

Total will have a 17 percent stake in the project, and GDF Suez will hold 8 percent, Total Chief Executive Christophe de Margerie told reporters on the sidelines of an official visit by French President Nicolas Sarkozy to Kazakhstan.

The Caspian Sea’s Khvalynskoye field, jointly owned by Kazakh state energy firm KazMunaiGas and Russia’s LUKOIL, is due to come on stream in 2016 with an estimated production of 8-9 billion cubic metres of gas per year. The output is mainly intended for Russia.

This is GDF Suez’s first investment in Kazakhstan, but Total is already present in the country’s giant Kashagan oil field project, in which Total has a 16.8 percent stake.

Other shareholders are Italy’s Eni, Royal Dutch Shell, Exxon Mobil, ConocoPhillips and KazMunaigas.

Kashagan, which is considered the world’s biggest oil find since the discovery of Prudhoe Bay in Alaska in the 1960s, is located in the northeast of the Caspian Sea.

Production is due to start in 2012. The project was initially due to come on stream in 2005 but was delayed by technical issues and, more recently, by months of tense negotiations between Astana and Western majors to bring soaring development costs down.
 

AFP - German auto parts maker Continental on Monday announced a breakdown in talks with the Dubai-based MAG group on the possible takeover by MAG of a tyre making plant in France.
  
The discussions ended by "mutual agreement," with no common ground having been found, Continental said in a statement.
  
"The two parties had led intensive discussions but finally agreed that it was not possible to reach common ground for further talks."
  
MAG vice president Fawaz Sabri said his group "would continue to examine the matter."
  
Continental had given MAG until September 30 to reach agreement on a letter of intent regarding the factory, located in Clairoix, northern France. The German group offered MAG additional time when the MAG response was deemed "incomplete" on September 30.
  

France Telecom announced the replacement of the group’s deputy head Louis-Pierre Wenes, whom labour unions claim is the man behind stress-inducing management policies blamed for a tense working climate. The French telecom company has come under fire for the alarming suicide rate among staff members, with 24 employees having taken their lives in the last 18 months alone.

Wenes has been replaced by Stephen Richard, a former cabinet director for French Finance Minister Christine Lagarde, who joined France Telecom on September 1 and was being groomed to replace the group’s CEO, Didier Lombard, in 2011.

French socialist and communist opposition leaders have been calling for the resignation of both Lombard and Wenes, but the group’s chief executive enjoys the backing of the French government. Lagarde reasserted her “full and unwavering support” for the troubled CEO after the two met last Thursday. According to the website of French weekly Le Point, the finance minister mentioned Richard as a possible replacement for Wenes at that meeting.

A concession to unions

News of Wenes’ departure was greeted with satisfaction by employees and union members. “Wenes is symbolic: he was responsible for ‘terror management’ tactics. He had to leave”, CFE-CGC union member Pierre Morville told AFP.
 
CFDT union member Pierre Dubois told FRANCE 24 that Wenes’ ousting was the logical consequence of his perceived insensitiveness to employee suicides. A second sticking point was his refusal to negotiate on the policy of forced transfers, whereby France Telecom managers are required to change postings every three years.

France Telecom, which had suspended forced transfers until October 31, announced on Monday that the halt was prolonged until December 31.

According to Ivan Le Roy, author of a book on “management by stress” at France Telecom’s mobile phone unit Orange, Richard is “well perceived by most unions, or at least much better than Wenes, who was despised as a ‘cost killer’ from day 1”.
 
“There was never any kind of dialogue with Wenes”, Dubois told FRANCE 24. “He never accepted to meet us, not until we published an open letter calling for his resignation on September 25”. On September 24, Wenes had told French magazine Le Nouvel Observateur that he would consider himself “the victim of a monstrous manipulation” if he were to take on the responsibility of employee suicides.

Deontological concerns

Although most unions are hopeful that negotiations will start afresh with Richard, some warn against hasty optimism.

Iin a joint press release, leftwing unions Sud and Solidaires said: “The nomination of Stéphane Richard, a close collaborator of President Nicolas Sarkozy, has raised concern among employees about the future of France Telecom. We hope he will rapidly shed light on his future role”. Dubois was also cautious: “Richard remains a big question mark – we don’t know much about him. We hope the management style will change, and that he will bring a fresh look to the heart of the issue: restructuring France Telecom”.

Deontological concerns surfaced immediately after Richard’s nomination. As a former member of government, he has been authorised to join France Telecom on condition that he “abstain from any contact with the cabinet of the finance until June 30, 2012”. However, it is not altogether clear how Richard is expected to do so, given that the state is one of the company’s main shareholders. 

REUTERS - Fierce disagreement over how much power rich nations should cede to developing countries clouded talks between global finance chiefs on expanding the role of the International Monetary Fund.

The IMF, which has lent more than $50 billion to countries around the world this year, says it needs more resources to oversee the recovery of the global economy and prevent future crises.

But this depends on giving emerging market economies a greater stake in the institution. Major developing nations are demanding an increase in voting power that would see the developed world shift at least 7 percentage points of its share to emerging countries.

"We can only hope that over-represented advanced countries will realise that they may do great harm to the Fund if they attempt to block or delay quota and voice reform," Brazilian Finance Minister Guido Mantega said on Sunday.

He said the Fund needed to change the structure of its board so it could "cease to be regarded as mainly an American-European institution and become a truly multilateral institution".

The Group of 20 major nations agreed at a summit of their leaders in Pittsburgh last month to a power shift of at least 5 percentage points to under-represented countries such as China.

But the demand for 7 percentage points is meeting resistance from the developed world, particularly European nations, which do not want to give up too much of their own power.

Finance Minister Anders Borg of Sweden, which is currently president of the European Union, warned that Europe could become less generous in its financial support of the Fund if it lost influence over it.

"Adequate participation in the decision-making process of the fund is a prerequisite for our taxpayers’ continued support of large financial contributions," he said.

Demand

Just a year ago the IMF was fighting to persuade governments of its importance. But the crisis has greatly increased demand for its loans and advice to countries struggling with budget and current account deficits.

Allowing big developing countries to play a bigger role in the IMF could secure billions of dollars of fresh contributions to the organisation.

To ensure the global economy is stable enough for countries to stop accumulating huge foreign exchange reserves as a form of insurance, it is estimated that the IMF might need up to $1 trillion of fresh contributions, IMF Managing Director Dominique Strauss-Kahn said on Friday.

But China, Brazil, Russia and India have said any increase in their contributions must be tied to changes in voting power.

China believes contributions should automatically adjust to reflect the size of individual countries’ economies, Yi Gang, a Chinese central bank vice governor, said on Sunday.

In addition to the IMF’s role as a lender of last resort, the Group of 20 major nations, which is managing the global recovery, wants the IMF to ensure balanced growth by reporting back to it on countries’ policies and recommending changes.

China, which holds the world’s largest foreign exchange reserves and has seen its financial markets buffeted by volatile capital movements, wants the activities of a reformed IMF to extend even further.

Yi said the IMF should strengthen its supervision over international capital flows and promote the relative stability of major reserve currencies.