Nissan cuts 20,000 jobs and warns on losses

Nissan, Japan's third-largest car maker, warned today of its first annual loss in 14 years and said that it would eliminate 20,000 jobs, mainly in Japan, to meet a 20 per cent cut in production next year.

The loss is the first since Carlos Ghosn, the chief executive, took the helm a decade ago, and its forecast of a 180 billion yen (£1.3 billion) loss for the year to the end of March comes only three months after he projected a Y270 billion profit.

Nissan said that the job cuts would come mostly through natural attrition in Japan and would be complete by the end of March next year.

It has already announced 1,200 job cuts at its UK plant in Sunderland

Last week Toyota tripled its annual operating loss forecast, citing a faster-than-expected sales slump in the US, Japanese and European markets.

Honda also cut its forecast last month; however, it expects to stay in the black.

Today's results are not good news for Renault, the French carmaker that owns 44 per cent of Nissan and in which, in turn, is 15 per cent owned by Nissan. Renault's own debts are rising.

As well as the global slump in demand for cars, hit first by rising fuel costs and then by inflation and the lack of consumer credit, Japanese carmakers have to battle with another problem, the soaring value of the yen against the dollar and most other currencies, that has made its cars seem relatively expensive.

Nissan’s shares have dived more than 70 per cent in the past 12 months, and Toyota and Honda are down 47 per cent and 30 per cent, respectively.

Nissan has shed $12 billion (£8 billion) in market value since Mr Ghosn arrived from Renault to rescue Nissan in 1999.

Nissan’s sales in the United States, its biggest market, fell 33 per cent last month, and by a similar rate in Japan.

For October-December, Nissan made an operating loss of Y99.2 billion and a net loss of Y83.2 billion.

A year ago, it made an operating profit of Y211.9 billion and net profit of Y132.2 billion.

Barclays halts directors' bonuses as profits fall

Barclays, Britain's third-largest lender, said that it would waive bonuses for its executive directors as it reported a 14 per cent fall in full-year pre-tax profits, announced £8.1 billion of writedowns and scrapped its dividend.

The bank reported a 2008 profit of £6.1 billion, ahead of analysts’ forecasts but down 14 per cent on the previous year.

Pre-tax profit fell from £7.1 billion in 2007 but ahead of an average forecast of £5.8 billion. The figures included a £2.2 billion gain that the bank made on its acquisition of a North American division of Lehman Brothers last year.

Barclays said that as a result of a “heavily negative” return on its shares in 2008 — its shares have fallen 76 per cent year on year — and the scrapping of its final dividend, “executive directors will receive no bonuses in 2008”.

However, is still paying about £600 million in bonuses below board level, which is nearly 50 per cent less than rewards paid in the previous year.

Barclays released its results as the dispute over bank bonuses continuted to rage.

Yesterday, Alistair Darling announced a review of how the British banking sector was run after an outcry over the level of bonuses that lenders, such as Royal Bank of Scotland, were proposing to pay after being bailed out by the taxpayer.

However, the review has drawn criticism because it is not scheduled to be concluded by the end of the year, while this morning, The Times revealed that the bankers who are managing the Government's £37 billion bailout of the banking sector will themselves receive bonuses.

Unlike RBS and Lloyds Banking Group, Barclays decided against taking government funds to boost its balance sheet, instead opting for funding from overseas investors.

This morning, Barclays revealed that its total staff costs had fallen 10 per cent on the year to £6.3 billion, with bonuses down 48 per cent, largely because of a lower level of performance-related payments at Barclays Capital and Barclays Global Investors, its two capital markets divisions.

The bank said that for this year and beyond it was reviewing its compensation policies and practices "to ensure that they evolve appropriately".

It will publish details in its forthcoming annual report. John Varley, chief executive, said that future performance payments were likely to contain a higher proportion of equity relative to cash and a greater element of deferred payments.

"I absolutely understand why this matter is the subject of scrutiny in the way that it is," Mr Varley said.

Barclays reaffirmed its intention to resume dividend payments in the second half of this year.

Its Tier 1 equity ratio, which is a key measure of a bank's financial health, was 6.7 per cent at the end of the year, up from 5.1 per cent a year earlier.

The shares rose nearly 10 per cent to 115.1p in early trading.

Gordon Brown says banks will not 'reward failure'

(David Moir/PA)

Gordon Brown says that banks should not "reward failure"

Gordon Brown insisted today that there must be “no rewards for failure” in Britain’s banks.

The Prime Minister's comments came despite reports that big banks that were bailed out with billions of pounds of taxpayer money are to pay more than £1 billion in bonuses to senior staff.

Speaking to an audience of economists in London, Mr Brown said that Britain was leading the way "in sweeping aside the old short-term bonus culture of the past and replacing it first of all with a determination that there are no rewards for failure and secondly that there are rewards only for long-term success”.

Mr Brown said that the policy not to reward failure would be pursued "aggressively", so that banks in which the state now holds a majority stake would pay no bonuses to board members and no dividends to shareholders this year.

He added: “I believe, as a society, we should support hard work, effort, enterprise and responsible risk-taking. We should not in any way condone, but should punish, irresponsible and excessive risk-taking.”

The Times reported this morning that the bankers recruited by the Treasury to manage the Government's £37 billion bank bailout are themselves in line for bonuses.

It added that UK Financial Investments Ltd (UKFI), the Treasury-run body created by Alistair Darling, the Chancellor, to manage the state's stake in the banks, is set to approve more than £1 billion in bonuses for banks that received bailout funding.

The Royal Bank of Scotland, which is 70 per cent owned by the state, wants to pay staff close to £1 billion in bonuses.

UKFI is also being asked to approve bonus payments in Lloyds Banking Group, another partially nationalised lender.

Mr Darling acknowledged public anger over bonuses yesterday and announced a review of the way that banks are run.

However, he said there was “nothing wrong with a bonus scheme that rewards success”.

George Osborne, the Shadow Chancellor, called for a fundamental change to bankers’ pay.

“The party is over for the banks," he said. "You can’t go on paying yourselves 20 times what a heart surgeon earns. That whole culture has to come to an end. I think the bankers, and indeed the Government, have to understand you can’t just reflate the balloon that burst,” he said.

The row has thrown the spotlight on to the arm’s-length body set up last November that must now decide how much banks can pay out in bonuses.

Since its creation UKFI has hired around a dozen senior bankers and other financial experts.

They include John Kingman, a senior Treasury official, John Crompton, formerly managing director of Merrill Lynch, and the banking analyst Tim Sykes. The Government has so far refused to say what UKFI’s staff are paid, but a spokesman yesterday admitted it intends to run a bonus scheme. The full details had yet to be finalised, he said.

Sources close to UKFI defended the proposed incentive payments. “If these guys sell RBS at a large profit for the taxpayer in a couple of years, who’s going to begrudge them a bonus?” said one.

Mr Darling was yesterday forced to defend Glen Moreno, UKFI acting chairman, after it was reported that he was a former trustee of Liechtenstein Global Trust, which has been at the centre of an international investigation into alleged tax evasion.

Barclays, which has taken advantage of government bailout schemes but has not accepted rescue capital from taxpayers, will today announce that bonuses for 2008 will be down by about half on average. Barclays Capital, its investment banking arm, is expected to pay out £600 million, while there will be additional bonuses for people in the retail and commercial arm of the bank.

French banks yesterday agreed a code of ethics to limit bonuses and peg them to long-term success rather than short-term profits. The code, the first of its kind in the world, comes after President Sarkozy blamed bankers for the global economic catastrophe.

UKFI staff will not be the first state bankers to be paid incentive payments. Bonuses worth 10 per cent of salaries were paid to Northern Rock staff last month because the lender hit targets to repay loans.

Bond market calls Fed's bluff as global economy falls apart

Global bond markets are calling the bluff of the US Federal Reserve.

The yield on 10-year US Treasury bonds – the world's benchmark cost of capital – has jumped from 2pc to 3pc since Christmas despite efforts to talk the rate down.

This level will asphyxiate the US economy if allowed to persist, as Fed chair Ben Bernanke must know. The US is already in deflation. Core prices – stripping out energy – fell at an annual rate of 2pc in the fourth quarter. Wages are following. IBM, Chrysler, General Motors, and YRC, have all begun to cut pay.

The "real" cost of capital is rising as the slump deepens. This is textbook debt deflation. It was not supposed to happen. The Bernanke doctrine assumes that the Fed can bring down the whole structure of interest costs, first by slashing the Fed Funds rate to zero, and then by making a "credible threat" to buy Treasuries outright with printed money.

Mr Bernanke has been repeating this threat since early December. But talk is cheap. As the Fed hesitates, real yields climb ever higher. Plainly, the markets do not regard Fed rhetoric as "credible" at all.

Who can blame bond vigilantes for going on strike? Nobody wants to be left holding the bag if and when the global monetary blitz succeeds in stoking inflation. Governments are borrowing frantically to fund their bail-outs and cover a collapse in tax revenue. The US Treasury alone needs to raise $2 trillion in 2009.

Where is the money to come from? China, the Pacific tigers and the commodity powers are no longer amassing foreign reserves ($7.6 trillion). Their exports have collapsed. Instead of buying a trillion dollars of extra bonds each year, they have become net sellers. In aggregate, they dumped $190bn over the last fifteen weeks.

The Fed has stepped into the breach, up to a point. It has bought $350bn of commercial paper, and begun to buy $600bn of mortgage bonds. That helps. But still it recoils from buying Treasuries, perhaps fearing that any move to "monetise" Washington's deficit starts a slippery slope towards an Argentine fate. Or perhaps Bernanke doesn't believe his own assurances that the Fed can extract itself easily from emergency policies when the cycle turns.

As they dither, the world is falling apart. Events in Japan have turned deeply alarming. Exports fell 35pc in December. Industrial output fell 9.6pc. The economy is contracting at an annual rate of 12pc. "Falling exports are triggering a downward spiral of production, incomes and spending. It is important to prepare for swift policy steps, including those usually regarded as unusual," said the Bank of Japan's Atsushi Mizuno.

The bank is already targeting equities on the Tokyo bourse. That is not enough for restive politicians. One bloc led by Senator Koutaro Tamura wants to create $330bn in scrip currency for an industrial blitz. "We are facing hyper-deflation, so we need a policy to create hyper-inflation," he said.

This has echoes of 1932, when the US Congress took charge of monetary policy. We are moving to a stage of this crisis where democracies start to speak – especially in Europe.

The European Central Bank's refusal to follow the lead of the US, Japan, Britain, Canada, Switzerland and Sweden in slashing rates shows how destructive Europe's monetary union has become. German orders fells 25pc year-on-year in December. French house prices collapsed 9.9pc in the fourth quarter, the steepest since data began in 1936. "We're dealing with truly appalling data, the likes of which have never been seen before in post-War Europe," said Julian Callow, Europe economist at Barclays Capital.

Spain's unemployment has jumped to 3.3m – or 14.4pc – and will hit 19pc next year, on Brussels data. The labour minister said yesterday that Spain's economy could not "tolerate" immigrants any longer after suffering "hurricane devastation". You can see where this is going.

Ireland lost 36,500 jobs in January – equal to a monthly loss of 2.3m in the US. As the budget deficit surges to 12pc of GDP, Dublin is cutting wages, disguised as a pension levy. It has announced "Rooseveltian measures" to rescue the foundering companies.

The ECB's obduracy has nothing to do with economics. It fears zero rates as a vampire fears daylight, because that brings the purchase of eurozone bonds ever closer into play. Any such action would usher in an EMU "debt union" by the back door, leaving Germany's taxpayers on the hook for Club Med liabilties. This is Europe's taboo.

Meanwhile, Eastern Europe is imploding. Industrial output fell 27pc in Ukraine and 10pc in Russia in December. Latvia's GDP contracted at a 29pc annual rate in the fourth quarter. Polish homeowners have had the shock from Hell. Some 60pc of mortgages are in Swiss francs. The zloty has halved against the franc since July.

Readers have berated me for a piece last week – "Glimmers of Hope" – that hinted at recovery. Let me stress, I was wearing my reporter's hat, not expressing an opinion. My own view, sadly, is that there is no hope at all of stabilizing the world economy on current policies.

Financial Coup d’Etat

In the fall of 2001 I attended a private investment conference in London to give a paper, The Myth of the Rule of Law or How the Money Works: The Destruction of Hamilton Securities Group.

The presentation documented my experience with a Washington-Wall Street partnership that had:

• Engineered a fraudulent housing and debt bubble;
• Illegally shifted vast amounts of capital out of the U.S.;
• Used “privitization” as form or piracy - a pretext to move government assets to private investors at below-market prices and then shift private liabilities back to government at no cost to the private liability holder.

Other presenters at the conference included distinguished reporters covering privatization in Eastern Europe and Russia. As the portraits of British ancestors stared down upon us, we listened to story after story of global privatization throughout the 1990s in the Americas, Europe, and Asia.

Slowly, as the pieces fit together, we shared a horrifying epiphany: the banks, corporations and investors acting in each global region were the exact same players. They were a relatively small group that reappeared again and again in Russia, Eastern Europe, and Asia accompanied by the same well-known accounting firms and law firms.

Clearly, there was a global financial coup d’etat underway.

The magnitude of what was happening was overwhelming. In the 1990’s, millions of people in Russia had woken up to find their bank accounts and pension funds simply gone – eradicated by a falling currency or stolen by mobsters who laundered money back into big New York Fed member banks for reinvestment to fuel the debt bubble.

Reports of politicians, government officials, academics, and intelligence agencies facilitating the racketeering and theft were compelling. One lawyer in Russia, living without electricity and growing food to prevent starvation, was quoted as saying, “We are being de-modernized.”

Several years earlier, I listened to three peasant women describe the War on Drugs in their respective countries: Colombia, Peru, and Bolivia. I asked them, “After they sweep you into camps, who gets your land and at what price?” My question opened a magic door. They poured out how the real economics worked on the War on Drugs, including the stealing of land and government contracts to build housing for the people who are displaced.

At one point, suspicious of my understanding of how this game worked, one of the women said, “You say you have never been to our countries, yet you understand exactly how the money works. How is this so?” I replied that I had served as Assistant Secretary of Housing at the US Department of Housing and Urban Development (HUD) in the United States where I oversaw billions of government investment in US communities. Apparently, it worked the same way in their countries as it worked in mine.

I later found out that the government contractor leading the War on Drugs strategy for U.S. aid to Peru, Colombia and Bolivia was the same contractor in charge of knowledge management for HUD enforcement. This Washington-Wall Street game was a global game. The peasant women of Latin America were up against the same financial pirates and business model as the people in South Central Los Angeles, West Philadelphia, Baltimore and the South Bronx.

Later, courageous reporting by Naomi Klein and Greg Palast confirmed in detail that the privitization and economic warfare model I discussed in London had deep roots in Latin America.

We were experiencing a global “heist”: capital was being sucked out of country after country. The presentation I gave in London revealed a piece of the puzzle that was difficult for the audience to fathom. This was not simply happening in the emerging markets. It was happening in America, too.

I described a meeting that had occurred in April 1997, more than four years before that day in London. I had given a presentation to a distinguished group of U.S. pension fund leaders on the extraordinary opportunity to reengineer the U.S. federal budget. I presented our estimate that the prior year’s federal investment in the Philadelphia, Pennsylvania area had a negative return on investment.

We presented that it was possible to finance places with private equity and reengineer the government investment to a positive return and, as a result, generate significant capital gains. Hence, it was possible to use U.S. pension funds to significantly increase retirees’ retirement security by successfully investing in American communities, small business and farms — all in a manner that would reduce debt, improve skills, and create jobs.

The response from the pension fund investors to this analysis was quite positive until the President of the CalPERS pension fund — the largest in the country — said, “You don’t understand. It’s too late. They have given up on the country. They are moving all the money out in the fall [of 1997]. They are moving it to Asia.”

Sure enough, that fall, significant amounts of moneys started leaving the US, including illegally. Over $4 trillion went missing from the US government. No one seemed to notice. Misled into thinking we were in a boom economy by a fraudulent debt bubble engineered with force and intention from the highest levels of the financial system, Americans were engaging in an orgy of consumption that was liquidating the real financial equity we needed urgently to reposition ourselves for the times ahead.

The mood that afternoon in London was quite sober. The question hung in the air, unspoken: once the bubble was over, was the time coming when we, too, would be “de-modernized?”

In 2009 — more than seven years later — this is a question that many of us are asking ourselves.

Interest rates: Bank of England accused of 'assault' on savers

The Bank of England was accused of launching an "assault" on savers as it slashed interest rates to a new record low.

Consumer groups and trade bodies expressed anger at the latest 0.5 per cent reduction, arguing that it penalised savers, while doing little to help the majority of borrowers.

They also voiced concerns that with the returns on deposit accounts already at a record low, people would be put off saving, further reducing the supply of funds available to banks and building societies for mortgage lending.

Adrian Coles, director-general of the Building Societies Association, said: "The rate cut is an assault on savers who will have seen their interest payments drop by 83 per cent since July 2007.

"Savers dependent on interest income have not seen prices fall by a similar amount - their lifestyles have taken a significant blow."

He added that savers with building societies outnumbered borrowers by nearly eight to one.

The sector has 23 million savers, although there will be some duplication in the figure from people who hold accounts with more than one society, compared with only 2.9m mortgage customers.

Pensioners, who rely on returns from their savings to supplement their income, have been particularly hard hit by the recent interest-rate slide.

Figures from website Moneynet.co.uk showed that nearly a quarter of variable rate savings accounts for balances of £500 currently pay returns of 0.1 per cent or less.

The Bank of England also published figures last month which showed that in December, interest paid on notice accounts, tax-free ISAs and bonds was the lowest since records began in 1995, while the average return on instant access accounts was just 0.81 per cent.

The already-low figures do not factor in the impact of January's 0.5 per cent cut, which was passed on, at least in part, by the majority of savings providers.

Andrew Hagger, of Moneynet, said: "Pensioners and those who rely on a monthly income from their nest egg to supplement their income are being driven to despair as they are increasingly forced to dig into their capital just to make ends meet."

He added that with interest rates so low, people should consider doing other things with their money, such as repaying debt.

Saga Personal Finance said savers and pensioners were the "innocent victims of the credit crunch".

Roger Ramsden, chief executive of Saga Personal Finance, said: "Savers have seen interest rates slashed from 5.75 per cent 18 months ago to 1 per cent today which has resulted in a significant drop in savings incomes.

"For example, someone who invested £20,000 in one of our fixed rate bonds last year would have received £115 per month interest after tax, however those opening accounts at the new 1 per cent rate from today would receive £45 per month.

"The recent rate cuts have had limited effect on the economy other than supporting those on variable-rate mortgages.

"The cuts have hit savers hard, particularly those in retirement who rely on monthly interest from their savings, this means that the effect of the rate cut has been to take money out of the economy as people have less interest to spend."

Simon Hodge, an independent financial adviser on Rubii.co.uk, also warned that the current "dire returns" on savings accounts could tempt pensioners and other cautious savers to put their money into riskier investments that were not appropriate for them.

Kevin Mountford, head of banking at moneysupermarket.com, said, "We are now getting dangerously close to the point where people will say it's just not worth saving.

"Following the rate cut in January we ran a poll of our users which found over two-thirds were angered by continuing rate cuts.

"The Government needs to apply some vision and kickstart the savings culture - as opposed to killing it."

In times of crisis, Parisians take to scavenging

By Elizabeth Pineau

PARIS (Reuters Life!) - It's closing time at a market in Belleville, a working-class neighborhood in Paris, and a young woman in a black parka and white cap is rummaging through the abandoned crates.

After a thorough inspection, she slips a cauliflower and some slightly squashed oranges into her shopping bag.

"That's going to be my dinner," says the woman, who will only give her name as Yng.

Nearby, an old man with a black beret selects two mangoes from the bottom of a battered cardboard box. He earlier bought a bag of apples, then filled his basket with discarded fruit and vegetables.

"Glanage," or gleaning, is a French tradition that reaches back to the Middle Ages, when people would go over the fields after the harvest and gather any crops that remained.

But today, the practice is becoming more widespread in cities, in what charity workers and social activists describe as a sign of growing economic despair.

FIGHTING OVER FOOD

At the market in Belleville, three women curse each other in French and Arabic as they fight over a bag of leeks.

"Those are mine, I picked them up," one of them says, pressing the bulging bag to her chest.

"Thief!" another one shouts at her.

Around them, more than 10 other people of all ages gather as much as they can before the cleaning crew arrives. Some of the traders encourage them.

"It's a gift, a gift," says Ali, a stall owner who declines to give his second name. "I give it away, otherwise it would just be discarded anyway," he adds, as two women hastily fill their blue plastic bags before hurrying away.

"It's difficult for me, I have six children and my husband is dead," says a woman in a black headscarf. Like the other foragers, she prefers to remain anonymous.

Fields and markets are no longer the only hunting grounds of thrifty "glaneurs." Every evening, people collect fruit, eggs and yoghurts past their expiry date from containers behind the big supermarkets.

Christophe Auxerre, national secretary of Secours Populaire, a charity, sees the revival in foraging as a symbol of growing social problems.

"There are people who go hungry in our country. On the 15th of every month, there's no money left to fill the plates," he said. "There are shop owners who deliberately put the eggs on top in the rubbish bin so that people can pick them up."

His charity has helped two million people in 2008, compared with 1.5 million in 2007.

"WILD PICNIC"

A report presented last week by Martin Hirsch, a left-wing former charity boss who is now in charge of a government-backed social welfare program, found that today's "glaneurs" come from a great variety of social backgrounds.

"(The economic crisis) is one more element in the picture of a vulnerable section of society, who have to be helped in a very concrete way," Hirsch told reporters.

"Apart from the poverty line, there's the concept of 'what's left to live on' -- what's left to pay for food, clothing, transport and so on -- and for some people, that's just a few euros per day," he added.

For a small group of scavengers, gathering discarded food is also a way of protesting against a consumerist society and its wastefulness, and against the rising cost of living in France.

Left-wing activists have been organizing "wild picnics" in supermarkets for the past few months, taking products off the shelves and offering them to customers for free -- a creative interpretation of a French law that gives customers the right to taste certain products before buying them.

"We do that at the end of each month, when the pockets are empty. It allows us to pass on a message: everything is going up, except salaries," said Victor Porcel, a member of l'Appel et la Pioche, a left-wing movement.