US employers cut far fewer jobs last month than in recent months and the unemployment rate dropped to five per cent, a better-than-expected showing that nonetheless reveals strains in the nation’s labor market.

For the fourth month in a row, the economy lost jobs, the Labor Department reported yesterday. But in April the losses totaled 20,000, an improvement from the 81,000 reductions in payrolls logged in March. Job losses for both February and March turned out to be a bit deeper than previously reported.

The latest snapshot of the nationwide employment conditions – while clearly still weak – was better than many economists were anticipating. They were bracing for job cuts of 75,000 and for the unemployment rate to climb to 5.2pc.

The unemployment rate, derived from a different statistical survey than the payroll figures, fell to 5pc from 5.1pc in March. That survey showed more people finding employment than those who didn’t.

Businesses are handing out pink slips as they cope with an economy that is teetering on the edge of a recession, or possibly in one already. A severe housing slump, harder-to-get credit and financial turmoil have forced people and businesses to be more cautious in their spending. And that has hurt the economy.

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India is leaving the Third World so fast that it is almost possible to watch it happeneing.

Many write off India as backward and poor. The reality is that its billion people have a booming economy, excellent education and limitless ambition – and they are ready to take over the world. America, Asia, Europe and the Middle East face a reversal of fortune that will astonish us and overpower us if we do not revise our rapidly dating assumptions and prejudices.

Yes India still has poverty with the power to turn the stomach. Yes, there are still elephants striding nonchalantly through the boiling city traffic and cows on the loose in the heart of a megalopolis which crams the population half the size of Australia into fewer than 750 square kilometers. But heartbreaking as these images are, they are not a true indication of the new civilisation which is growing here in the world’s largest free country.

In India, the amazing thing is that all the intelligent people are optimistic. The economists, the writers and the thinking classes in general, are full of an infectious patriotic delight at the way their mighty country is preparing for world power. No douby some unpredictable disaster could unhorse this new hope. A recent article in Forbes mentioned that India would have the maximum number of Billionaire’s in 10 years time.

The world is paying too much attention to China and too little to India. America and Europe, in particular, simply havnt been able to cope with the threat India’s information technology industry poses to their own jobs. “They could not believe Indians could do this. To them, this was still a country of snake charmers.
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f_bribery.gifThe U.S. Justice Department has begun a criminal investigation into whether aluminum maker Alcoa Inc. participated in bribery in the Persian Gulf state of Bahrain.

In documents filed Thursday in U.S. District Court, federal prosecutors asked a judge to halt a federal civil lawsuit that accused Pittsburgh-based Alcoa of bribing officials through overseas shell companies to secure hundreds of millions of dollars in overpayments.

The United States has a direct and substantial interest in this case, as the subject matter giving rise to this case is also the subject of an ongoing federal criminal investigation,” prosecutors in the Justice Department’s fraud section said in court filings.Aluminum Bahrain B.S.C., also known as Alba, in which the Bahrain government holds a 77 percent stake, is seeking more than $1 billion in damages from Alcoa and other affiliated defendants, according to a federal lawsuit filed last month.

“The Alba complaint alleges numerous facts which, if true, could be relevant to the government’s criminal investigation and a potential criminal trial,” prosecutors said in court filings.

“As the criminal investigation arises out of the same facts and circumstances on which the claims in this civil action are based, the determination of potential liability against possible subjects of the investigation, particularly if they are charged with crimes as a result of the investigation, will turn on the same essential factual questions at issue in this civil action,” the government said.

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wall-street.jpgYesterday the Fed cut US interest rates by 0.75%,on top of the 2.25%of cuts since last summer and hot on the heels of last week’s measures to stimulate liquidity and address funding problems through a new USD 200 billion lending facility for the banking system.

These measures have been particularly aimed at helping the increasingly distressed mortgage market. But despite the Fed’s efforts, credit markets remain blocked and investors are still looking for an answer to the ongoing and seemingly unquenchable market volatility.

However, perhaps investors and the Fed alike have been seeking the answer to the wrong, or at least different, questions.

Let’s look first at the average investor “on the street”. They cannot help but feel bombarded at the moment by a constant flow of bad news regarding the economy (the majority of financial analysts and journalists are now apparently in agreement that the US economy is actually in recession), and regarding the subprime crisis, where rumours andannouncements of financial company writedowns continue to undermine confidence.

Perhaps then the Fed’s willingness to act, while warmly receivedat first, is on reflection being perceived as confirmation of the darkest rumours and predictionsabout the US housing and mortgage markets currently doing the rounds. Why else would the Fed so deliberately seek to promote the orderly functioning of the mortgage market?
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captsgeooj83130407111840photo00photodefault-376x512.jpgThe euro climbed to a record high of US$1.5070 in midmorning European trading on Wednesday as sentiment increased that the U.S. Federal Reserve would continue its rate cut campaign.

Oil prices rose to a new intraday high near $102 a barrel Wednesday as a slide in the U.S. dollar prompted investors to pump more money into energy futures as a hedge against inflation.

Along with the rise in the British pound, which is nearing US$2 again, the surging euro will not be kind to Americans visiting Europe — they’ll have to pay more for hotel rooms in , entrance fees at the Louvre and chocolates in Belgium.

On the other hand, the stronger Euro makes shopping trips to the more appealing to Europeans.

The Euro’s strength is not likely to weaken anytime soon, given that any “worsening in interest-rate differentials dilutes a key support for the dollar.”

Weaker growth prospects in the United States, coupled with its deficit will “exert a significant downward influence” in the long term and cause some countries to shift more of their reserves from dollars to other currencies, including the Euro.

But, at the same time, the European Central Bank, which has left its own rates unchanged since last summer, is expected to keep them at 4 percent when it meets next week.

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In a bid to remain independent, Yahoo plans to reject Microsoft Corp.’s unsolicited takeover offer, according to reports on the Wall Street Journal’s web site.

Quoting sources familiar with the situation, the Journal reports that Yahoo’s board feels the offer of $31 per share “massively undervalues” the company. A letter spelling out the position is expected to be sent Monday. Yahoo also expressed concern that Microsoft’s offer does not account for risks to Yahoo should the deal be overturned by regulators.

The Journal source said the company would be unwilling to consider an offer below $40 per share, which would represent a $12 billion increase over Microsoft’s original $44.6 billion bid. It is unclear if Microsoft would be willing to increase its bid by such a significant amount.

The two companies have been in discussions about an alliance or merger for more than a year. Yahoo has long hoped to remain independent, believing it can reverse its fortunes and lift its flagging stock price.

In the summer of 2007, investors believed it was possible as well. Yahoo co-founder Jerry Yang replaced Terry Semel as CEO and announced he would unveil a new strategic plan for the company within 100 days.

“There will be no sacred cows and we need to move quickly,” he said. But, after the 100 days – and then some – passed, investor patience wore thin, driving the stock lower.

In late January, the slumping Internet pioneer reported a fifth-consecutive quarter of lower profits and warned of “headwinds” for 2008. Yahoo’s battered stock fell to a four-year low, below the $20 per share level, and Microsoft pounced.

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senate.jpgThe $150 billion economic aid package on a fast track to passage in the House faces an uncertain future in the Senate, where lawmakers in both parties are seeking to tack on billions for senior citizens and the unemployed.

The House planned a Tuesday afternoon vote on its plan to speed rebates of up to $600-$1,200 to most income earners while giving tax breaks to businesses.A Senate panel was to vote Wednesday on a $156 billion version, which gives $500-$1,000 rebates to a broader group, including older Americans living off Social Security and wealthier taxpayers, and would extend unemployment benefits. Senate leaders hope to pass it by week’s end, said Jim Manley, a spokesman for Majority Leader Harry Reid, D-Nev.

The action put the Senate on a collision course with President Bush, who has cautioned against adding to a carefully negotiated package that brought together House Democrats and Republicans, both of whom surrendered cherished proposals to reach a deal. The White House and congressional leaders agree it is critical to enact an economic recovery package as soon as possible to help head off a recession and boost consumer confidence.

“The Senate is threatening to create partisan conflict by trying to put in additional programs,” said Tony Fratto, a White House spokesman.

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benazir.jpgStocks fell in Thursday after the assassination of Pakistani opposition leader Benazir Bhutto and after the Commerce Department reported a weak increase in durable goods orders. The Dow Jones industrial average fell more than 100 points.

Bhutto’s assassination raised the possibility of increasing political unrest abroad, always an unsettling prospect for investors. Oil and gold prices rose following the news.

Witnesses said a man fired at Bhutto from close range, quickly followed by an explosion that the government said was caused by a suicide attacker. At least a dozen more people were killed in the attack.

Meanwhile, the government said orders for durable goods — big-ticket items from commercial jetliners to home appliances — rose by just 0.1 percent last month. Economists had been looking for a rise of 2.2 percent. Still, November saw the first rise in durable goods orders in the last four months.

The notion that the economy is slowing was also unnerving for the market.

The Labor Department said the number of workers seeking unemployment benefits showed a surprise increase last week. Applications filed for unemployment insurance rose by a seasonally adjusted 1,000 to 349,000. Economists had expecting the figure would fall to around 340,000 for last week.

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world-bank.jpgYesterday, the World Bank reported that the US has lost its status as the largest donor to the Bank’s main fund for poor countries, as Britain secured a record amount of aid with a pledge of increased funding.

Britain pledged $4.2 billion for the period from July 2008 through June 2011, after negotiations that began in March in Paris and ended with two rounds of talks in Berlin.

What does it mean to the US? Firstly, losing its position as the top donor could weaken Washington‘s influence over the World Bank, which is the largest provider of development assistance to poor countries, and over policies that determine the cash flow.

The US pledged a very substantial contribution but is now down to second place after Britain,

A total of 45 donor countries, the highest number ever, promised a record total of $25.1bn at the Berlin talks, with a further $16.5bn coming from the bank and previous donor pledges. The total of $41.6bn represents an increase of $9.5bn over the previous funding period and will support around 80 countries, with a focus on African countries.

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hubbard-inside.jpgBush Economic Adviser Joins Aides Leaving White House As President’s Term Winds DownAl Hubbard, chairman of President Bush’s National Economic Council, will announce on Wednesday that he’s leaving his post, joining a growing line of top presidential advisers exiting the White House as the Bush administration heads into its final year.

Hubbard’s departure comes as Bush faces one of the biggest economic challenges of his presidency, a severe slump in housing and a credit crisis that have roiled financial markets and triggered fears of a recession.

Hubbard, assistant to the president for economic policy, will submit a letter to the president later in the day to make official his decision to leave the White House after three years, according to a senior administration official, who spoke on condition of anonymity because the announcement had not yet been made.

His departure, by the end of the year, continues an exodus of key Bush aides and confidants. Earlier this month, Fran Townsend, Bush’s terrorism adviser, announced she was stepping down after 4 1/2 years. Top aide Karl Rove, along with press secretary Tony Snow, Attorney General Alberto Gonzales, Defense Secretary Donald Rumsfeld and senior presidential adviser Dan Bartlett, have already left.

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