The amount the International Monetary Fund can raise, primarily to help to create a sovereign firewall for Europe, stands at $320 billion. Although, several nations have said they will help push the sum close to the $400 billion goal. Media reports suggest that the most likely source of new money is the BRIC nations. But they are not budging. Each expects to have more of a say in IMF policies. The fact that a Frenchwomen, Christine LaGarde, was picked as the new head of the fund has not helped. The complaint of the BRICs, however, goes well beyond that. The fair question most have asked is why they should put money into a rescue of recession-plagued Europe when their economies have become a great part of the engine that drives global growth. Chinese news outlet Xinhua reports that China’s Foreign Ministry spokesman, Liu Weimin, said. “We are willing to discuss various funding plans for the IMF with IMF members, in a frank and positive manner.” Translated, that means the IMF cannot spend China’s money if China is marginalized as part of the process.
French Leadership
Polls in France show that current president Nicolas Sarkozy will serve only one term. He is about to be defeated by Socialist Francois Hollande, who has said he will increase taxes on the rich. Some economists believe that his tax plans will be regressive and will hurt the level of income to France’s treasury. Hollande also has said he will increase what the government spends to stimulate France’s anemic economy. These actions could cause ratings agencies to quickly cut their ratings of the nation’s sovereign paper. That may have the effect of increasing France’s borrowing costs. Hollande’s view of how the European Union has pressed austerity on nations in the region that are economically weak may also alter the tenor of how the southern European nations are treated. Sarkozy has been a partner, although often a reluctant one, of the major power in the region — Germany. A fracture in that relationship could upset the current plans to save the EU economy, at least as far as the area’s finance ministers decided recently.
Ford in China
Ford (NYSE: F) plans to increase it production facilities and dealer outlets in China twofold by 2015. The second-largest U.S. car firm said it would build a $760 million auto assembly plant in the eastern Chinese city of Hangzhou. Ford has joined the race to gain market share in the People’s Republic, where 18 million cars and light trucks were sold last year. But Ford faces formidable odds. General Motors (NYSE: GM) and its local joint venture partner SAIC are the market share leaders. Global manufacturing giant Volkswagen is not far behind. The rush into China includes every major auto firm in the world. The high-end luxury market has attracted BMW, Mercedes and Audi, each of which believes it can cater to China’s new rich. The other hurdle in China is that nationwide sales have stalled. First-quarter shipments of new cars and light trucks were up only 4.5%. If that level continues, China rapidly will become much less attractive to every manufacturer in the market. Ford may find it has overbuilt.
iPhone 5 Launch
The Apple (NASDAQ: AAPL) iPhone 5, which was supposed to be released in June, July or August — depending on the rumor — will be out in October, according to famous Apple watcher Piper Jaffray’s Gene Munster. He said signals from Qualcomm (NASDAQ: QCOM), which makes components for Apple, were the basis for most of his forecast. But that is really no better than a guess. What Munster and other experts cannot say is how the iPhone 5 will be different from the ridiculously successful iPhone 4S. The 4S has the new Siri voice recognition system, a more powerful chip than previous models, and a higher resolution screen. Each of those features could be upgraded. However, the most likely leap forward for the iPhone 5 is that it will work on new superfast 4G networks. Several Apple competitors, most notably Samsung, already make smartphones for 4G. AT&T (NYSE: T), Verizon (NYSE: VZ) and Sprint-Nextel (NYSE: S) have promoted these networks more than they have individual smartphones as they battle one another for market share. An iPhone 5 could accelerate the migration from 3G to 4G, if the product is as popular as its predecessors.
Douglas A. McIntyre
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