what about PR state ADUNs? more cavalier decisions by BN...

RM300,000 for each Perak BN state rep

Barisan Nasional (BN) assemblymen in Perak will receive their respective development fund soon, totalling RM300,000 each from the Federal Government, Minister in the Prime Minister's Department Datuk Seri Dr Ahmad Zahid Hamidi said yesterday.

"The allocation has been approved and will be distributed to the 27 assemblymen," he said after a gathering organised by the Perak Federal Action Council here.

Ahmad Zahid said that apart from the development fund, each constituency would also be allocated RM1 million in the form of public amenity projects, which would be channelled through federal agencies and departments.

He said this when asked to comment on complaints by Umno assemblymen, especially those who lost in the party divisional elections last year, that they had not received the allocation. -- Bernama

Bank bailout: More money, more problems

As the Obama administration moves to shore up the financial system, every possible solution raises another question.

NEW YORK (Fortune) -- The Obama administration is intent on fixing the banks. But doing so won't be simple or cheap.

Treasury Secretary Timothy Geithner has said officials are looking at a "range of options" that would boost confidence in troubled big banks. He said Wednesday that the administration expects to make its proposals public "relatively soon."

The plans are likely to include a program that would relieve banks of troubled mortgage assets, and may also feature promises for additional capital infusions or an offer to guarantee the value of some bank holdings.

Officials have been most vocal about the first option, though observers said any "comprehensive" plan, as Geithner has promised, may include elements of all three policies.

Still, while it's widely agreed that the government must do something, few expect to see the markets or the economy suddenly spring back to life once a plan is in place.

And while the administration has $350 billion in available funding under the Troubled Asset Relief Program approved by Congress last October, many observers now expect the upfront cost of the financial cleanup to run well into the trillions of dollars.

"It's not going to be a nice, clean answer," said Douglas Elliott, a fellow in economic studies at the Brookings Institution and a former investment banker at JPMorgan. "What they're looking toward is muddling through this crisis -- which sounds unsatisfying now but doesn't look too bad once you get to the other side."

Here are the pros and cons of three oft-discussed policy options.

Buying troubled assets. The creation of a "bad bank" that would take troubled assets off institutions' balance sheets could help remove uncertainty about the health of banks and give them room to resume lending.

Federal Deposit Insurance Corp. chief Sheila Bair has said officials are working on something called the "aggregator bank," which would be mutually owned by the government and the institutions that sell assets to it.

The effort is inspired by former Treasury Secretary Henry Paulson's original, unexecuted TARP proposal of last fall, and by the success of the Resolution Trust Corp., which was created by Congress in 1989 to take over thrifts that failed in the savings-and-loan crisis.

"The RTC worked, because you needed someone who could hold the assets without resorting to a fire sale," said Roger Kubarych, chief U.S. economist at UniCredit Markets & Investment Banking in New York.

Potential hurdles include the pricing of the assets to be taken by the bad bank, and the prospect of saddling taxpayers with the baggage from poor investment decisions made at privately owned institutions by well-paid executives -- many of whom remain in place.

John Koelmel, the chief executive officer of First Niagara Financial (FNFG), a community bank based in Lockport, N.Y., that got $184 million in TARP funds in October, said he was concerned about the lack of accountability for banks that lent recklessly.

"You can't perpetuate bad business practices," Koelmel said.

Making capital infusions. Paulson's original TARP proposal would have removed toxic assets, but he abandoned that plan within weeks of its passage in Congress. Instead, he plowed most of the first $350 billion of TARP funds into purchases of banks' preferred stock.

Though that effort has hardly been a success, some analysts say the Obama administration may need to repeat the TARP capital purchase program -- only with more funds, and with the government getting common stock instead of preferred shares.

Preferred shares typically pay higher dividends than common stock, and the owners of preferred stock get paid first in the event of a liquidation.

The need for a different type of capital infusion is bolstered by the sharp selloff in bank stocks this year. Despite all the Treasury purchases of bank preferred stock, investors have continued to flee the sector - in part because rising losses are eating away at banks' balance sheets.

Unless banks have a robust amount of common equity to absorb future losses, their health will remain suspect.

"You need to put in common equity," said Paul Miller, a financial services analyst at FBR Capital Markets in Arlington, Va., who has said the biggest U.S. banks need as much as $1.2 trillion in additional capital to be able to keep lending amid a sharp downturn in the economy.

One drawback to this approach is that it's costly, which could make it unpopular at a time when the U.S. is running substantial budget and trade deficits and is planning to spend hundreds of billions of dollars on fiscal stimulus.

Another is that large common-stock purchases could leave taxpayers holding big stakes in banks - though some observers suggest the government could solve that problem by instead taking warrants that convert into common stock when they're sold.

Insuring banks' assets. Another approach involves trying to put a floor on asset values by offering government insurance against future losses. The government has already made a step in this direction in recent months by guaranteeing loan losses at Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500).

Under those plans, the banks took the first loss on a pool of assets, then agreed to make a co-payment on the second round of losses. After that, all losses are to be absorbed by the government -- an arrangement that, if repeated on a broad enough scale, should reduce investors' fear that the banks will be wiped out by outsized losses on bad loans.

The plan could draw private capital back into the markets, proponents say. But skeptics say deciding what price the banks should pay for the government insurance could be difficult.

What's more, the arrangement forces taxpayers to shoulder losses from private-sector risk-taking -- while giving investors in the banks' stock and debt all the potential gains.

Because guarantees require a smaller upfront investment, "there is less downside -- but there is also less upside," said Elliott.

Those aren't the only options, of course. Some argue that the financial system won't recover until the government breaks up the biggest banks and resolves their problems through a bankruptcy proceeding of some sort.

This is probably unlikely, but it would force creditors to share in losses and wipe out some of the debts that are crippling the economy.

Meredith Whitney to banks: Deal with it

The influential analyst says taking toxic mortgages off banks' books only begins to address their fundamental problems.

The end goal is to get banks lending again, but Oppenheimer bank analyst Meredith Whitney doesn't think that separating the bad from the ugly will get money flowing. Instead, she says banks should bite the bullet and start selling their good assets.

In an interview with Fortune Friday, Whitney argued that a "bad bank" does not attack the fundamental problems eating away at these firms.

"The bad bank is a covert way to recapitalize banks by paying more for the assets than the market would, she said. "Then the banks might be able to write up the value of the securities. This would give them, on paper, more tangible equity. In theory they would look stronger."

But Whitney believes the banks will remain weak, even if their books look healthier, because they have to deal with a lot more than just bad assets: As consumer and business spending slows, banks will still incur losses on their "good" loans; they would be forced to set aside more cash, which would cut into earnings; and there's also the simple fact that a recession means less demand for their business.

Banks created and held onto billions of dollars in esoteric credit products that were made up of everything from subprime residential mortgages to credit card payments. These securities have sunk in value as default rates on the underlying assets rise.

As the credit crunch gathered steam, banks hoarded cash, including the money they received from the Treasury's $700 billion Troubled Asset Relief Program. This program was originally conceived to buy their toxic assets, but was used instead to inject money directly into the banks.

The original TARP plan was rejected in part because of worries about asset pricing. If Uncle Sam paid too little, the banks would crater anyway - pay too much and taxpayers would eat the losses. The "bad bank" proposal faces the same essential pricing problem.

Whitney says it would be better to force big institutions like Citibank (C, Fortune 500) and Bank of America (BAC, Fortune 500) to sell the marquee pieces of the business that they can, fill the hole, and shrink.

"That's what people like you and me, what taxpayers have to do when we are in financial distress. We have to sell whatever it is we can, which is almost always our best assets, and deal with it. We can't just sell what we want to, which would of course be our bad stuff."

It's a punitive measure that banks are trying to avoid, and they argue that there are no buyers out there for even the good, stable pieces of their businesses. But Whitney disagrees.

IMF: British economy in worst recession since WWII

LONDON, Jan 29 — Britain's economy will be the hardest hit in the developed world in what is expected to be the "deepest recession since the Second World War," the International Monetary Fund said yesterday.

The IMF now expects the British economy to shrink by 2.8 per cent this year, compared with the 1.3 per cent it was forecasting in November. This is worse than the 2 per cent average drop in output the organisation has estimated for advanced nations.

Global growth is expected to fall to 0.5 per cent this year as the "scale and scope of the current financial crisis have taken the global economy into uncharted waters".

Official figures last week confirmed that Britain fell into recession at the end of 2008. The British economy slumped by 1.5 per cent in the final three months of the year — worse than expected and sparking fears of a deep and prolonged recession. Over 2008 as a whole, the British economy shrank by 0.7 per cent.

Also today, a United Nations agency warned that more than 50 million jobs could disappear around the world this year. As the global economy battles its worst downturn since the Great Depression, the International Labour Organisation said its worst case scenario would see 51 million more jobs lost by the end of this year, taking the global unemployment rate to 7.1 per cent from 6 per cent last year.

More realistically, the organisation estimates that 30 million people could lose their jobs if financial turmoil continues through 2009, pushing the unemployment rate to 6.5 per cent. Under its most optimistic scenario, this year would end with 18 million more people out of their jobs and a jobless rate of 6.1 per cent.

"If the recession deepens in 2009, as many forecasters expect, the global jobs crisis will worsen sharply," the ILO said. "We can expect that for many of those who manage to keep a job, earnings and other conditions of employment will deteriorate."

Developing countries will suffer most, according to the organisation, whose governing structure includes governments, employers and workers' groups.

"Sub-Saharan Africa and south Asia stand out as regions with extremely harsh labour market conditions and with the highest shares of working poor of all regions," the report said.

The ILO estimates that North Africa and the Middle East had the highest unemployment rates at the end of 2008, at 10.3 per cent and 9.4 per cent respectively.

Central and south-eastern Europe and the former Soviet states ended last year with a jobless rate of 8.8 per cent. In sub-Saharan Africa it was 7.9 per cent and Latin America's rate was 7.3 per cent. East Asia fared best of the world's regions at 3.8 per cent.

Most job creation in 2008 came from south Asia, southeast Asia and east Asia, while developed economies and the European Union had a net loss of about 900,000 jobs. — The Guardian