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Dell said to getrival buyout bidsfrom Blackstone,Icahn

Blackstone Group LP (BX) and activistinvestor Carl Icahn submitted proposals tobuy Dell Inc. (DELL) that would rival a$24.4 billion buyout offer from Silver LakeManagement LLC and company founderMichael Dell, according to people withknowledge of the matter. Blackstone, theworld’s biggest private-equity firm,outlined an offer valued in excess of $14.25a share in cash, said one of the people, whoasked not to be identified because theprocess is private. Blackstone is workingwith Morgan Stanley, which is confident itcan raise debt to finance the deal, accordingto the person. Icahn said he’d pay $15 ashare for a leverage recapitalization with a58 percent cap on the amount of cash usedin the deal, the person said.

bloomberg View

BRITAIN’S Chancellorof the Exchequer, GeorgeOsborne, tinkered busilywith taxes and publicspending in his new

budget, as tradition requires, but left theoverall stance of fiscal and monetary pol-icy unchanged. This is a pity.

The U.K. economy is flailing. A newforecast by the Office for Budget Respon-sibility says Britain will avoid a triple-diprecession this year—barely. Expectedgrowth in gross domestic product is just0.6 percent, down from the previous fore-cast of 1.2 percent. The budget office pre-dicts a feeble recovery in 2014 and 2015,and says unemployment won’t fall below7 percent until 2017. “It is taking longer

than anyone hoped,” Osborne said, “but wemust hold to the right track.”

This isn’t the right track. Osborne iscorrect, of course, that turmoil in the euroarea has hammered U.K. exports and thathis program of fiscal austerity isn’t to blamefor the recession. He’s also right that thegovernment must get a grip on longer-termpublic borrowing. Nonetheless, too-tightfiscal policy here and now is making thingsworse. With interest rates very low, a sig-nificantly expanded program of public in-vestment would have made sense, even atthe cost of a bigger short-term deficit.

Osborne plans to increase the govern-ment’s capital spending, but wants to payfor it mainly by squeezing current spend-ing. That switch is fine, as far as it goes.Unfortunately, it caps the rise in capitalspending far too severely. The budget an-

nounced an increase in infrastructure allo-cations of just £3 billion ($4.5 billion) ayear from 2015.

In a calculated grab for favorable head-lines, Osborne announced a plan to subsi-dize and partially guarantee mortgage loansto buyers of new homes. Desirable as ahousing market recovery may be, that’s adubious initiative at best. Government med-dling in housing finance rarely ends well.Osborne also announced an additional cutin the tax on business profits—from 21 per-cent to 20 percent in 2015 (assuming hisparty is still in power).

Financial markets thought Osbornemight change the government’s instructionsto the Bank of England on monetary policy,perhaps signaling a more permissive atti-tude toward inflation. He made the smallestgesture in that direction by endorsing the

central bank’s flexible interpretation of itsmandate and telling it to be more explicitabout the trade-off between growth andshort-term inflation in explaining its mon-etary-policy decisions.

Osborne’s overall strategy remains as itwas before—continued fiscal stringency al-lied to monetary easing courtesy of the Bankof England. In Britain’s depressed economy,with interest rates at zero and diminishingreturns from quantitative easing, it’s hard formonetary policy to get much purchase.

Osborne’s right to worry about thepublic debt, but he’s got the balancewrong. The U.K. can borrow very cheaplyand has its own currency, so it can’t de-fault on its nominal obligations. That’s anadvantage it should exploit. Fiscal policyshould play a larger role, and this budgetwas a missed opportunity.

George Osborne’s missedopportunity

Shobhana Chandra

BloomBerg

Consumer spending probably increasedin February by the most in five monthsas incomesrebounded, providing a kickfor the U.S. economy at the start of theyear, economists project a report to showthis week.

Purchases rose 0.6 percent last monthafter climbing 0.2 percent in January, ac-cording to the median of 61 estimates ina Bloomberg survey before CommerceDepartment figures due on March 29.Other data may show the biggest gain indurable goods orders in five months andsustained strength in the housing market.

Resilient personal spending that ac-counts for 70 percent of the economy,along with advances in manufacturingand housing, points to a broadening ofthe expansion. Labor market progressand an increase in household wealthlinked to rising home valuesand stocks are helping Americans navi-gate the hurdles of higher payroll taxesand elevated gasoline prices.

“Consumer spending is growing at adecent pace, given all the headwinds,”said Nigel Gault, chief U.S. economistfor IHS Global Insight inLexington, Massachusetts. “Capitalgoods orders are moving up again. Thatsays something about domestic demand.”

The Commerce Department’s reportmay also show that incomes grew 0.9percent following a 3.6 percent plunge in

January that was the biggest since 1993,economists in the Bloomberg survey pro-jected. A 2 percentage-point increase inthe payroll tax rate went into effect at thestart of the year.

Incomes are being buoyed by payrollgrowth. Employers added a net 236,000workers in February after a 119,000 in-crease the prior month. Average hourlyearnings climbed 2.1 percent from Feb-ruary 2012, matching the year-over-yeargains in the previous two months as thestrongest since March 2012.Williams-sonoma

Williams-Sonoma Inc. (WSM) is amongretailers enjoying a pickup in sales.Same-store purchases at its West Elmhome-goods chain increased 19 percentin the San Francisco-based company’sfiscal fourth quarter, while sales at Pot-tery Barn Kids advanced 7.7 percent.

Some merchants are forecasting thepace of sales will be sustained through-out the year.Macy’s Inc. (M), the second-largest U.S. department-store chain,projects sales at stores open at least ayear will rise 3.5 percent this year, aftergrowing 3.7 percent in 2012.

Spending on big-ticket items like au-tomobiles is also growing as householdsreplace older vehicles and take advan-tage of low borrowing costs. Cars andlight trucks sold at a 15.3 million annualrate in February after a 15.2 million pacethe prior month, Ward’s AutomotiveGroup data showed.

Rising stock prices and a recovering

housing market are helping boost house-hold finances. TheDow Jones IndustrialAverage climbed to a record this monthand the broader Standard & Poor’s 500Index closed on March 22 within 10points of an all-time high.ProPerty Values

The S&P/Case-Shiller index of propertyvalues in 20 cities, to be released March26, climbed 7.9 percent in the 12 monthsended January, the biggest year-over-year gain since June 2006, according tothe Bloomberg survey median.

The same day, the Commerce De-partment may report a 420,000 annual-ized pace of new homesales last monthafter they reached 437,000 in January,which was the highest level since July2008, according to the Bloomberg surveymedian. Figures from the National Asso-ciation of Realtors the following daymay show more Americans signed con-tracts to buy previously owned proper-ties last month.

Persistent strength in the auto indus-try is helping give a lift to the nation’sfactories. Orders for durable goods,those meant to last at least three years,jumped 3.9 percent in February after a4.9 percent slump the prior month, Com-merce Department data may show onMarch 26.Boeing orders

The gain probably reflected a rebound indemand for commercial aircraft. BoeingCo. (BA) said earlier this month that itreceived orders for 179 aircraft in Febru-

ary, up from two a month earlier.Durable bookings excluding the

volatile transportation industry probablyincreased for the sixth consecutivemonth, the Commerce Department’s re-port may show.

3M Co. (MMM), the St. Paul, Min-nesota-based maker of products rangingfrom Scotch tape to dental braces, isamong companies expecting that steadygrowth in the U.S. will help offset weak-ness in other markets such as Europe, es-pecially in the consumer electronicsbusiness.

“We’re operating pretty steady in theU.S. and Latin America,” David Meline,chief financial officer, said at a March 21conference. “In Asia, it’s more mixed.Western Europe continues to have anumber of challenges.”

Finally, revised figures from theCommerce Department on March 28may show the economy expanded at a re-vised 0.5 percent annual pace in thefourth quarter, faster than the govern-ment’s previous estimate of 0.1 percentgrowth, according to the median forecastin a Bloomberg survey.

uS consumer spending probably rose most in five monthsBloomBerg SurveyIndicator Release Date Period Prior Value Median Forecast

Durables Orders MOM% 3/26 Feb. -4.9% 3.9%

Durables Ex-Trans MOM% 3/26 Feb. 2.3% 0.5%

Cap Goods Core MOM% 3/26 Feb. 7.2% -1.0%

Case Shiller Monthly YO 3/26 Jan. 6.8% 7.9%

Consumer Conf Index 3/26 March 69.6 67.5

New Home Sales ,000’s 3/26 Feb. 437 420

New Home Sales MOM% 3/26 Feb. 15.6% -3.9%

Pending Homes MOM% 3/27 Feb. 4.5% -0.4%

Pending Homes YOY% 3/27 Feb. 10.4% 8.7%

GDP Annual QOQ% 3/28 4Q T 0.1% 0.5%

Personal Consump. QOQ% 3/28 4Q T 2.1% 2.1%

Initial Claims ,000’s 3/28 23-Mar 336 340

Pers Inc MOM% 3/29 Feb. -3.6% 0.9%

Pers Spend MOM% 3/29 Feb. 0.2% 0.6%

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Corruption in Asia continues to be a drag ongrowing economies, draining billions of dol-lars from economic development and trigger-ing a public backlash in some places. Callsfor reform are coming from the private sectorand United Nations (UN) even as the region’seconomic prospects improve.

When protestors took to the streets ofBangkok last year, calls were made for theThai Government of Prime Minister YingluckShinawatra to address signs of growing cor-ruption in Thailand.

A 79-year-old businessman pointed torising costs of doing business, includingbribes for officials.

“I am an industrialist. I cannot stand any-more because we have to pay under the tableso much money,” he said. “All right you haveto accept that before it was between five andten percent. But now it’s a minimum 30 per-cent.”

Estimates for how much economic activ-ity is lost to corruption are difficult to judge,but a recent study by the University of theThai Chamber of Commerce concluded thatover two percent of national output or some$11 billion is likely to be lost to corruptionthis year.

The university said many from the pri-vate sector who were surveyed said they arepaying more bribes to government officersand politicians to win government contracts.

Thai political economist, Pasuk Pongpai-chit, says although there is evidence that in-dicates authorities are making progress in

curbing lower level corruption, the slowingglobal economy means growing competitionfor lucrative government contracts.

“Globalisation, the international pressurefor Thailand to become more transparent isbeing felt and various government depart-ments are responding to it. It doesn’t meanthat things are going to happen very quickly,”she said. “On the other hand, as the worldeconomy is slowing down and the local busi-ness is become more competitive, you couldsee that on specific cases the rate of corrup-tion may have increased because of the highercompetition.”

Analysts say the Thai Government is al-ready under scrutiny for spending more than$11 billion on water management infrastruc-ture following the 2011 floods and a further$67 billion on rail and other building projects.Economists have also charged that a $33 bil-lion rice price support program for farmers isbeset by corruption allegations.

Bandid Nijathaworn, a former centralbank deputy governor and now president ofthe Thai Institute of Directors, says corruptionin Thailand appears to be more of a problemnow than 10 years ago.

“Corruption is a global problem,” he said.“You see corruption appearing as headlinesin many countries. So it has become a globalissue both in national organisations and indi-vidual country’s governments trying to tackleit. In the case of Thailand we are having agreater challenge because the problem seemsto be worsening than maybe 10 years ago.”

Despite posting robust economic growthduring the past decade, many countries inAsia still rank poorly on international anti-

corruption indices. A recent report by the US-based Center

for International Policy said in China alone,between 2001 and 2010, $2.74 trillion in il-legal funds left the country, through criminalfinancial schemes, corruption, tax evasion orother illegal activities. For Thailand the figurestood at $64 billion over the same period. InIndia, the center of major anti-corruption ral-lies last year, the figure stood at $123 billion.

UN Office on Drugs and Crime(UNODC) regional anti-corruption adviser,Shervin Majlessi, says given Asia’s growinginfluence in the world economy, there is agreater need for oversight.

“Generally, speaking when you have thiskind of fast economic growth we are witness-ing in this region, it comes with the samechallenges and opportunities in terms of cor-ruption,” he said. “The challenge is obviouslythat there are more financial flows, there arebigger contracts, procurements and opportu-nities for corruption to increase. So you needstronger anti-corruption systems and regimesin place.”

In 2003 the UN passed a conventionagainst corruption. In South East Asia,Burma, ratified the convention in December- the last to do so of the 10 member Associa-tion of South East Asian Nations (ASEAN).

UNODC’s Majlessi says for ASEANgovernments the key is to implement the re-forms set out under the UN convention.

“Now the whole of ASEAN is finallycovered by this convention. So this is positivenews,” he said. “There is a key challenge inthe implementation of this kind of interna-tional norms and standards including legal re-forms, international reforms and mostimportantly political will to actually imple-ment this kind of instrument.”

The Asian Development Bank is alsosupporting ASEAN through a CorporateGovernance Scoreboard to promote trans-parency in business.

Thai Institute of Directors’ Bandid Ni-jathaworn, who oversees a new group ofcompanies aimed at fighting corruption, saysprivate sector involvement is also critical foranti-corruption efforts to succeed.

Analysts say the corruption fight needs togo beyond government law enforcement, andinclude non-government and private sectororganisations.

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INDIA will ease restrictions forforeign institutional investors incentral and corporate bondsnext month to attract inflowsand help fund a widening cur-

rent account deficit, Finance Minister PChidambaram said on Saturday.

Under the new rules, foreign in-vestors can invest up to $25 billion inlong-term government bonds, up from$15 billion. The cap on corporate bondsremains at the current level of $51 bil-lion, but separate limits on differenttypes of corporate debt have been re-moved.

“Effective from April 1, there willbe two baskets - one of $25 billion forgovernment securities and one $51 bil-lion for all corporate bonds,” Chi-dambaram told a conference.

Currently, foreign institutional in-vestors can invest up to $25 billion incorporate infrastructure bonds, $20 bil-

lion in other listed corporate bonds, and$5 billon could be invested by other for-eign investors including sovereignwealth funds, pension and insurancefunds.

India restricts foreign access to itsdebt markets because of its reluctance toowe money to overseas investors, andhas a complicated system of categoriesfor debt as well as restrictions on whichtypes of investors can bid for the debt.

But a record high current accountdeficit - which hit 5.4 percent of theGDP in the quarter ending September -has prompted the government to takesteps to increase capital inflows intocountry’s debt and stock markets.

New Delhi will review the foreigninvestor cap on corporate bonds when80 percent of the limit is reached, Chi-dambaram said, adding it would helplarge investors plan their investment.

The government may further in-crease the cap on FIIs to invest in gov-ernment bonds, depending on demandand macro-economic requirements, Chi-

dambaram said.“The annual enhance-

ment of the government bondlimit will remain within 5 per-cent of the gross annual borrow-ing of the central governmentexcluding buy backs,” he said. Thegovernment plans to borrow agross 5.79 trillion rupees in2013/14, excluding the500 billion rupees ofbonds it will sell to funda buy back. Chi-dambaram also saidthe current corporatebond auction mecha-nism will be replacedwith “on-tap system”that is used for infra-structure bonds.India’s current ac-count gap is ex-pected to touch anall-time high forthe fiscal year thatends in March.

India eases rulesfor FIIs in govt,corporate bonds

Asian economic growth masksgrowing corruption problem

IMF approves$1.25 billiondisbursementto Ireland

WasHington: The International MonetaryFund (IMF) on Friday approved a $1.25 billiondisbursement to Ireland under an existing loanprogram to aid the European island nation. Thelatest release of funds brings total aid to about $26billion, the international lender said, but officialshave said they expect Ireland to get off emergencyfunding later this year. Ireland has been one of thesuccess stories in the euro-zone debt crisis, withEuropean and IMF leaders eager to congratulate thecountry for the fiscal discipline that has helped itget back on its feet. “Ireland’s strong policyimplementation has continued and positive signsare emerging. Real GDP growth was 0.9 percent in2012, and employment rose slightly over the year,”the IMF said in a statement. Ireland was one of thebest-performing economies in the euro zone lastyear. Last week, Ireland managed to attractinvestors to fresh debt offerings, another sign thatthe nation could soon stand on its own. oNlINe

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Negotiations for a Cyprus bailoutwhich went into the small hours ofSunday failed to reach agreement andhopes are now pinned on further talksin Brussels later in the day to stave offa financial meltdown.

Cypriot President Nicos Anastasi-ades flies to Brussels in a bid to beat aMonday deadline to close a deal be-fore the European Central Bank stopsemergency liquidity support to the is-land’s banks.

A government statement said afternegotiations break up with the troika -the European Commission, the Euro-pean Central Bank and the IMF, Anas-tasiades will arrive in Brussels atmid-morning to continue talks withEuropean Union officials and the IMFchief Christine Lagarde ahead of a Eu-rogroup meeting scheduled to start at1700 GMT.

Negotiations are at a very delicatephase. The situation is very difficultand the deadlines are very tight, thegovernment statement said.

The official Cyprus News Agency

had earlier blamed the IMF represen-tative in the negotiations, Delia Vel-culescu, for blocking agreement.

The Cypriot government made aturn-around by accepting a 20 percentlevy on deposits above 100,000 euros(130,000 U.S. dollars) at the Bank ofCyprus and 4 percent at other banks.

The IMF insists that the Bank ofCyprus be split in line with an arrange-ment at the Cyprus Popular Bank intogood and bad sections, the good one totake over deposits below the 100,000mark and good loans while the bad oneto take lager deposits and bad loans.

The troika has agreed to provide a10 billion euros bailout to Cyprus,which has to raise 5.8 billion euros onits own.

Sources said hopes for finalisingthe bailout rest on the IMF withdraw-ing its insistence on the Bank ofCyprus split-up as the European Com-mission and the European CentralBank do not consider it to be of criticalimportance.

A deal has to be in place beforebanks reopen on Tuesday and authori-ties will impose capital controls toavert massive capital outflow.

Cyprus bailoutnegotiations fail toreach agreement

Syed Naveed Qamar and Malik Amad Kalabagh cut the cake at the

walima ceremony of Ali Murtaza Abbas, advisor MOL Oil and Gas as Dr

Ghazanfar Mehdi, Malik Muzaffar Abbas and Ali Murtaza Abbas look on.

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