WASHINGTON, Nov. 3--The Federal Reserve pumped $41 billion (28.4 billion euros) into the US financial system Thursday, one of its largest cash infusions to help companies get through a credit crunch that took a turn for the worse in August.
The action comes one day after Fed Chairman Ben Bernanke and all but one of his central bank colleagues voted to slice a key interest rate for the second time in six weeks to protect the economy from the ill effects of collapse in the housing market, aggravated by the credit troubles, AP reported.
The Fed on Wednesday ordered its key rate, called the federal funds rate, to be lowered by one-quarter percentage point to 4.50 percent. That followed up on a bolder, half-percentage point cut in September. Those two rate reductions might be sufficient to help the economy make its way safely through trouble spots, Fed policymakers indicated.
The funds rate affects many other interest rates charged to millions of individuals and businesses and is the Fed’s most potent tool for influencing economic activity.
The Federal Reserve Bank of New York, which carries out the central bank’s open market operations, moved Thursday to inject $41 billion (28.4 billion euros) in temporary reserves into the US financial system. It was an action designed to ensure that the markets--which have suffered through a period of turbulence over the last few months--functions smoothly. The cash infusion came in three separate operations.
Fed policymakers at their meeting on Wednesday noted that the strains from financial markets have eased somewhat on balance. Still many Fed officials in the last week have described the state of financial markets as fragile.
Bernanke and other Fed officials have said it will take time for the markets to fully recover from the credit crisis.
Since August, the Fed has been pumping cash into the financial system to help ease strains from the credit crunch.

Kenyan activists and farmers participate 27 September 2007 in an exercise to symbolize the inequality in trade between Europe and Africa occasioned by the EU-backed Economic Partnership Agreements during International Stop EPAÕs day in Nairobi.

NAIROBI, Kenya, Nov. 3--An unexpected challenge has been directed at the economic partnership agreement (EPA) being negotiated between the European Union and the east and southern African groups. Two lobby groups have filed a law suit in Kenya to halt the signing of the EPA, IPS reported.
The Kenyan government, on the other hand, has defended its position, saying that the trade deal is in the best interest of all concerned.
The Kenya Small-Scale Farmers Forum and the Kenyan non-governmental organization the Kenya Human Rights Commission last week (25 October) filed a suit with the Kenyan High Court.
They are taking on the ministry of trade and industry, the Kenya National Commission on Human Rights, the ministry of planning and national development and the Attorney General for what they regard as a contravention of the fundamental rights and freedoms in Kenya’s constitution.
The organizations are seeking an injunction halting the signing of the EPA.
Eather Jepkosgei, a small-scale farmer in Eldoret in Kenya’s Rift Valley Province and a party to the suit, likened the EPAs to the World Bank’s ill-fated structural adjustment programs (SAPs) of the 1980s.
Before the SAPs were introduced, there were various facilities such as fertilizers and chemicals provided by the government at subsidized rates, she pointed out.
“The introduction of SAPs destroyed these favorable conditions as well as the systems of credit and secured markets. Because of this, crop and products’ prices and farm incomes collapsed. I believe if the government signs this EPA, the gains achieved in the past five years will go the same way as what happened under the SAPs,“ she said.
Tom Kagwe, senior program officer at the Kenya Human Rights Commission, shared similar sentiments. “In the first two years, the effects of these trade agreements will not so much be felt. But after that, the EPAs will be worse than the SAPs,“ he warned.
The Kenya Human Rights Commission insists that the EPAs are not only an economic issue, but also a human rights issue. Kagwe warned that signing the EPA would be detrimental to economic development and lead to serious contradictions. “’From the milk provider to the person who sells yoghurt-- they will all lose their jobs.“

Toshihiko Fukui

TOKYO, Nov. 3--Bank of Japan Governor Toshihiko Fukui said global financial markets remain volatile and the central bank must implement monetary policy carefully, amid speculation interest rates won’t increase anytime soon.
Though the effect of a US housing recession on Japan has been limited, “we can’t deny the possibility of a further slowdown in the US economy,“ the governor told the fiscal and financial committee of the Parliament’s lower house on Friday, Bloomberg reported.
The central bank on Oct. 31 cut its forecasts for this year’s inflation and economic growth and left its key rate at 0.5 percent, the lowest among major economies. Fukui said on the same day that risks for Japan are increasing amid financial--market gyrations and uncertainty about the US outlook.
Fukui said there are considerable risks that bond yields will fluctuate in either direction and the bank must consider financial-market movements when deciding policy. Global inflation warrants caution, he added.
Japan’s 10-year bonds rose, heading for the biggest gain in seven weeks, after a slide in stocks drove demand for government debt. The yield on Japan’s 10-year bond fell 5.5 basis points to 1.61 percent as of 12:49 p.m. in Tokyo.
The improvement of the corporate sector is filtering into households at a slower pace than the bank expected, Fukui said. Wage growth has also been sluggish and that may be one reason why policy makers cut this year’s inflation forecast, he said. Wages fell 0.5 percent in September from a year earlier.
Fukui said the bank still expects Japan’s economic growth to be sustained and consumer prices to resume rising. The bank needs to raise rates gradually as long as the economy and prices develop as expected, he said.
The policy board has no preset schedule for raising rates and must monitor both upside and downside risks--or the possibility that growth may slow as well as accelerate excessively, the governor said. The bank’s basic stance is to take early action, he said.
Japan’s economy will expand 1.8 percent in the year ending March 31 and 2.1 percent in the following year, policy makers said in their semiannual outlook report. They had predicted 2.1 percent growth for both years in April.

An estimated 700,000 Asians, mostly from India, Pakistan and Bangladesh, work in the UAE construction sector.

DUBAI, UAE, Nov. 3--The United Arab Emirates warned on Friday that it will get tough with firms employing foreigners in violation of labor rules after the expiry of a deadline for illegal workers to leave the country.
The labor ministry will in conjunction with the interior ministry “step up its ongoing campaign and impose stiff penalties on violators after November 3,“ the official WAM news agency quoted Labor Minister Ali al-Kaabi as saying.
He singled out companies that employ illegal residents and those that do not apply the terms of contracts signed with workers as liable to prosecution.
The minister’s warning came on the eve of a deadline for illegal workers to leave the oil-rich Persian Gulf Arab country, and followed a series of strikes by disgruntled migrant construction workers in defiance of a ban on public protests.
The UAE had given illegal workers a three-month amnesty ending September 3 to either regularize their situation or leave the country.
It then extended the grace period until November 3 for illegal residents seeking to leave but not for those who would have chosen to obtain a work permit.
The government said in September that nearly 279,000 illegal workers had taken advantage of the amnesty to either regularize their situation or decide to leave.
Kaabi said the labor and interior ministries would deploy a “large number of inspectors“ to track down violators.
An estimated 700,000 Asians, mostly from India, Pakistan and Bangladesh, work as construction workers in the UAE, where only 20 percent of the four million population are UAE citizens.
Kaabi’s remarks came at the end of a week in which laborers involved in the construction of the world’s tallest skyscraper, Burj Dubai, downed tools to demand better conditions, following a strike and reported acts of vandalism by other expatriate construction workers over poor pay and living conditions.
Thousands of migrant laborers, most of them Indian, stopped work in Dubai late last month in a rare resort to industrial action in the UAE, where strike action is outlawed.

BEIRUT, Lebanon,
Nov. 3--Debt-laden Lebanon, where mobile phone calls are among the most expensive in the world, on Friday launched the privatization of its mobile network, a process expected to be completed early next year.
Telecommunications Regulatory Authority president Kamal Shehadi and Ziad Hayek, president of the Higher Council for Privatization, told a Beirut news conference that applications for the tender must be submitted on Feb. 1, AFP wrote.
A public auction will then be staged in the presence of the media on February 21, when the highest bidders will be chosen to take over the two existing mobile phone licenses, they said. Each winning bidder will be required to create a joint stock Lebanese company, they said.
The winning bidders will then have to transfer to the government one third of the equity of the joint stock company as part of the payment of the tender.
The government will then sell shares through an initial public offering on the Beirut Stock Exchange within 12 months, with share ownership restricted to Lebanese citizens, they said.
The country’s GSM network of 1.1 million mobile phone lines is currently state-owned and operated by Kuwait’s MTC Touch and Lebanon’s Alfa, whose contracts expire in mid-2008.
Shehadi told AFP on Thursday that under the privatization plan, a third operator will own and run a third GSM license by the first half of 2008.
Mobile telephony is one of the government’s main sources of revenue, generating about $900 million annually.
The decision to sell the mobile network forms part of government plans to introduce reforms as a precondition to obtain much-needed financial assistance pledged by donors at a Paris conference in January.
Lebanon secured pledges of $7.6 billion in grants and loans to help alleviate the country’s economic woes.
Privatization will also help to reduce the cost of mobile phone calls in Lebanon. “Our local and international tariffs are among the highest in the world, if not the highest,“ Shehadi told AFP on Thursday.

WASHINGTON, Nov. 3--New IMF managing director Dominique Strauss-Kahn will be paid nearly $500,000 a year tax-free, the International Monetary Fund said Friday.
The IMF released a letter to Strauss-Kahn indicating he would be given a salary of $420,930 per year, net of income taxes, AFP wrote.
The letter said the former French finance minister would also receive “an allowance in the aggregate amount of $75,350 per annum, similarly net of any income taxes.“ The allowance, “without any certification or justification“ will “enable you to maintain, in the interests of the Fund, a scale of living appropriate to your position as managing director and to the Fund’s need for representation,“ the letter said.
The 63-year-old Fund said it was the first time that it was publishing the terms of appointment for its managing director.
Strauss-Kahn on Thursday succeeded Spaniard Rodrigo Rato at the top IMF job and pledged to restore the relevance of the institution, which promotes global financial stability, and improve its severely strained finances.
“I have been chosen for the reform and now I am going to go on building on what Rodrigo Rato did during the last years, but going further and faster to reform the institution,“ Strauss-Kahn, 58, told journalists as he arrived for his first day on the job.
His new salary exceeds that of French President Nicolas Sarkozy, which French lawmakers voted this week to more than double to $346,000 a year. Sarkozy, who promoted Strauss-Kahn for the IMF post, has been in office five months.
US President George W. Bush also draws a smaller salary than Strauss-Kahn, records filed in April with tax authorities showed. Bush earned a presidential paycheck of 400,000 in 2006, and that he paid $186,000 in taxes. The president’s total income, including investments, was $642,000.
The new IMF chief’s salary and allowance will be adjusted on July 1 of each year beginning in 2008 by the percentage increase of the consumer price index in the Washington metropolitan area, the Fund said.
He also will be reimbursed for expenses including first-class travel and receive an IMF pension for life after leaving the Fund, the letter added.