Moody's Investors Service has cut various ratings on UBS AG (UBS) pointing out the significant challenges the company continues to face in its Investment Banking and Wealth Management businesses.  Moody's has downgraded the bank financial strength rating and the long-term debt and deposit ratings of UBS AG. The bank financial strength rating was lowered two notches to C from B-, while its deposits and senior debt ratings were lowered to Aa3 from Aa2. The ratings for senior subordinated debt were slashed to A1 from Aa3. The outlook for all ratings is negative implying that further downgrades are possible over the next 12 to 18 months.   Moody’s has expressed its concern over the loss of customer confidence, which is reflected by the ongoing net fund money outflows in the wealth management business. Also a number of key employees have left the organization that resulted in a significant ...

UBS AG (UBS) intends to close its relationship with the Swiss government by purchasing its toxic assets back from the bad bank deal and hopes to turnaround by next year. With the recent rebound in the credit markets, the company believes that it could add back its assets to its balance sheets. However, this would not be possible before the second half of 2010. UBS AG is engaged in a fight with FINMA, Switzerland’s financial independent supervisory authority over its plan to opt out of the bad bank scheme. Under the bad bank scheme, the company incurs hefty charges for protecting against huge losses on toxic assets. However, FINMA has ruled out such possibilities in the midst of the current unstable market. Though the Swiss government sold its 9% stake in UBS last month, around $23.5 billion of UBS assets are there in the government’s bad bank....

On Wednesday, the US and the Swiss governments officially signed the new dual tax treaty which represents an important development for the Obama administration’s endeavor to fight international tax evasion.

The Swiss government has agreed to the international standard on exchange of data. The treaty calls for compulsory arbitration in some tax cases. It also demands changes in the dividend treatments when a pension or retirement fund holds shares.

The US government pursued a tax evasion case against UBS AG (UBS), which was settled last month with the Swiss bank agreeing to provide account details of its 4,450 American clients who allegedly evaded taxes.

Over the years, Swiss banks have enjoyed large foreign deposit inflows as its domestic tax system emphasizes extreme confidentiality. However, adoption of the Organization for Economic Co-operation and Development’s standards for tax co-operation coupled with the lawsuit between the US Internal Revenue Service and

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The United States has officially started the process of gathering account details on 4,450 American clients of UBS AG (UBS) who have allegedly evaded paying taxes. This formal request has been made after Switzerland agreed to provide the relevant client details. Over the years, Swiss banks have enjoyed large foreign deposits inflows as a result of its domestic tax system, which comprised extreme secrecy. However, the adoption of the Organization for Economic Co-operation and Development (OECD) standards for tax co-operation coupled with the lawsuit between the U.S. Internal Revenue Service (IRS) and the Swiss bank UBS led to a dilution of secrecy. Recently, Switzerland signed an agreement to share banking information upon request from France's tax authorities from January 2010. As a result, there have been huge outflows of funds as the anxious investors are eyeing a safe refuge. UBS, formed after the 1998 merger ...

A long-awaited reversal in the monumental global stock market rally since early March finally arrived last week. As the first-quarter earnings season started winding down and post stress-test capital-raising weighed on some banks, investors were faced with a slew of gloomy economic reports suggesting the recent optimism about a global recovery might have been premature.

“This week, the hard economic data remind us that the global recession is ongoing: exports remain deep in the red; retail sales disappoint; inflation still volatile on food and energy but down on year; and industrial production declines. However, the data are consistent with the story of a slowing economic decline, foretold by several ‘green shoot’ survey reports,” said Rebecca Wilder (News N Economics).

Source: Tom Toles, Washington Post.

“Less bad” economic reports provided investors with little comfort, sparking a reassessment

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Sources: Treasury considers more mortgage-modification incentives Providing cash payments to holders of second-mortgage liens is among the options being considered by the U.S. Treasury to encourage lenders to modify mortgages as an alternative to foreclosure, sources said. Incentives for “short sales,” in which the lender gets some money but less than the full amount due under the loan, are also being discussed, the sources said. Reuters (21 Apr.)

European, U.S. banks face steep funding needs, IMF says To return to capital levels similar to those immediately before the financial crisis, banks in Europe and the U.S. must raise $875 billion in equity, the International Monetary Fund said. The IMF’s Global Financial Stability Report delves ...

Three-quarters of the world consists of water, but growing populations, higher living standards, and global climate change have more than a few analysts worried that there still may not be enough to go around.

In fact, water shortages are erupting around the world, from San Diego to Riyadh.

Hundreds of farm workers and locals from all parts of California took to the streets last Thursday as part of a four-day march to protest federal cutbacks in water supplies.

“This is ground zero,” Mario Santoyo, an adviser to the California Latino Water Coalition, told the New York Times. “There’s a human tragedy going on here, and we need water.”

The state of California projected in March that, because of a drought in the state’s Central Valley, as many as 23,700 full-time workers would lose their jobs, and farmers would lose up to $477 million in revenue, The Times

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My son, Kenji, was only three years old when I took him to Disneyland. And his favorite two rides were Dumbo the Flying Elephant and It’s a Small World. I swear, I had to listen to my son sing It’s a Small, Small World a couple hundred times over the next week. Walt Disney was a visionary in many ways. And he really nailed the concept of a shrinking world. But while he may have been thinking about a shrinking world in social terms, the global economy has been shrinking at a pace that even Disney couldn’t have foreseen. The World has become One Interdependent Global Economy The Group of Twenty industrial countries (G-20), which met last week in London, were responsible for 85 percent of the global gross domestic product....

A Wall Street Journal article published today (1/7/09) talks about recent efforts of steel producers around the world to open up select mills, in a sign that the market for steel may have bottomed. From their mid-2008 highs, steel and iron ore prices have slipped 40% as a weakening global economy and financial crisis has slowed demand for cars, houses and other durable goods. However, there are many factors that suggest that this commodity, so heavily correlated to economic activity, may have bottomed and may gain steam in 2009.Since the decline in global steel prices, producers have been quick to cut production. Several global steel/iron ore producers such as ArcelorMittal (MT), AK Steel Holdings (AKS), BHP Billiton (BHP) and Baosteel Group have cut 2009 production by 25-30%, hoping to stem further price deterioration.Producers have been opening mills back up selectively, ...

The deteriorating global economic scene is continuing to weigh on the outlook for oil demand. And while there are other forces at play as well (the financial crisis and dollar's strength, to name just two), the shaky foundation of the commodity's demand has been the most significant factor in the roughly $100 fall in oil price since July '08.

Given this backdrop, recent projections from the International Energy Agency (IEA) and the Energy Information Administration (EIA) provide useful data points. The former is the energy watchdog of the Organization for Economic Co-operation and Development (OECD), while the latter is basically the statistical arm of the U.S. Department of Energy.

Here are some of the key points from both reports.

Both the agencies see global oil consumption falling in 2008 -- the IEA expects total global consumption to drop by 200,000 Bbl/d [barrels per day], while the EIA is looking for ...