Finance news. My opinion.

Exxon Mobil may be getting more than it bargained for with its recent plan to purchase natural gas giant XTO Energy.

The $41 billion deal would make Exxon the country’s largest shale gas producer, drawing more attention to a controversial area of drilling that analysts say could invite tightened federal regulations for the entire industry.

When the acquisition was announced last week, it was generally seen as a smart business move. XTO (XTO, Fortune 500) is a big player in the so-called "unconventional" gas business — specifically, gas that lies in shale rock formations.

That business is booming. It’s one of the fastest growing energy sectors in the country. But some of the shale is near major population centers, and residents near the drilling are worried about air and, especially, water pollution from the chemicals used to extract shale gas.

"A $41 billion investment is going to make anyone with an environmental eye look sooner and deeper," said Kevin Book, a managing director at ClearView Energy Partners, a Washington, D.C.-based firm that tracks political developments in the energy sector. Exxon’s (XOM, Fortune 500) entry into the field, along with interest from other international oil companies, means that shale gas has hit the big time, Book said.

The shale gas industry has been operating in relative obscurity and with minimal federal oversight: A 2005 law exempted it from the federal Safe Drinking Water Act. State regulators do the policing.

Although there are air pollution and land issues associated with shale gas drilling, what most concerns people is the water. Extracting shale gas relies on a method known as hydraulic fracturing, where a huge amount of chemical-laced water is injected down the well hole to fracture the rock and allow the gas to flow out.

State regulators and the industry say the process is safe, as the gas lies thousands of feet below the water table.

But residents near the drilling, which includes much of the New York metro area, Dallas-Fort Worth, and other large population centers, fear the chemicals may contaminate the drinking water.

The federal Environmental Protection Agency has only just begun looking into the issue payday loans for bad credit.

Book said several bills in Congress include provisions that direct the EPA to study the issue more broadly, and could ultimately lead to further regulation. "These are the placeholders," said Book. "Is a change in the law coming? Probably."

Pushing up the price of clean energy

A change in regulation could result in gas companies having to pump out the injected water and removing the chemicals before disposing of it back in the ground. That could add anywhere from 8% to 30% to the cost of operating a well, said Neil Dingmann, a Houston-based analyst at Wunderlich Securities.

Yet pushing up the price of natural gas is not something environmentalists are keen to do. Natural gas is much cleaner source of electricity than coal and emits about half the carbon dioxide. Making it more expensive would only deter industries from using it, and push them toward cheaper and dirtier power sources like coal.

Exxon is so concerned about a change in the law it has a clause with XTO that allows it to walk away from the deal if Congress bans hydraulic fracturing or makes it prohibitively expensive, according to filings with the Securities and Exchange Commission. Exxon declined to comment for this story.

Dingmann also said there’s another reason Exxon may bring new attention to this type of drilling: They are a high profile company.

"It’s not the energy committee going after some company nobody’s heard of," said Neil Dingmann, a Houston-based analyst at Wunderlich Securities. "It’s big, bad Exxon."

Soon after the XTO deal was announced Chairman of the House Energy and Environment Subcommittee Rep. Ed Markey, D-Mass., issued a statement.

While acknowledging natural gas’ environmental benefits, Markey questioned the environmental safety of the drilling and raised anti-trust issues.

"I intend to convene hearings in the Subcommittee early next year so that our members can take a closer look at this proposed transaction," he said. 

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As the first decade of the 21st century comes to a close, the Denver Business Journal is revisiting some of the biggest business-news stories of the last 10 years.

Here, we look at Joseph Nacchio, the one-time hard-charging CEO of Qwest Communications International Inc. who is now serving a prison term following his 2007 conviction on 19 felony counts related to insider trading.

The story: Nacchio was an AT&T executive when Qwest — a telecom founded by Denver billionaire Philip Anschutz — named him CEO in 1996. He was granted millions of shares of Qwest stock in 1997.

In 2000, under Nacchio’s leadership, Qwest acquire the baby Bell U S West and became of the nation’s largest phone companies.

In 2001, Nacchio began selling off his shares before a write-down pushed the stock price downward. In August 2001, a class-action lawsuit was filed in federal court, accusing Nacchio and others of issuing "false and misleading" statements about the company’s financial state that had kept the stock price artificially high. Later, the Securities and Exchange Commission and the Justice Department launched probes.

In June 2002, after Qwest stock cratered, Nacchio resigned, and the company later was forced to restate three years’ worth of earnings.

Nacchio was indicted on 42 insider-trading counts in December 2005. His federal-court trial in March 2007 garnered worldwide attention.

Following his conviction and a string of unsuccessful appeals all the way to the U.S. Supreme Court, Nacchio reported to prison in Pennsylvania in April of this year.

Today: Nacchio remains behind bars while he awaits a resentencing on his original conviction, a date for which has not been set.

Click here for a roundup of DBJ coverage of this key story of the decade.

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NEW YORK–General Motors Co. said Friday it will shut down Saab after talks to sell the brand to a Dutch carmaker collapsed, marking the third time this year that a deal by GM to sell an unwanted brand has fallen through.

GM said it had a small window of time to complete the deal and issues arose during the sale talks with Spyker Cars that could not be resolved. GM vice-president John Smith said: "Like everybody, we would have preferred a different outcome, and we all worked very hard for that different outcome and we’ve come up short."

Saab employs about 3,400 people worldwide, most of whom work at its main plant in Trollhatten, Sweden. The brand has 1,100 dealers, that General Motors said will continue to honour warranties as the brand winds down.

Chris Budd, owner of Budds’ Saturn Saab in Oakville – one of three Saab dealers in the GTA – said he feels as if he’s "lost a friend."

"I’ve had the Saab franchise longer than I’ve been married," he said, having carried the brand since 1977.

He blames the recession – not GM – for its demise.

Martin Olivera, service adviser at Saturn Saab Hummer on the Queensway, however, puts the blame squarely at GM’s feet.

"Truthfully, GM destroyed Saab," he said. "They made it into an American car, not a European car."

To enthusiasts, Saab became appreciated for quirks like placing the ignition lock between the front seats. It was the first to offer heated seating in 1971 easy to get unsecured personal loans.

GM bought a 50 per cent stake and management control of Saab for $600 million (U.S.) after it split from Swedish truck maker Scania in 1989. It bought full ownership in 2000 for $125 million. But even after the GM takeover, Saab remained closely associated with Sweden and its history of making safe, reliable cars.

GM never made money on the acquisition and industry analysts complained that under GM, Saab lost its uniqueness in the crowded luxury segment.

GM first sought a buyer for Saab in January as part of its restructuring, which included plans to cut the number of its brands to four from eight. It was previously in talks to sell Saab to a consortium led by the Swedish sports carmaker Koenigsegg Group AB, but it turned to Spyker after Koenigsegg withdrew from the talks in November.

GM’s failure to sell Saab is the third deal to sell an unwanted brand that has failed this year.

In September, dealership chain owner Roger Penske scrapped plans to buy Saturn after an agreement to get cars from France’s Renault fell through. GM is now phasing out Saturn.

GM’s board last month ended a deal to sell the European Opel brand to a group led by Canadian auto parts maker Magna International Inc., fearing that Opel was too heavily integrated into GM’s global operations and that GM technology would fall into the hands of competitors.

With files from Brendan Kennedy

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The European Central Bank will lend banks more money than economists forecast in its final tender of 12-month funds as some financial institutions try to lock in cash at a record low interest rate.

Banks bid for 96.9 billion euros ($141 billion), the Frankfurt-based ECB said today. Economists forecast that it would lend 75 billion euros, the median of 23 estimates in a Bloomberg News survey showed. The cost of borrowing is indexed to the average of the ECB’s benchmark rate rather than fixed at 1 percent, as it was in the previous two tenders.

President Jean-Claude Trichet said on Dec. 10 that market conditions are “stable enough” to allow the ECB to withdraw some of the emergency measures introduced to fight the financial crisis. While the decision to index the rate on the tender will increase banks’ funding costs should policymakers raise the benchmark rate from 1 percent next year, the demand suggests the majority don’t expect an increase next year.

“Banks’ bidding behavior suggests the majority of them don’t expect a change in the policy rate during the duration of the tender,” said Klaus Baader, co-chief European economist at Societe Generale in London. The size of demand “will cause the liquidity situation in money markets to stay relaxed. Overnight and short-term money-market rates will remain very, very low.”

The Eonia overnight rate, the rate European banks charge each other for overnight loans, has declined to about 0.35 percent from 2.2 percent at the start of the year.

The euro was little changed after the announcement, trading at $1.4558 at 12:11 p.m. in Frankfurt, from $1.4538 yesterday.

Flagship Policy

The ECB has flooded markets with cash to fight Europe’s worst recession since World War II and revive lending. It lent 75.2 billion euros at its last 12-month tender in September and a record 442 billion euros in June cash till payday.

The ECB said that 224 banks bid in the latest tender, compared with 589 in September and 1,121 in June.

The 12-month loans formed one of the ECB’s flagship policies this year. The bank will also discontinue its six-month loans after March and only guarantee unlimited funding in its other refinancing operations until April 13.

‘Orderly Unwinding’

The euro-region economy’s emergence from the recession in the third quarter is helping the ECB deploy exit strategies. The central bank earlier this month forecast the economy to expand around 0.8 percent next year and 1.2 percent in 2011 after contracting around 4 percent in 2009.

Still, council members have signaled that they’re in no rush to step up efforts on withdrawing stimulus. Austria’s Ewald Nowotny said in an interview on Dec. 14 that tenders “that we didn’t mention will go on for the time being.” Germany’s Axel Weber said on Dec. 9 that the ECB will have a “process of orderly unwinding” and that the bank will reduce liquidity “slowly and step-by-step.”

The ECB began lending banks as much money as they wanted in the aftermath of Lehman Brothers Holdings Inc.’s collapse last year, effectively assuming the role of the money market. In May this year, it announced it would extend the maximum maturity on its loans to 12 months.

“The ECB was more or less successful with its measures to avoid too strong a use of the 12-month tender,” said Juergen Michels, chief euro-region economist at Citigroup in London. “That will make the liquidity drain easier in 2010.”

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Regulators closed regional banks in three U.S. states Friday, bringing the total number of failed banks this year to 133, the Federal Deposit Insurance Corp. said.

Customers of the failed banks are protected. The FDIC, which has insured bank deposits since the Great Depression, currently covers accounts up to $250,000.

In Florida, the Office of the Comptroller of the Currency (OCC) closed Republic Federal Bank, NA, and the FDIC was named receiver.

The four offices of the Miami-based bank will reopen Monday as branches of 1st United Bank, which is based in Boca Raton, Fla.

1st United will acquire all of the failed bank’s $352.7 million deposits. It will also buy $267.1 million of the $433 million worth of assets Republic Federal had on its books as of late September.

Elsewhere, state regulators in Kansas closed the six branches of SolutionsBank, which is based in Overland Park.

Arvest Bank, of Fayetteville, Ark., will assume all of the failed bank’s $421.3 million worth of deposits and will purchase all of its $511.1 million in assets. SolutionsBank branches will reopen Monday as branches of Arvest Bank.

The sole branch of Mesa, Ariz.-based Valley Capital Bank, NA, was closed by the OCC. Its roughly $41 million in deposits and $40 million in assets will be assumed by Enterprise Bank & Trust, of Clayton, Miss one hour payday loan.

The FDIC said customers of the failed banks can access their money over the weekend by writing checks or using ATMs or debit cards. Checks will continue to be processed, and borrowers should make mortgage and loan payments as usual.

An average of 11 banks have failed per month this year, and the FDIC’s deposit insurance fund has slipped into the red for the first time since 1991.

As of the end of September, the fund was $8.2 billion in the hole. But that figure includes $21.7 billion the agency has earmarked for future bank failures.

Friday’s failures of the three banks will cost the FDIC an estimated $252.1 million.

The fund is expected to move back into the black by 2012 as banks repay their insurance premiums over the next three years, which the FDIC says could raise $45 billion.

This year’s tally of bank failures is the highest number since 1992, when 181 banks failed. But the total is far from 1989’s record high of 534 closures which took place during the savings and loan crisis, when the insurance fund also carried a negative balance. 

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The developer of Tempe apartments designed and marketed for Arizona State University students says it has resolved a payment dispute and lawsuit with a construction contractor.

Chicago-based Campus Acquisitions says it has settled a $3 million lawsuit filed by contractor Nelson Phoenix LLC. Nelson claimed that Campus had not paid it for work done on the Vue on Apache.

The private development sits just east of ASU’s Tempe campus.

Campus Acquisitions Project Manager J.J. Smith said in a prepared statement the two companies resolved the $3 million dispute with mediators and “a new mutually agreeable payment amount" was established on a payment plan, Smith said payday loan.

The Vue on Apache, which opened August 2009, is one of the first privately developed and owned housing projects intended for ASU students, according to Smith’s statement.

Nelson filed a tax lien and lawsuit against Campus in late October saying Campus failed to make final payments on the private student housing next to ASU.

Calls to Nelson Phoenix LLC were not immediately returned.

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Greek Finance Minister George Papaconstantinou began the week with his office protected by baton-wielding riot police taming student protests. Now, investors have him under siege as the country’s bonds tumble.

“Things are difficult, there’s no question about it,” he said in an interview yesterday in his office overlooking Syntagma Square, the hub of downtown Athens. “It’s a very hard fiscal situation. It’s not one that’s not reversible.”

Papaconstantinou, 48, has spent much of the past week reassuring investors and European leaders that Greece won’t default on its $350 billion in debt, its banks will keep access to European Central Bank financing and Prime Minister George Papandreou understands the worst fiscal crisis in 15 years.

Greek bonds plunged to their lowest in seven months on Dec. 9 and stocks slumped after Fitch Ratings cut Greece one step to BBB+, saying Papandreou’s two-month-old government isn’t doing enough to tame a deficit of 12.7 percent of output, the highest in the European Union. A day earlier, Standard & Poor’s put its A- rating on watch for downgrade.

The yield on Greece’s 2-year bond has surged 127 basis points to 3.15 percent this week, driving it above Turkey’s for the first time.

Situation ‘Severe’

“I spent two hours on the phone with the finance minister a couple of days ago, and he understands the position they’re in,” Fitch analyst Christopher Pryce said in an interview on Dec. 9. “I am not convinced that the cabinet, even the prime minister, understand just how severe the situation is.”

European officials added to pressure on Greece. ECB President Jean-Claude Trichet said today that “courageous” action is needed to close the budget gap. Economists pointed to Ireland’s decision to cut wages for public servants, compared with Greece’s 1.5 percent pay increase for most workers.

Papandreou appointed Papaconstantinou, who holds a doctorate from the London School of Economics, after he led the socialists to victory in October elections, winning a 10-seat majority in parliament. While the party won on a platform of higher wages that contrasted with Karamanlis’s pledges for a pay freeze, Papaconstantinou was within weeks forced to publish revised figures that cast doubt over Greece’s fiscal health.

Recession

Data showed Greece’s deficit this year would be more than twice the previous government’s forecasts and four times the EU limit. Other revisions showed that, rather than being one of the few European economies still growing amid the worst global slump since World War II, Greece had been in a recession for a year.

Papaconstantinou defends his government’s strategy to reduce the deficit by more than 3 percentage points of GDP to 9.1 percent next year.

“What exactly has changed in the last 40 days to justify a downgrade?” he said of the Fitch decision installment payday loans.

Greece needs to show that it will do more than rely on optimistic revenue forecasts and one-time measures to achieve those gains, economists say.

“Political pressure is mounting for the government to start taking bold action,” Giada Giani, an economist at Citigroup Inc. in London wrote in a note to investors.

About 75 percent of the current deficit reduction plan comes from raising revenue rather than cutting spending, Deutsche Bank AG estimates. Much of that will come from a crackdown on tax evasion, a chronic problem in Greece that a series of governments have pledged to combat.

New Plan

Now after just two months as finance minister and with the rating companies circling, Papaconstantinou must design a new plan due in January to convince EU leaders that Greece is serious about cutting the deficit and deserves an extension of the 2010 deadline to get its shortfall back within the EU limit.

“Rating agencies and EU institutions will probably want to see much more structural measures than currently announced to tackle the deficit, aimed at permanently and credibly increasing tax revenues and tackling age-related soaring public spending,” Giani said.

The government will announce further deficit measures next week and is committed to cutting spending by 10 percent next year to control the shortfall, Papandreou said in an interview with CNBC in Brussels before a summit of EU leaders today. “There will be some more changes that will make this sustainable so that it’s not a one-off deal,” he said.

Risk Overblown

Nevertheless, talk of a default may be overblown because the rest of the EU would probably help Greece, says the head of the Organization for Economic Cooperation and Development.

“The question of the ratings is perhaps of less consequence than one should think,” said Secretary General Angel Gurria in an interview yesterday.

Papaconstantinou, married with two sons aged 14 and 11, says 10 years as an economist at the OECD will help him argue his case in Europe.

“You have to be able to have a presence around the Eurogroup table; you need to know what you’re talking about,” he said. “Especially because the issues have become infinitely more complicated than they have been in the past.

For now, Papaconstantinou says the force of the bond market isn’t disrupting his life as it might other people.

‘‘Actually I sleep quite well,’’ he said. ‘‘I think that’s one of the big advantages I have. I’m fairly level-headed in general and even though I do worry about things they don’t keep me up at night.”

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Chancellor of the Exchequer Alistair Darling this week may reverse a tax reduction for Britain’s richest households and will consider a levy on bankers’ bonuses in efforts to win over voters before next year’s election.

Darling said today that lowering the inheritance tax for the richest people is no longer a priority and didn’t dismiss an interviewer’s suggestion on BBC Television’s Sunday AM show that he is considering a one-time charge on bank bonuses. The chancellor is scheduled to publish a Pre-Budget Report with the tax plans on Dec. 9.

“I really can’t believe it would be the first priority of any government, at this time, to give a tax cut to the top 2 percent of estates in this country,” Darling said in the broadcast.

Darling and Prime Minister Gordon Brown are seeking to persuade voters that David Cameron’s Conservative Party, which is sticking to a similar inheritance tax plan, is siding with the rich at a time when the country is recovering from the worst economic crisis since World War II. That strategy has helped Brown’s Labour Party erode Cameron’s lead in opinion polls.

Darling said in 2007 that he would raise the inheritance tax threshold to 350,000 pounds ($578,000) from 325,000 pounds for single people and to 700,000 pounds from 650,000 for couples, starting April 2010. Cameron’s Conservatives want to abolish the tax for single people with estates below 1 million pounds and for couples with estates below 2 million pounds.

‘Lurch to Left’

“If the Labour Party wants to say don’t aspire to get on in life, then so be it,” George Osborne, the Conservative lawmaker who shadows Darling in Parliament, told the BBC program. “It’s part of their lurch to the left.”

Darling said he will not be “held to ransom” by banks threatening staff defections if their bonuses are curtailed, indicating he is considering plans to levy a one-time charge on bankers if they exploit loopholes on current bonus rules.

“We do have a veto over the package,” Darling said of government-controlled Royal Bank of Scotland Plc. “We are not going to be held to ransom by people who believe you can pay extremely large bonuses regardless of what’s going on.”

Osborne said he “wouldn’t rule out” such a charge if his party defeats Labour in the election, which has to take place before June.

An ICM Research poll for the Sunday Telegraph showed that the Conservatives are on course to obtain a majority of between 20 and 25 seats in the 646-seat House of Commons. A ComRes Ltd. survey Dec. 1 showed that the U.K. may be heading for a so- called hung Parliament, with Cameron leading Brown by 10 percentage points, down 3 points from October.

‘Party of Rich’

A YouGov Plc poll in today’s Sunday Times showed that more than half of the 2,000 people interviewed viewed the Conservatives as the party of the rich. Cameron said Brown had been “spiteful’ in his efforts to tell voters of his privileged upbringing and elite schooling.

Darling today stepped up the attack, saying Osborne’s plea to voters to endure tougher times isn’t consistent with tax cuts for the rich.

Darling said this week’s budget statement will spell out some detail on how he plans to implement his pledge to reduce the deficit by as much as half over four years. In April, the budget suggested the chancellor would have to find as much as 60 billion pounds to achieve this.

Darling has already announced tax increases that will account for about one-quarter of that amount, and has earmarked about 9 billion pounds by cutting waste in government departments, leaving him the challenge of finding a further 40 billion pounds by reducing government spending.

NHS Program

Darling told the BBC today that he will scrap a 12.4 billion-pound computer program for the National Health Service that is being developed mainly by iSoft Plc. Similar reductions, rather than staff cuts in schools and hospitals, would indicate “the direction of travel” in this week’s report, he said.

“The NHS had quite an expensive IT System and I don’t think we need to go ahead with it now,” he said.

Brown said yesterday in his weekly podcast that a plan to move more government services online would save about 400 million pounds a year.

Darling’s view is that the economy is too fragile to take more steps to repair the 175 billion-pound deficit this year, a Treasury official said this week. Darling will challenge the Labour government’s opponents to spell out their plans on what they plan to reduce, the official said.

Pound Rebounds

The pound snapped two weeks of declines against the euro last week as industry reports showed that U.K. services and manufacturing industries expanded in November, indicating that the recovery is taking hold.

Darling’s approach, contrasting with Conservative Party calls to make deeper and faster cuts, won the support of two groups in London today. The National Institute of Economic and Social Research, a London-based research group that counts the Treasury and the Bank of England as clients, said Darling should keep stimulating the economy during the next few months before reducing the deficit.

The British Chambers of Commerce said the government should refrain from cutting the fiscal deficit too quickly as the nation’s economic recovery faces “major risks,”

Darling will lower his forecast for the U.K. economy this year, saying the financial crisis has inflicted far deeper pain than he predicted in April, a government official said Nov. 27. Gross domestic product will fall 4.75 percent in 2009, compared with the 3.5 percent drop forecast seven months ago, the official said. Darling said today that growth in 2010 will be “moderate.”

Treasury officials said last week that Darling will scale back his estimate for the cost of bailing out Britain’s banks to no more than 10 billion pounds, from 50 billion pounds.

The reduction in the sum set aside in the government’s accounts to pay for losses will shave about 40 billion pounds off the Treasury’s debt, now about 792 billion pounds, the officials said.

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Safeway Inc. is sponsoring a gameday area on Sunday for the Arizona Cardinals home game in Glendale.

Safeway’s Gameday Experiene includes games, video game and TVs broadcasting other National Football League games. It also features food and drink stands offering samples of tailgating fare and other products fans might buy from the grocery store.

Safeway hosted a similar event outside University of Phoenix Stadium for the Nov payday loans with no fax. 15 game against the Seattle Seahawks.

The Cards game against the Minnesota Vikings is televised Sunday night on NBC. The Safeway promotion is free and located east of the stadium. The game starts at 6:20 p.m.

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Prime Minister Yukio Hatoyama will probably unveil his first stimulus package today amid growing signs that the recovery in the world’s second-largest economy is losing momentum.

Hatoyama, who took office in September pledging to transform the economy by emphasizing quality of life over growth, is grappling with a slide in prices and a surging yen. His approval ratings have slumped, hurting the Democratic Party of Japan’s momentum ahead of upper house elections in July 2010.

He may propose spending of as much as 4 trillion yen ($46 billion) in this year’s extra budget, Finance Ministry officials familiar with the matter said. The package would come three days after the Bank of Japan offered to pump 10 trillion yen ($113 billion) into the banking system, accommodating government calls for it to do more to fight declining prices.

“Right now, the biggest threat for the economy is the strengthening yen, while deflation also poses a very severe risk,” said Yoshimasa Maruyama, senior economist at Itochu Corp. in Tokyo. “The government is mindful of next year’s election and will want to spur employment because that’s what matters to voters the most.”

The yen climbed to 84.83 against the dollar on Nov. 27, the highest since 1995, and has gained more than 5 percent in the past three months. It traded at 88.10 as of 1:18 p.m. in Tokyo from 88.26 late yesterday. The Nikkei 225 Stock Average fell 0.3 percent and has lost 3.1 percent since Hatoyama took power on Sept. 16.

Workers, Environment

The stimulus plan is about “95 percent complete,” Deputy Prime Minister Naoto Kan said at a news conference in Tokyo today. The package is likely to focus on helping small and medium-sized businesses, employment aid, and incentives to buy environment-friendly goods.

Most of the funding for spending will probably come from the 2.7 trillion yen frozen from the previous administration’s extra budget. The remainder will be tapped from reserves in so- called special accounts, or money set aside and used at the discretion of bureaucrats, Jiji Press reported this week, citing unidentified ruling party officials.

Finance Minister Hirohisa Fujii said this week that funding for the package wouldn’t come from bond sales, assuring investors that the measures won’t exacerbate a public debt burden that’s the largest in the industrialized world.

The yield on the benchmark 10-year bond fell to 1.19 percent on Dec. 1, the lowest since January. It was unchanged at 1.27 percent today.

Support for Policies

While Hatoyama’s popularity has slipped, it remains high enough to win support for his policies, and he benefits from voter disgust with the way the Liberal Democratic Party managed the economy before its ouster in August, said Jeff Kingston, director of Asian Studies at Temple University in Tokyo payday loan.

“People are well aware that the DPJ was handed the poisoned chalice of an imploding economy and the mother of all fiscal messes,” Kingston said. “The shifting of stimulus spending away from roads and bridges to nowhere to social welfare spending, environmentally friendly products and child subsidies, plays very well here.”

Hatoyama’s approval ratings fell five percentage points from the previous month to 68 percent, according to a Nov. 30 survey by Nikkei Inc. and TV Tokyo Corp. The poll didn’t provide a margin of error.

Slower Growth

Gross domestic product expanded for a second quarter in the three months ended Sept. 30 after four quarters of contraction. Economists say the government will revise down last quarter’s growth from an annual 4.8 percent pace after a report yesterday showed companies cut spending a record 25.7 percent in the period.

Other figures this week showed the expansion may be weakening. Industrial production advanced at the slowest pace in eight months in October, and wages slid for a 17th month, extending their longest losing streak in six years.

Japan’s economy will probably shrink 5.4 percent this year, more than a 4.2 percent contraction in the euro area and a 2.7 percent drop in the U.S., the International Monetary Fund forecast in October.

Japanese policy makers are adding stimulus programs just their counterparts around the world consider how to withdraw them as the global economy recovers.

The Bank of Japan’s lending program will offer three-month loans at 0.1 percent interest. In a meeting with central bank Governor Masaaki Shirakawa two days ago, Hatoyama applauded the move and refrained from pushing for further monetary easing.

Revive Demand

Economist Akiyoshi Takumori says those measures won’t spur growth unless the government does more to revive demand.

“There needs to be support for the private sector,” said Takumori, chief economist at Sumitomo Mitsui Asset Management Co. in Tokyo. “The BOJ’s new 10 trillion yen program will be useless unless companies want to invest in plant and equipment.”

Businesses and workers have called for government action. Fujio Mitarai, head of the country’s largest business lobby, said last week that Japan needs to take “urgent steps” against the yen’s advance. Nobuaki Koga, head of the Japanese Trade Union Confederation, met Hatoyama on Dec. 2 to ask for “bold and aggressive” measures.

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