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Timothy Geithner was sworn in as U.S. Treasury secretary, putting him at the center of a global effort to arrest the financial crisis and end the country’s longest recession in a quarter-century.

After two hours of debate, the Senate voted 60-34 in his favor, the closest post-World War II margin for a Treasury secretary. Geithner, 47, overcame opposition from Republicans who objected that he underpaid federal taxes in previous years. Four Democrats also voted against him.

Geithner, who had been president of the Federal Reserve Bank of New York since 2003, inherits the worst economy in decades, a record budget deficit and a financial system reeling from $1 trillion in writedowns and losses.

“He’s seen the crisis unfold,” Senate Majority Leader Harry Reid said during two hours of debate before the vote. “He’s uniquely suited to know the difference between what has worked and what has failed.”

Geithner’s confirmation opens the way for the New York Fed to name his successor as president of the central bank’s main liaison with Wall Street. William Dudley, the New York Fed’s markets director, is the leading contender, according to people familiar with the deliberations. An announcement may come as soon as tomorrow.

Stimulus, TARP

Geithner’s tasks include persuading Congress to pass an $825 billion fiscal stimulus proposal, managing the second half of a $700 billion bank rescue program and weighing a slate of proposals to stabilize the financial system and pull the economy out of a 13-month recession.

“We are at a moment of maximum challenge for our economy and our country,” Geithner said at his swearing-in ceremony, with President Barack Obama attending and Vice President Joe Biden administering the oath of office. “Our agenda is to move quickly to help you do what the country asked you to do.”

Geithner will announce Obama’s strategy for stabilizing financial firms “soon” after Senate confirmation, Lawrence Summers, director of the White House’s National Economic Council, said yesterday.

“He will be laying out the plans and principles behind our approach,” Summers said on NBC’s “Meet the Press” program.

Obama is pressing for speedy passage of a stimulus plan to cut taxes, spend more on public works and preserve or create as many as 4 million jobs.

7.2 Percent

The U.S. unemployment rate in December soared close to a 16-year high of 7.2 percent; the budget gap may more than double the last year’s record of $455 billion; and the Dow Jones Industrial Average lost 33.8 percent in 2008, the steepest annual drop since 1931.

In his written responses to lawmakers last week, Geithner said there were “no current plans” to request more financial- bailout funds, and he played down any need to nationalize U paydayloans.S. banks, without specifically ruling out the option.

“The Obama administration is committed to using the full arsenal of tools available to get credit flowing again to families and businesses,” Geithner said. “We will ensure that support under this program is directed at making credit available to support recovery.”

Geithner also has affirmed the U.S. “strong dollar” policy.

“A strong dollar is in America’s national interest,” he said last week. “Maintaining confidence in the long-term strength of the United States economy and the stability of the U.S. financial system is good for America as well as our trading and investing partners.”

China’s Currency

He said the Obama administration believes China is “manipulating” its currency, a harsher tone than the Bush administration took with the country that’s the biggest foreign purchaser of U.S. Treasuries.

In a confirmation hearing last week, Geithner was also grilled on his failure to pay almost $50,000 in taxes. He accepted responsibility, saying his errors were “careless” and unintentional. He also apologized to the committee for the toll the issue has taken on his confirmation.

“Timothy Geithner is neither incompetent nor corrupt and certainly not unethical,” Orrin Hatch, a Republican from Utah, said in support Geithner’s nomination. “It’s important to note that people make mistakes.”

The Senate Finance Committee approved Geithner 18 to 5 in a vote Jan. 22.

GDP Report

Gross domestic product probably contracted at a 5.5 percent annual rate from October through December, the biggest drop since 1982, according to the median estimate in a Bloomberg News survey ahead of Commerce Department figures due Jan. 30.

“The challenges facing this new administration are formidable,” Finance Committee Chairman Max Baucus, a Democrat from Montana, said at last week’s hearing. “Our new president needs to have his Treasury secretary in place to help address these challenges.”

Before the vote on Geithner, seven of the 23 Treasury secretary nominees since 1945 have been considered under Senate roll-call tallies in which lawmakers’ individual votes are recorded, according to research from the Senate Historical Office. The average margin of support for those seven was 95-1. The rest were approved under procedures that allow for confirmation without an official vote count.

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Groups trying to pave the way for a second AmerenUE nuclear plant in Missouri have a new weapon in Jefferson City — a top lobbyist for environmentalists.

Irl L. Scissors, who previously represented a leading Missouri environmental and conservation alliance, last week announced in an e-mail to leaders of that group he was going to work to help undo the law that prohibits utilities from charging customers for power plants under construction.

Scissors, 38, is a one-time policy adviser to former Missouri Democratic Gov. Bob Holden. Today, he heads his own firm, ILS Consulting LLC. As a lobbyist, he has represented environmental and conservation groups for more than three years, and has helped advance legislation encouraging greater use of renewable energy and tighter regulations of factory farms.

He declined to comment on his decision to help facilitate another nuclear plant in central Missouri.

AmerenUE filed an application last year with the U.S. Nuclear Regulatory Commission to build a second reactor next to its Callaway plant outside Fulton, Mo. The St. Louis-based company said it won’t make a decision whether to build the plant until 2011 but submitted the paperwork to the NRC to be eligible for federal loan guarantees.

The utility also has been working for months to undo a ban on so-called Construction Work in Progress charges, saying it cannot build another nuclear plant unless it is allowed to charge customers during the five-year construction period.

Thursday, Sens. Delbert Scott, R-Lowry City, and Frank Barnitz, D-Lake Spring, filed legislation that would repeal the CWIP ban.

Consumer groups argue that repealing the law isn’t necessary and have urged regulators to initiate meetings to discuss how the project — if it goes forward — would be financed.

In Scissors’ Jan. 14 e-mail, obtained by the Post-Dispatch, he said he decided to help repeal the CWIP law after hearing from legislators that there would be little opposition over environmental concerns.

"Knowing the economic and political climate of the country and Missouri, I do not feel the effort to stop CWIP is viable and I am not comfortable leading this effort in Jefferson City," he wrote. Scissors and Missouri Votes Conservation lobbyist Kyna Iman have "never run into a buzz saw like this," he said.

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While it’s not unusual for lobbyists to leave one client for another, Scissors’ sudden defection after the legislative session has begun caught environmental leaders off-guard same day payday loans.

It’s a "huge, unfortunate surprise," said Kathleen Logan Smith, executive director of the Missouri Coalition for the Environment. She declined to comment further.

Mark Haim, co-founder of Missourians for Safe Energy, a Columbia-based group opposed to nuclear power, said he didn’t know Scissors well enough to comment on his move.

"I do know that taking us down the path of nuclear power would be a profound mistake for Missouri," he said.

Scissors, in the e-mail, argued that his new position will give him a voice on the issue in Jefferson City, and that greater reliance on nuclear power along with renewable energy can help displace older coal-fired power plants.

Missouri’s CWIP law has been in place since voters approved it by a 2-1 ratio in 1976. These days, environmentalists and anti-nuclear groups have set as a key legislative priority to protect the law from being undone. They have established Missourians for Fair Electric Rates and established a separate website, NoCWIP.org.

Scissors is the only lobbyist registered to represent Missouri Conservation and Environment Alliance, according to the state Ethics Commission. The alliance was created in 2007 to establish a bigger presence in Jefferson City. Members include Audubon Missouri, the Conservation Federation of Missouri, Missouri Coalition for the Environment, Missouri Parks Association, Missouri Sierra Club and Missouri Votes Conservation.

House Speaker Ron Richard, R-Joplin, has indicated that repealing the CWIP ban is part of his job-generation agenda, even though Ameren is still two years from making a firm decision and construction work probably wouldn’t begin until a year or two after that.

Richard, however, bristled at the thought that Ameren was using its financial might to get its way. The company’s political action committee and various executives contributed more than $300,000 to Missouri lawmakers in the most recent election cycle after a couple of years of very little political giving.

"I don’t care if they give me a dollar or a million dollars," Richard said. "If you can’t take their money and eat their chicken and say no, you’ve got no business being around here."

AmerenUE declined to respond when asked whether the company was helping organize the coalition to repeal the CWIP law, even though the utility would be the biggest benefactor. According to Scissors’ e-mail, the group includes utilities and other businesses, organized labor and "faith-based groups."

The utility also has not provided a detailed cost projection, but it has estimated that it would generate 2,500 temporary construction jobs and 400 permanent jobs.

Tony Messenger of the Post-Dispatch contributed to this report.

jtomich@post-dispatch.com | 314-340-8320

kmcguire@post-dispatch.com | 314-340-8250

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Blackstone Group () has invested more than $730 million in India since arriving three years ago, only to see much of it wiped out by the country’s weakening economy and stock market plunge.

Blackstone’s tough start in India is a cautionary tale to other Western private equity firms such as Kohlberg Kravis Roberts & Co. and Permira that are opening offices in Mumbai.

If newcomers weren’t already wary of India’s foreign investing rules, which forbid borrowing and set a purchase price range, certainly Blackstone’s performance so far may give them pause. Entrenched firms, too, are likely to wait before pouncing.

Blackstone is not the only private equity firm watching its Indian investments take a hit, as Warburg Pincus can attest.

But unlike Warburg and other private equity players, Blackstone is relatively new to India. It hasn’t been there long enough to sell stakes to balance losses with gains.

What’s worse, it appears to have done most of its eight Indian deals at the very top of the market.

Blackstone says it remains a long term investor in India.

“Short-term capital market volatility does not alter our investment thesis nor does it impact our commitment to an investee company,” Blackstone India head Akhil Gupta said in an email reply to questions about the portfolio payday advance.

“We are long term investors who are focused on adding value to portfolio companies over long periods of time.”

New York-based Blackstone, one of the largest private equity firms in the world, launched plans to expand in Asia in 2005, choosing India as its first destination after hiring Gupta from Reliance Industries () to run the Mumbai-based team.

India’s economy, despite a slowdown, is still growing significantly. Companies and infrastructure projects are hungry for foreign capital. Foreign money is attracted to future growth prospects and the ability to buy into assets on the cheap.

The broader Indian market fell 52 percent last year, its sharpest annual fall after a five-year bull run that saw the benchmark rise six fold.

How quickly the economic climate stabilizes is up for debate.

BLACKSTONE IN INDIA

Shares of Nagarjuna Construction () have fallen 71 percent since Blackstone agreed to invest $150 million in August 2007. Garment maker Gokaldas Exports () has also lost 71 percent of its value since Blackstone inked a deal that same month for $165 million. 

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Mexico’s central bank will probably reduce its benchmark interest rate for the first time in more than 2 1/2 years to help bolster the country’s slumping economy.

The bank’s five-member board, led by Governor Guillermo Ortiz, will cut the lending rate a half percentage point to 7.75 percent, according to 14 of 27 economists surveyed by Bloomberg. Eight analysts expect a quarter-point decrease, one foresees a full point cut and four economists say the bank will keep the rate unchanged.

Lower rates may give a boost to Mexico’s economy, which Ortiz has said will probably contract this year because of the global financial crisis. The bank has room to cut without concern it will spur inflation because weakening consumer demand, and a government plan to trim energy costs, will moderate price increases, said Alfredo Coutino, a senior economist for Latin America at Moody’s Economy.com.

“The prospects for inflation have improved tremendously,” said Coutino, who is based in West Chester, Pennsylvania. “There is a high probability the central bank will start to relax monetary policy.”

Ortiz said Jan. 12 that Mexico’s gross domestic product will probably shrink in 2009 and that the government’s plan to reduce energy costs would allow the bank to adopt a monetary policy that “helps to mitigate the drop in economic growth.”

Lower interest rates can help prompt businesses to invest and consumers to buy on credit. Cheaper loans also can spur inflation by strengthening demand. The bank hasn’t cut rates since April 2006.

Price Freezes

On Jan. 7, President Felipe Calderon announced that state oil and power companies would freeze gasoline prices, reduce heating gas costs and lower electricity rates for some industries as part of a financial stimulus package. The initiative on energy costs will help slow inflation to about 4 percent by the end of 2009, said Fernando Losada, an economist at Deutsche Bank Securities Inc payday loan. in New York.

Still, policy makers may be hesitant to cut rates on concern that inflation, already at a seven-year high, won’t cool. Prices climbed 6.53 percent in December from a year earlier as a weaker peso drove up the cost of imported goods.

Inflation concerns may prompt policy makers to keep rates unchanged or make a smaller, quarter-point cut, said Bartosz Pawlowski, a strategist at TD Securities Ltd. in London.

“Inflation is still very high,” said Pawlowski, who says a cut to 8 percent is most likely. “A weaker exchange rate means higher import prices.”

Mexico’s Economy

The economy will contract in the first half of this year as scarce credit in international markets hurts investment and smaller remittances from Mexicans living abroad damps consumption, Finance Minister Agustin Carstens said Jan. 9. The economy contracted last quarter, Ortiz said last week.

Third-quarter economic growth of 1.6 percent was the lowest in five years. The country’s manufacturing index fell to a record low in December, the sixth straight month the index showed a contraction. A government report last week showed the economy, as measured by the country’s global economic indicator, shrank 0.9 percent in October.

Calderon’s stimulus plan, which includes increased infrastructure spending and unemployment benefits, will add 120 billion pesos ($8.6 million) to the economy, or about 1 percent of gross domestic product, Miguel Messmacher, the Mexican Finance Ministry’s chief economist, said Jan. 7.

“The Mexican economy is already in recession and the recession is going to deepen,” Pawlowski said. “There will be scope for rate cuts at each and every meeting from now on.”

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Outgoing Wal-Mart CEO Lee Scott said the recession may have caused a "fundamental change" in the incessant shopping habits of Americans - which will hurt retailers but will benefit society as a whole.

Scott, citing his recent meeting with young shoppers, said many had given up eating out, going to the movies and shopping.

"Everyone has given up something and said how good they felt about it," he said. "I think in some ways it is healthy [for society], even though for us retailers it’s not good."

Scott’s remarks Monday were part of his keynote speech on the second day of the National Retail Federation’s (NRF) four-day annual convention of retailers and suppliers in New York.

Scott also said the first half of 2009 will be "extraordinarily challenging," although he’s confident that the government’s efforts to stimulate the economy will help.

"We’ve all just lived through a tough Christmas. There are big issues facing retailers and the country as a whole," Scott said in what he termed as his "last public speech."

"We need bold decisive action to get the economy moving again and I am confident that the stimulus plan to pump liquidity into the economy will make a difference," he said.

But the turnaround in the economy isn’t likely to happen anytime soon, he warned fast payday loan.

"I think the first half of the year will be extraordinarily challenging," he said. "The second half, [we’re] hoping will be better, if only modestly."

In this environment, he said retailers need to have accurate understanding of customers’ needs and tightly control their inventory.

Scott, who ends his 10-year tenure as Wal-Mart CEO on Jan. 31, was also asked about key lessons he’s learned in his 30 years with the company.

"The big one is that you have to hire people who are better than you are and you have to give them credit," he said.

As an example, he cited Wal-Mart’s $4 generic drugs program that was launched in 2006.

"What it’s done for Wal-Mart and the country is incredible," he said. "But I had nothing to do about it. But I so much wanted to take credit for it."

"If you surround yourself with people better than you are, it’s extraordinary what can happen," Scott said.

"On Jan. 31 when I turn off the light, I believe (Wal-Mart founder) Sam Walton will be proud of me and what my team has accomplished," he added. 

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India’s Satyam Computer faces a crisis of “unimaginable proportions,” its interim chief executive said a day after the chairman revealed profits had been falsely inflated for years.

Chairman Ramalinga Raju resigned on Wednesday in India’s biggest corporate scandal in memory, after saying that about $1 billion, or 94 percent of the cash and bank balances on the company’s books at end-September did not exist. The company’s shares plunged nearly 80 percent.

The scandal, which some analysts dubbed “India’s Enron” after the collapsed U.S. energy firm, has cast a cloud over foreign investment in Asia’s third-largest economy and over its once-booming outsourcing sector.

It may also increase investors’ nervousness about weak corporate governance and oversight in emerging markets, which are reeling from the global financial crisis.

Interim CEO Ram Mynampati said on Thursday that Satyam, India’s fourth-largest software company, had contacted its top 100 customers, who account for almost 80 percent of revenue, and had received expressions of support.

Satyam specializes in business software and back-office services for clients such as General Electric and Nestle.

“Our only aim at this time is to ensure that the business continues,” Mynampati said at a media conference on Thursday.

Mynampati said the liquidity situation was “not very encouraging now,” but added Satyam had healthy receivables and would be able to deal with obligations this month.

There is little chance of Satyam being bought by another company given the scandal and losses from potential law suits, ABN Amro analysts said in a report, calling its cash position “precarious fast cash.”

A team from the Securities and Exchange Board of India arrived at the company’s headquarters in Hyderabad in southern India on Thursday to search for clues on how the fraud could have been hidden for so long.

Satyam was assessing Raju’s revelations of overstated revenues and fictitious assets, and many actions against him were possible, Mynampati said, but the company had not yet lodged a complaint with authorities.

“The government will take all necessary action to ensure these types of scandals do not take place again. Whatever steps could be taken will be taken,” Corporate Affairs Minister Prem Chand Gupta told Reuters late on Wednesday.

Satyam employees shuffled into its Hyderabad office as usual, refusing to speak to reporters outside the gates.

The chief financial officer had not reported to work, citing personal reasons, but was assisting with required information, Mynampati said. He added the CFO had submitted his resignation on Thursday, but it had not yet been accepted by the board, which will meet on January 10.

The government has asked the registrar of companies in Hyderabad to file a report, while the stock market regulator has ordered a probe into trading in the company’s shares. 

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About the only winners in the worst stock market since the Great Depression were discount retailers and the brewers and tobacco growers that were boosted by takeovers.

The two stocks in the 30-member Dow Jones industrial average that rose were Wal-Mart Stores Inc., the discount retailer, and fast-food giant McDonald’s Corp. Fast Retailing Co., the operator of Japan’s Uniqlo discount clothing stores, soared 63 percent. St. Louis-based Anheuser-Busch Cos., the owner of Budweiser beer, jumped 31 percent, but only after InBev NV agreed to acquire it to create the world’s biggest brewer. UST Inc. surged 27 percent after Altria Group Inc. offered to buy the snuff and cigar company.

Only 8 percent of the 1,693 stocks in the MSCI World index of 23 developed markets defied last year’s rout, after more than $1 trillion in bank losses and writedowns at the world’s biggest financial companies caused the first simultaneous recessions in the United States, Europe and Japan since World War II. About 80 percent of the companies that sell consumer staples, the category that includes beer makers and chain stores, retreated.

"Even the classic defensive stocks didn’t do their job." said John Wilson, co-director of equity strategy at Morgan Keegan & Co., which manages $120 billion in Memphis, Tenn.

More than $30 trillion was erased from equity markets worldwide in 2008. The Standard & Poor’s 500 index tumbled 38 percent.

Twenty-eight national benchmarks lost more than half their value, led by the 67 percent drop in Russia’s Micex index, a 66 percent retreat in China’s CSI 300 index and a 52 percent decrease in India’s Sensex index. The U.K.’s FTSE 100 index posted the smallest decrease among the world’s 20 biggest markets, slumping 31 percent.

The MSCI World Consumer Staples index fell 25 percent, even with gains by Anheuser-Busch, UST and discount retailers.

Anheuser-Busch rose to $68.58 from its 2007 close of $52.34 before its purchase by Leuven, Belgium-based InBev in November faxless cash advance. The merger created a brewer with more than 200 brands including Budweiser, Stella Artois and Beck’s.

UST of Stamford, Conn., closed at a record high of $69.38 on Wednesday, boosted by Richmond, Va.-based Altria’s $69.50-a-share offer. UST reported third-quarter profit in October that fell less than analysts estimated as promotions helped sales of its top-selling Copenhagen and Skoal brands.

Discount stores increased on speculation consumers will seek out bargains as economies slow around the world. Fast Retailing, based in Japan’s Yamaguchi prefecture, said November sales at Uniqlo stores open at least 12 months jumped a record 32 percent.

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Wal-Mart’s same-store sales climbed 3.4 percent in November and may have risen almost 3 percent in December, according to the Bentonville, Ark.-based company. Oak Brook, Ill.-based McDonald’s, the world’s largest restaurant company, said global sales expanded 7.7 percent in November after promotions of $1 double cheeseburgers and coffee.

Wal-Mart shares gained 18 percent in 2008, while McDonald’s rose 5.6 percent.

"People are going to cut back where its easier to cut," said Jeffrey Schappe, who helps manage $16 billion as chief investment officer at BB&T Asset Management Inc. in Raleigh, N.C. "But they still have to buy groceries and clothing, and with clothing they’ll buy clothes that are less trendy and more of a value."

With reporting by Adam Haigh in London.

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