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India’s recent rapid growth masks the fact that it still lags far behind China in terms of its economic development. Its catch-up potential remains huge, and its growth could be even faster. By Diana Choyleva and Maya Bhandari.

Bolivian president Evo Morales has taken control of foreign energy companies operating in the landlocked country. The deals give the government a majority share of the companies’ revenues, generated by the second-largest natural gas reserves in Latin America, behind Venezuela. According to Morales, this nationalization process, begun in May with the petroleum industry, “will continue [in 2007] with the recovery of other natural resources benefiting the Bolivian people”.

Alongside the announcement that it was raising its key interest rates by 25 basis points last month, the European Central Bank released the latest set of growth and inflation forecasts prepared jointly by the staff of the ECB and the euro area national central banks. ECB president Jean-Claude Trichet is always at pains to emphasize that these “projections” – which are shown as ranges, rather than point estimates, to reflect the uncertainties associated with past forecasting errors – are published on the responsibility of the staff and are not formally endorsed by the ECB’s executive board or its governing council.

At the start of December, Ford Motor Co grabbed a liquidity lifeline with its first ever secured loan facility. All manufacturing and auto assets, plus some or all of its subsidiaries, are included. The move structurally subordinates unsecured debt holders, particularly in FMC, prompting one-notch downgrades to triple Caa1 for FMC from Moody’s, and to B from Fitch and a two-notch move from S&P to CCC+. Ford Motor Credit remains in Single B territory.

The May-June 2006 markets crunch was a dress rehearsal for liquidity implosion. And, in an alarming trend, the Eurasian savings glut is increasing, sustaining Goldilocks short-term but aggravating the potential global demand deficiency. Charles Dumas argues that a hard landing followed by poor recovery is the natural consequence of the glut.

M&A and capital expenditure needs likely to drive more deals.

In its financial stability review in December, the European Central Bank suggested the introduction of an international register containing information on the exposure of firms to highly leveraged institutions, such as hedge funds and prime broker banks. The register would provide prime brokers with frequent and aggregated risk information on the whole portfolio of an individual hedge fund, says the report. However, the report adds, it’s a little bit complicated and might be best left to some of the existing market products that collect reporting and flow information.

Private banks have never had it so good. Every region in the world offers a growth opportunity. Clients want an ever-increasing array of products and services. This leads to intense competition, evident in Euromoney’s latest annual private banking survey. But is further consolidation inevitable? Helen Avery reports.

Vincenzo Pelosi explains why pension funds are catching the swaps bug.

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