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ATLANTA — Discount carrier AirTran Airways says it would be willing to discuss a codeshare agreement with larger rival Southwest Airlines Co.

"If Southwest was willing to talk, we’d certainly be willing to listen," AirTran Chief Executive Bob Fornaro told analysts on a conference call Thursday.

Codeshare agreements allow airlines to sell seats on each other’s planes.

Fornaro said AirTran and Southwest, to date, have not discussed the idea. He added in an interview with The Associated Press, "We’ll see what the future brings."

A Southwest spokeswoman, Beth Harbin, declined to comment on Fornaro’s remarks.

Calyon Securities analyst Ray Neidl said "crisis breeds strange bedfellows and the current economic malaise may be the incentive for them to do something even though they are competitive in some markets."

Dallas-based Southwest currently does not serve Atlanta, home to the world’s busiest airport. AirTran, a unit of Orlando, Fla.-based AirTran Holdings Inc., has its hub in Atlanta.

AirTran also serves several major cities in the Northeast that Southwest does not fly to. Southwest, on the other hand, has much larger scale than AirTran throughout the U.S. AirTran could benefit from that scale if the two were to ink a codeshare agreement, Fornaro said.

"We would be much more interested at this point in time than perhaps two or three years ago," Fornaro told AP.

Fornaro said AirTran has developed the ability with its reservation system over the last several years to accommodate a codesharing arrangement if it chose to proceed with one internet payday loans.

In July, Southwest announced its first international codesharing deal, with Canadian low-fare carrier WestJet Airlines Ltd. Details of the arrangement have not been disclosed, but Southwest jets will not go to Canada; WestJet planes will fly over the border to U.S. cities served by Southwest.

Southwest CEO Gary Kelly has also said the airline would like a similar agreement to connect passengers to Mexico and the Caribbean by late 2009, and to Europe and beyond in later years.

Southwest is also looking for a new partner to offer Hawaii flights. Southwest sold seats to Hawaii until partner ATA Airlines filed for bankruptcy and stopped flying.

AirTran does not serve Hawaii, but the airline will launch service to Cancun, Mexico, on Feb. 25.

Persistently high fuel prices have hampered the entire industry. Even with the recent steep decline in oil prices, fuel prices are still high by historical standards, and the worsening economy has raised concern among some carriers that demand for air travel could weaken heading into next year.

Like other airlines, AirTran has cut capacity, shed jobs, implemented new fees and made other changes to deal with high fuel costs.

Currently, several carriers say that advance bookings show their planes are expected to be as full as or fuller than a year ago over the late fall and winter holidays in part because they have taken so many seats out of planes.

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Malaysia's central bank pledged it will take action to prevent the economy from deteriorating after keeping the benchmark interest rate unchanged for the 20th straight meeting.

“In the face of diminishing inflationary pressures, and in the event of heightened downside risks to growth, the bank will take swift monetary policy action to provide support to the economy,'' Bank Negara Malaysia said yesterday, after maintaining the overnight policy rate at 3.5 percent.

The decision contrasts with cuts by central banks in China, India and Australia, which have lowered borrowing costs in recent weeks to spur growth amid a looming global recession. Malaysia's inflation has started to ease from a 26-year high and that may give the central bank room to reduce interest rates should the economy slump.

“Bank Negara will look to ease policy, possibly as soon as the next meeting, especially if the growth risks become clearer and inflation risks diminish,'' said Mark Tan, an economist at Goldman Sachs Group Inc. in Hong Kong. “The main factor that will influence future rate decisions would be how fast they expect the growth outlook to unravel.''

Earlier this year, the central bank had held off from raising rates to cool inflation as challenges to Prime Minister Abdullah Ahmad Badawi's leadership threatened to hurt consumer confidence and economic growth. Opposition Leader Anwar Ibrahim, who had said he wanted to topple the government by September, said this week that goal is now harder to achieve.

Inflation Peaks

The Malaysian ringgit is the fifth worst performer among 10 Asian currencies, according to Bloomberg data. It has fallen 7.5 percent against the U.S. dollar this year, compared with a 6.7 percent gain by the Chinese renminbi and a 34 percent plunge by the South Korean won.

The central bank said yesterday inflation has peaked and risks to global growth have increased “significantly.'' Consumer-price gains slowed to 8.2 percent last month from 8.5 percent in August.

Bank Negara expects inflation to slow to below 4 percent before the second half of 2009, Governor Zeti Akhtar Aziz said last week get a free credit report. The government cut gasoline prices three times since late August as crude oil fell from a record in July.

“An increasing number of indicators now signal an easing of inflationary pressures,'' the central bank said yesterday. “Lower cost pressures and moderating domestic demand are expected to reduce inflation in 2009.''

Global Crisis

Central banks around the world are shifting their focus to supporting growth from damping inflation as the global credit crisis escalates. The turmoil has led to the collapse of banks and forced some countries to approach the International Monetary Fund for loans, while more nations are reporting a contraction in their economies, increasing the risk of a world recession.

During the 1997 Asian financial crisis, Malaysia rejected IMF money, opposing conditions on government policies that came with such loans. Malaysia imposed restrictions on foreign exchange movements in September 1998, trapping about $10 billion in foreign investment in the country, and pegged the ringgit at 3.8 to the U.S. dollar.

“The greater focus of policy makers is now toward restoring the functioning of the international financial markets and toward avoiding a sharp global economic downturn,'' Bank Negara said.

Growth Forecast

Malaysia will cut its 2009 economic-growth forecast on Nov. 4, from the current estimate of 5.4 percent, Finance Minister Najib Razak said this week.

“The slower global growth and the decline in commodity prices will affect the performance of the export sector and consequently, the overall economic growth in 2009,'' the central bank said.

Other central banks have already cut interest rates. The Reserve Bank of India lowered its benchmark by 1 percentage point on Oct. 20, while China has cut borrowing costs twice in the past six weeks.

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European Central Bank President Jean- Claude Trichet may need to show he's still inflation fighter-in- chief after price expectations soared in the wake of the bank's Oct. 8 interest-rate reduction.

Economists at Deutsche Bank AG say the ECB will slash the benchmark rate to a record low of 1.5 percent by the middle of next year from the current 3.75 percent as the euro-region economy heads into a recession. Other economists say that underestimates Trichet's commitment to combating inflation.

“We're a bit more cautious,'' said Kenneth Broux, an economist at Lloyds TSB Plc in London, who sees the key rate dropping to 3 percent. The financial crisis “hasn't solved the inflation problem.''

The bank ignored inflation at almost twice its 2 percent limit when it joined the global round of rate cuts. The five- year/five-year forward breakeven rate, the bank's preferred gauge of the medium-term inflation outlook, has jumped 14 basis points since the cut, to 2.5 percent. It wiped out almost half the decline that followed the ECB's initial October decision to keep the main rate at a seven-year high of 4.25 percent.

Trichet described the first rate reduction in five years as a “signal of confidence'' to markets. The move, which followed the worst stock-market drops since the 1987 crash, marked a shift in the bank's focus toward economic growth and away from its usual preoccupation with prices, said Dario Perkins, senior economist at ABN Amro Holding NV in London.

`Different Objective'

“It's quite clear that they have changed,'' said Perkins. “All the talk was about confidence and that's a different objective from what they had at the beginning of October.''

The ECB raised rates as recently as July.

Investors expect the ECB to lower rates by at least a quarter point on Nov. 6 and a further half point to 3 percent by February as the credit crunch hits Europe, Eonia forward contracts show.

Deutsche Bank's chief European economist Thomas Mayer expects a 1.4 percent contraction in the economy next year.

The financial crisis is fueling a debate that's smoldered since the ECB was set up in 1998 on how the central bank should interpret its mandate. While the Maastricht Treaty of 1992 sets out price stability as the ECB's “primary objective,'' the bank also has scope to support the European Union's “general economic policies'' once inflation is under control.

Change of Brief?

“The crisis is taking central banks away from their traditional mandate,'' said David Bowers, a consultant with Merrill Lynch & Co. in London. “The fact that the ECB has been forced to move comes pretty close to a change in their brief.''

Sweden's central bank today cut its lending rate for the second time in two weeks, by a half-point to 3.75 percent.

French President Nicolas Sarkozy and predecessor Jacques Chirac have led the push for the ECB to do more for growth. Even former Spanish central bank governor Luis Angel Rojo has broken with central banking convention and criticized his former colleagues, saying in an Oct. 20 interview that price stability “shouldn't be their only objective.''

“In certain situations, including the present one, they haven't given enough attention to other problems such as the decline in economic activity,'' Rojo said cash advance now.

In an interview yesterday, Spanish Economy Minister Pedro Solbes said that with the ECB's inflation ceiling “more achievable,'' the bank would give “more weight'' to the pace of growth when setting monetary policy. Finland's Finance Minister Jyrki Katainen told Bloomberg News that the European economy may take up to three years to escape recession.

Market Slump

The ECB's rate cut came as Europe's benchmark index, the Dow Jones Stoxx 600, suffered its worst week on record, dropping 22 percent. The euro has plunged 13 percent against the dollar in a month, to a two-year low yesterday, as concerns mount that the euro-region economy is slumping.

Trichet may be more comfortable with faster inflation until the current crisis abates even if he doesn't admit it, said Julian Callow, chief European economist at Barclays Capital in London. The danger is that an extended economic slump would push down prices and wages just as banks restrain the flow of credit, increasing the risk of a deflationary spiral.

“It's prudent to allow for those risks in setting the rate and therefore this implicitly means you should accept a higher inflation rate than otherwise,'' said Callow. “The ECB is tilting this way for sure.''

Trichet denies the bank has taken its eye off inflation. He argued after the rate cut that the financial crisis eased the inflation outlook, giving the ECB room to act.

Risks Materialize

“There has been a materialization of the downside risks to growth and we have to take that into consideration in all respects, and particularly as regards the influence that it has on the upside risks for price stability,'' Trichet said in New York on Oct. 14. In an interview on French radio on Oct. 19, he described the 15-nation euro area as being in a “very, very important growth slowdown.''

“Whether that means inflation is suddenly going to fall enough is highly doubtful,'' said Broux. “Unemployment is the lowest in a generation.''

While oil prices have halved in the past three months and inflation slowed to 3.6 percent in September, workers are demanding compensation for higher costs.

Germany's IG Metall labor union is seeking an 8 percent pay increase, the largest in 16 years, and workers at Ireland's Electricity Supply Board last month demanded 11.3 percent.

`Sticky' Inflation

Elga Bartsch, chief European economist at Morgan Stanley in London, said “sticky'' inflation means the ECB will cut rates less than the 275 basis points of easing in its last cycle.

She expects a reduction in the key rate to 3 percent by mid- 2009 because the central bank never completed its tightening campaign and because costlier fuel and finance have reduced the region's non-inflationary growth potential.

Cutting borrowing costs too much also risks repeating the mistake made by the ECB and the Federal Reserve earlier this decade, when rate reductions helped fuel asset-price inflation, said Gilles Moec, an economist at Bank of America in London.

“The challenge of 2009 is to cut rates sufficiently to avoid a catastrophe, but without feeding the next bubble,'' he said. “Political pressure will be extreme, so they will have to fight.''

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Michigan and Georgia lost the most jobs in September, led by a slump in employment at government agencies and manufacturers as the slowdown spread through the U.S. economy.

The count in Michigan dropped by 28,300 employees last month as government agencies eliminated 18,000 jobs and factories cut payrolls by 6,500, the Labor Department reported today in Washington. A 7,500 drop in employment at public agencies was the biggest factor behind a 22,300 decline in Georgia's job total.

The report showed payrolls shrank in 41 states, including Ohio, Florida, North Carolina and Pennsylvania — among those most hotly contested in next month's presidential election. The loss of jobs underscored why Democrat Barack Obama has gained against Republican John McCain in polls over the last month.

The unemployment rate rose in 21 states, led by a 0.6 percentage-point gain in Tennessee. The jobless rate dropped in states such as Michigan and South Carolina where payroll losses mounted as thousands of workers gave up looking for employment and left the labor force. People not in the labor force aren't counted as unemployed.

The jobless rate in Michigan, which McCain effectively ceded to Obama after pulling out his campaign staff earlier this month, was 8.7 percent in September, the second-highest in the nation. Detroit-based General Motors Corp. and Ford Motor Co., based in Dearborn, Michigan, continued firings as sales slumped.

“The economic meltdown has increased both Obama's lead and his odds of winning considerably,'' Larry Sabato, director of the Center for Politics at the University of Virginia in Charlottesville, said in an interview.

State Tally

The tally of individual state figures showed the U.S. lost 251,000 jobs last month, compared with the 159,000 drop in payrolls reported by the Labor Department earlier this month.

The state and local employment data are derived independently from the national statistics, which are typically released on the first Friday of every month. The state figures, because they come from smaller surveys, are subject to larger sampling errors, making the national figures more reliable, according to the government's Bureau of Labor Statistics.

The states also use different seasonal-adjustment factors and the timing of their surveys may differ from the national report. The state totals showed either smaller job losses or gains in payrolls from May through August compared with the national figures that showed a drop every month.

In the 12 months ended in September, Florida led all states with a 155,500 drop in payroll employment, followed by Michigan, with a decrease of 77,700, and California, with a 77,200 decline. Texas gained 247,900 jobs in the last year.

Hurricane Ike

Texas lost 4,000 jobs in September, the first decline in more than year faxless online payday advances. The decrease was due to the slowdown in U.S. growth rather than the effects of Hurricane Ike, the state said.

“September job losses in Texas reflect continued turbulence in the national economy,'' Texas Workforce Commission Chairman Tom Pauken, said in statement on the state's Web site.

“Due to the statistical formula used in our monthly calculations, the negative effect of Hurricane Ike won't begin to register until our October numbers are released.''

The report corroborates the Labor Department's statement earlier this month that it was “unlikely'' Hurricane Ike “had substantial effects'' on September's payroll figures. That indicates job losses in October may be even larger, reflecting the influence of the storm.

Florida, Ohio

In Florida, which voted for George W. Bush in the last two presidential elections, the unemployment rate has risen 2.6 percentage points in the past year to 6.6 percent. In Ohio, which every Republican who won a presidential election has carried, the jobless rate is up 1.3 percentage points to 7.2 percent.

Americans facing the worst housing slump in a generation and a deteriorating labor market saw their retirement savings implode this month as stock markets crashed. The worst financial crisis in at least 70 years forced the Republican Bush administration to buy stakes in some of the nation's largest banks.

The drumbeat of dire news has focused voters' attention on the economy. A Bloomberg/Los Angeles Times poll released last week showed that more than three-quarters of Americans say the U.S. faces a “serious economic crisis,'' and 56 percent of respondents said they were confident Obama had a plan to deal with the financial crisis. Almost half of voters said Obama would do a better job handling the market meltdown and the economy in general.

Up for Grabs

The economy has put states like Virginia, which has gone Republican in the last 10 elections, and North Carolina, which no Democrat has won since Jimmy Carter in 1976, up for grabs. North Carolina's jobless rate last month reached 7 percent, a rate not exceeded since 1984.

“Ever since things have tanked, it increased the sense in me that we need a different way of doing things.'' said Pam Doak, a 45-year-old Virginia state employee in Richmond who plans to vote Democratic. “I am concerned about job security.''

The jobless rate nationwide in September was 6.1 percent, matching August's as the highest since 2003. Economists surveyed by Bloomberg forecast it will rise to 6.4 percent by the end of this year.

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In speech after speech, presidential candidate John McCain hammers on the claim that his rival Barack Obama will raise taxes on many small businesses.

At the debate on Wednesday night, McCain said, "The small businesses that we’re talking about would receive an increase in their taxes right now."

More typically he has said: "What [Obama] hasn’t told you is that he would tax half of the income of small businesses in America," a line used in La Crosse, Wisc., last week.

Should small business owners fear for their wallets if Obama is elected? Not the vast majority, business and tax experts say.

To make its claim, according to a McCain spokesman, the campaign counts as a small-business owner any taxpayer who files a Schedule C, E or F - the forms used to report gains and losses from business ventures and farms.

Using that definition and citing IRS data, the campaign notes that "56.8% of total small business income is earned by businesses in the top two rates, which Barack Obama has pledged to raise."

It’s true that Obama has proposed raising taxes on the top two income rates.

But there are three main problems with McCain’s charge.

First, it relies on a broad definition of what counts as a small business, including everyone who files a Schedule C, E and F.

But most people who file those forms don’t run a business for a living: Those forms are also used to report income from freelance and consulting work, real-estate rentals, and most other non-salary sources.

For example, McCain and Obama both file Schedule C returns, thanks to their book royalties - but they hardly should be considered small business owners.

In 2005, there were 21.5 million Schedule C returns filed, according to the IRS.

A more realistic definition of small businesses turns up far fewer firms. The Small Business Administration estimates that there were 6 million small businesses in 2005, as measured by those with fewer than 500 employees and with staff on the payroll other than the owner.

Second, even using the broad definition of small business that McCain likes, very few owners would see their own taxes rise.

That’s because the lion’s share of taxable income comes from a small number of wealthy businesses. Out of 34.7 million filers with business income on Schedules C, E or F, 479,000 filers fall into the top two brackets, according to an analysis of projected 2009 filings by the nonpartisan Tax Policy Center.

The other 34.3 million - or 98.6% - would be unaffected by Obama’s proposed rate hike.

That includes Joe "The Plumber" Wurzelbacher, whom McCain invoked nearly two dozen times at the debate Wednesday night to illustrate the plight of the average worker and small business owner.

"Joe wants to buy the business that he has been in for all of these years … he wanted to buy the business but he looked at your tax plan and he saw that he was going to pay much higher taxes," McCain said no fax payday advance.

In an interview afterward with WTOL, Wurzelbacher acknowledged that he’d still like to eventually buy the plumbing company he works for but that he wouldn’t yet be hit by higher taxes.

"I want to set the record straight: Currently I would not fall into Barack Obama’s $250,000-plus," he said. "But if I’m lucky in business and taxes don’t go up then maybe I can grow the business and be in that tax bracket - well, let me rephrase it. Hopefully, that tax won’t be there."

Few owners are that lucky in business. In a member survey conducted late last year, the National Federation of Independent Business (NFIB) found that only 14% of respondents said they had $200,000 or more in annual income.

As Tax Policy Center fellow Len Berman recently told Fortune Small Business: "Most owners of small businesses have small incomes."

Third, even if you’re one of the rare business owners making enough money to be affected by Obama’s proposed tax increases, you still won’t see a big hike in your tax bill.

McCain’s claim that Obama "will increase taxes on 50% of small business revenue" - the line he used in the second presidential debate - is incorrect because of how income is taxed.

If a business owner falls into the top bracket, that doesn’t mean that all of his or her income is taxed at the highest level.

For example: If a small-business owner makes $210,000 in taxable income, he edges into the 33% bracket, one of the two top tax rates that Obama would like to raise.

But he would pay the higher tax only on the amount that exceeds the cutoff - in 2007, the two top tax rates applied to single filers with income of $160,850 or more and joint filers with income of at least $195,850. As a single filer, this business owner would see his federal taxes increase $1,475 under Obama’s plan, which calls for raising the 33% tax rate to 36%.

"While Obama does favor raising the top two rates, the quote is not true because not all the small business income of those in the top two rates is taxed at the 33% and 35% rates," said Gerald Prante, a senior economist at the nonpartisan Tax Foundation.

The bottom line: McCain’s claim only works by using an overly broad definition of what counts as a "small business" - and even with that definition, fewer than 2% of business owners would be hit by Obama’s proposed rate increase. For those who are affected, the increase would be levied only on a part of their earnings, not all of them.

CNNMoney.com writer Emily Maltby contributed to this report. 

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The European Union's 1.1 trillion euro ($1.5 trillion) plan to bail out the region's banks may have come too late to keep the euro's biggest drop on record from getting worse.

While leaders of the 27-nation EU agreed in the past two days to guarantee bank loans and take stakes in lenders, currency strategists and investors say the actions may not prevent the region's economy from slowing. Morgan Stanley predicts a decline in the euro to $1.25 by 2009, from $1.37 today and $1.60 in July, and strategists at BNP Paribas see weakness after “some support in the near term.''

“The euro was overbought, over-owned, over-rated and overvalued,'' said Stephen Jen, the global head of currency research at Morgan Stanley in London. Jen correctly predicted in July that the euro would slump just as it began to weaken 15 percent. “The strategic view has to be that a global recession will keep seeing the euro sold off.''

As recently as April, economists at the National Bureau of Economic Research in Cambridge, Massachusetts, predicted the euro would overtake the dollar as the world's reserve currency. The outlook isn't so bright now because the region's economy is forecast to slow more than the U.S. and Europe's interest rates have further to fall.

EU government leaders failed before the weekend to agree on a plan to rescue financial institutions from the seizure in credit markets that caused the Dow Jones Europe Stoxx Banks Index to tumble 55 percent between the start of September and Oct. 10. The Oct. 12 pact came more than a week after the U.S. set its own rescue plan in motion.

`Concrete Measures'

“We need concrete measures, we need unity, which is what we achieved,'' French President Nicolas Sarkozy said at a press conference on Oct. 12 at the Elysee Palace in Paris. “None of our countries acting alone could end this crisis.''

European leaders agreed to back new bank debt and use taxpayer money to keep distressed lenders afloat, trying to stop the worst rout in Europe's stock markets in two decades and stave off a recession.

Germany will provide 500 billion euros in loan guarantees and capital, equivalent to 20 percent of its economy, while France set aside 320 billion euros of loan guarantees and 40 billion euros to buy stakes in beleaguered banks. Spain's cabinet approved measures yesterday to guarantee as much as 100 billion euros of bank debt this year and authorized the government to buy shares in banks in need of capital.

`Waiting for Details'

“We got a unified announcement, but we're still waiting for details,'' said Simon Derrick, chief currency strategist in London at Bank of New York Mellon Corp., which holds $23 trillion as the world's largest custodian of financial assets. “The lack of clarity, relative to that of a single government, is quite telling at a time when investors crave clarity.'' The euro may drop below $1.20 in a year, he said.

The euro strengthened 1.3 percent yesterday, rising as high as $1.3682, and gained 2.7 percent to 138.57 yen. The currency closed last week at $1.3408, the lowest since June 2007, and fell to 134.96 yen, down from an all-time high of 169.96 on July 23. The euro's 7 percent drop against the yen last week was its biggest decline since the currency was created in 1999.

Strategists and investors say the gains may not last. The economy of the euro region will expand 1.35 percent this year, slowing to 1 percent in 2009, according to the median of 32 forecasts compiled by Bloomberg. Growth in the U.S will be 1.6 percent this year and 1.2 percent in 2009, a separate survey of 75 economists showed.

Rate Liability

Higher interest rates, which supported the euro in the first half of the year, are becoming a liability as the global economy slows. The European Central Bank joined the Federal Reserve and four other central banks in cutting rates last week by half a percentage point, lowering its target to 3.75 percent from 4.25 percent. The Fed cut its key rate to 1.5 percent from 2 percent. The Bank of Japan held at 0.5 percent.

The ECB, based in Frankfurt, will reduce the rate to 3 payday advance.5 percent next year, according to the median estimate of economists surveyed by Bloomberg. Goldman Sachs Group Inc. in New York predicts a decline to 3 percent.

“The surprisingly unified approach to emerge from Europe over the weekend will also likely see the euro regaining some support in the near term,'' Sebastien Galy, head of foreign- exchange research at BNP Paribas in New York, wrote in a report to clients yesterday. Even so, “we continue to expect the dollar to move higher,'' he said.

Overtaking the Dollar

When the euro was rallying 38 percent from November 2005 through July, economists said the dollar was in danger of losing its place as the leading reserve currency. The euro's share of global central bank reserves increased to 27 percent at the end of March from 17 percent in 2000, as the dollar's share fell to 62.5 percent from 72.1 percent, according to the International Monetary Fund in Washington.

The National Bureau of Economic Research, the group that determines when recessions begin and end, said the euro may become the world's leading reserve currency in the next seven years. Jeffrey Garten, a professor of international trade at the Yale School of Management in New Haven, Connecticut, and undersecretary for commerce and international trade in the Clinton administration, said in November the world was undergoing a “rebalancing'' of economic power.

Supplanting the dollar is looking increasingly unlikely as the credit crisis threatens to tip the global economy into a recession.

Global Slowdown

The IMF's World Economic Outlook last week forecast that global growth will slow to 3 percent in 2009, from 3.9 percent this year and 5 percent in 2007. That would mean a world recession under the fund's informal definition.

“In a global recession the dollar will do well as we'll see further repatriation,'' said Momtchil Pojarliev, head of currencies at London-based Hermes Pension Management Ltd., which has about $70 billion under management. “This just highlights that the dollar remains the world's reserve currency.''

The euro will fall to $1.20 by the end of next year, Pojarliev forecast. Hermes is betting the euro will decline versus a basket of currencies including the U.K. pound, Swiss franc, Swedish krona and dollar, he said.

“The ECB will basically cut rates while the Fed is almost done,'' Pojarliev said. “That will move the balance in favor of the dollar.''

Currency Forecasts

Frankfurt-based Deutsche Bank AG, the world's biggest currency trader according to a Euromoney Institutional Investor Plc survey, says the euro will depreciate to 134.41 yen and trade at $1.38 in 12 months. David Simmonds, head of currency research in London at the Royal Bank of Scotland Group Plc, wrote in an investor report last week that it may drop to $1.25 by the end of next year.

The median estimate of 38 strategists surveyed by Bloomberg that gives greater weight to most recent forecasts is for the euro to trade at $1.36 in mid-2009. In August, the expectation was $1.45. Against the yen, it will likely trade at 146, compared with an August prediction of 158.50.

While European leaders agreed on a program to combat the growing credit crisis spreading through the region, they must now convince their individual governments that the plans make sense.

The stakes are rising after the IMF said on Oct. 7 that the world's major banks may need $675 billion in fresh capital over the next several years. Financial institutions have lost or written down $635 billion since the start of last year amid the worst housing slump since the Great Depression, according to data compiled by Bloomberg.

The “euro is an emperor without clothes,'' a team led by Tom Fitzpatrick, global currency head of strategy at Citigroup Global Markets in New York, wrote in a report Oct. 8. “A single currency without a coordinated system behind it. The European financial system is being stress tested.''

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You once could bet on casinos’ luck holding out even in tough economic times, but things are turning dicey now. St. Louis-area casinos saw a nearly 4 percent drop in business last month, according to figures released this week by Missouri and Illinois gambling regulators.

"This is the first time casinos have not been immune to an economic downturn," said Mike Knopfel, spokesman for the Ameristar Casino in St. Charles. "We’ve never been affected like we are now."

Local gamblers spent $80.1 million at the region’s six casinos in September, down from $83.3 million in the same month last year. This is the first overall decline since December 2007 when bad weather kept gamblers away.

In August, revenue was up 4.8 percent compared with the year ago period, but much of the gain was driven by the new Lumi

Mexican President Felipe Calderon laid out a plan Wednesday to help his country avoid or mitigate the effects of the economic uncertainty besetting other nations.

"The world is in a grave crisis, and this affects us," he said in a nationally televised address.

He predicted that the crisis would result in fewer Mexican exports, fewer tourists, fewer international companies investing in Mexico and fewer Mexican migrants sending money home from the United States.

"This will, lamentably, affect economic growth and jobs," he predicted.

Because of the U.S. credit freeze, some Mexican companies will not get the money they need to grow, he said.

Slower growth globally will mean about 28 billion pesos ($2.3 billion) less in revenue for the oil-exporting nation’s government, he said.

But Mexico is well positioned to mitigate any damage, with the lowest inflation rate in Latin America, Calderon said, adding that his country’s finances and banking system are in order.

He noted that Mexico has more than $90 billion in foreign reserves and the Central Bank is prepared to inject more dollars into the system if necessary to ensure stability of the Mexican peso 100% approval faxless payday loans.

In addition, he announced measures to combat the crisis:

– Stimulate internal growth by investing in more infrastructure and public works;

– Provide more credit to small- and medium-sized businesses to stimulate job growth;

– Build a refinery to ease Mexican dependence on imported fuel;

– Revise the 2009 budget and spending plan to reflect lowered growth and lowered oil prices;

– Simplify duties and fees charged to foreign companies wishing to invest in Mexico.

Calderon said he was sending a plan to Congress calling for more funding for clinics and hospitals, sports stadiums and indigent housing and the tourism industry.

"I’m sure that, with the participation of everyone, our country will end up ahead," he said.

– CNN’s Harris Whitbeck contributed to this story. 

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The Federal Reserve’s unusual move to ease credit for businesses lifted U.S. stocks at Tuesday’s open.

The Dow Jones industrial average (INDU) bounced above the 10,000 mark - which it fell below Monday for the first time in nearly four years - with a gain of more than 100 points. The Standard & Poor’s 500 (SPX) index and the Nasdaq composite (COMP) were also higher.

Treasury prices slumped, raising the corresponding yields as investors dumped government debt in favor of stocks and other assets.

The Federal Reserve and Treasury Department said they would buy commercial paper, short-term financing that companies use to fund day-to-day operations, from individual companies.

This would, in essence, put the Fed in a position of funding companies in order to keep the economy running. In the current credit crisis, companies are having a difficult time getting funds to operate.

The markets: European stocks rallied in the afternoon. Pacific stocks ended mixed, with Tokyo’s Nikkei index down 3%, while an Australian central bank rate cut pushed stocks higher in Sydney and throughout Asia.

Investors are hoping to do better than Monday, when concerns about the ongoing credit crisis caused a selloff around the world. In the United States, the Dow ended down nearly 370 points - after being as much as 800 points lower earlier in the day.

AIG in the spotlight: At 10 a.m. ET, the House Committee on Oversight and Government Reform will hold a hearing on AIG (AIG, Fortune 500), the insurance giant that the government bailed out with an $85 billion credit line. On Oct. 3, AIG said it had already used $61 billion worth of the loan and was selling off parts of its business to help pay it off.

This will be the second of several House hearings to examine what went wrong with the economy (pay day loan). The first, on Monday, grilled Richard Fuld, chief executive of the bankrupt bank Lehman Brothers, over why his company failed.

On Oct. 16, the House will hold a hearing on the regulation of hedge funds. An Oct. 22 session will focus on the breakdown of credit rating agencies, and a hearing on Oct. 23 will scrutinize the role of federal regulators.

Companies: Bank of America (BAC, Fortune 500) on Monday reported a 68% plunge in third-quarter profit, chopped its dividend in half and announced plans to sell off $10 billion worth of stock.

In other company news, the battle over the Wachovia (WB, Fortune 500) takeover took a break, as the prospective buyers Wells Fargo (WFC, Fortune 500) and Citigroup (C, Fortune 500) decided late Monday to halt litigation until Wednesday.

The economy: At 2 p.m. ET, the Federal Open Market Committee will release the minutes from its Sept. 16 meeting, which could provide insight into why the target for the federal funds rate was kept at 2%.

At 3 p.m., the Federal Reserve will release its report on consumer credit for August. A consensus of economists interviewed by Briefing.com project a $5 billion rise in consumer debt, primarily credit cards and auto loans, from a $4.6 billion rise in July.

Currency and oil: The dollar slipped versus the euro and the British pound, but rose against the yen. Oil bounced off an eight-month low to jump $2.90 a barrel to $90.71. 

Source

French banking giant BNP Paribas will take a 75% stake in the remaining operations of troubled bank Fortis NV, the Belgian government announced Sunday.

Prime Minister Yves Leterme said the deal gives the Paris-based bank control of Fortis’ Belgian and Luxembourg operations, including the bank’s insurance and investment arms. The Belgium and Luxembourg governments also will receive a blocking minority share in BNP Paribas.

"No client or depositor (at Fortis) will end up in problems due to the financial crisis," Leterme told reporters late Sunday after two days of closed-door talks between BNP Paribas and government officials.

Leterme said it was important for another bank to take over troubled Fortis to restore confidence in the company before markets reopen Monday .The bank’s stock has plummeted in recent weeks amid fears it could be declared insolvent.

A previous bailout last week, which left Belgium and Luxembourg with 49% share stakes each in Fortis failed to quell widespread concerns over the bank’s solvency.

Under the deal announced Sunday, the Belgian government will buy all remaining shares in Fortis Belgium for euro4.7 billion ($6.5 billion) and then sell a 75% stake to BNP Paribas for euro8.25 billion ($11.4 billion) and receive an 11.7% minority share in BNP Paribas. Luxembourg will get a 1.4% share in BNP.

The Belgian government will also keep a 25% stake in Fortis’ Belgian operations and Luxembourg will hold a 33% share in the bank’s Luxembourg subsidiary.

Leterme said the minority stakes in BNP would give the governments the power to ensure the French bank does not move to cut jobs at Fortis. The bank currently employs some 25,000 in Belgium.

Banking officials and authorities have been in closed-door talks all weekend in an effort to restore credibility and trust in Fortis after Dutch government announced Friday it was buying Dutch-held operations of the bank for euro16 (fast cash loans).8 billion ($23.2 billion) after a previous bailout failed to remove market doubts. The Dutch move effectively split Fortis in two along national lines but led to renewed concerns that Fortis’ remaining operations would continued to suffer.

Fortis last week lost a potential buyer of half of its asset management arm, Fortis Investments, when Chinese insurer Ping An Ltd backed out of an earlier agreement to pay euro2.15 billion ($3.39 billion) for the unit.

Then Fortis essentially confirmed rumors that had dogged it for months by disclosing huge losses in its credit derivatives portfolio - noteworthy because few European banks have been full and frank about their woes. It warned that further write-downs were possible.

Fortis, once one of Europe’s largest financial companies, was laid low in part by its ill-timed acquisition of the Dutch banking operations of ABN Amro last year for euro24 billion ($33 billion) as part of the largest takeover in banking history.

The company’s share values have plummeted some 70 percent since January and they fell Friday to euro5.42 ($7.50). But the deal announced Sunday likely will wipe out the common shareholders since the Belgian government will hold the remaining 25 percent stake in Fortis’ Belgian operations not held by BNP.

Media reported that it was unclear whether trading in Fortis would continue as usual, since parts of the Dutch takeover of its operations in the Netherlands and the BNP Paribas deal still needed to be finalized.

Meanwhile French-Belgian bank Dexia SA insisted Sunday that the bailout of German lender Hypo Real Estate would only have a "very limited impact" on its own solvency. It said last week’s government and shareholder injection of euro6.4 billion (US$9.2 billion) would allow it to weather "deteriorating conditions." 

Sourse