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Singapore's economy probably shrank last quarter as a manufacturing slump and easing demand for financial services drove the nation into its first recession since 2002, adding pressure on policy makers to stimulate growth.

Gross domestic product declined an annualized 6.3 percent from the second quarter, after shrinking 5.7 percent in the previous three months, according to the median estimate of 10 economists in a Bloomberg survey. That matches last month's initial estimate by the government, which will release the revised data at 8 a.m. tomorrow.

Singapore is bringing forward its 2009 budget announcement to January from February and plans to help companies secure loans and train retrenched workers as the global credit crunch pushes the world into a recession. The central bank, which ended a policy favoring gains in its currency to bolster the economy last month, may seek a weakening by April, analysts say.

“The situation warrants urgency,'' said Vishnu Varathan, an economist at Forecast Singapore Pte. “We can expect a generous budget aimed at mitigating the sharp slowdown that is expected in growth. As far as monetary policy is concerned, we expect that more easing moves will be under way given the escalation of risks from the deterioration in global economic and financial conditions.''

The Singapore dollar fell as much as 0.3 percent to 1.5336 against the U.S. currency today, and traded at 1.5293 as at 10:28 a.m. local time.

Policy Announcements

Traders are awaiting the growth data “and likely some growth-supportive fiscal policy announcements, with some market speculation about an inter-meeting easing on the monetary policy front,'' analysts including Emmanuel Ng at Oversea-Chinese Banking Corp cash in 1 hour. said in a research note to clients today.

There is “a very high chance'' that the central bank will ease policy before the next meeting in April, Varathan said.

The Monetary Authority of Singapore, which conducts monetary policy by guiding the currency within an undisclosed band based on a basket of major trading partners' currencies, may be open to depreciation to help revive exports and the economy, UBS AG currency strategists Ashley Davies and Nizam Idris wrote this week.

Asian policy makers and their counterparts around the world have lowered interest rates and announced economic stimulus plans in recent weeks as the global financial crisis that's toppled banks in the U.S. and Europe forced companies such as Citigroup Inc. to eliminate thousands of jobs. That's pushed the U.S., Japan, Europe, Hong Kong and New Zealand into recession, hurting demand for Singapore's exports.

The island's exports have dropped for six straight months and Prime Minister Lee Hsien Loong foresees several years of slow growth. The trade ministry predicts Singapore will grow about 3 percent in 2008 from a year earlier, the weakest pace in seven years.

The $161 billion economy probably shrank 0.5 percent from a year ago last quarter, after gaining 2.3 percent between April and June, a separate survey showed. That prediction matches the government's estimate released Oct. 10.

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Nektar Therapeutics will sell some of its inhaled drug technology to Novartis AG for $115 million in cash.

San Carlos-based Nektar (NASDAQ: NKTR), led by CEO Howard Robin, will sell powder and liquid drug formulations, capital equipment and factory leases, along with 140 Nektar workers. Novartis (NYSE: NVS) also is buying some intellectual property in the deal.

Nektar will keep its Ciprofloxacin inhaled powder program, its Amikacin inhale program (NKTR-061) — set for Phase III testing later this year — and inhaled vancomycin, which is entering Phase II tests early next year payday advance low fees.

This deal requires regulatory approval and has other conditions. It should close by year end.

Robin said the assets being sold “had little future value for Nektar.”

Novartis is based in Basel, Switzerland and led by CEO and Chairman Daniel Vasella, M.D.

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Nouriel Roubini, the professor who two years ago predicted the financial crisis, said world financial officials should orchestrate interest-rate cuts of at least 1.5 percentage points to help avert a depression.

A temporary guarantee of all bank deposits, unlimited liquidity for solvent financial institutions and fiscal-stimulus measures are also needed, the New York University professor of economics said in a commentary e-mailed today to Roubini Global Economics subscribers.

“It will take a significant change in leadership of economic policy and very radical, coordinated policy actions among all advanced and emerging-market economies to avoid this economic and financial disaster,'' said Roubini, 50. From late 2006, he highlighted the dangers flowing from a likely U.S. housing crisis.

The economist urged immediate action as officials from the International Monetary Fund, World Bank and Group of Seven nations meet in Washington this weekend. Stocks tumbled around the world today as the yearlong credit crisis deepened, sending Japan's Nikkei 225 Stock Average to its worst weekly drop in history. The MSCI World Index was set for its biggest weekly decline since records began in 1970.

In the U.S., the Dow Jones Industrial Average fell below 9,000 for the first time since 2003 yesterday. More than $4 trillion has been erased from global equities this week.

Investor Panic

“At this stage the risk of an imminent stock-market crash — like the one-day collapse of 20 percent plus in U.S. stock prices in 1987 cannot be ruled out,'' said Roubini. “The financial system is breaking down, panic and lack of confidence in any counterparty is sharply rising and investors have totally lost faith in the ability of policy authorities to control the meltdown.''

In a coordinated emergency move on Oct. 8, the Federal Reserve, European Central Bank, Bank of England, Bank of Canada and Sweden's Riksbank cut their benchmark rates by half a percentage point. Switzerland also took part and China announced a cut at the same time.

Roubini proposed “another rapid round of policy rate cuts of the order of at least 150 basis points on average globally.''

Officials are trying a range of approaches. U.S. Treasury Secretary Henry Paulson plans to buy stakes in banks, U.K. Chancellor Alistair Darling wants guarantees for their lending and German Finance Minister Peer Steinbrueck is pushing for greater regulation.

Bursting Bubbles

One of Roubini's proposals is an agreement between countries with current-account deficits and those with surpluses to maintain orderly financing of deficits and “avoid a disorderly adjustment of such imbalances.''

The world is experiencing the simultaneous bursting of housing, equity, bond, credit, commodity, hedge-fund and private-equity bubbles, the economist said, and even better- performing economies such as Brazil, Russia, India and China are at risk of “a hard landing.''

The threat of a global financial meltdown means a decade- long “L-shaped'' recession — like Japan's after its real estate and equity bubbles burst — cannot be ruled out, Roubini said.

As demand falls, the next challenge may be deflation as the world faces a glut of excess capacity and goods, he said.

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The allegations of overstated revenue and financial fraud at Entellium are sparking a debate in the Seattle technology community about board oversight and the role of audits at venture-backed companies.

Seattle accounting firm Moss Adams today acknowledged that it never completed a full audit of Entellium, whose top two executives were charged with wire fraud in Seattle U.S. District Court Wednesday for allegedly “cooking the books” at the software startup.

Moss Adams’ chief practice officer Neal West said his firm was engaged to perform audits on Entellium in “multiple years,” but did not complete any of the audits and therefore never issued any reports or opinions. West did not know which years the audits were started and why they were never completed, but said his office is looking into it.

“We did not complete any audits and therefore never issued any opinions on their financial statements,” West said.

“We’re still in the midst of looking at our records on this, and beyond that I’m not able to comment,” West said.

Asked if Entellium was using any other accounting firms, West said “not to my knowledge.”

It was unclear whether Entellium or its board requested audits. Ignition Partners, one of the largest venture backers of Entellium, did not immediately return calls seeking comment on the audit question.

There is some disagreement among investors, lawyers and accountants as to whether an audit actually would have uncovered fraudulent activities at Entellium.

“It surprised me there wasn’t an audit, but I don’t know what went into that decision,” said Alan Smith, a partner at the Fenwick & West law firm in Seattle. Smith said startups often get an audit after the first major funding rolls in.

Smith added: “Even the best-intended directors that are active and engaged are going to have a difficult time uncovering something like this if management is determined to hide it (online instant cash advance).”

Bill Bryant, a venture capitalist at Draper Fisher Jurvetson, agreed.

“Entellium should have at least had a review, but that may not have caught the fraud,” he said. “Enron and Worldcom had full audits, and people still didn’t catch on to what was going on for a number of years.”

Roger Clark, an accountant with the Seattle office of Grant Thornton, said an audit of Entellium’s business most likely would have uncovered discrepancies in revenue.

“It was likely that an audit was never done on this company,” said Clark. “You test the numbers the company gives you, and then you see if those numbers match the auditing work.”

In this case, an auditor would have investigated key customer contracts, revenue recognition, receipts and other factors, he said.

While Clark said it is common for venture capital firms to request audits before making an investment, he added that they are sometimes waived in tough times due to the added expense.

In the Entellium case, Clark said it appears that executives allegedly adjusted revenue with the hope of making up the shortfall in future quarters. In the end, Clark said, “they got trapped.”

“It is really a disaster for everyone involved,” Clark said. “It is a personal disaster for the two officers. It is a disaster for the venture funds that lost their money. And it is a disaster for employees who were trusting their leaders.”

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Constellation Brands Inc (STZ.N: Quote, Profile, Research, Stock Buzz), the world’s largest wine producer, posted a quarterly profit excluding items that beat Wall Street estimates by a penny, and maintained its full-year earnings outlook.

On a net basis the owner of Robert Mondavi and Ravenswood wines reported a loss for its fiscal second quarter of $22.7 million, or 11 cents per share, compared with a net profit of $72.1 million, or 33 cents per share, a year before.

Excluding restructuring charges, acquisition-related costs, inventory write-downs from selling some Australian assets and other items, Constellation earned a profit of 45 cents per share. Analysts on average were expecting 44 cents, according to Reuters Estimates.

Net sales rose 7 percent to $956.5 million, with branded wine sales growing 6 percent and spirits sales growing 4 percent.

Excluding the recent acquisitions of premium wine brands including Clos du Bois and Wild Horse, the company’s branded wine business rose 4 percent faxless online payday advances. In North America, wine sales rose 7 percent from the year-ago period, when the company sold much less wine in order to reduce distributors’ inventory levels.

Wine sales, excluding acquisitions, fell 3 percent in Europe and 1 percent in Australia and New Zealand. The company said recent price increases hurt sales volume.

Sales of the company’s spirits brands, which include Svedka Vodka, Black Velvet Canadian Whisky and 99 Schnapps, rose 4 percent.

The company maintained its prior earnings outlook for fiscal 2009, which ends in February, saying it expects to earn $1.68 to $1.76 per share, excluding items.

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St. Jude Children’s Research Hospital CEO William Evans has been elected chairman of the Tennessee Technology Development Corp.

TTDC is charged with improving Tennessee’s competitiveness in research and development, venture capital formation and entrepreneurship. Last year, the state infused $5 million into the nonprofit organization.

Evans, who is a doctorate of pharmacy, will “lead TTDC’s revitalization strategy as the organization works to improve the state’s economic competitiveness in the knowledge economy of the 21st century,” according to a TTDC statement.

“Dr. Evans is a life-long Tennessean who has built a reputation as a leader within this state’s medical and scientific research community for more than 30 years,” said Eric Cromwell, CEO of TTDC, in a statement. “He acutely understands the strengths of Tennessee’s research infrastructure and knows firsthand the challenges and opportunities of bringing new innovations and ideas out of the lab to market faxless payday loans. Bill is uniquely qualified to provide the insight we need as TTDC launches new programs and initiatives to build innovation capacity and encourage more technology transfer from our state’s research institutions.”

Evans said TTDC complements the work of the Department of Economic and Community Development by “focusing on the pillars of innovation as an economic engine.”

“Tennessee has extraordinary assets, and we need to invest strategically to effectively leverage these assets to compete and win in emerging industries like biopharmaceuticals, energy technologies and medical devices,” he said in a statement.

Based in Memphis, St. Jude Children’s Research Hospital is a leading pediatric treatment and research facility focused on children’s catastrophic diseases. It employs more than 3,000 in Memphis.

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The Federal Reserve would gain more power over short-term interest rates as part of Congress's $700 billion legislation to revive credit markets, making it easier for the Fed to pump funds into the banking system.

The draft bill, released yesterday, gives the Fed authority as of Oct. 1 to pay interest on reserves held at the central bank by financial institutions. That would encourage banks to deposit excess funds with the Fed rather than dumping them into the money markets and distorting its overnight federal funds rate.

The flood of liquidity pumped into the financial system by the Fed to encourage interbank lending over the past year has made it harder for the central bank to gauge market conditions and keep fed funds at its 2 percent target. The rate has traded between zero and 7 percent since Sept. 15.

“It's probably a good thing,'' said Marvin Goodfriend, a former senior policy adviser at the Richmond Fed who is now professor of economics at Carnegie Mellon University in Pittsburgh. Allowing payment of interest on reserves will “enable the Fed to have credit policy that's independent of its monetary policy,'' he said.

While containing the interest provision sought by Fed Chairman Ben S. Bernanke since May, the draft legislation increases congressional scrutiny of the Fed's emergency loans in connection with the collapses of Bear Stearns Cos. and American International Group Inc.

Report to Congress

The bill requires the central bank to submit reports to Congress on loans to nonbanks since March 1 as well as updates at least every two months while the loans are outstanding.

The Federal Open Market Committee sets a target for the federal funds rate, which the New York Fed is obligated to achieve on a daily basis through temporary and permanent purchases or sales of bonds in the open market. Banks are required to hold a proportion of their customers' deposits in an account at the central bank.

Paying interest on reserves puts a “floor'' under the traded overnight rate, which would allow a central bank “to provide liquidity during times of stress'' without affecting the rate, New York Fed economists said in a paper last month advance america cash advance. New Zealand's central bank has adopted such an approach.

The Fed had already received authority in 2006 to start paying interest on reserves in October 2011. Bernanke asked House Speaker Nancy Pelosi in May to expedite the authority. U.S. lawmakers are reviewing the $700 billion plan to buy troubled assets from financial institutions, and the House and Senate may vote tomorrow.

New Date

The draft legislation doesn't mention the Fed in the three- line section that would provide the interest-payment authority. The bill says that the part of the 2006 law giving the Fed the power “is amended by striking `October 1, 2011' and inserting `October 1, 2008'.''

In 2006, the Congressional Budget Office estimated that Fed interest payments would cost the government $1.4 billion in the first five years.

“I expect them to use it to manage the funds rate more efficiently,'' said Lou Crandall, chief economist at Wrightson ICAP LLC, in Jersey City, New Jersey.

A measure of availability of cash among banks, known as the Libor-OIS spread, widened to 2.08 percentage points, the most on record, on Sept. 26. In the year before the credit crisis started in August last year, the spread averaged 8 basis points.

Commercial banks borrowed $39.4 billion from the Fed's discount window for the week ending Sept. 24, almost double the previous period, as the financial crisis deepened and funding from other banks dried up.

Counterparty fears also increased in the wake of Lehman Brothers Holdings Inc.'s bankruptcy filing on Sept. 15.

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Treasury Secretary Henry Paulson said he's confident several countries will take steps comparable to the $700 billion plan he proposed to buy bad mortgage-related securities to address the global financial crisis.

“We are talking very aggressively with other countries around the world and encouraging them to do similar things, and I believe a number of them will,'' Paulson said on ABC News' “This Week'' program.

Paulson yesterday asked Congress for unfettered authority to buy devalued mortgage-related securities from investment firms in an effort to keep the financial system from coming to a standstill. The proposal would prevent courts from reviewing the Treasury's actions while raising the nation's debt ceiling.

German Finance Ministry spokesman Stefan Olbermann said members of the Group of Seven industrial nations are in “ongoing talks about the situation on financial markets worldwide.'' Finance ministers from the G-7 countries meet in Washington on Oct. 10.

Asked about the U.S. plan, Olbermann said, “We have to see if and to what extent those measures make sense for Germany.''

The U.K. currently has no plans to set up such a fund, a British Treasury official said.

Prime Minister Gordon Brown today said “in relative terms, we've done a huge amount'' by giving banks access to more than 100 billion pounds ($183 billion) under a Bank of England program that allows them to swap bonds hurt by the collapse of the subprime mortgage market payday loans.

While a French finance ministry spokesman declined to comment on Paulson's latest remarks, Finance Minister Christine Lagarde spoke with U.S. officials during the week and told Europe 1 radio today that the U.S. response had “allowed us to avoid a systemic crisis.''

Treasury's Plan

“We have obstacles to overcome,'' Lagarde said.

The U.S. Treasury late yesterday modified its proposal to allow for purchases from institutions outside of the U.S., a step Paulson today said was needed to mute the impact of the credit crisis in the U.S.

“As you think about this, if a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institutions,'' he told ABC News.

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The European Central Bank and the Bank of England joined the Federal Reserve in taking action to soothe financial markets spooked by Lehman Brothers Holdings Inc.'s bankruptcy filing.

The ECB said it awarded banks 30 billion euros ($43 billion) in a one-day money-market auction that was more than three times oversubscribed. The Bank of England loaned banks 5 billion pounds ($9 billion) for three days. Earlier, the Federal Reserve widened the collateral it accepts for loans to securities firms.

Stocks plunged and the cost of borrowing dollars surged after Lehman became the latest victim of a yearlong credit squeeze. Financial institutions worldwide have reported more than $500 billion in losses and writedowns and the credit-market turmoil has erased $11 trillion from global stocks in the past year.

“It remains to be seen whether today's operation will be sufficient to restore market confidence,'' said Jacques Cailloux, chief euro-area economist at Royal Bank of Scotland Group Plc. “The ECB will likely wait for the U.S. open to consider more aggressive action. Key will be how credit and equity markets develop in the coming days.''

The ECB said it injected the funds at a marginal rate of 4.30 percent. The Swiss central bank offered liquidity through its overnight facility for the first time since Feb. 22.

“We have to be extraordinarily alert,'' ECB President Jean-Claude Trichet told reporters in Frankfurt today. “We have said it in recent weeks'' that “it's an ongoing market correction'' with “episodes of a high level of volatility.''

China, Australia

China cut interest rates for the first time in six years and the Reserve Bank of Australia added A$2.1 billion ($1.7 billion) through so-called repurchase agreements today. The Bank of Japan, whose markets were closed today for a holiday, said it was monitoring the situation.

“The job of central banks now is to ensure there is sufficient liquidity in the system and they're assuring market participants of that,'' said Thomas Mayer, co-chief economist at Deutsche Bank AG in London.

The Fed also yesterday boosted its program for lending Treasuries to bond dealers by $25 billion, bringing it to $200 billion quick payday. At the same time, a group of 10 banks that includes JPMorgan Chase & Co., Goldman Sachs Group Inc. and Citigroup Inc. formed a $70 billion fund to ensure market liquidity.

Yields on two-year Treasury notes fell below 2 percent for the first time since April on speculation the Fed will need to cut rates. U.S. index futures dropped, with December contracts on the Standard & Poor's 500 Index falling 3.3 percent. The cost of borrowing dollars overnight jumped to 3.11 percent today from 2.15 percent.

No Rate Cut Yet

The ECB and the Bank of England may nevertheless hold off cutting rates right away as they seek to curb inflation. The ECB has spent much of the past year arguing that it can use its money market operations to tackle the credit crisis and doesn't need to resort to rate cuts.

“Rate cuts are only likely to be forthcoming if financial markets melt down in the coming days or weeks,'' said David Mackie, chief European economist at JPMorgan Chase & Co. “For the time being, European policy makers look like they will continue to hold the line on the separation of powers. At some point though, that line could be reached.''

Trichet said in his speech today that “price stability is a prerequisite for financial stability, a very important objective at the current juncture.''

The ECB was the first central bank to respond when credit markets first seized up in August last year by offering financial institutions unlimited funds. Banks today asked for 90.3 billion euros in funds, close to the 94.8 billion euros bid on the first day of the crisis last year.

“The results of the one-day refinancing bill auction show that demand for liquidity is currently very high and highlights how fragile the current situation is,'' said Cailloux. “The ECB will likely take note that the financial system remains starved of cash and that it might thus be forced to step in again.''

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U.S. Global Investors Inc. recorded a sharp drop in net income and revenue during its recently completed fiscal fourth quarter. The decline is due, in part, to the current credit crunch affecting the markets in the wake of the subprime mortgage crisis, says Frank Holmes, CEO and chief investment officer of U.S. Global (NASDAQ: GROW). “There has been tremendous volatility in the financial sector, and GROW’s stock price has been dragged down by the problems in the sector, which has seen massive writedowns in the past year,” Holmes says. “The negative sentiment for financials across the board is another example of markets not behaving in a rational manner.” For the quarter ended June 30, U.S. Global reported net income of $3.84 million, or 25 cents per diluted share, on revenue of $16.96 million. That compares to net income of $6.41 million, or 42 cents per diluted share, on revenue of $21.83 million during the same period last year pay day loan. For fiscal year 2008, U.S. Global recorded net income of $10.84 million, or 71 cents per diluted share, on revenue of $56.04 million. The company reported net income of $13.76 million, or 90 cents per diluted share, on revenue of $58.60 million in fiscal year 2007. The company had $5.44 billion in average assets under management in fiscal year 2008, up 12.2 percent from the previous year. U.S. Global is a San Antonio-based registered investment advisor that manages domestic and international funds that offer a range of investment options. It specializes in emerging markets and natural resources.

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