Business, economy and markets

Inflation will rise to about 5 percent in Europe and the United States, said former Federal Reserve Chairman Alan Greenspan in an interview with a Dutch paper, published on Monday. Interest rates would have to rise towards 10 percent because of higher inflation, Greenspan told NRC Handelsblad. "The lower inflation of the last two decades will turn out to be a once-only event, the exception that confirms the rule," Greenspan was quoted as saying.

Nine chief executive Eddie McGuire has stepped down from the top job, ending months of speculation.

The announcement, posted on the ninemsn website, came shortly before 9am today - when staff were also notified of the decision.

Nine said McGuire will move to an increased presence on air and the provision of creative and programming services, with the change taking effect from June 30.

Qantas bid could have succeeded

Miscalculations by hungry hedge funds in a giant game of brinksmanship appear to be the key reason behind the apparent crash of an A$11 billion takeover offer for Australia's Qantas Airways Ltd , analysts said.

Qantas shares remained on hold Monday night after questions were raised if in fact the bid team had reached the required 50 per cent. A condition of accepting the offer was that it was all or nothing. This measn any seller who sold only part of their shares is in fact required to sell all their shares, which will leave the bid with over 60 per cent.

Labor has taken a huge lead over the Government despite pressure on Opposition Leader Kevin Rudd over his meetings with Brian Burke.

The ALP has moved to an extraordinary 61-39 per cent two-party lead — its biggest since this measure was included in the late 1980s — and a 50 per cent primary vote. If the results were replicated in the election this year, it would cause a near wipe-out for the Coalition.

Mr Rudd has hit another record high approval for an Opposition leader — 67 per cent — and opened a 14-point advantage over John Howard as preferred prime minister in the ACNielsen/Agepoll taken from Thursday to Saturday.

Cynthia Banham leaves the Indonesian Hospital for Perth

An Australian journalist suffering serious burns after an Indonesian passenger jet crash has arrived in Perth for medical treatment.

Sydney Morning Herald reporter Cynthia Banham arrived in an International SOS private charter from Yogyakarta about 2.15am (WST) today.

The Department of Foreign Affairs and Trade (DFAT) said today another Australian, believed to be 63-year-old businessman Roger Tallboys, was being flown to Singapore for medical treatment. He was expected to arrive shortly.

U.S. stocks tumbled on Tuesday, driving the Dow Jones industrial average down in its worst slide since the aftermath of the September 11 attacks, as a sell-off in China's stock market raised concerns that equity valuations may be too high.

The Australian market echoed the US market but the fall was more limited with the ASX 200 down by about 3 per cent.

In London overnight, BHP Billiton - a big supplier of minerals to China - plunged 6 per cent and was dwon 5 per cent in local markets.

Australia's central bank today kept its benchmark interest rate unchanged at a six-year high after consumer prices fell for the first time in eight years.

Reserve Bank of Australia Governor Glenn Stevens left the overnight cash rate target at 6.25 percent after raising it a quarter percentage point in November to stem inflation. All 24 economists surveyed by Bloomberg News expected no change today.

The bank's three interest-rate increases since May have cooled consumer spending and stalled a housing recovery, slowing the Asia- Pacific region's fifth-largest economy as it enters a 16th year of expansion. Falling fuel and fruit costs drove down consumer prices at the end of 2006, dousing expectations of another rate increase this year.

Former Reserve Bank chief, Bernie Fraser, has hitout at the failure to use Australia's economic strength to address major commuity issues such as education, health, transportand energy.

He also suggested most of the inflation gains revealed in the lastest numbers were as a result of China's low cost imports.

His comments came as Australia's consumer prices fell in the fourth quarter for the first time in almost eight years as the cost of gasoline and medicines declined.

The consumer price index fell 0.1 percent in the three months ended Dec. 31, after gaining 0.9 percent in the third quarter, the Bureau of Statistics reported today. The annual inflation rate was 3.3 percent.

It is make or break time on whether there will be another interest rate rise, with Wednesday's Consumer Price Index figures likely to be the decisive factor in the Reserve Bank's decision on February 6.

Investors and economists are claiming it is a line-ball call and are hedging their bets about a 25 basis points rate hike to 6.5 per cent - its highest level in over a decade - until after the CPI announcement.

But if Reserve Bank of Australia governor Glenn Stevens does lift rates for a fourth time in less than 12 months, it is expected to add an extra $40 a month onto the average mortgage repayment on a $250,000 loan. This will push the average repayment up by about $160 a month within less than a year.

eBay to dominate the scalper market

Ticket scalper has become big money with eBay buying leading ticket scalper site stubhub.com for $400 million.

The purchase challenges the myriad of legislatures and event operators who have sought to ban scalping of tickets.

Stubhub and eBay both deal with so called ticket brokers who work the black market in ticketing, often using special software to ensure they get first grab of big event tickets from operators like ticketek.

Qantas says it is worth more than $11 b

Qantas, Australia's biggest airline, rejected a A$10.9 billion ($8.6 billion) buyout offer from Macquarie Bank Ltd. and Texas Pacific Group as ``not acceptable.''

The other bidders included Allco Equity Partners, Allco Finance Group Ltd. and Onex Corp.

The firms offered to pay A$5.50 a share, the Sydney-based carrier said in a statement today, calling the offer non-binding and conditional. The proposal is 26 percent higher than the price Qantas shares traded at before the airline said it was in talks. The stock fell to as low as A$4.93 today.

Qantas about to fly away

Qantas is expected to announce a takeover offer of around A$10.9 billion (US$8.55 billion) from a consortium led by Macquarie Bank Ltd. this week, possibly as early as tomorrow, sources said.

Shareholders have been waiting for the offer since the carrier confirmed nearly two weeks ago that it had received a buyout approach from a consortium that includes Macquarie and private equity firm Texas Pacific Group .

 

Two people close to the transaction said a bid was unlikely to be announced on Tuesday, but was not far away. A source close to Qantas said the ball was in the acquirer's court.

J.B Fairfax will hold the dominant shareholding

Twenty years after losing control of their family media company, the Fairfax family has secured the dominant shareholding in a $7.7 billion merger between Fairfax Media and Rural Press

Fairfax will offer a cash and scrip merger proposal for the entire issued capital of Rural Press and the combined business will have a market value of over $7.7 billion.

The merger positions the combined business to take advantage of rapid growth in online media, the companies said, although in percentage terms the forecast for digital revenues actual declines.