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 CURRENT AFFAIRS
International Affairs
Business News
Tata Consultancy Services
will partner with Swedish
defence and aerospace
group Saab for an
aeronautical design and
development centre.
Sports broadcaster ESPN
Star Sports (ESS) has paid
a staggering $ 975 million
for exclusive global
commercial rights for the
T20 Champions League for
a 10-year period, starting
with the inaugural
tournament between
December 3 and 10, 2008.
Fearing worldwide impact of
collapse of American
Insurance Group (AIG), the
United States government
has agreed to a $ 85 billion
bailout that gives it control
of the troubled insurance
giant AIG.
The Anil Ambani promoted
Reliance Big Entertainment
(RBE) has sealed the deal
with Hollywood’s iconic
director Steven Spielberg’s
Dream-Works. The total
investment that RBE will
make in a phased manner
across a number of years
will stand at about $ 1.5
billion, of which $ 500
million will be via equity and
the rest will be in debt. The
deal entails producing 25-30
movies across a four-year
period.
The US Federal Reserve
has agreed to convert the
once high-flying investment
banks, Goldman Sachs and
Morgan Stanley, into more
conventional depositary
institutions. By agreeing to
much tighter Fed regulation
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Month in a Nutshell
World markets shake as two
iconic US banks crash: In a stunning
reshaping of America’s financial land-
scape, two venerable Wall Street firms
fell from the shock waves of the credit
crisis on September 15, 2008. Stocks
across the world tumbled in response
to the latest fallout. Lehman Brothers
filed for federal bankruptcy protection
after rescue attempts failed. Bank of
America, meanwhile, snapped up Mer-
rill. Ominously, AIG, once the world’s
largest insurance company, had to be
bailed out by the US government.
Goldman Sachs and Morgan Stanley,
the two most influential securities
firms and the arteries supplying capital
to Wall Street, decided to convert them-
selves into retail banks. U.S. financial
crisis deepened further with 119-year-
old banking institution Washington
Mutual deciding to file for bankruptcy
protection after selling its banking
operations to JPMorgan Chase. The
financial crisis virus spread to Asia and
Europe. Europe’s biggest bank rescue
of the global financial crisis to date
took shape on September 29, ahead of
a US lawmaker vote on a $700 billion
toxic debt fund as fears that the plan
will fail gripped financial markets. Mar-
kets pivoted on passage of the US
bailout, as investors’ attention turned
to signs of a gathering recession.
Stocks dropped, with the S&P 500
index closing at its lowest level in
almost four years.
Pakistan President Zardari’s
maiden address to Parliament: In
his maiden address to Parliament on
September 20, 2008, President Asif Ali
Zardari promised zero tolerance to vio-
lation of Pakistan’s sovereignty and
territorial integrity, offered to shed
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alongwith your complete name and address.
powers usurped by military dictator
General Pervez Musharraf, vowed to
promote trade-driven closer ties with
India and resolved to end poverty and
hunger by turning around the faltering
economy.
60 killed in Islamabad hotel
blast: On September 20, 2008, more
than 60 persons were killed and more
than 200 injured in what was described
as the biggest suicide attack that virtu-
ally devastated the entire building of
Islamabad’s main Marriott Hotel. The
blast took place about three hours
after President Asif Zardari delivered
Contents or Translation of contents of this document must not be reproduced in any manner without prior permission.
his maiden address to the joint session
of Parliament, less than a km from the
scene of the explosion.
Aso is Prime Minister of
Japan: Outspoken nationalist Taro
Aso, an advocate of spending and tax
cuts to boost the economy, has been
elected Japan’s new Prime Minister to
take over from Yasuo Fukuda, who quit
earlier just as the economy was flirting
with recession and faces further dam-
age from turmoil on Wall Street. The
new leader must try to revive the
world’s second-biggest economy
despite the constraints of its huge pub-
lic debt, although he may have scant
time to do so if, as media and pundits
predict, he calls an early poll for Parlia-
ment’s powerful lower house.
© The Competition Master.
President Mbeki of SA resigns:
Capping a prolonged power struggle
within the country’s ruling ANC, South
African President Thabo Mbeki
announced his resignation on Septem-
ber 22, 2008, but denied the charge of
interfering with justice in a corruption
case to nail Jacob Zuma, his challenger
for the top post. In a nationally tele-

as bank holding companies,
Goldman Sachs Group Inc and
Morgan Stanley moved to avoid the
fate of rivals that either collapsed or
were taken over in the worst financial
crisis to sweep Wall Street since the
Great Depression.
Nomura, the Japanese securities
group, has reached a deal to buy the
Asian operations of bankrupt US
financial giant Lehman Brothers for
$225 million (1,021 crore).
Swan telecom has become the first
of the new mobile licences to have
made a killing by offloading 45%
stake to UAE’s Etisalat for $ 900
million. While a pan-India telecom
licence covering all 22 telecom
circles costs about $ 400 million,
Swan had paid a much lower figure
as it acquired licences to operate in
only 13 circles. The deal has enabled
Emirates Telecommunications Corp
(Etisalat) to finally get a foothold in
the Indian telecom space.
Cement manufacturer Lafarge India
has roped in cricketer Mahendra
Singh Dhoni as its brand
ambassador.
Jagdish Khattar, former Maruti MD,
has announced his foray into the
organized multi-brand car sales and
service business with an investment
of Rs 1,000 crore over the next five
years. The new company is backed
by Rs 80 crore investment from
Wipro chairman Azim Premji’s
PremjiInvest
Sistema, one of the largest public
diversified corporations in Russia
and the CIS, has announced that it
would invest over $ 1.5 billion in
India next year to build a pan-India
telecom network on the CDMA
platform. The Russian major, which
holds a majority stake in Shyam
Telelink, has also announced the
launch of CDMA services under the
brand Rainbow in Rajasthan.
British consulting firm Axon has
agreed to accept a $ 785 million bid
from HCL. The acquisition will be the
largest by an Indian IT company.
Japanese small car maker Suzuki
Motor Corp has launched its fifth
global model small car, which will be
launched in India under “A-Star”
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vised address, President Mbeki told
the nation that he had decided to
resign after he was asked to do so by
the National Executive Committee of
the ruling ANC. In an unemotional
and measured tone, he categorically
denied that he had interfered in the
work of prosecutors. The President
said the central approach we adopt-
ed has always been to defend the
judiciary rather than act in a manner
that would have had a negative
impact on its work.
Israeli Prime Minister
Olmert quits: Disgraced Israeli
Prime Minister Ehud Olmert, under
public storm on a string of corrup-
tion charges, submitted his resigna-
tion of President Shimon Peres on
September 21, 2008, paving the way
for his successor Tzipi Livni, the
newly elected leader of the ruling
Kadima party, to form a coalition.
Olmert’s almost three-year rule was
marked by Israel’s inconclusive 2006
war against Lebanese Hezbollah
guerrillas, a war on its northern
frontier that exposed the Jewish
State’s vulnerability to rocket
attacks, strengthening of Islamist
Hamas faction that has taken control
of Gaza and dwindling hopes
of a peace agreement with the
Palestinians.
Zimbabwe’s rivals sign his-
toric power-sharing deal: Zim-
babwe’s rival political parties signed
a landmark power-sharing deal on
September 15, 2008, which means
President Robert Mugabe will cede
some of his powers for the first time
in nearly three decades of iron rule.
Mugabe, main opposition Movement
for Democratic Change (MDC) leader
Morgan Tsvangirai and Arthur
Mutambara who heads a breadaway
MDC faction signed the agreement
after weeks of tense negotiations.
Under the deal, Tsvangirai will
become Prime Minister and chair a
council of ministers supervising the
cabinet. Zimbabweans hope the
agreement will be a first step in
CURRENT AFFAIRS
helping to rescue the once prosper-
ous nation from economic collapse.
Inflation has rocketed to over 11
million per cent and millions have
fled to neighbouring African
countries.
Important News in
Detail
INTERNATIONAL ECONOMY
World markets shake as two
iconic US banks crash
In a stunning reshaping of
America’s financial landscape, two
venerable Wall Street firms fell from
the shock waves of the credit crisis
on September 15, 2008. Stocks
across the world tumbled in
response to the latest fallout of what
US Presidential nominee Barack
Obama called the “most serious
financial crisis since the Great
Depression of the 1930s”.
Lehman Brothers filed for fede-
ral bankruptcy protection after
rescue attempts failed. Bank of
America, meanwhile, snapped up
Merrill Lynch in a $59 billion
all-stock transaction. Ominously,
AIG, once the world’s largest insur-
ance company, had to be bailed out
by the US government as it struggled
to raise $40 bn to avoid crippling
credit-rating downgrade.
A new chapter was added to the
ongoing saga of financial meltdown
on September 22, even as it marked
the end of an era on Wall Street. This
time, it was the turn of the remain-
ing survivors among the Big Five
investment banks of the US to eat
humble pie. Goldman Sachs and
Morgan Stanley, the two most
influential securities firms and the
arteries supplying capital to Wall
Street, decided to convert them-
selves into retail banks. The deci-
sion, born out of compulsion rather
than choice, has been approved by
the US Federal Reserve. It does not
end here.
U.S. financial crisis deepened
further with 119-year-old banking
institution Washington Mutual
CURRENT AFFAIRS
brand. The car will be manufactured
at the Manesar plant of Suzuki’s
India subsidiary, Maruti Suzuki India
Ltd.
Samsung has appointed Abhinav
Bindra, 2008 Beijing Olympic gold
medallist in shooting, as their brand
ambassador for the consumer
electronics division.
Xchanging Plc, the UK head-
quartered BPO major, has
announced its intention to acquire
75% stake in the Bangalore-based
IT/ITES firm Cambridge Solutions.
deciding to file for bankruptcy
protection after selling its banking
operations to JPMorgan Chase. The
fall of Washington Mutual, popularly
known as WaMu, is viewed as
the biggest banking failure in the
American history. WaMu, according
to reports, was expected to
lose around $19 billion on bad
mortgages.
The financial crisis virus spread
to Asia and Europe Britain’s Finan-
cial Services Authority imposed a
four-month ban on short selling
financial stocks and the US Securi-
ties and Exchange Commission fol-
lowed suit with a 10-day ban. Mean-
while, the world’s central banks
redoubled their efforts to lubricate
the seized-up money markets.
Japan, Australia, India and Indonesia
pumped in $ 42 billion after the US
Fed co-ordinated a $ 180 billion
package. The bank of England
offered $ 40 billion to banks.
Europe’s biggest bank rescue of
the global financial crisis to date
took shape on September 29, ahead
of a US lawmaker vote on a $700
billion toxic debt fund as fears that
the plan will fail gripped financial
markets.
In Britain, mortgage lender
Bradford & Bingley became the
second British bank of be taken
under the government’s wing since
the crisis began. Shares in French
bank Dexia tumbled more than 20%
on a newspaper report that it might
launch an emergency capital
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increase. Fortis became the first
major euro zone bank to buckle
under the financial turmoil.
In Germany, Hypo Real Estate
struck a last minute deal with a
consortium of banks to resolve a
financing squeeze with the German
government providing the credit
guarantee for £ 35 billion.
On October 5, the European
leaders vowed after crisis talks to do
all they could to fend off the finan-
cial mayhem that has snowballed
out of Wall Street and is now hitting
banks in Europe. French President
Nicolas Sarkozy, who called the
emergency meeting, said govern-
ments needed to act in a coordinat-
ed manner.
Sarkozy arranged the Paris sum-
mit in the hope that a show of unity
would help restore confidence in the
banking sector and an economy on
the brink of recession across the
developed world.
British Prime Minister Gordon
Brown said no sound bank would be
allowed to fail for lack of liquidity.
We will continue to do whatever is
necessary, he said.
On October 4, the US govern-
ment enacted a landmark $ 700 bil-
lion bank bailout on, but investors
questioned whether it could contain
a panic that began on Wall Street and
spread to become a global financial
crisis.
Markets pivoted on passage of
the US bailout, as investors’ atten-
tion turned to signs of a gathering
recession. Stocks, which had been
higher before the vote, dropped,
with the S&P 500 index closing at its
lowest level in almost four years.
The dollar was also in retreat.
What is this crisis all about:
Lehman Brothers and Merill Lynch,
two the world’s largest financial
institutions, booked big losses on
account of their exposures in some
highly risky assets. Lehman Brothers
posted a loss of $ 3.9 billion (Rs
17,500 crore) in the quarter ending
June 2008. This created panic
among investors resulting in fall of
Lehman’s stock price into rubble,
and forcing it to filling of bankrupt-
cy. On the same note Merrill Lynch
posted a second quarter loss of
$ 4.65 billion. Following this, the
shares of the two companies came
under pressure.
Lehman Brothers was counting
big on the real estate boom and
hence had overexposed its invest-
ments in the real estate sector. As
property prices went bust, so did the
optimism of Lehman prospect on
those investments. The fall in real
estate prices was triggered by a sub-
prime crisis.
Sub-prime, refers to a loan given
to a borrower who does not qualify
for a regular home loan, because of a
poor credit record, low income and
no job security. In the current con-
text, in the US, banks gave out many
such loans in their zeal to keep
ahead of their peers in the banking
sector. The subsequent defaults
coupled with high unemployment
resulted in major loss of income
across the economy. The sub-prime
issue erupted almost a year ago. The
sub-prime crisis is a result of indi-
vidual incentives and lack of
accountability.
PAKISTAN
President Zardari’s maiden
address to Parliament
In his maiden address to Parlia-
ment on September 20, 2008, Presi-
dent Asif Ali Zardari promised zero
tolerance to violation of Pakistan’s
sovereignty and territorial integrity,
offered to shed powers usurped by
military dictator General Pervez
Musharraf, vowed to promote trade-
driven closer ties with India and
resolved to end poverty and hunger
by turning around the faltering
economy.
In his address Zardari described
his journey from prison to Presiden-
cy after wading through river of
blood and tears. He promised to
fulfil the mission of his slain wife
Benazir Bhutto and vision of her
father Z.A. Bhutto to end poverty,
 CURRENT AFFAIRS

disease and hunger in the country against terrorism. But, he said Pak- stitution Avenue on which key gov-
and build a free, democratic society istan would not tolerate violation of ernment buildings, including the
with equal rights for all without dis- its territorial integrity by any world Parliament House, the Presidency
crimination of caste, creed, gender power in the name of combating and the Prime Minister’s House are
or region. terrorism. located. The suicide bomber then
PML-N chief Nawaz Sharif had turned back and blew himself up in
responded to Zardari’s personal 60 killed in Islamabad hotel the Marriott Hotel Building.
invitation and flew into Islamabad blast About 1,000 kg of explosive was
from Lahore. Zardari walked up to On September 20, 2008, more used in the attack and is reported to
Sharif seated in the Presidential than 60 persons were killed and be the heaviest in scores of bomb
enclosure to embrace him immedi- more than 200 injured in what was blasts in the recent years. The
ately after he concluded his address. described as the biggest suicide impact was felt miles away from the
He was the first President in 18 attack that virtually devastated the scene of the blast.
years since 1990 whose address was entire building of Islamabad’s main The Marriott Hotel was original-
heard without any interruption. Marriott Hotel. ly selected as venue for the Iftar-
Offering to shed the Presidential The blast took place about three dinnar reception hosted by the
powers accumulated by Pervez hours after President Asif Zardari Speaker of the National Assembly on
Musharraf under the 17th Amend- delivered his maiden address to the the fateful day of September 20.
ment, including the authority to dis- joint session of Parliament, less than President Asif Zardari suggested
solve Parliament, Zardari proposed a a km from the scene of the explo- shifting the venue to the Prime
Parliamentary committee to make sion. Minister House at the last minute
amendment and suggest necessary The authorities said the truck and that saved almost the entire
changes. Never before in the history used in the blast first tried to break civil and military leadership of the
of Pakistan has a President given through the heavily barricaded Con- country that attended the reception.
away his powers, Zardari said amid
loud cheers.
But he hurriedly skipped over
the issue of restoration of deposed
judges and perfunctorily referred to
commitment on independence of
judiciary.
On relations with India, Zardari
pledged to carry forward a compo-
site dialogue process for resolution
of bilateral issues through peaceful
means, including that of Kashmir.
He talked about supporting Kash-
miri people’s struggle for fundamen-
tal rights and significantly omitted
the traditional expression of self-
determination. He said both coun-
tries were working out plans to pro-
mote trade across the line of control
in Kashmir and also resolved to
strengthen trade-driven relations
with India as also liberalizing the
visa regime to foster people-to-
people contacts.
The President denounced mili-
tancy and extremism and reaffirmed
commitment to establish writ of the
State in the troubled tribal areas bor-
dering Afghanistan. He said Pakistan
would remain a strong ally of the
international community in its war

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