Financial thoughts

Kenya’s central bank will probably increase its benchmark interest rate for a second consecutive meeting as it seeks to curb inflation that has exceeded the government’s target all year.

Kenya’s monetary policy committee will raise the benchmark interest rate by between a quarter percentage point and 1 percentage point from the current 6 percent, according to all seven economists surveyed by Bloomberg. The central bank is due to announce the decision tomorrow afternoon in the capital, Nairobi.

The bank surprised the market in January with a quarter- point cut, and then reversed the decision at its last meeting in March after inflation accelerated and the shilling weakened. Further increases will be needed in the coming months to counterbalance soaring food and fuel costs, said Celeste Fauconnier, an analyst at Rand Merchant Bank in Johannesburg.

“There is a feeling the central bank is very much behind the curve and it needs to take a stronger monetary stance to steer inflation toward the government’s 5 percent target,” Fauconnier said. Increases will be tempered by the need to ensure economic growth before elections next year, she said.

Kenya’s inflation rate rose to 12.05 percent in April, the highest for two years. Inflation figures for May are due to be published today or tomorrow cash advance loan.

The government increased the retail price of super petrol, the most commonly used gasoline, by 3.8 percent this month, and poor rainfall has pushed food prices higher. Kenya imports all of the oil it uses and some grains.

IMF Warning

The International Monetary Fund said last week that inflation in Kenya, East Africa’s largest economy, is a risk that needs to be addressed. The fund also lowered its economic growth forecast for 2011 to between 5 percent and 5.4 percent, from 5.7 percent.

David Cowan, Citigroup Inc.’s Africa economist, predicts that the bank will increase rates by 50 basis points, or half a percentage point, though “the market would like a 100 basis- point rise.”

“They are going to have to play catch-up considering where the inflation rate is now, it’s been rising much quicker and higher than they thought it would,” he said by phone from London.

Kenya has also been relying on other measures to cool inflation, including removing liquidity through repurchase agreements, cutting taxes on kerosene and diesel, and proposing the removal of duties on imports of corn and wheat.

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Chris Housand dumped his job as a forklift operator in January to seek skills that would make him valuable over a lifetime.

“Being 22 and with two kids and a wife I had a lot of weight on my shoulders,” said the Tarboro, North Carolina, resident. Warehouse work “was pretty much a dead-end job.”

He enrolled in electrical-lineman school at Nash Community College in nearby Rocky Mount. After graduation on May 6, he was hired into a four-month paid internship program that holds the promise of a permanent position, at a time when 16.1 percent of men in his age group are jobless.

Housand is catching a wave of demographic change that’s likely to benefit younger workers. A generational replacement cycle is taking hold as companies such as General Electric Co. (GE), Norfolk Southern Corp. (NSC), Boeing Co. (BA), American Electric Power Co. Inc. and Dominion Resources Inc. all try to hire skilled younger staff to prepare for a wave of retiring workers.

“In the next five to 10 years well over 100,000 utility sector jobs will be available for refilling,” said Bob Powers, president of utilities at Columbus, Ohio-based American Electric Power, where the average workforce age is about 49. “It is an opportunity and a challenge.”

Unemployment for 20- to 24-year-olds peaked at 17.1 percent in April last year, almost 10 percentage points above the 7.2 percent low in May 2007 during the last expansion.

Saving Seniority

Despite the 9 percent national unemployment rate in April, labor scarcity may be the longer-term challenge for U.S. corporations, said Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania.

The question is whether it will be masked by overall jobless rates, which could remain high for years as companies absorb the skilled labor pool and leave the rest behind.

Companies could start to bid aggressively for a limited group of skilled workers, building inflation pressures with the unemployment rate as high as 7 percent, according to economists at Barclays Capital Inc. in New York. Fed officials currently estimate labor supply and demand are in balance around a 5.4 percent unemployment rate.

“The Federal Reserve needs to be very sensitive to this and vigilant,” said Zandi. “We may be bumping up against constraints in the labor market a lot faster than we think if these companies aren’t able to attract and train quickly enough.”

As demand collapsed in 2008 and 2009, corporations cut junior staff and tried to preserve senior personnel. Unwittingly, they “created a major problem as they try and plan for the next five to 10 years,” said Joe Carson, director of global economic research at AllianceBernstein LP in New York.

Growth Agenda

“U.S. companies not only have a growth agenda now as earnings and liquidity improve, they also have a human capital replacement cycle they haven’t seen in the past 20 to 30 years,” Carson said.

The number of workers 55 and older rose to 31 million in April 2011 from 19.2 million in April 2001. By contrast, people in the labor force between the ages of 20 to 24 grew less than 1 million to 15.2 million from 14.6 million in April 2001. The entire U.S. labor force stood at 153.4 million last month, up just 6.9 percent since 2001.

“When I sit down with a business, and ask, what are your biggest challenges over the next five years, almost without exception I hear that one of them is the demographics of the workforce,” said Thomas Schneider, founder of Restructuring Associates Inc., a Washington firm specializing in labor productivity. Still, he said, “We are under-investing in the highest skill, blue-collar and technical jobs.”

More Interns

Companies such as Chicago-based Boeing, where the average age is in the “high 40s,” according to senior vice president Rick Stephens, are trying to change that.

The world’s second-largest aircraft maker will hire 1,500 to 2,500 engineers this year, some right out of college, and is boosting its intern program to 1,100 from 900 in 2009. Around 2 percent of Boeing’s 164,495 workers retire each year, and that number is likely to increase, Stephens said.

“Firms will increasingly find that the outflows of retiring workers are bigger than the inflows of younger workers,” said Nicole Maestas, a labor economist at the RAND Corporation, a Santa Monica, California-based policy group paydayloans. “Nobody is immune to these basic demographic facts.”

GE doubled its U.S. college hiring program to 1,278 in 2010. The world’s biggest maker of jet engines, gas turbines, and medical-imaging equipment scouts some 40 U.S. universities to replenish its pipeline of engineers and future managers and spends $300,000 per student in its two-year trainee program.

‘Big Swings’

“We can afford to take some big swings, and investing in people and growing talent is what we do best,” said Steven Canale, manager of global recruiting and staffing for Fairfield, Connecticut-based GE. “The workforce is getting older.”

The median age for the U.S. population climbed to a record 37.2 in 2010, according to the Census Bureau, and the workforce in several industries is even older.

The median age in aerospace manufacturing was 47.9 in 2010, meaning half the workforce in Boeing’s industry was older than that; in electrical power generation it was 45.4; and in rail transportation it was 46.5, according to Bureau of Labor Statistics data.

Norfolk Southern let its staff shrink through attrition and retirement during the recession that began in December 2007. The economy has since expanded for seven quarters, and demand for natural resources and exports has snapped back.

Coal Facility

The Norfolk, Virginia based railroad, which owns the largest coal-export facility in the northern hemisphere, hired 2,800 people last year and has plans to hire 4,000 this year, according to Cindy Earhart, vice president of human resources.

One goal is to rebuild the ranks of young managers. The company is seeking about 300 college graduates to replace the 6 percent of 4,800 managers who will retire this year.

Companies such as Dominion Resources in Richmond, Virginia, are also looking for young “gray-collar” workers for jobs that require both physical ability and technical knowledge. Matt Kellam, supervisor in charge of strategic staffing at Dominion, says finding a supply of linemen and engineers is a priority.

“A good number of our lineman are 45 years and older,” Kellam said, adding that community college graduates and military veterans can provide the company with the skilled technicians it needs.

The firm has about 48 people in its lineman training program. Starting salaries are about $33,000 in the industry, Kellam said, and can rise to $80,000 or more with overtime for a journeyman.

Dropout Rates

At Nash Community College, instructor Bob Schubauer says about 30 students enroll in his lineman classes each semester. Rigorous climbing in the rain, cold and heat, and demanding engineering math, usually cut that number by two-thirds by the time his 16-week certification program is over.

In an 8:30 a.m. class, Schubauer barks orders to his students after he asks them to diagram an electrical network on the white board.

“I don’t want any confusion, I don’t want any assumptions. I want these diagrams to speak for themselves,” he says. “I don’t want to see any inconsistencies.”

Housand approaches the board and begins to draw how he would configure a bank of three transformers to go from high to usable voltage. Some of the diagrams the students draw involve about two dozen calculations.

Schubauer wants the students to know the theory behind what they are handling even though most linemen head into the field with detailed plans. The cost of a mistake is blown transformer, a power outage, injury or death, he said.

Cold Climbing

An hour later, Housand and his classmates are cinching a BuckSqueeze, a climbing belt made by Buckingham Manufacturing Co. in Binghamton, New York, around 40-foot poles, then inchworming their way up. His internship at the City of Rocky Mount lasts for 16 weeks. Four other classmates also found work.

“It is very reasonable to expect, if we have an opening, for Chris Housand to be hired unless another applicant has a lot more experience,” said Darryl Strother, Rocky Mount’s electric superintendent.

Housand worked at a cotton gin right out of high school. Now, he calls himself a “linegineer,” his term for a job that requires physical stamina and engineering knowledge.

“We do not have a labor shortage in America, we have a skill shortage,” said Boeing’s Stephens. “The key is will there be enough people to meet our needs?”

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South Korea’s current-account surplus widened to a four-month high in April as record exports offset a rise in dividend payments to foreign shareholders.

The surplus was $1.88 billion, compared with a revised $1.33 billion in March, the Bank of Korea said in a statement in Seoul today. The current account is the broadest measure of trade, tracking goods, services and investment income.

South Korea’s exports have climbed at a double-digit pace since November 2009 even as the won has risen, with the government boosting its estimate for sales of ships made by companies such as Hyundai Heavy Industries Co. The stronger won may help ease inflation pressure, which the Bank of Korea has tried to contain by raising interest rates twice this year.

“Exports are remarkably strong, adding upward pressure on the won,” June Park, an economist at Woori Investment & Securities Co. in Seoul, said before the release. “The won will likely rise further but only gradually, so it won’t deter the central bank from raising interest rates next month.”

The won rose 1.2 percent to 1,088.40 per dollar at the 3 p.m. close in Seoul yesterday, according to data compiled by Bloomberg. The Kospi share index gained 2.8 percent.

Rising Exports

Total exports on a customs-cleared basis rose 25.1 percent last month from a year earlier, compared with a revised 28 no faxing pay day loans.8 percent gain in March, according to today’s statement. Imports climbed 23.9 percent after expanding a revised 27.6 percent in March. Overseas shipments probably rose 28.7 percent this month, according to the median forecast of six economists surveyed by Bloomberg News.

Hyundai Heavy Industries and other shipbuilders won a combined $12.8 billion new orders for the first three months of this year, according to economy ministry data released last month. The ministry boosted its estimate for this year’s ship orders to $51.7 billion from $50.5 billion.

The central bank held off boosting borrowing costs for two months after raising the benchmark interest rate by a quarter of a percentage point in both January and March, with inflation exceeding its target in each the past four months. Governor Kim Choong Soo’s policy board meets June 10 to decide whether to raise rates for the third time this year.

The surplus on traded goods widened to $3.93 billion last month from a revised $2.75 billion in March, today’s report showed. The services deficit, which measures the flow of travel, transport costs and royalties, was $179 million in April, compared with revised $328 million in March.

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Hormel Foods Corp.’s fiscal second-quarter profit climbed 41 percent despite facing rising food costs, helped by strong performance from refrigerated foods like deli meats and Jennie-O Turkey.

The maker of Spam and Dinty Moore stew also raised its full-year earnings outlook.

Like many food makers, Hormel has been dealing with higher ingredient costs and has raised its prices to help cope. Hormel said it expects to face higher costs for the rest of the year and will continue to raise prices and cut costs to offset this.

“We believe our strong portfolio of brands and our balanced model will allow us to overcome those obstacles,” said CEO Jeffrey Ettinger.

The Austin, Minn.-based company said its net income rose to $109.6 million, or 40 cents per share, for the three months ended May 1, up from $77.9 million, or 29 cents per share, a year ago. Analysts expected a slightly higher 41 cents per share, according to Fact Set.

Revenue increased 15 percent to $1.96 billion from $1.7 billion. That was much better than the $1.82 billion analysts predicted.

All results reflect a two-for-one stock split Hormel implemented Feb. 1.

Shares fell 43 cents to $29.59 in pre-market trading after rising earlier.

Sales of Hormel’s largest segment, refrigerated foods, which make up more than half of Hormel’s total revenue, rose nearly 17 percent. Top sellers were Hormel party trays and deli meats.

Sales of Jennie-O Turkey, which makes up 19 percent of total revenue, rose 25 percent, helped by cost cuts and stronger commodity meat markets.

Grocery products revenue edged up 1.4 percent, boosted by sales of Spam, Hormel bacon toppings, Hormel Kitchen hash and Dinty Moore stew, while sales of microwave products and imported canned meats were weaker.

Specialty foods revenue rose 4 percent, with operating profit hindered by higher raw material costs.

The company now expects full-year net income of $1.67 to $1.73 per share, up from prior guidance of $1.62 to $1.68 per share. Analysts expect $1.71 per share.

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Europe’s debt crisis deepened as Greece struggled to complete a fifth austerity plan to keep pace with its mounting deficit, Italy faced a possible credit-rating cut and Spain’s ruling party was routed in local voting.

The cost to insure Greek debt against default rose to a record and the yield on its 10-year bonds increased to a euro- era high as Prime Minister George Papandreou’s government met today in Athens to endorse a new package of spending cuts and state-asset sales needed to assure the flow of bailout funds.

“The bond market is the only language policy makers will listen to,” Axel Merk, chief investment officer for Merk Investments Llc said in an interview with Bloomberg Television’s Betty Liu. “Once the bond markets impose austerity on the country that’s when they follow through, when there is a backing off, when things are going better, that’s when they lapse.”

More than a year after European policy makers approved a 750 billion-euro ($1.1 trillion) bailout blueprint to stem the sovereign crisis, bond yields in debt-laden peripheral countries are at record highs and officials are floating plans to extend Greek repayments. Hours before the May 20 S&P warning about Italy, Fitch Ratings cut Greece three levels and said it would consider an extension of maturities as a default.

The extra yield investors demand to hold Italian 10-year bonds over German bunds rose to a four-month high of 179 basis points after Standard & Poor’s said it may cut the country’s credit rating. Spain’s yield spread rose to 251 basis points, also the highest since January, after the ruling socialists suffered their worst defeat in 30 years in local elections in a voter backlash against austerity.

Asset Sales

European Union demands may require Greece to sell 15 billion euros of assets by the end of 2012, a year ahead of schedule, in order to win a new three-year loan package, a person familiar with the talks said today. EU Economic and Monetary Affairs Commissioner Olli Rehn said creating a vehicle to manage Greece’s privatization program was being considered.

“The possibility to create a trust fund or a privatization agency is one option we’re exploring among several options,” Rehn told reporters in Vienna today.

The government discussed today selling stakes in Hellenic Postbank SA, and the country’s ports in the first phase of the asset-sale program, said a government official. The state’s direct 34 percent stake in Postbank has a market value of 275 million euros.

‘Refinancing Hole’

“With an economy still in recession, it’s very difficult to keep piling on larger amounts of fiscal tightening and I think instead we are moving to an environment where asset sales are going to be used as the key means of signaling Greece’s commitment here,” David Mackie, London-based chief European economist at JPMorgan Chase & Co., said in a conference call today.

Greece has a “refinancing hole” of 30 billion euros for both 2012 and 2013, according to economist Nouriel Roubini. Greece could restructure by issuing debt with lower interest payments and extend maturities as it’s unlikely the nation will “regain market access for the next five to 10 years,” he said in an interview last week.

The demands on Greece come amid renewed pressure on Spain and Italy, in addition to Ireland and Portugal, the other two euro nations that received bailouts.

Election Rout

Spanish Prime Minister Jose Luis Rodriguez Zapatero’s Socialist party had its worst electoral setback in local elections since the country’s 1979 return to democracy as voters punished the ruling party for austerity policies. The shift in power in some key regions may spark doubts over Spain’s ability to contain its deficit as newly elected officials may reveal weaker finances than their predecessors reported.

Euro-area governments also want bondholders to buy new Greek bonds to replace maturing debt, stopping short of the debt extension, or “reprofiling,” floated by Luxembourg Prime Minister Jean-Claude Juncker last week, the person said.

Such a postponement of debt redemptions would be classified as a default, Fitch Ratings said last week when it cut Greece’s credit rating by three levels to B+.

Pressure on peripheral bonds isn’t letting up because “discussion on Greece will continue, Italy’s negative outlook will reinforce risk aversion and the result of Spanish regional elections will foster speculation that the newly appointed administrations will unveil ‘hidden debt,’ ” Luca Cazzulani, fixed income strategist at UniCredit Research, said in a note to investors.

Bonds Decline

Greek 10-year yields jumped 49 basis points to a record 17 percent as of 3 p.m. in London, while yields on two-year notes climbed 64 basis points to 26.1 percent. Irish 10-year yields advanced 29 basis points to 10.83 percent, with Italy up 4 basis points to 4.81 percent. The yield on Spain’s 10-year bond rose 5 basis points to 5.53 percent.

Declines in so-called euro-region peripheral bonds have deepened amid speculation that Greece will need to restructure its debt as it struggles to avoid default. The nation’s securities have lost 13 percent this year, with Portugal losing 14 percent and Ireland 7.1 percent, according to indexes from Bloomberg and the European Federation of Financial Analysts Societies.

The euro fell as much as 1.4 percent to $1.3970, weakening to less than $1.40 for the first time since March 18, and depreciated to 1.23235 Swiss francs, a record.

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The U.S. government is investigating whether companies that distribute airline flight and fare information are stifling competition and violating federal antitrust laws.

The Justice Department confirmed the investigation Friday after several airlines and two ticket information-distribution companies said they received letters from officials.

This is the latest twist in an escalating fight between airlines and so-called global distribution systems over how air travel is sold, especially to lucrative corporate accounts.

Many consumers buy tickets online directly from the airlines, but corporations often use travel agencies that get information about flights and fares from the three big distribution companies.

American Airlines has led the challenge to the current setup. It wants to deal directly with travel agents to reduce fees it pays to the distribution systems and to use its own information about customers to sell them extra services.

American claims distribution companies have struck back by making information about its flights harder to find.

American said Friday that it had received a civil demand for information from the Justice Department. The airline declined to release the document, but spokesman Andrew Backover said, “American is not the subject of the investigation.”

Delta Air Lines and US Airways acknowledged getting similar requests, as did two large distribution systems, or GDS companies, Travelport Ltd. and Sabre Holdings.

Travelport spokeswoman Jill Brenner said the company “welcomes the GDS industry investigation” and “is confident that it is in complete compliance with the antitrust laws.”

Sabre spokeswoman Nancy St. Pierre said that the Justice Department made no allegations when it contacted the company.

Justice Department spokeswoman Gina Talamona said the agency’s antitrust division “is investigating the possibility of anticompetitive practices in the global distribution systems industry.” She declined to comment further.

The airlines say their complaint is with the distribution systems, not travel agents.

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The Fitch ratings agency downgraded Greece’s debt grade by three notches further into junk status on Friday, another blow to the debt-ridden country that saw its borrowing rates spike to new record highs.

Fitch cited problems with Greece’s implementation of essential reforms to its economy, which European officials have said are behind schedule and need to be broadened.

The downgrade “reflects the scale of the challenge facing Greece in implementing a radical fiscal and structural reform program necessary to secure solvency of the state and the foundations for sustained economic recovery,” the agency said.

It cut Greece’s long-term sovereign rating to B+ from BB+ _ a move which the government criticized as having been influenced by media rumors and a failure to consider the additional commitments Athens has made.

Many have said the sheer size of Greece’s debt, which stood at over euro342 billion ($488 billion) in 2010, combined with a budget deficit of 10.5 percent of GDP, means the country will eventually have to restructure its debt _ pay creditors later or less than the full amount owed.

Top European officials disagree over whether that is a viable option. The European Central Bank opposes the idea, with chief economist Juergen Stark indicating the ECB would cut off Greek banks from emergency credit support if that happened.

His comments contrasted with those of other top European Union officials, who have said they would not exclude a voluntary stretch-out of bond repayments.

Earlier this week, Jean-Claude Juncker, who heads the group of 17 eurozone finance ministers, said he “wouldn’t exclude” a voluntary delay to repayments, but warned any such move would only be considered after Greece makes more efforts to raise money from privatization and budget cutting.

Amid the uncertainty, Greek borrowing costs spiked to record highs, with interest rates on 10-year bonds hovering around 17 percent. The high interest rates demanded by investors indicate they fear Greece cannot repay its debts.

For the past year, Greece has been relying on funds from a euro110 billion package of bailout loans from the International Monetary Fund and other eurozone countries. In return, it has been implementing strict austerity measures.

European officials, however, have warned Greece it is slipping from its targets and needs to urgently speed up reforms, including a euro50 billion privatization program.

A delegation from the EU, the ECB and International Monetary Fund is currently in Athens reviewing progress in reforms required for the country to receive the next batch of bailout loans, worth euro12 billion.

“Implementation and political risk have risen as further fiscal austerity measures are required to realize the 2011 budget deficit goal of 7.5 percent of GDP due to the under-performance of tax receipts and higher deficit outturn for 2010 than originally targeted,” Fitch said.

It added that Greece also faced problems in pushing through its plan to privatize state assets.

“The greater emphasis on privatization has heightened the risk that the policy conditional funding under the EU-IMF program will be delayed given the political and technical obstacles to the realization of euro50 billion of asset sales,” the agency said.

The government, which has often accused ratings agencies of not basing their downgrades on facts, said Fitch’s action Friday “comes at a time when the country’s economic adjustment program is still being reviewed by the European Commission, the European Central Bank and the IMF, and amidst intense and unfounded rumors in the media.”

The downgrade “ignores the additional commitments that the Greek government has already made in order to achieve its fiscal targets for 2011, and to accelerate the privatization program,” the Finance Ministry said, adding that the specific policies for these commitments would be announced after the current evaluation is complete.

Speaking earlier in the day, Prime Minister George Papandreou insisted the country will repay all its loans.

“Of course, the deficit is the reason the debt is increasing, it is also the reason that markets are expressing reservations as to whether we can cope or not,” he said.

“It is the reason we are forced to ask for help from our partners … to depend on their help, on their loans,” he stressed. “And, of course, I want to say here that we will pay back these loans.”

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Dominique Strauss-Kahn, the embattled managing director of International Monetary Fund, resigned Wednesday, saying he wanted to devote “all his energy” to battle the sexual assault charges he faces in New York.

The IMF’s executive board released a letter from the French executive Wednesday in which he denied the allegations lodged against him but said that with “sadness” he felt he must resign. He said that he was thinking of his family and that he wanted to protect the IMF.

“It is with infinite sadness that I feel compelled today to present to the executive board my resignation from my post of managing director of the IMF,” the five-paragraph letter said. “I think at this time first of my wife _ whom I love more than anything _ of my children, of my family, of my friends. I think also of my colleagues at the Fund. Together we have accomplished such great things over the last three years and more.

“To all, I want to say that I deny with the greatest possible firmness all of the allegations that have been made against me. I want to protect this institution which I have served with honor and devotion, and especially _ especially _ I want to devote all my strength, all my time and all my energy to proving my innocence.”

Strauss-Kahn, who faced increasing international pressure to quit, announced his decision on the eve of a bail hearing Thursday that could have spelled the end of his leadership of the IMF anyway. He faces charges of assaulting a maid at a New York hotel.

The maid, a 32-year-old immigrant from the West African nation of Guinea, told police that the 62-year-old Strauss-Kahn came out of the bathroom naked, chased her down, forced her to perform oral sex on him and tried to remove her underwear before she broke free and fled the room.

If a New York judge denies bail for Strauss-Kahn or imposes highly restrictive conditions on his freedom, the IMF’s executive board would have expected him to resign, two senior IMF officials said earlier Wednesday. If he didn’t, the board could have removed him on the grounds that he couldn’t lead the IMF from a jail cell or far from its Washington headquarters.

The two officials spoke on condition of anonymity because of the highly sensitive situation. Strauss-Kahn is jailed in New York City. Attempts to reach his lawyers were unsuccessful.

The IMF’s statement late Wednesday said the process of choosing a new leader would begin, but in the meantime John Lipsky would remain acting managing director.

One of the IMF officials said earlier Wednesday that the fund had yet to speak with Strauss-Kahn since his weekend arrest. There were no procedures for suspending or placing its leader on extended leave.

While Strauss-Kahn remains confined to a Rikers Island jail cell, the dividing lines are sharpening in a dispute over whether someone from a rich or an emerging economy should lead the IMF after his exit.

Europe is aggressively staking its traditional claim to the top position. But fast-growing nations such as China, Brazil and South Africa are trying to break Europe’s grip on an organization empowered to direct billions of dollars to stabilize the global economy.

Europeans have led the IMF since its inception after World War II. Americans have occupied both the No. 2 position at the IMF and the top post at its sister institution, the World Bank. The World Bank funds projects in developing countries.

Europe has “an abundance of highly qualified candidates” to lead the IMF, German government spokesman Christoph Steegmans declared Wednesday. He also noted the relevance of having a European at the helm, to deal with the debt problems that have racked the eurozone.

Steegmans didn’t name any potential candidates or say whether Germany might propose one make quick cash. But German Chancellor Angela Merkel, along with the finance ministers of Sweden and the Netherlands, have pressed Europe’s case for the IMF leadership.

Still, developing nations see Europe’s stranglehold on the position as increasingly out of touch with the world economy. China’s is now the world’s second-largest economy. India’s and Brazil’s have cracked the top 10. Many emerging economies are sitting on stockpiles of cash and have become forces of financial stability, while rich countries have become weighed down by debt.

“We must establish meritocracy, so that the person leading the IMF is selected for their merits and not for being European,” Brazilian Finance Minister Guido Mantega said, calling for a “new criteria” for leadership. “You can have a competent European … but you can have a representative from an emerging nation who is competent as well.”

China suggested it was time to shake things up at the IMF, with Foreign Ministry spokeswoman Jiang Yu saying the leadership “should be based on fairness, transparency and merit.”

And South African Finance Minister Pravin Gordhan spoke in stronger terms. He said the new director should come from an emerging economy, to “bring a new perspective that will ensure that the interests of all countries, both developed and developing, are fully reflected in the operations and policies of the IMF.”

It remains unclear which way the United States is leaning. Treasury Secretary Timothy Geithner had said Tuesday that Strauss-Kahn is “obviously not in a position” to run the IMF, escalating pressure on the 62-year-old economist.

The United States has a major say in determining who will head the fund, in part because it holds the largest number of votes. The prevailing view among analysts and former Treasury officials appears to be that Washington would back a strong European candidate who could be approved in a smooth process.

“It’s kind of not our fight,” said Phillip Swagel, a Treasury official in the George W. Bush administration. “There are very good reasons to have a forceful, prominent European head of IMF.”

One such candidate would be French Finance Minister Christine Lagarde.

Other Europeans touted as possibilities are Germany’s former central bank chief Axel Weber; the head of Europe’s bailout fund, Klaus Regling; and Peer Steinbrueck, a former German finance minister.

Candidates from elsewhere include Turkey’s former finance minister, Kemal Dervis; Singapore’s finance chief Tharman Shanmugaratnam; and Indian economist Montek Singh Ahluwalia.

More possibilities include Trevor Manuel, South Africa’s former finance minister; Mexico’s central bank governor, Agustin Carstens; and former Brazilian central bank president Arminio Fraga.

Strauss-Kahn was removed from a plane Saturday at John F. Kennedy International Airport, moments before he was to fly to Paris. He was supposed to meet Sunday with German Chancellor Angela Merkel to discuss aid to debt-laden Greece and then join EU finance ministers in Brussels on Monday and Tuesday.

Strauss-Kahn’s flight from Washington was paid for by the IMF, with an approved stopover in New York, the official said. That meant his New York visit was in a private capacity. He was not accompanied by security personnel or any IMF aides.

The official said Strauss-Kahn’s security team was supposed to meet him at Paris’ Charles de Gaulle airport. His assistants were already in Europe.

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Crystal City

“Thor” nailed down the No. 1 spot at the box office again.

Paramount’s 3-D superhero film starring Chris Hemsworth as Marvel’s hammer-toting god of thunder earned $34.5 million in its second weekend, according to studio estimates Sunday.

That brings the total haul of “Thor” to $119.2 million, though not quite as impressive as fellow comic book hero “Iron Man 2,” which earned $211.2 million by its second weekend the same time last year.

“`Thor’ had a really great playing field to work on for its second weekend in theaters,” said Paul Dergarabedian, box office analyst for Hollywood.com. “For a big-budget Marvel Comics film that opened very solidly to drop only 48 percent indicates some very strong word of mouth. I think Kenneth Branagh being the director really brought a lot to the table.”

Universal’s “Bridesmaids,” the raunchy comedy starring Kristen Wiig as a down-on-her-luck maid of honor, debuted above expectations in second place with $24.4 million. Nikki Rocco, head of distribution for Universal, attributed the movie’s good reviews and word of mouth to wide audience appeal: 67 percent of the audience was female; 33 percent male.

“That’s pretty good considering this is a picture titled `Bridesmaids,’” said Rocco.

The next adversary for “Thor” arrives next week with the opening of “Pirates of the Caribbean: On Stranger Tides,” the fourth film in the blockbuster Disney franchise starring Johnny Depp as mischievous pirate Capt. Jack Sparrow. On Memorial Day weekend come the sequels “The Hangover Part II” from Warner Bros paydayloan. and “Kung Fu Panda 2″ from Paramount.

“The cavalry is about to arrive,” said Dergarabedian. “We’re poised for a strong Memorial Day weekend. We’re down year-to-date about 13 percent on revenue. A month ago, we were down 20 percent. We’re making up ground, and this weekend was down only 3 percent, which is impressive considering the strength of `Iron Man 2′ in its second weekend a year ago.”

Universal’s car-racing sequel “Fast Five” with Dwayne Johnson shifted into the third position with $19.5 million in its third weekend in theaters.

Sony’s 3-D vampire-hunting graphic novel adaptation “Priest” opened in fourth place with $14.5 million, while Fox’s animated bird tale “Rio” landed at fifth place with $8 million in its fifth weekend in theaters.

Estimated ticket sales for Friday through Sunday at U.S. and Canadian theaters, according to Hollywood.com. Final figures will be released Monday.

1. “Thor,” $34.5 million.

2. “Bridesmaids,” $24.4 million.

3. “Fast Five,” $19.5 million.

4. “Priest,” $14.5 million.

5. “Rio,” $8 million.

6. “Jumping the Broom,” $7.3 million.

7. “Something Borrowed,” $7 million.

8. “Water for Elephants,” $4.1 million.

9. “Tyler Perry’s Madea’s Big Happy Family,” $2.2 million.

10. “Soul Surfer,” $1.8 million.

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Online:

http://www.hollywood.com/boxoffice

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