NEWS,07.02.2013

ECB holds rates despite French concerns

The European Central Bank held its key interest rates unchanged at its policy meeting on Thursday despite French concerns that the euro's recent strong rise could pose a threat to economic recovery.As widely predicted by analysts and ECB watchers, the central bank's policy-setting governing council voted to leave the main refinancing rate at a historic low of 0.75%, where it has been since July.ECB president Mario Draghi is scheduled to explain the reasoning behind the decision at his usual post-meeting press conference.Analysts said that with no new policy moves expected, attention is likely to focus on the euro which late last week rose to its highest level against the dollar in more than a year.Newedge Strategy analyst Annalisa Piazza said she expected Draghi to remain cautious about the outlook for growth, despite rising confidence across the euro area, because "the good news coming from rising business confidence might be offset by negative effects of a stronger euro."Jennifer McKeown at Capital Economics said Draghi would likely shrug off questions about the potential impact of the strong euro."All-in-all, the message is likely to be that the ECB is happy for now to remain on the sidelines," she said.The central bank always insists it has no exchange rate target.And analysts say Draghi will likely reiterate the stance of the Group of 20 (G20) nations which said in November that they remain committed to "more market-determined exchange rate systems and exchange rate flexibility to reflect underlying fundamentals."Nevertheless, France has triggered a debate this week that a strong currency could trample the still tender green shoots of recovery in the euro area, even as Germany insists there is no cause for alarm just yet.On Tuesday, French President Francois Hollande called for the eurozone to manage the euro's exchange rate.Speaking before the European Parliament in Strasbourg, Hollande said "a single currency zone must have a foreign exchange policy otherwise it will see an exchange rate imposed on it (by the markets) which is out of line with its real competitive position."But Berlin says there is no cause for concern, arguing that from an historical point of view, the euro is currently not overvalued and that the recent rise is a counter-reaction to the massive depreciation in the wake of the eurozone crisis.German officials argue that the euro's rise is a good thing since it shows that financial markets' confidence in the single currency is returning.

Appeal for Spain PM's resignation grows

A petition calling for Spanish Prime Minister Mariano Rajoy to resign over a corruption scandal has garnered more than a million signatures, an online count showed on Thursday. The petition at change.org was sparked by the publication of documents purportedly showing that Rajoy and other members of his conservative Popular Party had received undeclared payments."I demand the immediate resignation of Prime Minister Mariano Rajoy and the calling of snap elections, as well as the resignation of any member of the Popular Party named in the documents who holds office publicly or in the party," the petition read.On Thursday afternoon the number of signatories logged on the online petition was 1 017 188 and counting - about one signature for every 47 people in Spain.Rajoy has resisted calls from the opposition Socialist Party and from angry street protestors to resign over the scandal.It came at a sensitive time for Spain as Rajoy's government imposes spending cuts and tax rises on Spaniards suffering in a recession.The allegations are based on account ledgers purportedly written by the party's former treasurer Luis Barcenas and published in leading centre-left newspaper El Pais a week ago.Rajoy, Barcenas and the party have denied the alleged secret payments and said the ledgers are false.Barcenas on Wednesday went before an anti-corruption prosecutor investigating the affair. In that hearing Barcenas repeated his denial that the party kept secret accounts, Spanish media said.

US military is not a 911 service

The US military is not a 911 service ready to rush to every emergency around the world, Pentagon Chief Leon Panetta told lawmakers on Thursday, defending the response to an attack on a mission in Libya. He also urged a Senate committee to help remove the threat of deep automatic budget cuts set to hit the defence department from 1 March, calling them one of the greatest risks to America's national security.The defence secretary and the chairperson of the Joint Chiefs of Staff, General Martin Dempsey, were grilled by senators probing what happened during the deadly 11 September militant attack on the US mission in Benghazi."I firmly believe that the department of defence and the US armed forces did all we could do in the response to the attacks in Benghazi," Panetta told the Senate Armed Services Committee.Despite having US bases in the Africa region and in Italy, Panetta said there was not enough time to scramble resources to Benghazi as the mission and a nearby annex came under fire.An unmanned surveillance drone did arrive on the scene an hour and 11 minutes after the start of the attack, but it would have taken a fixed-wing aircraft between nine to 12 hours to get there."The US military, as I've said, is not and frankly should not be a 911 service capable of arriving on the scene within minutes to every possible contingency around the world," Panetta said."The US military has neither the resources nor the responsibility to have a firehouse next to every US facility in the world."Panetta also stressed there had been "no specific intelligence" of an attack on the mission in Benghazi, in which the US ambassador to Libya, Chris Stevens, and three other Americans were killed."Frankly, without an adequate warning, there was not enough time, given the speed of the attack, for armed military assets to respond," Panetta said.However, he assured lawmakers that the defence department, working with the state department, was putting in place new measures in the wake of the attack, including plans to base 1 000 more Marines at US missions around the world.But he warned of the threat to the Pentagon if lawmakers fail to reach a deal with President Barack Obama to avert automatic budget cuts on 1 March, which would slash the defence budget by $46bn.The threat of what is called sequestration is "one of the greatest security risks we are now facing as a nation," Panetta said."This budget uncertainty could prompt the most significant military readiness crisis in more than a decade," he warned.

US: 92% support gun background checks

More than 90% of US voters supported background checks for all gun buyers, while much smaller majorities were for stricter gun control laws such as bans on assault weapons and high-capacity magazines, said a poll released on Thursday.But the National Rifle Association (NRA) edged out President Barack Obama in the poll, with 46% saying the pro-gun lobby better reflects their views on guns, versus 43% for Obama.By a margin of 92% to 7%, voters supported background checks, the Quinnipiac University telephone poll showed. In households with a gun, 91% were in favour, while 8% were opposed, Quinnipiac said.In response to the 14 December shooting that killed 20 school children and six adults in Newtown, Connecticut, Obama last month announced a series of gun-control measures opposed by the NRA, including proposals for enhanced background checks and a ban on military-style assault weapons.House Democrats were expected to announce their own firearms legislation on Thursday.A majority of those surveyed supported stricter national gun control laws, Quinnipiac said. Fifty-six percent were for a ban on the sale of assault weapons, and the same percentage supported a ban on the sale of high-capacity magazines, defined as those holding more than 10 rounds.Congress would need to approve those initiatives and background checks."The politics of gun policy are also unclear," Peter A Brown, assistant director of the Quinnipiac University Polling Institute, said in a statement. "Despite the huge news media coverage of the issue since the Newtown shooting, only 37% of voters are more likely to vote for a congressman who votes to ban sales of assault rifles, while 31% are less likely, and 30% say it would not affect their vote."The poll surveyed 1 772 registered voters from 30 January to 4 February and had a margin of error of plus or minus 2.3 percentage points, Quinnipiac said.

The dark side of Hong Kong

For many of the richest people in Hong Kong, one of Asia's wealthiest cities, home is a mansion with an expansive view from the heights of Victoria Peak. For some of the poorest, like Leung Cho-yin, home is a metal cage.The 67-year-old former butcher pays $167 a month for one of about a dozen wire mesh cages resembling rabbit hutches crammed into a dilapidated apartment. The cages, stacked on top of each other, measure 1.5m². To keep bedbugs away, Leung and his roommates put thin pads, bamboo mats on their cages' wooden planks instead of mattresses."I've been bitten so much I'm used to it," said Leung.  "There's nothing you can do about it. I've got to live here. I've got to survive," he said as he let out a phlegmy cough.Some 100 000 people live in what's known as inadequate housing, according to the Society for Community Organisation, a social welfare group. The category also includes apartments subdivided into tiny cubicles or filled with coffin-sized wood and metal sleeping compartments as well as rooftop shacks. Forced by skyrocketing housing prices to live in cramped, dirty and unsafe conditions, their plight also highlights one of the biggest headaches facing Hong Kong's unpopular Beijing-backed leader. Leung Chun-ying took office as Hong Kong's chief executive in July pledging to provide more affordable housing in a bid to cool the anger. Home prices rose 23% in the first 10 months of 2012 and have doubled since bottoming out in 2008, the International Monetary Fund said in a report last month. Rents have followed a similar trajectory.The soaring costs are putting decent homes out of reach of a large portion of the population while stoking resentment of the government, which controls all land for development, and a coterie of wealthy property developers. Housing costs have been fuelled by easy credit thanks to ultralow interest rates that policymakers can't raise because the currency is pegged to the dollar. Money-flooding in from mainland Chinese and foreign investors looking for higher returns has exacerbated the rise.In his inaugural policy speech in January, the chief executive said the inability of the middle class to buy homes posed a threat to social stability and promised to make it a priority to tackle the housing shortage."Cramped living space in cage homes, cubicle apartments and sub-divided flats has become the reluctant choice for thousands of Hong Kong people," he said, as he unveiled plans to boost supply of public housing.His comments mark a distinct shift from predecessor Donald Tsang, who ignored the problem. Legislators and activists, however, slammed Leung for a lack of measures to boost the supply in the short term. Some 210 000 people are on the waiting list for public housing, about double from 2006. About a third of Hong Kong's 7.1 million population lives in public rental flats. When apartments bought with government subsidies are included, the figure rises to nearly half.Anger over housing prices is a common theme in increasingly frequent anti-government protests. Legislator Frederick Fung warns there will be more if the problem can't be solved. He compared the effect on the poor to a lab experiment."When we were in secondary school, we had some sort of experiment where we put many rats in a small box. They would bite each other," said Fung. "When living spaces are so congested, they would make people feel uneasy, desperate," and angry at the government, he said.Leung, the cage dweller, had little faith that the government could do anything to change the situation of people like him."It's not whether I believe him or not, but they always talk this way. What hope is there?" said Leung, who has been living in cage homes since he stopped working at a market stall after losing part of a finger 20 years ago. With just a Grade 7 education, he was only able to find intermittent casual work. He hasn't applied for public housing because he doesn't want to leave his roommates to live alone and expects to spend the rest of his life living in a cage.His only income is $515 in government assistance each month. After paying his rent, he's left with $350, or about $11.60 a day."It's impossible for me to save," said Leung, who never married and has no children to lean on for support.While cage homes, which sprang up in the 1950s to cater mostly to single men coming in from mainland China, are becoming rarer, other types of substandard housing such as cubicle apartments are growing as more families are pushed into poverty. Nearly 1.19 million people were living in poverty in the first half of last year, up from 1.15 million in 2011, according to the Hong Kong Council of Social Services. There's no official poverty line but it's generally defined as half of the city's median income of $1 550 a month.Many poor residents have applied for public housing but face years of waiting. Nearly three-quarters of 500 low-income families questioned by Oxfam Hong Kong in a recent survey had been on the list for more than 4 years without being offered a flat.Lee Tat-fong, is one of those waiting. The 63-year-old is hoping she and her two grandchildren can get out of the cubicle apartment they share in their Wan Chai neighbourhood, but she has no idea how long it will take.Lee, who suffers from diabetes and back problems, takes care of Amy, 9, and Steven, 13, because their father has disappeared and their mother - her daughter - can't get a permit to come to Hong Kong from mainland China. An uncle occasionally lends a hand.The three live in a 4.6m², one of seven created by subdividing an existing apartment. The room is jammed with their possessions: plastic bags filled with clothes, an electric fan, Amy's stuffed animals, cooking utensils."There's too little space here. We can barely breathe," said Lee, who shares the bottom bunk with her grandson.They share the communal kitchen and two toilets with the other residents. Welfare pays their $451 monthly rent and the three get another $774 for living expenses but the money is never enough, especially with two growing children to feed. Lee said the two often wanted to have McDonalds because they were still hungry after dinner, which on a recent night was a meagre portion of rice, vegetables and meat.The struggle to raise her two grandkids in such conditions was wearing her out."It's exhausting," she said. "Sometimes I get so pent up with anger, and I cry but no one sees because I hide away."