NEWS,27. AND 28.02.2013

News of the Day From Across the Globe

1 Premier ousted: Slovenia's Parliament ousted Prime Minister Janez Jansa and his conservative government Wednesday, designating a financial expert from the opposition to try to form a new administration. The moves come amid corruption allegations against Jansa and growing public anger over the struggling economy and austerity measures that have seen living standards fall and unemployment rise. The 55-33 no-confidence vote named Alenka Bratusek as prime minister-designate. Bratusek, 42, would be the first woman to lead Slovenia's government since its secession from Yugoslavia in 1991.

2 Iraq warning: Iraqi Prime Minister Nouri al-Maliki warned Wednesday that a victory for rebels in the Syrian civil war would create a new extremist haven and destabilize the wider Middle East, sparking sectarian wars in his own country and in Lebanon. The prime minister's remarks reflect fears by many Shiite Muslims in Iraq and elsewhere that Sunni Muslims would come to dominate Syria should President Bashar Assad be toppled. 

3 Corruption case: Vassilis Papageorgopoulos, the former mayor of Greece's second city, Thessaloniki, and two of his top aides were sentenced to life in jail Wednesday after being found guilty of embezzling almost $23.5 million in state funds. It's a rare conviction in a country where political corruption has contributed to Greece's dysfunction and economic decline.

4 Swiss shooting: A longtime employee opened fire at a wood-processing company in central Switzerland on Wednesday, leaving three people dead, including the assailant, in the country's second multiple-fatality shooting in two months, police said. Seven other people were wounded, six of them seriously, in the shooting at the premises of the company Kronospan, in the small town of Menznau. The incident occurred as the Swiss Parliament prepares to consider tightening some aspects of the country's famously lax gun legislation.

5 Shark attack: About 150 friends and family of 46-year-old Adam Strange wrote messages to him in the sand and stepped into the water Thursday at a New Zealand beach to say goodbye after he was killed Wednesday by a large shark. Strange, an award-winning television and short film director, was swimming near popular Muriwai Beach Wednesday when he was attacked by a shark that may have been 14 feet long. The fatal attack is one of only about a dozen in New Zealand in the past 180 years.

6 Lethal fire: A fire broke out at an illegal six-story plastics market in the Indian city of Kolkata on Wednesday, killing at least 19 people, police said. The blaze was likely caused by a short circuit, police said.

7 Lion gangster: Authorities have removed four lions and two bears from the Bucharest estate of a notorious Romanian gangster. Ian Balint, who reportedly used the animals to threaten his victims, was arrested Feb. 22 with dozens of others on charges of attempted murder, kidnapping, blackmail and possessing illegal weapons. Environmental authorities tranquilized the animals Wednesday and transported them to a zoo.

8 Tallest hotel: The JW Marriott's Marquis Dubai formally opened this week after gaining the title of tallest hotel from Guinness World Records. At 1,099 feet, the 72-story hotel towers over the skylines of most cities.

 

US economy shows strength

 

Even with automatic spending cuts looming, the outlook for the US economy brightened a bit Tuesday after reports showed that Americans are more confident and are buying more new homes.Home prices are also rising steadily, and banks are lending more. Such improvements suggest that the economy is resilient enough to withstand the deep government cuts that will kick in Friday.That's especially encouraging because uncertainty over the federal budget could persist for months."The stars are lining up for stronger private sector growth this year," said Craig Alexander, chief economist at TD Bank.Sales of new homes jumped nearly 16% in January to their highest level in 4 years, adding momentum to the housing recovery. Consumer confidence rose in February after three months of declines. And home prices increased in December from the same month in 2011 by the largest amount in more than six years.The upbeat economic news contributed to a rally on Wall Street. The Dow Jones industrial average jumped more than 100 points.Consumers still face numerous burdens. Among them is a sharp increase in gas prices. The national average for a gallon, $3.78 ($1 a litre), has surged 44 cents in a month.And Social Security taxes rose 2 percentage points beginning January 1. This year, the increase will cost a typical household that earns $50 000 about $1 000. Income taxes for the highest-earning Americans also rose.Both factors could reduce overall spending.On Friday, about $85 billion in automatic spending cuts are to kick in, and there's little sign that the White House and Congress will reach a budget deal to avoid them. The cuts will cause furloughs and temporary layoffs of government workers and contractors and sharply reduce spending on defense and domestic programs.For about 2 million long-term unemployed, benefits now averaging $300 a week could shrink by about $30. Payments that subsidize clean energy, school construction and state and local public works projects could be cut. Low-income Americans seeking heating or housing aid might face longer waits.Overall, the tax increases and spending cuts could shave up to 1.2 percentage points from growth this year, economists estimate. Alexander estimates that without the spending cuts or tax increases, the economy would expand more than 3 percent this year. Instead, he predicts growth of only 2%.But growth should accelerate later this year as the effects of the government cutbacks ease, he and other economists say. And several reports on Tuesday suggest that the economy's underlying health is improving despite the prospect of lower government spending and further budget stalemates:

• The Standard & Poor's/Case-Shiller 20-city home price index rose 6.8% in December from a year earlier. That was the biggest year-over-year increase since July 2006. Rising home prices tend to make homeowners feel wealthier and encourage more spending. They also cause more people to buy before prices rise further. And banks are more likely to provide mortgages if they foresee higher home prices.

• Consumer confidence rose after three months of declines, according to the Conference Board, a business research group. Confidence had plunged in January after higher taxes cut most Americans' take-home pay. The rebound, though, suggests that some consumers have begun to adjust to smaller paychecks. The consumer confidence index rose to 69.6 in February from 58.4 in January. That's higher than last year's average of 67.1.

• Bank lending rose 1.7% in the October-December quarter, the Federal Deposit Insurance said. It was the sixth rise in seven quarters. Banks made more commercial and industrial loans to businesses and auto loans to consumers. More lending means the Federal Reserve's policy of keeping interest rates at record lows will benefit more people. Chairman Ben Bernanke reiterated to Congress on Tuesday that the Fed's efforts are helping the economy and signaled that they will continue.

• Sales of new homes rose to a seasonally adjusted annual rate of 437 000, the Commerce Department said. That's the highest level since July 2008. The gain will likely encourage more construction. Higher sales are keeping the supply of new homes low, even as builders have tried to keep up. At the current sales pace, it would take only 4.1 months to exhaust the supply of new homes for sale. That's the lowest such figure in nearly eight years.

"Builders are not putting up homes fast enough to meet underlying demand," said Patrick Newport, an economist at IHS Global Insight.New homes have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90 000 in tax revenue, according to data from the National Association of Homebuilders.Construction hiring has picked up in recent months. The industry has gained 98,000 jobs since September, its best stretch since the spring of 2006 - before the housing bubble burst.

Will Italian Politics Be a Threat for International Financial Stability?

Mr. Grillo and the Five Star movement is part of a trend across the developed world, as electorates become disenchanted with established parties and vote for a protest party. From Occupy Wall Street to the Tea Party to the EU's Pirate Party, an increasing number of transatlantic voters tire of the options presented by established two party systems. This may be driven by the failure of governing parties to adapt to societal tensions raised by the current economic crisis. In that light, the strong protest vote in Italy should not be seen as an outlier.Despite the current uncertainty in the composition of the next government, Italy remains an important ally for the United States, and a key strategic partner in all future discussions about Europe and transatlantic relations. For this reasons America should follow carefully what happens in Italy. The demand for renewal and change that is the real message of recent elections is something too important to be considered just a local case. Understanding the political process of how Italian governments are formed is therefore key.On February 25th the results of the political elections in Italy stunned all commentators by presenting a country apparently deeply divided and a parliament that seems not to allow any reasonably stable coalition for leading the country.The polls gave a limited majority to the leftwing coalition (29.5% in the lower house) leading on Silvio Berlusconi's rightwing coalition (29.1%). But the surprise was the significant result of the "Five Stars movement" of Mr Beppe Grillo (25.5%) and the relatively low result achieved by current Prime Minister Mario Monti (10.5%).The new electoral law (approved late in 2012, just few months ahead of the elections), allows the left to gain a solid majority in the lower house (with 55% of the legislature, although they led the right-wing coalition by only 0.4% of the vote), but in the upper house, there is an apparent stalemate, as the left elected 123 senators, the right 117, Five Stars 54 and Monti 18. A coalition government must include two of the first three parties mentioned, as a government requires a majority in both houses.The problem is that, at the moment, there is not much appetite for an agreement. The left-wing coalition does not seem interested in a deal with Berlusconi and the Five Stars leader, Mr Beppe Grillo, suggested that he would not make any deal with anyone at all. It now appears that Mr Bersani would like to open a bridge to Mr Grillo rather than trying a grand coalition with Mr Berlusconi. It is unclear if he will succeed, but in any case it will be hard to imagine that Italy will have a strong government in this situation.As the new parliament assumes office on March 15th, there is time for negotiations and compromise. But in the meantime, talks need to be held also in order to designate the new leadership of the lower house and Senate and its constituent committees and to elect the new president of the Republic, as the incumbent's mandate is expiring in May.Who will govern Italy in the meantime? Currently, there is still a caretaker government in office, which is the existing cabinet of Prime Minister Monti. It is nevertheless expected that after the new parliament is fully operational, the president of the republic, Mr Giorgio Napolitano, will try to facilitate the forming of a government and is likely to give a mandate to a designate Prime Minister. As Bersani's leftwing coalition has the majority in the lower house, unless the coalition otherwise indicates, Bersani remains the likely next Prime Minister. But with no agreements for a majority, he will be rather unlikely to succeed.The Italian system is a parliamentary democracy, and the new government, that formally takes office at the moment the ministers are sworn in, needs to win a vote of confidence from both houses of the parliament immediately after taking office. In the past, the tradition has been that, if the designated Prime Minister, after having made his consultations, realizes that there is no support for his government, he will indicate so to the President and resign his post. That meant that the previous government remained as caretaker until a new Prime Minister was selected and then formed the government, or, if no solution was available, the president of the republic called for new elections and dissolved the government.Currently, Monti stays in office as Prime Minister until an alternative is selected, and the need for stability would suggest that until a solution is found the best is for him to stay. However, things are so uncertain, no one can predict when or if a new government would be formed.

Wall Street gains despite IMF warning

Wall Street advanced, with gains tempered by expectations that Congress will not act to stop automatic federal spending cuts that are widely expected to put the brakes on the pace of expansion in the world's largest economy.The International Monetary Fund warned it will downgrade its economic forecast for the US if US$85 billion of schedule federal spending cuts take effect on March 1.If all cuts go ahead, the IMF would lower its current estimate for a 2% expansion for US gross domestic product this year by at least 0.5%, IMF spokesman William Murray told reporters at a news briefing. Global growth also would be hit.In afternoon trading in New York, the Dow Jones Industrial Average rose 0.14%, the Standard & Poor's 500 Index gained 0.18%, while the Nasdaq Composite Index climbed 0.37%.Expectations of a slowdown in the pace of growth buoyed US Treasuries.Commerce Department data released today showed GDP expanded at an annual rate of 0.1% in the final three months of 2012, compared with a previously estimated 0.1% contraction. That was below the 0.5% growth forecast by economists polled by Reuters."It's pretty well baked into the cake that no action is likely to be taken on the sequestration tomorrow," Thomas Simons, a government debt economist in New York at Jefferies Group, one of 21 primary dealers that trade with the Fed, told Bloomberg. "GDP was weaker than expected. It's nice to see the negative sign go away, but it's still pretty weak."The negative sentiment was offset by the latest news on the labour market. Applications for jobless benefits surprisingly dropped 22,000 last week to 344,000. Economists polled by Reuters had expected first-time applications to fall to 360,000.Shares of JC Penney sank, last down 14%, after the company reported a net loss of US$552 million in the quarter ended February 2, compared with US$87 million a year earlier.In Europe, the Stoxx 600 Index finished the day with a 1% gain from the previous close. The index has advanced for the ninth straight month and is up 3.7% so far this year, according to Bloomberg.Good news on Europe's largest economy helped as German unemployment posted a surprise drop February.Benchmark stock indexes rose in Frankfurt and Paris, both advancing 0.6%, while the UK's FTSE 100 added 0.6%.The political impasse in Italy remains a concern for all of Europe. In Berlin, Italian President Giorgio Napolitano said the formation of a new government would take time and that it's important to keep in mind that the Monti government remains in office for now.

NEWS,29.01.2013

RBS faces £500m fine over Libor scandal

Britain's Royal Bank of Scotland could face a £500m ($786m, €585m) fine from British and US authorities for its role in the Libor rate-rigging affair, media said Tuesday.The Wall Street Journal, citing people briefed on negotiations, added that US authorities were pushing for a settlement of allegations that would result also in an RBS division pleading guilty to criminal charges.The newspaper said that the deal could be completed within the next fortnight and added that RBS was resisting any guilty plea amid fears it would lose clients and spark costly litigation.A spokesperson for the state-rescued bank would not be drawn on the article, simply saying: "Discussions with various authorities in relation to Libor setting are ongoing."We continue to co-operate fully with their investigations," he added in a statement.Investors meanwhile took flight at Tuesday's development. RBS shares sank 5.98% to finish at 345.80 pence on London's FTSE 100 index of leading shares, which ended 0.71% higher at 6 339.19 points.The Edinburgh-based lender is 82% owned by the British government after a vast bailout during the global financial crisis.The Libor affair erupted in June 2012 when Barclays bank was fined 290m by British and US regulators for attempted manipulation of Libor and Euribor interbank rates between 2005 and 2009.In December, Swiss banking giant UBS was slapped with fines totalling $1.5bn after a major probe by Swiss, British and US regulators revealed evidence of massive misconduct."It cannot be said that this comes as a surprise given that it was well flagged that authorities will chase RBS following the successful takedowns of Barclays and UBS," said analyst Ishaq Siddiqi at trading group ETX Capital."However, it does serve to remind us just how careless and brazen traders at these banks were, taking excessive risk to manipulate rates."The response in markets may be somewhat muted in the sessions ahead as over the months we have learnt just how deep this corruption ran through the Libor market and instead, investors are likely to breathe a sigh of relief as these charges will remove an overhang in the stock price."The Libor rate is used as a benchmark for global financial contracts worth about $300 trillion. However, the system was found to be open to abuse, with some traders lying about borrowing costs to boost trading positions or make their bank seem more secure.The London Interbank Offered Rate, or Libor, is a flagship instrument used all over the world, affecting what banks, businesses and individuals pay to borrow money. Euribor is the eurozone equivalent.

Global tourism peaked in 2012 - UN

International tourist arrivals exceeded one billion for the first time last year, with the Asia-Pacific region posting the biggest increase in foreign visitors, and numbers will rise further in 2013, a UN body said on Tuesday. The number of international tourist arrivals grew by 4.0% to 1.035 billion in 2012, up from 996 million in 2011, the Madrid-based United Nations World Tourism Organisation said in an annual survey."2012 was a year of constant economic instability in the entire world, especially in the euro zone. Despite this international tourism managed to maintain its course," the body's Secretary General Taleb Rifai told a news conference.The organisation forecasts international tourist numbers will grow in 2013 although at a slightly lower rate of 3.0%  4.0%.Global tourism figures were hit hard by the 2008 global financial crisis, with the rise in international arrivals that year slowing to 2.1% after jumping 6.6% in the previous year.Arrivals plunged by 3.9% in 2009, its worst performance in 60 years, as the outbreak of the swine flu virus contributed to cash-strapped consumers' decision to stay home.But international tourism arrivals bounced back the following year, rising 6.6% in 2010 and by 5.0% in 2011 even though global economic crisis had not yet ended. The Asia-Pacific region posted the largest growth in visitor arrivals last year with the number of foreign tourists up by 14 million or 6.5% to 233 million.Growth in the number of foreign visitors was highest in Southeast Asia, with the number of arrivals up by 8.7% over 2011.Tourist numbers climbed 4.1% in emerging economies compared with a 3.6% rise in advanced economies.The only region to report a decline in tourist numbers compared with 2011 was the Middle East with 2.0% fewer arrivals because of political instability in popular tourist spots such as Egypt and Syria.But the drop in the number of visitors to the region was smaller than the decline of 7.0 posted in 2011, the UN body said.Asia and Africa are expected to post the greatest growth in tourist numbers this year.The agency predicts tourist arrivals will increase by 5.0%-6.0% in the Asia-Pacific region this year and by 4.0%-6.0% in Africa.The Middle East will see the number of foreign visitors to the region rise by 0 and 5.0% this year while Europe will post growth of 2.0%-3.0%.The forecast of continued growth in international tourist arrivals next year comes a week after the International Monetary Fund (IMF) predicted the global economy will grow slightly less in 2013 than expected.The IMF projects global gross domestic product annual growth of 3.5% this year, a dip of 0.1 point from its October forecast owing largely to weakness in the eurozone, and 4.1% in 2014.The UN World Tourism Organisation predicts international tourist arrivals will rise by an average of 3.8% each year between 2010 and 2020 and will reach 1.8 billion in 2030.

Japan to approve $1.02 trillion budget

Japan's cabinet was Tuesday set to approve a $1.02 trillion annual budget with boosts in defence and public works spending amid a festering territorial row with China and a renewed assault on deflation.The cabinet is expected to approve a ¥92.61 trillion budget for fiscal 2013, with revenue estimated at ¥43.10 trillion and new bond issuance at ¥42.85 trillion - the first time in four years revenue will have been greater than new bond issuance, local reports have said.The budget is down from the ¥92.9 trillion allocated in the fiscal 2012 initial budget, the first decrease in seven years, they said.But the defence budget is up by ¥40bn or about 0.8% from the previous year to ¥4.75 trillion, the first rise in 11 years, at a time Japan is embroiled in a row with China over a chain of islands in the East China Sea.Beijing has repeatedly sent vessels to the disputed waters, prompting calls in Japan for more measures to defend the Tokyo-controlled islands, called the Senkakus in Japan but known as the Diaoyus in China.Defence Minister Itsunori Onodera has said the military will add nearly 300 personnel to help defend the disputed islands.Meanwhile, public works spending rises for the first time in four years, growing by ¥710bn to ¥5.29 trillion, reports said.Prime Minister Shinzo Abe, who took office in December, has pledged to pull Japan out of years of deflation by active government spending coupled with aggressive monetary easing by the Bank of Japan.Abe's government announced a $226.5bn stimulus package earlier this month.In the fiscal 2013 budget, the issuance of new government bonds decreases by ¥1.4 trillion from the preceding year to ¥42.85 trillion, Jiji Press said.The government is planning an $86bn bond sale to pay for the stimulus, stoking fears about spending by Tokyo, which already owes creditors cash equal to twice the size of its economy.

 

Japan, China set to boost economic ties

Japanese Prime Minister Shinzo Abe said on Tuesday he was open to a meeting with Chinese leaders to rebuild ties damaged by a territorial dispute but said there was no room for negotiations on their row over a group of small islands.The remarks came after China's Communist Party chief, Xi Jinping, told a Japanese envoy sent to Beijing last week that he was committed to developing bilateral ties and would consider holding a summit meeting.Relations between the world's second- and third-largest economies plunged after the Japanese government bought three disputed islands from a private owner last September, sparking anti-Japan protests across China.Some Japanese businesses were looted and Japanese citizens attacked."It is precisely because we have a problem that we should hold the summit between leaders and have high-level talks," Abe said on a television programme, "I would like to consider a top-level summit if circumstances allow."The conservative prime minister has just increased the defence budget for the first time in 11 years and swept back to power in a December election calling for the protection of Japan's "beautiful seas".He reiterated Japan's stance on the islands, which it controls. Japan calls them the Senkaku while China calls them the Diaoyu."The Senkaku Islands are our land and China has taken provocative steps against them ... we have been clear that there is no room for negotiation on this matter," he said."But on top of that, there's an economic relationship. Japan invests in China and reaps benefits from exporting its goods there while China creates job places thanks to Japanese investment," said Abe, adding that maintaining strong economic ties were vital for both countries."If top-level meeting was necessary to achieve that, we should do it and from that point on rebuild our relationship."

NEWS,27.01.2013

Brazil Nightclub Fire Kills At Least 230 People

Flames raced through a crowded nightclub in southern Brazil early Sunday, killing more than 230 people as panicked partygoers gasped for breath in the smoke-filled air, stampeding toward a single exit partially blocked by those already dead. It appeared to be the world's deadliest nightclub fire in more than a decade.Witnesses said a flare or firework lit by band members may have started the blaze in Santa Maria, a major university city of about 225,000 people.Television images showed smoke pouring out of the Kiss nightclub as shirtless young men who had attended a university party joined firefighters using axes and sledgehammers to pound at windows and walls to free those trapped inside.Guido Pedroso Melo, commander of the city's fire department, told the O Globo newspaper that firefighters had a hard time getting inside the club because "there was a barrier of bodies blocking the entrance."Teenagers sprinted from the scene desperately seeking help. Others carried injured and burned friends away in their arms."There was so much smoke and fire, it was complete panic, and it took a long time for people to get out, there were so many dead," survivor Luana Santos Silva told the Globo TV network.The fire spread so fast inside the packed club that firefighters and ambulances could do little to stop it, Silva said.Another survivor, Michele Pereira, told the Folha de S. Paulo newspaper that she was near the stage when members of the band lit flares that started the conflagration."The band that was onstage began to use flares and, suddenly, they stopped the show and pointed them upward," she said. "At that point, the ceiling caught fire. It was really weak, but in a matter of seconds it spread."Guitarist Rodrigo Martins told Radio Gaucha that the band, Gurizada Fandangueira, started playing at 2:15 a.m. "and we had played around five songs when I looked up and noticed the roof was burning""It might have happened because of the Sputnik, the machine we use to create a luminous effect with sparks. It's harmless, we never had any trouble with it."When the fire started, a guard passed us a fire extinguisher, the singer tried to use it but it wasn't working"He confirmed that accordion player Danilo Jacques, 28, died, while the five other members made it out safely.Police Maj. Cleberson Braida Bastianello said by telephone that the toll had risen to 233 with the death of a hospitalized victim. Officials counted 232 bodies that had been brought for identification to a gymnasium in Santa Maria, which is located at the southern tip of Brazil, near the borders with Argentina and Uruguay.An earlier count put the number of dead at 245.Federal Health Minister Alexandre Padhilha told a news conference that most of the 117 people treated in hospitals had been poisoned by gases they breathed during the fire. Only a few suffered serious burns, he said.Brazil President Dilma Roussef arrived to visit the injured after cutting short her trip to a Latin American-European summit in Chile."It is a tragedy for all of us," Roussef said.Most of the dead apparently suffocated, according to Dr. Paulo Afonso Beltrame, a professor at the medical school of the Federal University of Santa Maria who went to the city's Caridade Hospital to help victims.Beltrame said he was told the club had been filled far beyond its capacity during a party for students at the university's agronomy department.Survivors, police and firefighters gave the same account of a band member setting the ceiling's soundproofing ablaze, he said."Large amounts of toxic smoke quickly filled the room, and I would say that at least 90 percent of the victims died of asphyxiation," Beltrame told The Associated Press by telephone."The toxic smoke made people lose their sense of direction so they were unable to find their way to the exit. At least 50 bodies were found inside a bathroom. Apparently they confused the bathroom door with the exit door."In the hospital, the doctor "saw desperate friends and relatives walking and running down the corridors looking for information," he said, calling it "one of the saddest scenes I have ever witnessed."Rodrigo Moura, identified by the newspaper Diario de Santa Maria as a security guard at the club, said it was at its maximum capacity of between 1,000 and 2,000, and partygoers were pushing and shoving to escape.Santa Maria Mayor Cezar Schirmer declared a 30-day mourning period, and Tarso Genro, the governor of the southern state of Rio Grande do Sul, said officials were investigating the cause of the disaster.The blaze was the deadliest in Brazil since at least 1961, when a fire that swept through a circus killed 503 people in Niteroi, Rio de Janeiro.Sunday's fire also appeared to be the worst at a nightclub since December 2000, when a welding accident reportedly set off a fire at a club in Luoyang, China, killing 309.In 2004, at least 194 people died in a fire at an overcrowded nightclub in Buenos Aires, Argentina. Seven members of a band were sentenced to prison for starting the flames.Several years later, in December 2009, a blaze at the Lame Horse nightclub in Perm, Russia, killed 152 people after an indoor fireworks display ignited a plastic ceiling decorated with branches.Similar circumstances led to a 2003 nightclub fire that killed 100 people in the United States. Pyrotechnics used as a stage prop by the 1980s rock band Great White set ablaze cheap soundproofing foam on the walls and ceiling of a Rhode Island music venue.The band performing in Santa Maria, Gurizada Fandangueira, plays a driving mixture of local Brazilian country music styles. Guitarist Martin told Radio Gaucha the musicians are already seeing hostile messages."People on the social networks are saying we have to pay for what happened," he said. "I'm afraid there could be retaliation".

 

Bangladesh factory fire concerns groups

International labour rights groups called on Sunday for global clothing retailers to ensure adequate safety measures for garment workers in Bangladesh after a blaze killed seven employees at a small factory.Saturday's fire gutted Smart Exports Garment Ltd, just two months after Bangladesh's worst ever factory blaze killed 112 workers and injured 150 at Tazreen Fashions Ltd, a multi-storey garment workshop in Dhaka's Ashulia suburb.In a joint statement issued after the latest blaze, three organisations asked retailers and brands to sign a fire safety agreement with Bangladesh."After more than two decades of the apparel industry knowing about the risks to these workers, nothing substantial has changed," the executive director of the International Labour Rights Forum, Judy Gearhart, said in the statement."Brands still keep their audit results secret. They still walk away when it suits them and trade unions are still marginalised, weakening workers' ability to speak up when they are at risk," she added. The Worker Rights Consortium (WRC) and the Clean Clothes Campaign (CCC) also signed the statement.Another rights group, the Institute for Global Labour and Human Rights (ILGHR), said on its website it had gained access to the gutted factory and found seven women workers had been crushed to death as employees tried to escape the fire.Firefighters and police said the cause of the latest blaze was not yet known. Survivors said it could have been caused by an electrical short circuit at the factory on the upper floor of a two-storey building in the crowded Mohammadpur area.Kalpona Akter, Executive Director of the Bangladesh Center for Workers Solidarity told Reuters that two garment factories had subcontracted orders to the factory's owner, Smart Export Garments Ltd. She said the company was not a member of the Bangladesh Garments Manufacturers and Exporters Association and had no license from fire prevention or labour bodies.An official report into the Tazreen blaze in November concluded it was the result of both sabotage and negligence. Bangladesh has about 4 500 garment factories and is the world's biggest exporter of clothing after China. Clothing makes up 80% of its $24bn annual exports.

Davos warns on global economic crisis

The world's political and business elite headed home on Sunday from this year's Davos forum with warnings that while the worst of the financial crisis seems over there is still much to be done.International Monetary Fund chief Christine Lagarde said in the closing moments of the annual gathering in the snowy Swiss ski resort on Saturday that she recommended the "do not relax principle" for the coming year.Where for the two previous years a sense of crisis had hung over the World Economic Forum, the mood was sunnier at the 2013 edition as speaker after speaker said they were now cautiously optimistic."I feel the circumstances in which I'm addressing you today are very different than 12 months ago," said Italian Prime Minister Mario Monti in his opening speech, following a torrid year dominated by the euro crisis.European central banker Mario Draghi meanwhile hailed 2012 as the year that the troubled single currency was "relaunched", even as others were hailing him as the man who had saved the eurozone from catastrophe.The Chinese economy's slowdown seemed less serious than a year ago to the participants while the step back from the fiscal cliff in the United States also eased minds.But as the 2 500 world leaders, financial officials, tycoons and journalists departed the picture-postcard Alpine resort, they may have felt a chill that was not just down to the subzero temperatures.Lagarde said the IMF's forecast of a "very fragile and timid recovery for 2013" was based on "eurozone leaders, the US authorities on the other hand and the Japanese authorities making the right decisions".She added: "And that's what I mean by 'do not relax' because some good policy decisions have been made in various parts of the world. In 2013, they have to keep the momentum."The head of the Organisation for Economic Cooperation and Development (OECD), Angel Gurria, warned meanwhile that countries had exhausted most room for manoeuvre in terms of fiscal and monetary policy."We should be very worried because the lack of room for some of the more traditional tools has gone and we are left with very few of these tools," he said.As in previous years the Davos forum was partly hijacked by external events, particularly after British Prime Minister David Cameron vowed to hold a referendum on European Union membership by the end of 2017.The move threatened to cause a stir, with Cameron's European counterparts worried about the effect the uncertainty would have on the euro's already fragile recovery, but they left any rows for another day.The turmoil in the Arab world also took centre stage for a time as officials including Jordan's King Abdullah II urged "desperately needed" action over Syria's civil war, though none came.Amid the cocktail parties and lavish luncheons at Davos this year there was sometimes a "mood of complacency", said Axel Weber, the chairman of Swiss bank UBS and former head of Germany's Bundesbank."My biggest fear is that 2013 could be a replay of 2012, another lost year," he said. "We shouldn't be complacent, we haven't really fundamentally improved that much."Many were still worried by the euro. The Deloitte financial group's global chief executive Barry Salzberg told AFP he was "reasonably comfortable, with one exception - and that is what's the impact on the US from Europe."Other officials expressed fears that governments would increasingly lean on central banks, which have often been the heroes of the fragile global recovery in the past two years, instead of taking action themselves.But in many ways it was business as usual at Davos, with world leaders huddling in private and corporate deals sewn up on the sidelines, such as a $10bn shale gas deal between Ukraine and oil giant Royal Dutch Shell.Even a noisy protest on Sunday by three topless, pink-flare-waving women from a Ukrainian feminist group failed to shock - they had targeted Davos the previous year too.

Gun control: Listen more, Obama says

President Barack Obama urged gun control advocates to listen to views of rural Americans who use guns for hunting and said bridging a cultural divide in attitudes to gun ownership would be critical to his administration's push to curb gun violence. "If you grew up and your dad gave you a hunting rifle when you were 10, and you went out and spent the day with him and your uncles, and that became part of your family's traditions, you can see why you'd be pretty protective of that," Obama said in an interview with The New Republic magazine published on Sunday.Obama made gun control a top priority for his second term after 20 children and six adults were killed by a gunman at a school in Newtown, Connecticut in December. Obama spoke with The New Republic on 16 January, the same day he announced he would put the full weight of his office behind urging Congress to approve an assault weapons ban and background checks for all gun buyers."Part of being able to move this forward is understanding the reality of guns in urban areas are very different from the realities of guns in rural areas," Obama said."So it's trying to bridge those gaps that I think is going to be part of the biggest task over the next several months...and that means that advocates of gun control have to do a little more listening than they do sometimes," he said.Vice President Joe Biden is leading the White House effort to talk to Americans about gun control proposals and galvanise public support to pressure Congress to act. e addressed the issue in Virginia on Friday. Gun ownership rights are enshrined in the US Constitution and past efforts to restrict gun ownership have been blocked by gun owners, the National Rifle Association and their supporters in Congress.

NEWS,21.11.2012

Debt deal for Greece fails again

International lenders failed for the second week to reach a deal to release emergency aid for Greece and will try again next week, but Germany signalled that significant divisions remain.Euro zone finance ministers, the International Monetary Fund and the European Central Bank were unable to agree in 12 hours of overnight talks in Brussels on how to make the country's debt sustainable.They want a solution before paying the next loan tranche which is urgently needed to keep Greece afloat.Several European officials played down the delay, saying the disagreements were technical and a deal would be reached when they meet again on November 26.German Finance Minister Wolfgang Schaeuble said he was confident the funding gap could be filled by a mixture of letting Greece buy back its own debt at a discount, tapping ECB profits on Greek bond purchases, and lowering interest rates on government loans to Athens, but not below the cost to lenders."Additional measures are needed and we have spoken about this intensively with the International Monetary Fund. We agree essentially that the gap can and will be filled, that a buyback programme of Greek debt on the market will be carried out," he told reporters.Schaeuble earlier told conservative lawmakers at a closed-door briefing that the lenders were split over how to define debt sustainability and fill a hole in Greek finances."He sees the extension of the debt sustainability goal as one of the main bones of contention. The other is how to cover the Greek financing gap of 14 billion euros through 2014," said one lawmaker who attended the meeting of Chancellor Angela Merkel's centre-right Christian Democrats in parliament.European governments want to give Greece an extra two years, until 2022, to cut its debt to a sustainable level of 120% of GDP but the IMF does not agree.The Europeans, led by Germany, are refusing to write off any loans. Both options would make it easier for Greece to meet the targets in the bailout programme.Merkel told the lawmakers the gap could be plugged by lowering interest rates on loans to Greece, extending their maturity to 30 years from 15, and increasing guarantees provided to the euro zone's temporary EFSF bailout fund, in which Germany would take its share, a participant said."I believe there are chances, one doesn't know for sure, but there are chances to get a solution on Monday," she told the Bundestag lower house of parliament during a debate.Any options that cost the German taxpayer more money come with a heavy political price tag with elections less than a year away and would have to voted through by an increasingly restive Bundestag."If we get the impression we are being cheated, we won't come to the rescue anymore when you need our support," Social Democrat leader Peer Steinbrueck warned in a speech to the chamber just before Merkel took the podium.Until now Merkel has been able to count on the support of parties like the SPD and Greens to help push through controversial bailout votes in the lower house.Greece needs the next 31 billion euro aid tranche to keep servicing its debt and avoid bankruptcy. Its next major repayment is in mid-December.Athens says it has carried out the tough reforms required in the bailout programme but needs more time to reach fiscal targets agreed with lenders because its economy keeps shrinking.French Finance Minister Pierre Moscovici said agreement was close, echoing overnight comments from Eurogroup chairman Jean-Claude Juncker, who said talks were stuck on technicalities."We are a whisker away from a deal. I am very confident we will get there on Monday," Moscovici told Europe 1 radio.GREEK ANGERGreece is increasingly frustrated about the repeated delays in releasing the aid and says it has done what is necessary."Greece did what it had committed it would do. Our partners, together with the IMF, also have to do what they have taken on to do," Prime Minister Antonis Samaras said in a statement."Any technical difficulties in finding a technical solution do not justify any negligence or delays."Samaras will meet Juncker in Brussels on Thursday and has cancelled a trip to Qatar next week to monitor the talks, a government spokesman said.The prime minister is under growing pressure from his own coalition allies and the opposition after pushing through deeply unpopular austerity measures that he said were the only way to get more aid to avert bankruptcy."The euro zone cannot use Greece as an alibi to justify its weakness in dealing effectively and definitively with the crisis," said Evangelos Venizelos, head of the co-ruling PASOK party. Opposition leader Alexis Tsipras, whose party is rising in polls, said Samaras had lost all credibility.Investors were disappointed with the news. Greek banking stocks fell nearly 6% in morning trade. Most of Greece's next aid instalment has been earmarked to shore up the country's tottering banks.The euro, European shares and the prices of higher-yielding euro zone debt lost ground but later recovered some of the losses.NO WRITE DOWNA document prepared for the Brussels meeting and seen by Reuters showed Greece's debt cannot be cut from 170% of GDP to 120%, the level deemed sustainable by the IMF, unless either euro zone member states write off a portion of their loans to Greece or the IMF extends its deadline by two years.Germany and other EU states say writing down their loans would be illegal. The European Central Bank, a major holder of Greek bonds, has refused to take a "haircut" on its holdings.Berlin contends a debt haircut would not tackle the roots of Greece's debt problems and would be unfair to other euro zone countries that have taken tough steps to improve their finances."It would cost money, it would be a fatal signal to Ireland, Portugal and possibly Spain, as they would immediately ask why they should accept difficult conditions and push through difficult measures ... and it would have consequences under budget law," Norbert Barthle, budget spokesman forMerkel's Christian Democrats said.Without corrective measures, the Eurogroup document said, Greek debt would be 144% in 2020 and 133% in 2022.Juncker said after a meeting a week ago that he wanted to extend the target date to reduce Greek debt by two years to 2022, but Lagarde insists the 2020 goal should stand. She is believed to favour euro zone member states taking a writedown.Under a buy-back plan, Greece would offer to purchase bonds from private investors at a sharp discount to their face value. Options are under consideration including using about 10 billion euros of EFSF money to buy back bonds at between 30 and 35 cents on the euro.There are also proposals to reduce the interest rate on loans already extended by euro zone countries to Greece, to allow a long moratorium on interest payments and lengthen the maturities on loans, all of which would cut the debt burden.

Shares climb amid hope for Greece

World shares advanced as policymakers in Europe reassured markets that a deal on releasing emergency aid to Greece was close, although the failure of lenders to come to an agreement on their own kept investors cautious.Euro zone finance ministers, the International Monetary Fund and the European Central Bank will gather again next week, after nearly 12 hours of talks overnight in Brussels failed to produce a consensus on how to shrink Greece's debts.After the meeting ended, French Finance Minister Pierre Moscovici said a deal was just "a whisker away," while European paymaster Germany said a plan was being developed to provide Greece with funding until 2016.Shares in Europe rebounded from early losses. The FTSEurofirst 300 index of top shares closed 0.3% higher, while the Euro STOXX 50 recouped from an earlier drop to add 0.5%."European exchanges themselves are doing okay, so investors are saying 'we didn't really expect a resolution (on Greece),' just kind of learning to live with it," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.US stocks gained in trading thinned by a national holiday Thursday for Thanksgiving. The Dow Jones industrial average was up 53.21 points, or 0.42%, at 12,841.72.The Standard & Poor's 500 Index was up 3.27 points, or 0.24%, at 1,391.08. The Nasdaq Composite Index was up 9.56 points, or 0.33%, at 2,926.24.Investors in the US digested the latest data, including weekly jobless claims that met expectations and a final read on November consumer sentiment that was below forecasts.Market participants remained anxious about tax and spending changes - known as the fiscal cliff poised to come into effect in the new year, though policymakers are not expected to get back to negotiations until after Thanksgiving.The benchmark 10-year US Treasury note was down 6/32, with the yield at 1.6882%.The euro rose 0.1% to $1.28, also rebounding from earlier weakness of as much as 0.5%.Prices for German debt, the safest in the euro zone, had eased slightly, sending 10-year yields down modestly to 1.431%.However, a sale of 3.25 billion euros ($4.2 billion) of new German 10-year debt, which paid an interest rate of 1.5%, drew solid demand from investors worried about the outlook.Before the Greek impasse, world equity markets had come under pressure after Federal Reserve Chairman Ben Bernanke warned that the central bank lacked the tools to cushion the impact of a potential US fiscal crisis.Bernanke said worries over fiscal negotiations, aimed at preventing a series of mandatory tax increases and spending cuts early next year, had already damaged growth in the world's largest economy.His comments snapped a two-day rally on Wall Street Tuesday, but the MSCI world equity index later rose 0.3%.Asian shares had initially fallen Wednesday in reaction to the Greek aid payment delay, but closed modestly higher, buoyed by gains in mainland Chinese markets and in Tokyo.MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.2%, while Japan's Nikkei stock average closed up 0.9% at a two month-high.The Nikkei's gains came as shares of exporters rose, after the yen hit a seven-month low against the dollar, on expectations a new government will aggressively push the Bank of Japan to expand monetary stimulus.Japan's opposition Liberal Democratic Party, tipped to win next month's general election, also promised to boost spending as it emerged that exports had fallen in annual terms for a fifth straight month in October.The yen rose 0.9% to the dollar, rebounding from its weakest level since early April. The US dollar was off 0.1 against a basket of currencies, while Brent crude erased earlier losses to trade flat at $109.91 per barrel.Oil was flat, after earlier having been supported by mounting tensions in the Middle East amid days of fighting between Israel and Hamas, which many feared could disrupt oil flows.Concerns about Greece and the impact that could have on international growth, however, weighed on crude prices."There are opposing forces where the uncertainty in Europe and the United States meets with the bullish uncertainty in the Middle East ... so I think we're going to see a volatile market," said Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong.

NEWS,16.11.2012

Road closures in Israel indicate military build-up

The Israeli army said today it was closing three roads that lead to, or border the Gaza Strip, in an indication of a probable military build-up in the area.Shortly before, political sources said Defence Minister Ehud Barak was seeking government approval to mobilise up to 75,000 reserve troops for Israel's Gaza campaign, in a sign of preparations for a possible ground offensive.Western governments are watching Egypt's response to the attacks for signs of a more assertive stance towards Israel since an Islamist came to power in the Arab world's most populous nation.President Mohamed Mursi is mindful of anti-Israeli sentiment among Egyptians emboldened by last year's Arab Spring uprising but needs to show Western allies his new government is no threat to Middle East peace.His prime minister, Hisham Kandil, visited Gaza today in a demonstration of solidarity after two days of strikes by Israeli warplanes targeting Gaza militants."We see what is happening in Gaza as blatant aggression against humanity," Mursi said in comments carried by Egypt's state news agency. "I warn and repeat my warning to the aggressors that they will never rule over the people of Gaza."I tell them in the name of all the Egyptian people that Egypt today is not the Egypt of yesterday, and Arabs today are not the Arabs of yesterday."The Egyptian foreign minister also spoke to his counterparts in the US, Jordan, Brazil and Italy on Friday to discuss the situation in Gaza, a statement from the foreign ministry said.Mohamed Kamel Amr spoke to US Secretary of State Hillary Clinton about the necessity of cooperation between the US and Egypt to end the military confrontations. Amr stressed the necessity of Israel ending attacks on Gaza and a truce being rebuilt between the two sides, the statement said.Mursi's toppled predecessor Hosni Mubarak was a staunch US ally who upheld a cold but stable peace with Israel.The new president has vowed to respect a three-decade peace treaty with the Jewish state. But ties have been strained by protests that forced the evacuation of Israel's ambassador to Cairo last year and cross-border attacks by Islamist militants.More than 1000 people gathered near Cairo's al-Azhar mosque after prayers, many waving Egyptian and Palestinian flags."Gaza Gaza, symbol of pride", they chanted, and "generation after generation, we declare our enmity towards you, Israel"."I cannot as an Egyptian, an Arab and a Muslim just sit back and watch the massacres in Gaza," said protester Abdel Aziz Nagy, 25, a member of the Muslim Brotherhood.Protesters were marching from other areas of Cairo towards Tahrir Square, the main rallying point for last year's uprising.

Iran ready to double nuclear work in bunker -IAEA

Iran is set to sharply expand its uranium enrichment in an underground plant after installing all the centrifuges it was built for, a United Nations report said, a move likely to increase Western alarm about Tehran's nuclear course.It also showed Iran's stockpile of its most sensitive nuclear material grown and was getting closer to an amount that could be sufficient for a nuclear weapon.The latest quarterly International Atomic Energy Agency (IAEA) report on Iran came 10 days after the re-election of US President Barack Obama, which raised hopes for a revival of nuclear diplomacy with Iran following speculation that Israel might attack the nuclear facilities of its arch-enemy soon.But the UN watchdog's findings underlined the tough task facing world powers seeking to pressure Iran to curb atomic activity they fear is aimed at developing a nuclear weapons capability, a charge Tehran denies."The report paints the picture of Iran's continued lack of cooperation with the IAEA, and details its continued enrichment and installation of centrifuges in violation of UN Security Council resolutions," a senior Western diplomat said.The Islamic state has put in place the nearly 2800 centrifuges that the Fordow enrichment site was designed for and is poised to double the number of them operating to roughly 1400 from 700 now, according to the confidential IAEA report."They can be started any day. They are ready," a senior diplomat familiar with the IAEA's investigation said.If Iran chose to dedicate the new machines to produce higher-grade uranium, it could significantly shorten the time required for any bid to build an atomic bomb. Iran says it needs to refine uranium to make reactor fuel.In another potentially worrying development for the West, Iran appears to have virtually stopped converting this uranium into making civilian reactor fuel since the previous report.As a result, the stockpile of uranium gas refined to a fissile concentration of 20 percent increased by nearly 50 percent to 135 kg, the latest report said, still below the level of 200-250 kg experts say would be sufficient for an atomic bomb if refined further."This puts added pressure on the West's diplomacy with Iran, which has to operate on a tighter schedule," said research fellow Shashank Joshi at the Royal United Services Institute.Israel has recently signalled that an attack on Iran was not imminent - after months of talk that it might be on the cards soon by pointing to Iran's decision earlier this year to use part of its 20 percent uranium for civilian purposes."As Iran's 20% stockpile approaches around 240 kg, the Israeli sabre-rattling will resume,"

French PM tries to reassure Berlin

France's German-speaking prime minister has offered a worried Berlin reassurances his government would reduce the deficit and prevent France from becoming the next victim of the euro crisis by applying a new economic model.Jean-Marc Ayrault, making his first visit to Berlin since Francois Hollande became president, told German Chancellor Angela Merkel that France would find its own way to reduce spending and boost economic growth and jobs, rather than copying Germany."My challenge, the government's challenge, is to reform what isn't working, to correct what is too weak, but to keep the profound values that make France what it is," he told a joint news conference after talks with the conservative chancellor."The job that is under way is constructing the new French model," said Ayrault, a Socialist.A  report that Merkel's finance minister had asked the German government's economic advisers to consider preparing policy recommendations for France has stirred outrage in Paris.But Merkel said she would never dare to evaluate the decisions of the French government and added diplomatically: "We want a strong France just as France wants a strong Germany, so that together we can become a strong Europe."Ayrault also held a 20-minute meeting with German Finance Minister Wolfgang Schaeuble, who emerged saying Germany and France did not "grade" each others' economic policies.But it was clear French pride had been stung. Ayrault told a conference in Berlin organised by the Sueddeutsche Zeitung newspaper that his host country Germany also had its problems."The German population is ageing quicker than the French, which poses problems for pensions and social security," said the French premier."This sort of understanding for other countries' problems I expect it for my own country too."Paris is under intense pressure to improve French economic competitiveness relative to Germany and southern European countries that have implemented painful reforms to bring down their own debt in the face of a crippling three-year crisis.German officials are worried that without bolder reforms, France could get sucked into the crisis which has forced bailouts of Greece, Portugal and Ireland in what would be a crushing setback for the bloc's efforts to stem the turmoil.In response to calls by industrialist Louis Gallois for cuts in labour charges to reverse decades of industrial decline, the French government has now announced plans to grant companies 20 billion euros in annual tax credits to lower labour costs.Ayrault cited this as one example of the "courage" France's Socialist government was showing on economic reforms.His knowledge of Germany and its language may have been one of the reasons for his appointment. Relations between Merkel and the new president are often contrasted with the close partnership - especially on the euro crisis that she enjoyed with Hollande's conservative predecessor Nicolas Sarkozy.Hollande criticised Merkel's focus on austerity for the euro zone during his election campaign and the new Franco-German leadership couple have not got off to the best start."The main thing is to build a personal relationship," Ayrault said, adding that although the two governments belonged to opposing political factions, their relationship had to be "ueberparteilich" the German word for non-partisan.Ayrault and Merkel both rejected suggestions that the French premier's plans to meet Germany's centre-left opposition Social Democrats on Friday - less than a year before federal elections when Merkel will seek a third term undermined this ideal."The important thing is for us to work together well," said Merkel.

NEWS,14.11.2012

Anti-austerity strikes sweep Europe

Police and protesters clashed in Spain and Italy today as millions of workers went on strike in organised labour's biggest Europe-wide challenge to austerity policies.Hundreds of flights were cancelled, schools were shut, factories were at a standstill and trains barely ran in Spain and Portugal where unions held their first joint general strike. Stoppages in Belgium interrupted international rail services.Workers also protested in Greece and France against austerity policies that have taken a heavy economic toll and aggravated mass unemployment. But the demonstrations organised by the European Trade Union Confederation seemed unlikely to force hard-pressed governments to change their cost-cutting strategies.In Spain, 110 people were arrested  including two allegedly with material to make explosives after confrontations at picket lines and damage to storefronts. Riot police fired rubber bullets at protesters in central Madrid in one brief clash.Even non-union workers jointed protests and marches. "This isn't about politics or unions. This is social and economic.If we have to shut down the country we'll shut it down," said 24-year-old Mariluz Gordillo, a non-unionised phone operator at El Corte Ingles department store.In Rome scuffles broke out between police in riot gear and demonstrators who threw stones, bottles and fireworks at police. About 60 demonstrators were detained. Protesters occupied Pisa's mediaeval leaning tower for an hour, hanging a banner reading "Rise up. We are not paying for your crisis".In Portugal and Greece both rescued with European funds and under strict austerity programmes  the economic downturn sharpened in the third quarter, data showed today.Portuguese unemployment jumped to a record 15.8% while in neighbouring Spain, one in four of the workforce is jobless. Greece's economic output shrank 7.2% on an annual basis in the third quarter as the debt-laden country staggers towards its sixth year of depression.Close to 26 million people are unemployed in the European Union while governments take aim at spending on treasured universal health care and public schools."Things have to change... Money has ended up with all the power and people none. How could this happen?" said Esteban Quesada, 58, a hardware store owner in Barcelona who closed his shop to join the protests in Spain's second city.Throughout southern Europe governments are trying to put public finances back on track after years of overspending.Portugal and Greece have cut pensions and, with Spain, have slashed public sector wages as well as spending on hospitals and schools. Italy and France are also under pressure to control their budget deficits.EU Economic and Monetary Affairs Commissioner Olli Rehn praised Spain today for making progress in trimming its budget but acknowledged many Spaniards are struggling.In Spain, most of the savings have been gobbled up by higher interest payments on the national debt, swollen by the cost of rescuing banks after a real estate bubble burst in 2008.Germany's central bank, the Bundesbank, said in a report today that the euro zone debt crisis is still the number one risk to German banks and insurers, and the situation had not improved from last year.Promises from the European Central Bank to support sovereign bond prices for countries that seek aid have brought some relief to Spain and Italy in the capital markets. On today, Italy sold 3-year bonds at the lowest borrowing cost in two years.While several southern European countries have seen bursts of violence, a coordinated and effective regional protest against austerity has yet to force a significant policy shift.Spanish Economy Minister Luis de Guindos told reporters today the government would stay the course with spending cuts to meet ambitious deficit cutting targets, despite the strike."We're on strike to stop these suicidal policies," said Candido Mendez, head of Spain's second-biggest labour federation, the General Workers' Union, or UGT.Union leaders in Spain said more than 9 million workers joined the strike the second this year. The government said participation was much lower and played down the impact, saying many services were functioning normally.Stores opened normally in many parts of the country, though some had protesters outside.About 5 million people, or 22% of the workforce, are union members in Spain. In Portugal about a quarter of the 5.5 million strong workforce is unionised.Passions were inflamed when a Spanish woman jumped to her death last week as bailiffs tried to evict her from her home. Spaniards are furious at banks being rescued with public money while ordinary people suffer.In Portugal, which took an EU bailout last year, public and political opposition to austerity is growing, threatening to derail measures sought by Prime Minister Pedro Passos Coelho.Passos Coelho's policies were held up this week as a model by German Chancellor Angela Merkel, who is despised in much of southern Europe for taking a hard line on the conditions attached to EU aid.Inspectors from the "troika" of the International Monetary Fund, ECB and European Commission who monitor implementation of the conditions also drew the protesters' anger.In Lisbon, thousands filled a square in front of the Portuguese parliament shouting "This debt is not ours" and "Out IMF, out troika". Police were guarding the building."I'm on strike because those who work are basically being blackmailed into sacrificing more and more in the name of debt reduction, which is a big lie," said Daniel Santos de Jesus, 43, who teaches architecture at the Lisbon Technical University.Major demonstrations were planned for the evening in Madrid, Lisbon, Barcelona and other cities.

Wall St slips on angst about 'fiscal cliff' and Europe

US stocks fell today, erasing earlier gains, as strong earnings from technology bellwether Cisco were not enough to offset investor anxiety over US budget negotiations and Europe's economic troubles.Wall Street had opened higher after Dow component Cisco Systems reported first-quarter earnings and revenue that beat expectations, driving its shares up 5.8% to $17.83. But the positive momentum was short-lived."Again today, the market started off hoping for an optimistic tone out of Washington on the 'fiscal cliff' issue, which spurred a move higher. But then, we got nothing and gains basically fizzled out. We are probably going to have many more days like this," said Randy Frederick, managing director of trading and derivatives at Charles Schwab's Center for Financial Research."It's been very hard recently to be optimistic about anything and to have a real buying interest."The S&P 500 has fallen 3.8% over the past five trading days. The index closed below its 200-day moving average for a fourth day in a row on Tuesday, a technical indicator that suggests recent declines could gain momentum.The Dow Jones industrial average was down 83.26 points, or 0.65%, at 12,672.92. The Standard & Poor's 500 Index was down 7.61 points, or 0.55%, at 1,366.92. The Nasdaq Composite Index was down 10.90 points, or 0.38%, at 2,872.99."Under this scenario, there is near-term downside risk to 1,330-1,350 (on the S&P 500), the index's lower trend channel extended from its June low," said Ari Wald, an analyst at PrinceRidge Group, in New York.Despite Cisco's gains, the broader technology sector has been weak lately, dropping almost 10% over the past two months on earnings disappointments from Google and others. It was the worst-performing sector on Tuesday.In earnings news, Abercrombie & Fitch Co soared 27.8% to $39.85 after reporting a steep rise in its quarterly profit and a full-year forecast that beat analysts' estimates. Staples rose 1.8% to $11.46 after posting earnings that beat expectations.Abercrombie, Cisco and Staples ranked as the S&P 500's top three percentage gainers.But broader trading will likely be partially dictated by macroeconomic issues as investors grapple with the impact of Europe's debt crisis and the US "fiscal cliff" a series of mandated tax hikes and spending cuts that start to take effect next year.Analysts say serious fiscal negotiations are still weeks away, but Congress' failure to reach a deal could tip the world's largest economy into recession.Retail sales fell 0.3% in October, hurt by the impact of Superstorm Sandy in the US Northeast.The drop was slightly more than expected, but stocks barely reacted to the data. The overall USProducer Price Index fell 0.2% in October, contrary to economists' consensus forecast for a gain of 0.2%.A separate piece of data showed US business inventories rose more than expected in September but stocks excluding automobiles were flat for a second month, which could prompt economists to lower their estimates for third-quarter growth.The FTSEurofirst-300 index of European shares lost 1% as Greece's unresolved crisis raised questions about the region's potential for economic growth.

Who will be on Obama's new dream team?

A week after winning re-election President Barack Obama has yet to reveal his new White House dream team amid fierce jostling for coveted posts key to shaping America's foreign and defence policy.Speculation is heating up in Washington corridors about who will be crowned the new secretaries of state and defence, with veteran Senator John Kerry, US Ambassador to the United Nations Susan Rice and National Security Adviser Tom Donilon the odds-on favourites to be among the new cabinet faces.White House spokesperson Jay Carney said on Tuesday that Obama "has not made a decision on personnel matters", refusing to discuss any of the rumours.On Wednesday, Obama will give his first press conference since winning a second term. But his closely-guarded calculations may have been thrown askew by Friday's shock resignation of CIA director David Petraeus, which opened up another job to fillKerry, the longtime chairperson of the Senate Foreign Relations Committee with foreign policy stamped into his DNA, is a well-known, respected figure in international circles and has long dreamed of becoming secretary of state.But the outspoken, feisty Rice is part of Obama's inner circle and has been a loyal champion of US foreign policy at the UN. US dailies reported her nomination to replace Hillary Clinton may almost be in the bag.Kerry might instead be tapped for the Pentagon to take over from Defence Secretary Leon Panetta, both The New York Times and The Washington Post said, quoting White House officials.Among his qualifications for the job is his service in the US Navy during the Vietnam War, for which he was decorated with a Silver Star, a Bronze Star with Combat V and three Purple Hearts.Both nominations could be problematic though.Rice has come under fire from Republicans who have alleged there was a bid to cover up the circumstances surrounding September's attack on the US mission in Benghazi.Too many questions remained unanswered and "Susan Rice would have an incredibly difficult time getting through the Senate", veteran Republican Senator Lindsey Graham said on Sunday."It depends whether the president wants her bad enough in that position to go... fight" for her, Barry Pavel, director of the Brent Scowcroft Centre on International Security at the Atlantic Council, said.Kerry's appointment to a cabinet post would also force an election for his Massachusetts seat in the US Senate, which could see popular Republican Scott Brown defeated on 6 November make another bid for Congress.However, analysts said the Democrats had done better than expected in last week's elections by winning a 55-seat majority in the Senate, including two Independents expected to vote with them.During Kerry's 2004 presidential campaign, some Vietnam veterans launched a controversial smear campaign, alleging false claims about his war record.But he is widely seen as a safe pair of hands to be entrusted with America's wide-ranging and powerful foreign policy."There's a combination of prudence, and knowledge," said Christopher Preble, vice president for defence and foreign policy studies at the Cato Institute.The veteran senator would bring sober reflection on US intervention in world crises to the table born from the "lessons taken away from the war in Iraq in particular, but also Afghanistan", Preble said.And there were voices of support for his nomination  to either post as US lawmakers returned to work. Kerry would be "an excellent choice for either of those positions", said Republican Senator Dick Lugar.Kerry was deflecting all speculation"Senator Kerry's only focus right now is his job as senior senator from Massachusetts and chairperson of the Foreign Relations Committee," his spokesperson Jodi Seth said in a statement.Donilon, who has been Obama's trusted national security adviser since 2010, is said to want the State Department post, but some say he lacks the political stature of either Rice or Kerry."The White House would have a sense of tighter control if it were" either Rice or Donilon, Pavel said in a nod to Obama's efforts to keep a tight rein on foreign policy.And Pavel did not see Rice's famed outspokenness as mitigating against her hopes for top US diplomat.Obama, however, may also have a surprise in store as in 2008 when he picked Clinton, his fierce foe in the Democratic primary race, and kept defence secretary Robert Gates in his post as a holdover from former president George W Bush's administration.epublican names circulating include former secretary of state Colin Powell, Chinese speaker Jon Huntsman who was appointed US envoy to Beijing by Obama and former Nebraska senator Chuck Hagel."It's the kind of thing a pragmatic President Obama might do," Pavel said.Preble, however, argued that picking a Republican in this partisan climate may not buy Obama much goodwill.Showing a willingness "to co-operate with the Democrats and particularly the Democratic president" effectively undermines your credibility among your party", he said.