NEWS,03.04.2013

Economist warns of radical climate change

The author of an influential 2006 study on climate change warned on Tuesday that the world could be headed toward warming even more catastrophic than expected but he voiced hope for political action. Nicholas Stern, the British former chief economist for the World Bank, said that both emissions of greenhouse gas and the effects of climate change were taking place faster than he forecast seven years ago.Without changes to emission trends, the planet has roughly a 50% chance that temperatures will soar to five degrees Celsius (nine degrees Fahrenheit) above pre-industrial averages in a century, he said."We haven't been above five degrees Centigrade on this planet for about 30 million years. So you can see that this is radical change way outside human experience," Stern said in an address at the International Monetary Fund."When we were at three degrees Centigrade three million years ago, the sea levels were about 20 some meters above now. On sea level rise of just two meters, probably a couple of hundred million people would have to move," he said.Stern said that other effects would come more quickly including the expansion of deserts and the melting of Himalayan snows that supply rivers on which up to two billion people depend.Even if nations fulfill pledges made in 2010 at a UN-led conference in Cancun, Mexico, the world would be on track to warming of four degrees (7.2 Fahrenheit), he said.Stern's 2006 study, considered a landmark in raising public attention on climate change, predicted that warming would shave at least five percent of gross domestic product per year.Despite the slow progress in international negotiations, Stern saw signs for hope as a number of countries move to put a price on greenhouse gases."My own view is that 2013 is the best possible year to try to work and redouble our efforts to create the political will that hitherto has been much too weak," Stern said.Stern said that French President Francois Hollande was keen for nations to meet their goal of sealing an accord in 2015 in Paris.Stern also voiced hope that German Chancellor Angela Merkel, long a prominent voice on climate change, would become more active after this year's elections.US President Barack Obama has vowed action on climate change after an earlier bid was thwarted by lawmakers of the rival Republican Party, many of whom reject the science behind climate change.Emissions have risen sharply in recent years from emerging economies, particularly China.

Minister vows to revive Cypriot economy

The new finance minister of cash-strapped Cyprus vowed on Wednesday to do "whatever it takes" to sort out the EU country's teetering finances and put the economy back on track for growth. Haris Georgiades was speaking hours after President Nicos Anastasiades swore him in, warning of "difficult days ahead" for an island struggling to recover from a near financial meltdown and the need for a crippling eurozone bailout.Anastasiades said this would entail "firstly, collectivity and, secondly, consistency and fiscal discipline and all those measures that will contribute to kick-starting the economy as soon as possible."The new minister, a 40-year-old British-educated economist, vowed to implement the terms of the bailout "fully... we shall meet all time frames and meet all targets"."We... shall do whatever it takes to fix our public finances and put our economy back on track for growth.""Even though today's circumstances might be bleak, the medium- and long-term prospects remain excellent. We have received a blow but I'm absolutely confident we shall overcome," said Georgiades.Under the terms of the bailout, Cyprus will drastically reduce the size of its bloated banking sector, raise taxes, downsize the public sector workforce and privatise some state-owned firms.Cyprus is already in recession, with unemployment at around 15% and expected to grow sharply this year and next.Forecasts before the deal was agreed saw GDP contracting by 3.5% this year.On Tuesday, outgoing finance minister Michalis Sarris said "2013 will be a very difficult year, and the beginning of 2014 will also be difficult. Beyond this I believe the prospects are positive".Georgiades, who became labour minister when Anastasiades was elected in February, was appointed after Sarris stepped down on Tuesday.Sarris had been chairperson last year of failed Laiki Bank, whose collapse was a major contributor to the crisis. He said he was resigning to cooperate with a panel of judges appointed to investigate the causes of the crisis.His departure came as the government wrapped up talks with the IMF, European Commission and European Central Bank that will open the way for Cyprus to receive a €10bn ($12.8bn) bailout.The deal will see Cyprus receiving the loan with an interest rate of between 2.5 and 2.7%, repayable over 12 years after a grace period of 10.On Wednesday, International Monetary Fund managing director Christine Lagarde said the IMF's contribution would be approximately €1bn."This is a challenging programme that will require great efforts from the Cypriot population," Lagarde said in a statement, but it "provides a durable and fully financed solution to the underlying problems facing Cyprus and provides a sustainable path toward a recovery".Under the final deal, Cyprus won a two-year extension, from 2016 to 2018, to get its public finances in order.Cyprus should get the first payment from the bailout next month after the rescue accord is formally ratified, the European Commission said.Also sworn in on Wednesday was Zeta Emilianidou, who becomes the first woman in the cabinet and replaces Georgiades at the labour ministry.Anastasiades told her: "The ministry you are undertaking certainly requires great sensitivity. It is a ministry that deals with the government's social policy for vulnerable groups" and with industrial relations.Banks have been operating under stringent capital controls since they reopened last Thursday, after a near two-week lockdown prompted by fears of a run on deposits.The central bank has been progressively easing these restrictions, and has now raised the limit on business transactions from €5 000 to €25 000 and allowing people to write cheques of up to €9 000.Thus far, there has been no labour unrest in Cyprus, but bank workers union ETYK called a two-hour stoppage for Thursday over fears that pension funds at Laiki and Bank of Cyprus are not being protected under the bailout.Last week, Anastasiades said every effort would be made to preserve provident (pension) funds at Laiki and Bank of Cyprus.

March US job gains worse-than-expected

The US private sector added 158

• jobs in March, sharply below February's growth as the jobs market slowly recovers, payrolls firm ADP said on Wednesday.The worse-than-expected March reading followed February's upwardly revised figure of 237

• new jobs, from an initial estimate of 198

• Analysts on average had forecast 197

• new jobs were added last month. The March number was well below the first quarter's average monthly gain of 191

• jobs and marked the smallest increase since October.The massive US services sector continued to generate the greatest job growth, adding 151

• posts in March from February.Goods-producing employment rose by 7

• jobs, the slowest growth in six months.Manufacturing gained 6

• jobs.Construction added no jobs, after three months of average gains of 29

• "Construction employment gains paused as the rebuilding surge in the wake of Superstorm Sandy ended," said Mark Zandi, chief economist of Moody's Analytics, referring to the devastating storm that battered the Northeast at the end of October."The job market continues to improve, but in fits and starts," he said.The ADP report came ahead of the government's closely watched jobs and unemployment data Friday.The labour department was expected to report that the United States gained 192

• jobs in March, slowing significantly from growth of 236

• in February, and the jobless rate was unchanged at 7.7%.

IMF set to provide €1bn to Cyprus

The International Monetary Fund has agreed to provide approximately €1bn to the €10bn rescue plan for cash-strapped Cyprus, managing director Christine Lagarde said on Wednesday.This would be through a three-year 891 million Special Drawing Rights (about €1bn) loan, Lagarde said in a statement, adding that she expects the deal to go to the IMF executive board for approval in early May.The IMF, European Commission and European Central Bank agreed with Cyprus on Tuesday the terms of a programme that will see the country drastically downsize its bloated banking sector and put state finances in order."The Cypriot authorities have put forward an ambitious, multi-year reform programme to address the economic challenges they face," Lagarde said, describing it as "resolute.""The overarching goals are to stabilise the financial system, achieve fiscal sustainability and support the recovery of economic activity to preserve the welfare of the population."As part of the deal, Cyprus agreed last week to shut down bankrupt Laiki (Popular) Bank, transferring its deposits under €100 000 to the country's largest lender, Bank of Cyprus, which will be recapitalised.Deposits over €100 000 at Bank of Cyprus will be subject to a still-undetermined haircut which could reach 60% of their value. At the same time, the government imposed capital controls to prevent a run on banks.Lagarde said efforts will now "focus on completing the financial sector recapitalisation process, gradually restoring normal financial flows and facilitating the restructuring of banks' impaired loans".Cyprus has also committed itself to raise taxes, rein in spending and carry out structural reforms in the public sector to put its public finances in order.Lagarde said "this is a challenging programme that will require great efforts from the Cypriot population," but that it "provides a durable and fully financed solution to the underlying problems facing Cyprus and provides a sustainable path toward a recovery."She added that the measures adopted "seek to distribute the burden of the adjustment fairly among the various segments of the population and to protect the most vulnerable groups. The IMF, together with its European partners, will continue to support the efforts of the Cypriot people".

Dodging taxes 'second nature' in India

In a country long defined by its poverty, it's easy now to find India's rich.They're at New Delhi's Emporio mall, where herds of chauffeur-driven Jaguars and Audis disgorge shoppers heading to the Louis Vuitton and Christian Louboutin stores. They're shopping for Lamborghinis in Mumbai. They're putting elevators in their homes and showing off collections of jewel-encrusted watches in Indian luxury magazines. They're buying real estate in comfortable but unpretentious neighborhoods neighborhoods thought of as simply upper-middle-class just a couple years ago where apartments now regularly sell for millions of dollars.They're just about everywhere. Unless it's income tax time. Then, suddenly, they barely exist.The reality is simple: "There are very few people who are paying taxes," said Sonu Iyer, a tax expert at Ernst & Young in New Delhi. And tax dodging is everywhere. "It's rampant - rampant."If the generalities of that have long been known here, Finance Minister Palaniappan Chidambaram stunned the country in late February when he proposed a new tax on India's top earners. The surprise wasn't the temporary 10% surcharge on those earning more than 10,000,000 rupees, or about $185 000, per year, but the number of Indians who fall into that category.That number? Just 42 800 people."Let me repeat," Chidambaram told Parliament in his budget speech, making sure no one thought he had misspoken, "only 42 800" people say they earn that much.In a country of 1.2 billion people, a country where years of staggering economic growth annually create tens of thousands of new millionaires and a recent slowdown has done little damage to a thriving luxury goods market, far less than one ten-thousandth of the population admits they are in the top tax bracket.With so few Indians willing to come clean, the perennially cash-starved government has to scrabble every year for revenue.Among the rich, dodging taxes has become second nature, said Jamal Mecklai, CEO of Mecklai Financial, a Mumbai-based financial consulting firm. About 158,000 Indians are thought to be dollar millionaires, according to a 2012 Credit Suisse estimate, though some analysts believe the number is far higher."It's just taken as the reality" that most wealthy Indians are cheating, he said, adding that he pays everything he owes. India's top tax rate is currently 30%.It's not just the rich evading their taxes. Less than 3% of Indians file income tax returns at all, and officials say only about 1.5 million taxpayers say they earn more than 1,000,000 rupees per year about $18 000.Most of those not paying have legitimate reasons. Well over half the population earns so little they don't have to pay income taxes. Despite its ever-growing population of nouveau riche, more than 400 million Indians still live below the poverty line.Millions more people are exempt because regulations exclude agricultural income from taxes, no matter how much is earned. Since India has hundreds of millions of small farmers, and a powerful bloc of wealthy farmers, that's a tax break few politicians dare challenge. Various other tax breaks legally keep many more people off the tax rolls.The bulk of those paying income taxes, experts say, are salaried employees whose companies are responsible for making their tax payments. While those taxpayers can fudge their numbers to an extent, using inflated receipts to magnify tax breaks on expenses like housing, it's extremely difficult for them to completely escape tax authorities.But most everyone else from the barons of family-owned businesses to doctors, lawyers and small traders operate in largely cash economies that enable them, if they want, to hide most of their income.The size of India's underground economy and the amount of lost taxes is widely debated, but even the lowball figures are immense in a country with a nearly $2 trillion GDP. In recent studies, experts estimated that anywhere from 17% to 42% of the economy operates beneath the official radar.Billions of dollars are widely thought to be hidden in Switzerland, Singapore and other tax havens.Then there is the strange case of Mauritius. More than 40% of foreign direct investment in India comes through this tiny island in the Indian Ocean. In part, that statistic reflects an India-Mauritius tax treaty that legally eases the flow of investment funds into India. But, experts say, it also allows Indians to launder vast amounts of untaxed wealth by sending their illegal cash to Mauritius, then "round-tripping" it back to India in the form of legal investments.If it would take concerted effort to shut down complex, international money-laundering operations, catching at least some of India's high-end tax dodgers should be ridiculously simple. This is, after all, a country where flaunted wealth often seems as common as traffic jams.How about targeting the buyers of the 25 000 luxury cars sold last year in India? Or the buyers and sellers of big-budget apartments? What about the people racking up thousands of dollars a month in credit card bills? Maybe tax investigators could go to those high-end malls, looking to see who is buying all the expensive shoes.While the government says it recently has begun targeting some big spenders, mailing notices to tens of thousands of people they say may have underpaid their taxes, few believe officials have truly become aggressive."It's not really that difficult to chase down the tax dodgers," said Mecklai, the consulting firm CEO. "It's just a matter of putting the machinery in place."So why isn't the government doing that?The answers range from sheer incompetence to corrupt tax bureaucrats to a political class accustomed to making vast wealth on the side, and unlikely to do anything that might jeopardize its ill-gotten gains.Certainly the Indian public sees official corruption as a major part of the equation."Of course I don't pay all my taxes," said a New Delhi businessman who spoke on condition he not be named because he was admitting to breaking the law. "Why should I pay my taxes while the politicians are getting richer and richer every day?"Such talk is, experts say, the most commonly heard rationale for tax evasion, one entrenched by decades of political corruption and waves of official scandals.But it doesn't explain everything. Iyer, the Ernst & Young tax expert, notes that the culture of tax-avoidance runs deep in India. She points particularly to the way buyers and sellers of real estate openly discuss how much of the price will be paid in "white" declared money, and how much will be paid under the table in "black.""No one thinks of it as something to be ashamed about," she said. "In a country of holier-than-thou's, no one thinks that it's a blatant lie" to cheat on your taxes.Embarrassment, she said, may be what India needs most of all."The moment this society establishes a stigma to it, I think you'd see a change."

Cyprus to swear in new FM

Cyprus's new finance minister was due to be sworn in Wednesday following his predecessor's resignation hours after a probe was launched into how the island was pushed to the verge of bankruptcy. Haris Georgiades, a 40-year-old economist who had been serving as labour minister, will formally take up his new post a day after Michalis Sarris said he was stepping down to cooperate with judges investigating the failure of Laiki Bank, where he was chairman for much of last year.The bank's collapse was a major contributor to the island's near financial meltdown and need for a crippling eurozone bailout.President Nicos Anastasiades said on Tuesday he had accepted Sarris's resignation with "sadness" and lauded his "high political ethos" for stepping down.Sarris said he believed stepping down was "the right thing" to do to facilitate the investigators' work.His departure came as the government wrapped up talks with international lenders that will open the way for Cyprus to receive a €10bn bailout, said government spokesperson Christos Stylianides."Today we have completed the forming of the memorandum, which is a precondition for the loan agreement," with the period to implement the deal extended by two years to 2018 to "ease pressure on the economy", he said.It "should have taken place a lot sooner, under more favourable political and financial circumstances," he said, but added: "Even with this delay, the situation is now normalising, stabilising and the conditions to restart the economy are created."Cyprus is already in recession, and as he resigned Sarris said that "2013 will be a very difficult year, and the beginning of 2014 will also be difficult. Beyond this I believe the prospects are positive."

Ex-Goldman trader guilty in $118m scandal

A former trader with US banking giant Goldman Sachs has pleaded guilty to wire fraud.Matthew Marshall Taylor entered the plea Wednesday in federal court in Manhattan.Taylor admitted he took a trading position 10 times larger than he would have been allowed. He wanted to score profits that would enhance his reputation and boost his bonuses.The judge who accepted the plea said he was miffed that the government is holding Taylor responsible for only up to $2.5m in losses.Taylor was arrested on Wednesday on criminal charges of fraud linked to a scheme to hide an $8bn futures bet, officials said. Matthew Marshall Taylor "was in FBI custody as of early this morning," a source familiar with the government's case told AFP on condition of anonymity.The federal prosecutor's office in Manhattan said Taylor was due to appear before a judge on the charges "in connection with a scheme to accumulate and conceal an unauthorized $8bn position in a trading account that he managed at Goldman Sachs".In November, the Commodities Futures Trading Commission filed a civil suit accusing Taylor of defrauding his employer "by intentionally concealing... the true huge size, as well as the risk and potential profits or losses associated"."On or about December 13 2007, Taylor's scheme culminated in his concealment of an approximately $8.3bn long (S&P 500) e-mini futures position," the watchdog said, alleging that Taylor ended up defrauding Goldman Sachs of $118.4m.In December last year, the CFTC ordered Goldman Sachs to pay $1.5m in a fine for the actions of its trader, saying "it failed to diligently supervise its employees for several months in late 2007".The central bank eased restrictions imposed last week to prevent a bank run, raising the limit on business transactions from €5 000 to €25 000 and allowing people to write cheques of up to €9 000.With public anger mounting, Anastasiades said no one would be immune from the new judicial inquiry into the banking collapse, and called on the commission headed by former Supreme Court judge George Pikkis to investigate him and his relatives with "extra vigour".This is seen as a move to counter so far unsubstantiated allegations that family members used privileged information to get money out of the country before deposits were locked down.Other leading politicians and business figures have also been accused of taking advantage of their positions to protect their assets from a hit on bank deposits imposed by EU-led creditors last week.Under the bailout deal with the European Union, European Central Bank and International Monetary Fund, those with savings larger than €100 000 in the Bank of Cyprus face losing up to 60% of their deposits over that amount.Those in second lender Laiki will have to wait years to see any of their money over €100 000 as the bank is shuttered.Central bank official Yiangos Demetriou told state radio on Tuesday that Bank of Cyprus savers would now be able to access 10% of their deposits over €100 000.But he added the "troika" of bailout creditors had asked for more information before agreeing to release the full 40% of deposits over that threshold that savers can be sure of retaining.Banks have been operating under stringent capital controls since they reopened on Thursday, after a near two-week lockdown prompted by fears of a run on deposits.Central Bank of Cyprus governor Panicos Demetriades said the remaining controls would be eased in stages."I can't really tell you if it will be seven or 14 days before capital controls end," he told the Financial Times. "We have to lift them gradually."

Strike halts train, sea travel in Greece

Tens of thousands of travellers were stranded across Greece on Wednesday as seamen and train conductors called a 24-hour strike to protest austerity measures.Ferries were moored at ports across the country, and train services were disrupted as employees protested cutbacks, including the abolition of collective labour contracts that safeguard wage levels and other benefits.Dock workers were demanding back pay from ship owners and an end to undocumented and uninsured employees. The workers also want the government to cancel a plan to regulate the minimum number of dock workers required in each crew, saying it would lead to layoffs.Air traffic was also expected to be disrupted on Thursday as air-traffic controllers were to hold a 24-hour walkout.Greek unions have held dozens of strikes over the past three years to protest public sector pay cuts and tax hikes. The heavily indebted government passed the measures to secure bailout loans.

Italy seizes €1bn in Mafia-linked assets

Italian police on Wednesday said they had seized assets worth €1.3bn from a Sicilian renewable energy developer in the biggest ever seizure of Mafia-linked assets.The assets, including 43 wind and solar energy companies, 98 properties and 66 bank accounts, belonged to Vito Nicastri, a 57-year-old businessman dubbed the "Lord of the Wind" for his prominent role in the business."This is a sector in which money can easily be laundered," Arturo de Felice, head of Italy's anti-Mafia agency, told news channel SkyTG24."Operating in a grey area helped him build up his business over the years," De Felice said.The anti-Mafia agency said in a statement that it was the biggest seizure of mafia-linked assets.The assets had been frozen in 2010 and Nicastri is on probation under orders not to leave his town of Alcamo in western Sicily during the investigation.Nicastri had "numerous and high-level contacts with mafia figures," the anti-mafia agency said, adding that this had been confirmed by messages found during the arrest of two local Mafia bosses.The businessman was also linked to Matteo Messina Denaro, a fugitive who is considered the godfather of the Sicilian mafia, the statement said.The seizure "impacts in a significant way on the economic power of Matteo Messina Denaro, who is considered the lord of that land," it added.Italy's renewable energy sector has been heavily infiltrated by the mafia because of once-generous state subsidies and lax controls, as well as the availability of land in areas of southern Italy with a strong Mafia presence.

NEWS,03.08.2012

Argentina shows Europe how it's done

Bond payoffs are supposed to be boring, but Argentina's president is celebrating Friday's final $2.3bn payment on a bond given to people whose savings were confiscated a decade ago, calling it a lesson for European countries now mired in foreign debt. The nation's economic disaster left thousands with a grim choice after the government seized their dollar-denominated deposits to stop bank runs in 2002. They could switch to devalued pesos and regain access to what was left of their savings, or accept a piece of paper promising to repay the money in dollars over the next 10 years. Few had any faith in the government's promises back then. Argentina had just defaulted on more than $100bn in foreign debt, banks were shuttered, the economy was in ruins and streets were filled with pot-banging protesters whose chants of "throw them all out" would send five presidents packing. But Argentina has mostly paid up after all, making good on 92.4% of that defaulted debt so far, including $19.6bn in US currency over the years to cancel the Boden 2012 bond. Most of the hard-luck account-holders later sold the bonds at a loss, but as the government makes its last $2.3bn payment on Friday, the few stalwarts who kept the faith have been made whole, while earning a modest 28% profit over the years. "It was good business" for anyone who got the bonds early and held them, said Jorge Oteiza, a bond trader with Banco Comafi in Argentina. "To have the same buying power you had back then isn't bad." President Cristina Fernandez praised her government for meeting its commitments and blamed multinational financial institutions for the debt crises that afflicted Argentina back then and threaten Europe today. "This is the money that the banks should have returned to the Argentine citizens," she said during a national address from the Buenos Aires stock exchange Thursday night. Showing charts and rattling off numbers, she argued that her government has shown the world how to emerge from default without imposing austerity measures, growing its economy and strengthening the social safety net. This debt relief "has given us an immense independence from the activity of the market," she said to applause from the hundreds of guests she had invited onto the exchange floor. Argentina's foreign-currency debt has dropped from a daunting 166% of GDP at the end of 2002 to a more manageable 42% of GDP at the end of 2011, said Ramiro Castineira of the Econometrica consulting firm. "If before it was a burden to shoulder, now it's just a handbag. It doesn't restrict the economy as it did in the past," he said. However, the debt has grown in nominal terms during the same period, from $137bn to $179bn. Many economists suggest the official story is misleading at best, since the government has refused to pay billions of dollars in other bad debts while borrowing freely within Argentina, taking money from pension funds, provinces, state-owned banks and the central reserve to stimulate the economy and reduce its foreign debt exposure. In her determination to make Argentina financially independent, critics say Fernandez has only shifted the debt burden onto her citizens, imposing terms that could stunt the country's future growth. For example, the government promised to pay negative 0.25% interest over ten years for the $27.9bn it took from the treasury for debt relief, the central bank said. "It's wonderful to see Argentina pay down debt, but for every dollar they're paying down, they're borrowing two or three through the other window, and increasingly from their own people," said Arturo Porzecanski, an expert on emerging markets at American University in Washington. Economy Minister Hernan Lorenzino proudly described the Argentine recipe in a column Wednesday published by Telam, the government news agency: Spurn the requirements of the International Monetary Fund and World Bank. Strong-arm the so-called "vulture funds" into accepting lower returns on their risky bets. Nationalise private pension plans, the airline and now the YPF oil company, putting their assets to use creating jobs. And tap central bank reserves to pay down international debts. Frozen out of international markets as a consequence of the 2002 default, this government made breaking their rules a point of pride, Lorenzino suggested. "At first, they called us heretics and the international community turned its back on us," he recalled. But "this government makes policies today without conceding to international pressure, thinking first of those on the inside, and later on those outside." Lorenzino has said this government will not take on more international debts. Not that it could: Friday's payoff still doesn't resolve nearly $7.5bn it owes the US and other Paris Club nations, or the $11.2bn claimed in US courts by bond holdouts. Argentina also owes millions in court judgments to US companies, and Spain's Repsol Group wants $10.5bn for its shares in YPF that Fernandez expropriated this year. Many of these investors would try to seize any newly borrowed money before it reaches Buenos Aires. Lorenzino suggested that Argentina's renegade approach makes it better prepared to confront global crises because the portion of its debt held by the private sector has dropped from 124% of GDP a decade ago to 14% last year. "This was possible only under the concept of economic independence, political sovereignty and social justice," Lorenzino wrote. But this shift from private to public debt means that the government is essentially borrowing from Argentine taxpayers and bank account holders to stimulate its economy, at rates far below inflation, which is estimated at 25% a year or more. Unless this changes soon, the money could run out and there will be few other places to turn for help. "This is no longer an 'us-versus-them' problem," Porzecanski said. "At first they went after the big multinationals, then the 'filthy-rich bondholders,' then powerful institutions like the IMF. Now it has become a fight for financial resources within Argentina. That's why I think the end is coming."

 

A Better Job Report But Challenges Remain

 

When it comes to economic data, I have been dreading the employment report issued on the first Friday of every month. And I am not the only one.For the last few years, this release from the Department of Labor has signaled insufficient job creation. It has also pointed to an increasingly segmented labor market, where the highly educated and affluent do well while vulnerable segments of society see little improvement. In the process, the unemployment crisis has gotten more embedded into the structure of the American economy.So it was a major relief this morning that the July report was a lot better than prior ones.At 163,000, job creation came in ahead of consensus expectations of 100,000. Long-term joblessness fell from 5.4 million to 5.2 million. The employment gains were broad based in terms of sectors. And average weekly earnings rose slightly.This is all good news... and especially after way too many months of disappointments. Yet, and unfortunately, it is too early to relax.The report still contains flashing yellow lights; and the future is still too uncertain with respect to both domestic and international conditions.In July, the unemployment rate edged up slightly to 8.3% despite more Americans falling out of the labor force. In fact, the participation rate declined from 64.0% to 63.7%; and the employment-population ratio, which is the most comprehensive measure out there, slipped from 58.6% to 58.4%.Then there are the compositional issues. There was little relief for those who need it most, including too many Americans who risk slipping from being unemployed to being unemployable.For example, teenage unemployment rose from 23.7% to 23.8% while joblessness among those with less than a high school diploma increased from 12.6% to 12.7% (compared to a stable 4.1% for those with bachelor degrees and higher).Put these numbers together and what you get is a picture of an economy that is healing, but doing so gradually and unevenly.So much for the past and present; how about the future?Left to its own devices, the economy would continue to heal and, concurrently, job creation would accelerate. But will they?For the improvement in the labor market to continue and broaden, America needs to minimize the risk of derailment by three clear and present dangers: the reluctance of Congress to deal with the fiscal cliff, Europe's inability to get ahead of its crisis, and a possible geo-political shock emanating from Iran.In such circumstances, it would be reasonable to expect Congress to be giving the unemployment crisis the attention it needs and deserves. Our elected representatives should be working hard on ways to accelerate the economic healing and also minimize vulnerability to these potential shocks.Unfortunately they are too polarized to do so; and it looks like they won't until the November elections are behind them, at the earliest.So despite the latest monthly improvement, America's unemployment situation will remain a challenge. And many of us will continue to nervously await the monthly data releases.

NEWS,12.04.2012.

North Korean missile crisis: Will Pyongyang defy the world?

Fighter jets roared through the skies over downtown Pyongyang on Thursday as the world watched to see whether North Korea would defy international warnings and launch a long-range rocket over the Yellow Sea. The five-day window for the launch of a rocket mounted with an observation satellite opened on Thursday as North Koreans woke to details about developments at a Workers' Party conference where leader Kim Jong Un ascended to top posts and brought with him a new generation of officials. His father, Kim Jong Il, was granted the posthumous title of "eternal general secretary" at the special one-day party conference on Wednesday. The immortalisation of the late leader provided a glimpse into how North Korea will handle the nation's second hereditary succession and indicates he will be honored much in the same way his father, Kim Il Sung, was made "eternal president" following his 1994 death.Footage on state TV Thursday showed Kim Jong Un seated at the front of the conference with white statues of his grandfather and a new statue of his father in his trademark khaki work ensemble, one arm on his hip. There was no word on Thursday morning on the timing of the controversial launch, which the North has said will take place sometime between Thursday and Monday. In 2009, a similar launch from an east coast site took place on the second day of a five-day window. The United States, Japan, Britain and others say the launch would constitute a provocation and would violate UN Security Council resolutions banning North Korea from developing its nuclear and missile programs.
Experts say the Unha-3 carrier is similar to the type of rocket that could be used to fire a missile mounted with a nuclear warhead to strike the US or other targets.

 Software engineer's job best, reporter's fifth worst

A reporter's job figures among the ten worst professions, alongside the likes of butchers, waiters and dishwashers, as per a new study by the US-based consultancy CareerCast, which has named a software engineer's occupation as the best for the year 2012.The annual study has ranked a total of 200 jobs from best to worst on the basis of five core criteria such as physical demands, work environment, income, stress and hiring outlook.It mostly covered the jobs in the US and is based on data from the US Bureau of Labour Statistics and other government agencies.Among the ten worst jobs, the study has named a newspaper reporter's occupation at the fifth position, after that of a lumberjack, dairy farmer, enlisted military soldier and oil rig worker.Others in the ten worst jobs for 2012 include waiter/waitress, meter reader, dishwasher, butcher and broadcaster."As the digital world continues to take over and provide on-demand information, the need for print newspapers and daily newscasts is diminishing. To be sure, both jobs once seemed glamorous, but on-the-job stress, declining job opportunities and income levels are what landed them on our worst Jobs list," the report noted.The study has also listed out ten most stressful jobs and none of these occupations figure in the list of ten best jobs.CareerCast has ranked enlisted soldier, firefighter, airline pilot, military general, police officer, event coordinator, public relations executive, senior corporate executive, photo-journalist and taxi driver among the most stressful jobs.On the other hand, job of a software engineer has topped the list in the best jobs category, followed by actuary, human resources manager, dental hygienist and financial planner.Software engineers earn a median income of more than $ 88,000 with few physical demands and minimal stress, it noted.The report further said that those in the top categories earn between $ 68,000 to $ 104,000 annually.

NEWS,02.02.2012

Portuguese strike flops, workers fear for jobs

The trains ran and the buses, too. Staff made it to work and shops and banks opened across Lisbon. Weak backing for a transport strike on Thursday reflected a broader lack of appetite for militant action by workers concerned for jobs threatened by Portugal's growing debt crisis. Already facing its worst hardship in decades, Portugal has come under increasing pressure over the last month on fears it will be forced to seek another bailout beyond its current 78-billion-euro lifeline or restructure its debts like Greece. Italian, Irish and Spanish bonds rally, but Portugal's remain mired in doubt Lisbon can handle its debt. Government austerity measures are biting. Unemployment is above 12 percent and expected to rise further in the poorest country in Western Europe. However, the strike appeared to have little impact. Trains and buses were running. Only Lisbon's metro and ferries shut down.” They are raising the prices and now there is a strike as well, this is annoying," said Rosario Mendes, a janitor waiting for a bus to return home from her early shift. "We can't go on strike, there are no jobs.” Shops and commerce was functioning normally in Lisbon. Even union officials acknowledged the strike was weak.” We are analyzing why (train and bus) workers didn't mobilize as we had expected," said Jose Manuel Oliveira, a coordinator for the FETRANS transport union.The Portuguese have so far shown little passion for the kind of violent protests and strikes that have hit Greece during its crisis. Portugal has few traditions for widespread protest. The situation is similar in neighbouring Spain despite 23 percent unemployment. A general strike in November 2010 had limited impact. Spain's unions have lost clout and credibility. There is also wide-spread sentiment in Spain that families and the government lived beyond their means during a 10-year-long housing and construction boom. Nor has there been much sign of widespread militancy in France or in Italy. Thursday’s strike in Portugal was aimed at government efforts to restructure public transport companies, which have huge debts and will almost inevitably lead to job losses. The government has not yet detailed its plans.” This strike was premature and badly explained by the organizers, as the government has not yet outlined its plans for the transport restructuring," said sociologist Elisio Estanque at Coimbra University. "So it does little but caricature and vulgarizes the strike movement.” Portugal’s second-largest umbrella union, the UGT, reached an agreement with the government and employers last month on labor reforms that will make it easier to hire and fire workers, boosting competitiveness.UGT chief Joao Proenca said his decision to sign up to the agreement was motivated by his view that Portugal's lenders -- the European Union and IMF -- are under pressure to listen to unions in order to avoid a failure like in Greece. That should give unions greater clout in future reforms of the economy. Since Portugal's crisis began there have been only two general strikes -- one in November last year and one in November the previous year. There have been some sporadic strikes, such as train drivers and port workers, but they have related to specific issues in the sector, not in general against austerity measures. But, as Portugal enters the harshest year of austerity and recession under its bailout there are still risks that social protest could flare up, especially if the government decides to adopt further cost-cutting measures to meet budget goals. It has already effectively eliminated two months' pay for civil servants, cut health and pension spending and raised taxes across the board. Prime Minister Pedro Passos Coelho said this week he would meet the terms of the bailout "whatever the cost.” Another factor that could have undermined the union movements a split between the moderate UGT and the more radical CGTP, which refused to sign the labour reform agreement with the government and is affiliated to the small Communist Party.

"Prices are soaring; they are robbing the people and sinking the country. Reject the pact of aggression," read Communist Party banners plastered around Lisbon, in reference to the labor reform accord. Economic reality -- whether the slump deepens or the first signs of recovery appear this year -- may well end up being the key factor in deciding whether more workers join protests. Still, the challenges have only increased since many investors started believing Portugal may have to seek more bailout money, putting Lisbon further behind the recovery seen in Ireland, the euro zone's other bailed-out country."If we manage to get closer to Ireland and not Greece, strife should subside, but if more draconian austerity measures are imposed, there will be a limit after which popular discontent will spill over to the streets," said Estanque.