NEWS,19.02.2013

Italy Elections 2013: Nearly A Third Of Population Undecided Or Will Not Vote, According To Final Poll

Five days before national elections almost a third of Italians have yet to decide who to vote for or are considering not voting at all, a survey showed on Tuesday, highlighting uncertainty over the outcome. The poll in Corriere della Sera daily showed the proportion of Italians undecided or tempted to abstain has declined from 51.5 percent in December but remains at a significant 27.7 percent less than a week before the vote on Sunday and Monday. Final polls on Feb. 8, before a legal black-out period set in, indicated that the centre-left Democratic Party would win a lower house majority but will need to form a coalition with outgoing Prime Minister Mario Monti's centrist grouping. Silvio Berlusconi's centre-right alliance was about 6 percentage points behind the frontrunners. But the hefty proportion of undecided voters means the outcome is still unpredictable and the final days of campaigning will be crucial. Publication of polls is illegal in the two weeks leading up to the Feb. 24-25 election but analysts are permitted to reveal data on likely participation rates. Most of the undecided are middle-aged housewives or pensioners with relatively low education levels, mainly living in the south of Italy, and with little interest in politics, pollster Renato Mannheimer of the ISPO institute said. "More than half of those who are currently undecided or potential abstainers say they can't place themselves on the right or the left," Mannheimer told the Milan daily. He added it was likely that many people who were yet to decide would probably not vote, based on past electoral trends. But historical participation rates suggest about 5 million people, or 10 percent of voters, will make up their minds in the last few days, swayed by last-minute promises from party leaders regardless of their place on the political spectrum, he said. Many polls over the last year have shown Italians disenchanted with a political class clinging to its privileges as the euro zone's third biggest but chronically uncompetitive economy descended deeper into crisis.

China Suspected Of Hacking Attacks Against The U.S.

A secretive Chinese military unit is believed to be behind a series of hacking attacks, a U.S. computer security company said, prompting a strong denial by China and accusations that it was in fact the victim of U.S. hacking. The company, Mandiant, identified the People's Liberation Army's Shanghai-based Unit 61398 as the most likely driving force behind the hacking. Mandiant said it believed the unit had carried out "sustained" attacks on a wide range of industries. "The nature of 'Unit 61398's' work is considered by China to be a state secret; however, we believe it engages in harmful 'Computer Network Operations'," Mandiant said in a report released in the United States on Monday. "It is time to acknowledge the threat is originating in China, and we wanted to do our part to arm and prepare security professionals to combat that threat effectively," it said. The Chinese Foreign Ministry said the government firmly opposed hacking, adding that it doubted the evidence provided in the report. "Hacking attacks are Trans national and anonymous. Determining their origins is extremely difficult. We don't know how the evidence in this so-called report can be tenable," spokesman Hong Lei told a daily news briefing."Arbitrary criticism based on rudimentary data is irresponsible, unprofessional and not helpful in resolving the issue."Hong cited a Chinese study which pointed to the United States as being behind hacking in China. "Of the above mentioned Internet hacking attacks, attacks originating from the United States rank first. "China's Defence Ministry did not immediately respond to faxed questions about the report. Unit 61398 is located in Shanghai's Pudong district, China's financial and banking hub, and is staffed by perhaps thousands of people proficient in English as well as computer programming and network operations, Mandiant said in its report.The unit had stolen "hundreds of terabytes of data from at least 141 organisations across a diverse set of industries beginning as early as 2006", it said.Most of the victims were located in the United States, with smaller numbers in Canada and Britain. The information stolen ranged from details on mergers and acquisitions to the emails of senior employees, the company said.The 12-storey building, which houses the unit, sits in an unassuming residential area and is surrounded by a wall adorned with military propaganda photos and slogans; outside the gate a sign warns members of the public they are in a restricted military area and should not take pictures. There were no obvious signs of extra security on Tuesday. "ECONOMIC CYBER ESPIONAGE" Some experts said they doubted Chinese government denials of military involvement in the hacking. "The PLA plays a key role in China's multi-faceted security strategy, so it makes sense that its resources would be used to facilitate economic cyber espionage that helps the Chinese economy," said Dmitri Alperovitch, chief technology officer and co-founder of CrowdStrike, one of Mandiant's competitors. Though privately held and little known to the general public, Mandiant is one of a handful of U.S. cyber-security companies that specialise in attempting to detect, prevent and trace the most advanced hacking attacks, instead of the garden-variety viruses and criminal intrusions that befoul corporate networks on a daily basis. But Mandiant does not promote its analysis in public and only rarely issues topical papers about changes in techniques or behaviours. It has never before given the apparent proper names of suspected hackers or directly tied them to a military branch of the Chinese government, giving the new report special resonance. The company published details of the attack programmes and dummy websites used to infiltrate U.S. companies, typically via deceptive emails. U.S. officials have complained in the past to China about sanctioned trade-secret theft, but have had a limited public record to point to. Mandiant said it knew the PLA would shift tactics and programmes in response to its report but concluded that the disclosure was worth it because of the scale of the harm and the ability of China to issue denials in the past and duck accountability.The company traced Unit 61398's presence on the Internet including registration data for a question-and-answer session with a Chinese professor and numeric Internet addresses within a block assigned to the PLA unit and concluded that it was a major contributor to operations against the U.S. companies. Members of Congress and intelligence authorities in the United States have publicised the same general conclusions: that economic espionage is an official mission of the PLA and other elements of the Chinese government, and that hacking is a primary method. In November 2011, the U.S. National Counterintelligence Executive publicly decried China in particular as the biggest known thief of U.S. trade secrets. The Mandiant report comes a week after U.S. President Barack Obama issued a long-awaited executive order aimed at getting the private owners of power plants and other critical infrastructure to share data on attacks with officials and to begin to follow consensus best practices on security.Both U.S. Democrats and Republicans have said more powerful legislation is needed, citing Chinese penetration not just of the largest companies but of operations essential to a functioning country, including those comprising the electric grid.

Chavez returns to Venezuela from Cuba

 

President Hugo Chavez returned to Venezuela early Monday after more than two months of treatment in Cuba following cancer surgery, his government said, triggering street celebrations by supporters who welcomed him home while he remained out of sight at Caracas' military hospital. Chavez's return was announced in a series of messages on his Twitter account, the first of them reading: "We've arrived once again in our Venezuelan homeland. Thank you, my God!! Thank you, beloved nation!! We will continue our treatmen there. "They were the first messages to appear on Chavez's Twitter account since Nov.1."I'm clinging to Christ and trusting in my doctors and nurses," another tweet on Chavez's account said. "Onward toward victor always!! "Vice President Nicolas Maduro said Chavez arrived at 2:30 a.m. and was taken to the Dr.Carlos Arvelo Military Hospital in Caracas. Chavez's return came fewer than three days after the government released the first photos of the president in more than two months, showing him looking bloated and smiling alongside his daughters. The government didn't release any additional images of Chavez upon his arrival in Caracas, and unanswered questions remain about where he stands in a difficult and prolonged struggle with an undisclosed type of pelvic cancer. Chavez was re-elected to a new six-year term in October, and his inauguration, originally scheduled for Jan. 10, was indefinitely postponed by lawmakers in a decision that the Supreme Court upheld despite complaints by the opposition. Some speculated that with Chavez back, he could finally be swornin. Hundreds of Chavez supporters celebrated his return in downtown Caracas, chanting his name and holding photos of the president in Bolivar Plaza. Supporters also gathered outside the hospital. "I want to see my president," said Alicia Morrow, a seamstress who stood outside the hospital on the verge of tears. "I've missed him a lot because Chavez is the spirit of the poor. "Chavez's precise condition and the sort of cancer treatments he is undergoing remain a mystery, and speculation has grown recently that he may not be able to stay on as president. The Venezuelan Constitution says that if a president dies or steps down, a new vote must be called and held within 30days. The 58-year-old president hasn't spoken publicly since he left for Cuba on Dec. 10. He underwent his fourth cancer-related surgery on Dec. 11, and the government says that he is now breathing through a tracheal tube that makes talking difficult.

Israeli leader brings dovish rival into coalition

Israeli Prime Minister Benjamin Netanyahu on Tuesday added his first coalition partner as he works to build a new government, agreeing to bring in a dovish rival to oversee contacts with the Palestinians in what could signal a new approach to peacemaking by the hard line leader. Under the deal, former Foreign Minister Tzipi Livni will serve as justice minister in the next Israeli government, in charge of peace efforts with the Palestinians. Livni, who led negotiations during the last substantive round of peace talks four years ago, has a good relationship with Palestinian President Mohmoud Abbas and favours a softer line than Netanyahu. Standing alongside Livni at a news conference Tuesday evening, Netanyahu vowed to make a serious attempt to reach peace under his next government. He said bringing in Livni, who has been a fierce critic, was part of his goal of forming a "wide and stable" government. "We need a Palestinian partner and I hope we will find a Palestinian partner who will take seriously Israel's security needs and that will be willing to end the conflict once and for all. Today Israel outstretches its hand to peace once again," he said. Netanyahu, who has come under heavy criticism, both at home and abroad, for the deadlock in peace efforts during his previous term, has promised to take a more aggressive approach under his next government. But he has given no details on whether he is prepared to make any new concessions, and it remained unclear whether Livni's addition to his Cabinet would be enough to lure the Palestinians back to negotiations. "What is important is the policies that will be adopted and implemented by the incoming Israeli government," said Yasser Abed Rabbo, a top adviser to Abbas. He said that if Netanyahu stuck to his policies of building settlements on occupied land, "it's better for Livni to search for another mission." As foreign minister, Livni served as the chief negotiator with the Palestinians under former Prime Minister Ehud Olmert. While both sides have said they made great progress during that time, the talks collapsed in late 2008 and have remained virtually frozen since Netanyahu took office early the following year. The Palestinians have refused to negotiate with Netanyahu while he continues to build Jewish settlements in the West Bank and east Jerusalem, areas captured by Israel in the 1967 Mideast war. The Palestinians claim both areas, along with the Hamas-ruled Gaza Strip, for their future state. The Palestinians also want negotiations to resume from the point where they broke off under Olmert and Livni. Olmert has said he offered a near total withdrawal from the West Bank and shared control over Jerusalem. Netanyahu has said these concessions were far too generous and that negotiations should begin without any preconditions. He also has claimed that even when he imposed a partial freeze on settlement construction, the Palestinians did not enter substantive negotiations. But after four years of deadlock, the international community has grown impatient with the Israeli leader. In a sign of the international disapproval, the U.N. General Assembly overwhelmingly voted in November in favour of an independent Palestinian state in all of the West Bank, east Jerusalem and Gaza. Although largely symbolic, the vote signified an international endorsement of key Palestinian demands on future borders. With President Barack Obama scheduled to visit in late March, Netanyahu is eager to present a new face to the international community. Livni's addition to his Cabinet is a step in that direction. In addition to her good working relationship with the Palestinians, Livni is well known and well respected around the world, and has appeared on lists of the world's most influential women compiled by magazines like Forbes and Time.

NEWS,08.01.2013

Bumpy road for German economy - experts

More evidence of sliding German exports and industry orders on Tuesday compounded concerns that the eurozone crisis may have battered the region's largest economy into contraction at the end of last year.German imports and exports slid in November, narrowing the trade surplus, and industry orders fell more than expected.Imports slid 3.7%, while exports fell 3.4%, data from the Federal Statistics Office showed on Tuesday. Economists polled by Reuters had expected imports to increase by 0.4% and shipments abroad to drop 0.5%. Seasonally-adjusted industrial orders fell 1.8% in November, due mainly to a sharp fall in demand from non-eurozone countries. That was below a 1.4% drop forecast by a Reuters poll of 29 economists. Germany has served as a pillar of regional strength through the three-year eurozone debt crisis but the economy slowed in the third quarter of last year and economists expect it to have contracted in the last quarter. Although many see Germany escaping a recession and staging a steady improvement this year, Tuesday's data prompted some economists to predict a bumpy road." With a pick-up of global demand, exports could quickly return as the reliable growth driver. However, (the) latest new order data illustrate that the way out of contraction will not necessarily be a straight upward-sloped line," said Carsten Brzeski, senior economist at ING. Germany is unlikely to join eurozone stragglers, he added, but "could end up humming the 'things will get worse before they get better' tune still for some time."Trade surplus narrows The seasonally-adjusted trade surplus narrowed more than expected to €14.6bn from a downwardly revised 14.9bn in October. The consensus forecast in a Reuters poll was for it to narrow slightly to €15.0bn. Weakness in the European Union, where Germany sells roughly 60% of its exported goods, is weighing on exports. Sovereign debt crises have driven most of its partners to raise taxes and cut spending, weakening appetite for German goods, although demand from emerging markets has gone some way to compensating for that.A breakdown of the German trade data on an unadjusted basis showed exports to the eurozone slumped 5.7% on the year, even as exports to countries outside Europe rose 5.6%.The drop in imports raises questions about the ability of German consumers and companies to prop up growth during the eurozone crisis, as many had hoped, with unemployment on the rise and consumer morale deteriorating. Nonetheless, unemployment is close to a 20-year low and wages are rising for the first time in years. Purchasing managers' reports showed the private sector expanded for the first time in eight months in December, while the Ifo index showed morale at German businesses rising in November and December. The economy ministry played down the decline in manufacturing orders given strong October figures."Overall, demand seems to be stabilising. The slight improvement in sentiment indicators also points to this," said the ministry in a statement.Providing some reassurance about domestic demand, bookings from within Germany increased by 1.3%.However, foreign orders fell by 4.1%. While bookings from the eurozone inched up 0.2%, contracts from countries outside the currency union slumped by 6.5% after an 8% rise in October. "Demand for capital goods remains low in view of the weak economic environment in Europe, where there is significant overcapacity in many places," said Bernd Hartmann, head of investment research at VP Bank.

Eurozone jobless rate jumps to new high

Europe's unemployment numbers are rising to worrying new records with dire figures from Spain especially underlining a growing north-south divide, official data showed on Tuesday.The unemployment rate across the troubled eurozone hit 11.8% in November, up from 11.7% in October, with the number of people out of work in the 17-nation single currency area now nudging 19 million. The 19th rise in a row for the eurozone, home to some 330 million people, represented an increase of more than two million on the dole compared to a year ago. London-based IHS Global Insight analyst Howard Archer calculated the cumulative increase since April 2011 as 3.278 million out-of-work."The only crumb of comfort was that this was the smallest rise since August, although it did follow a particularly sharp rise of 220,000 in October," Archer said, adding that he expected the jobless rate to "move clearly above 12% during 2013."While the jobless numbers exceeded 26 million for the first time across the full 27-member European Union, which includes Britain and Poland, the EU as a whole recorded an unchanged 10.7-percent unemployment rate.Indeed, there were more jobless over the past year, according to Eurostat data, in the 17-nation eurozone where the number of newly unemployed was 2.015 million, compared to 2.012 million for the EU. Facing a bust property boom and riddled with bad debt in its banks, Spain recorded the highest unemployment rate of all the European countries - at 26.6%, worse even than bailed-out Greece. Among under-25s, both countries saw unemployment rates hovering around 57%.According to Eurostat figures seasonally-adjusted for comparative purposes, the November unemployment rate in key rival economies was 7.8% for the United States and 4.1% for Japan."2012 has been another very bad year for Europe in terms of unemployment and the deteriorating social situation," said European Commissioner for Employment, Social Affairs and Inclusion Laszlo Andor. Giving his annual report on employment trends, he said that "appropriate labour market reforms and improvements in the design of welfare systems" could make countries more resilient to economic shocks. But with a north-south divide between Germany and similar satellite economies faring far better than Europe's southern Mediterranean rim, Andor said it was "unlikely that Europe will see much socio-economic improvement in 2013.""A widening gap is emerging," Andor said, even between the north and south just of the eurozone. The Commission concluded there was a divergence between "countries that seem trapped in a downward spiral of falling output, fast-rising unemployment and eroding disposable incomes, and those that have so far shown good or at least some resilience."Southern and peripheral countries whose governments and companies face much higher interest rates or no access to market financing will continue to struggle, the Commission said, citing an over-allocation of lending during the construction boom of the last decade.

Italian jobless ranks swell

Italy's jobless rate remained at a record high in November while youth unemployment jumped to a new peak above 37%, data showed on Tuesday. Italy has been in a deep recession since the middle of 2011 and unemployment has risen steadily as businesses clamp down on staffing levels to cope with crumbling domestic demand. The plight of the unemployed and particularly young people will be a crunch issue at the election and outgoing Prime Minister Monti, who heads a centrist group, has been criticised by opponents on the left and right of hurting the economy in his efforts to fix public finances. Unemployment was stable in November at October's record high of 11.1%, national statistics institute ISTAT reported. Joblessness rose above 11% in October for the first time since the first quarter of 1999. Before January 2004 ISTAT only issued quarterly jobs data. November's rate was marginally below a forecast of a further rise to 11.2% in a Reuters survey of analysts, but it was up 1.8 percentage points from November 2011 when Monti was appointed to save Italy from a mounting debt crisis. The youth unemployment rate, referring to 15-24 year-olds, jumped for the third month running in November to 37.1%, its highest level since records began in 1992.Companies are reluctant to give new recruits regular contracts because strong job protection means it is hard to fire them. So young people tend to move from one temporary contract to the next, and opportunities have dried up in the recession. Monti sought to address the problem with a hotly contested labour reform passed last summer, but critics say that by making it more costly and complicated for firms to offer temporary contracts the reform discouraged hiring in the recession. "You always hope that if you put some effort in you will get something back," said 22 year-old Michele Andaloro as he lined up in search of work at one of Rome's largest job centres. "The next government needs to work for the future of young people and not behave like in the past." Analysts say the growing financial difficulties of families are also forcing more young people to look for work rather than study or live off family income. In a dismal series of records, the employment rate edged down in November to a 12-month low of 56.8%, while the male employment rate fell to 66.3%, the lowest since records began in 1992."The worst hit by the crisis are those in the industrial section and construction," an ISTAT spokesperson said.I talian industrial output is still more than 25% lower than its level of mid-2008, before the recession brought on by the global financial crisis. Analysts say the real challenge for Italy is to increase its chronically low rates of employment and participation in the labour market, which are among the lowest in the industrialised world, especially among women, the young and the elderly.

Merkel challenger remarks spark outrage

Chancellor candidate Peer Steinbrueck was widely criticised on Sunday, even by his own centre-left Social Democrats (SPD), for saying German leaders were underpaid. Steinbrueck has struggled to gain ground against Chancellor Angela Merkel ahead of next September's election, in part due to lingering criticism over him earning €1.25m as an after-dinner speaker in the past three years.The remarks from the former finance minister about what he called the inadequate compensation for the chancellor drew speedy rebukes across the country's political spectrum, including from the last SPD chancellor Gerhard Schroeder."A German chancellor does not earn enough based on the performance that is required of her or him compared with the jobs of others who have far less responsibility and far more pay," Steinbrueck, 65, was quoted on Sunday by the Frankfurter Allgemeine Sonntagszeitung newspaper saying."Nearly every savings bank director in North Rhine-Westphalia earns more than the chancellor does," Steinbrueck said of his home state.Merkel's pay is set to rise by €930 per month to €17 106 in 2013 along with pay rises for her ministers and members of parliament, increases that have been criticised by some for sending the wrong signal in an era of austerity."Some of the debates kicked up by the 'guardians of public virtue' are grotesque and are harmful for anyone considering getting involved in politics," Steinbrueck said.The SPD trails Merkel's conservatives by 10 points in opinion polls, but, with its Greens allies, it does have a chance of winning power in September because of the prolonged weakness of Merkel's Free Democrat (FDP) coalition partners. Steinbrueck, whose blunt talk makes him popular among some voters despite him never winning a major election and him being defeated as state premier in North Rhine-Westphalia in 2005, said there were times in his career when he was not as well off and admitted he was now a "wealthy Social Democrat". Schroeder, chancellor from 1998 to 2005, has endorsed Steinbrueck to lead his party against Merkel but distanced himself from Steinbrueck's views on pay."In my view politicians in Germany are adequately compensated," Schroeder told Bild am Sonntag newspaper. "I was certainly always able to live off the pay. And anyone who doesn't feel it's enough pay can always look for another job."Other SPD leaders indirectly criticised Steinbrueck. Dieter Wiefelspuetz, a top SPD member of parliament, said politicians were misguided if they compared their wages to private industry."To serve as chancellor is a fascinating job and the pay is definitely not shabby," he said.Steinbrueck was once seen as the centre left's best hope of winning back the chancellorship. He was popular as the no-nonsense finance minister and the SPD hoped he would siphon centrist voters away from the conservatives.But the controversy over his earning €1.25m for 89 speeches will not go away and his campaign has been marred by setbacks and awkward comments.Analysts say he is also struggling to win over female voters, many of whom are put off by his combative style. "Merkel is popular due to a 'woman's bonus' that she gets," Steinbrueck told the paper.

Italy upbeat at end of 2012

Italy is ending 2012 on an upbeat note, with renewed financial market confidence and optimism among analysts that the worst of the financial crisis is over, despite expectations of political uncertainty in the run-up to a general election in February.The Treasury's borrowing rates were slightly higher at short, medium and long-term debt auctions last week, but were well below levels seen at the end of 2011, when Prime Minister Mario Monti took over from Silvio Berlusconi as Italy teetered on the brink amid the eurozone debt crisis.In late November 2011, the country was paying a 7.56% rate for its benchmark ten-year bonds, sparking widespread concerns it might have to ask for a bailout.On Friday, that rate stood at 4.48%.As 2012 draws to a close, "even if public debt has breached the two trillion euros mark, Italy's ability to finance itself is no longer in doubt," said Enrico Marro in Italy's Il Sole 24 Ore financial daily."For 2013, optimism reigns," he concluded.The turnaround is principally the result of two factors: the European Central Bank's promise to buy sovereign debt issued by eurozone member states without limit if necessary if they meet certain strict conditions, and Monti's decisive reforms which have restored Italy's credibility internationally. Experts have forecast a couple of months of volatility on the markets in the lead up to the February 24 and 25 elections, but the worst appears to be over. Italian bank Intesa Sanpaolo said "the fever should drop off in 2013 compared with 2012."The bond spread a key measure of the difference between Italian and German 10-year bond yields has also dropped sharply over the year, dipping below 300 basis points in early December from double that figure at its peak. While European leaders congratulated Monti on restoring calm to the markets, Berlusconi's announcement at the start of December that he is running again for prime minister sparked panic and the spread began to inch up again.The media magnate has dismissed the spread measure as "a trick and an invention" used to bring down his government. Investors will be watching closely in the coming weeks to see if Berlusconi's large-scale media campaign for re-election wins him potential votes from Italians tired of Monti's austerity packages and record unemployment levels.Renewed confidence in financial markets contrasts sharply with official forecasts for economic growth over the coming year, as Italy struggles to pull itself out of a recession.Despite Monti's "Grow Italy" plan, the economy is not expected to return to growth before the end of 2012 or the beginning of 2014."Business and household sentiment does not appear to have benefited from the easing market tension," Intensa Sanpaolo said.The government has forecast a 0.2% contraction of the country's gross domestic product in 2013 an outlook considered overly optimistic by Italy's business association Confindustria, which expects GDP to shrink by 1.1% next year.One figure is on the rise however: the number of people on Twitter following Monti, who is drumming up support for a reform-led electoral campaign. Monti, who resigned last week after Berlusconi's People of Freedom party pulled support from the government, has said he is keen to lead the country again after the elections a message welcomed by the markets, European leaders and Italy's Catholic Church alike.

 

IMF, EU push for softer deficit cuts

The International Monetary Fund and European Commission officials have encouraged France and its eurozone partners not to fixate on deficit reduction targets if it would exacerbate the bloc's debt crisis.The head of an IMF mission in France, Edward Gardner, urged officials in Paris last week to consider their 2013 budget targets "in a broader European context."The IMF and the EU Commission expect the French public deficit to amount to 3.5% of gross domestic product (GDP) next year.They do not believe France can reach its 3.0% goal, the eurozone limit, without additional measures that could aggravate an already tenuous economic situation."The credibility of the medium term orientation policy" was more important than a specific deficit target, Gardner told reporters.Loosening the criteria would "be more effective, more credible in a coordinated fashion" across the 17-nation eurozone, he suggested.In Portugal the public deficit fell at the end of the third quarter to 5.6% of GDP from 6.7% at the same point a year earlier, while neighbouring Spain has promised to slash its deficit to 3.0% by 2014 from a blowout shortfall equal to 9.4% of output last year. Germany expects its budget to be in balance this year, two years ahead of schedule, but IMF head Christine Lagarde has suggested that Berlin ease up a bit in its drive for healthy finances. "Germany ... and others ... can allow themselves to go a little more slowly than others in the push to straighten out their public finances," Lagarde told the German weekly Die Zeit in comments published last week.Her call echoed other European voices that are now arguing for greater emphasis on growth rather than austerity measures."The IMF is beginning to understand that the French situation has become dangerous," economist Marc Touati at the ACDefi consulting group said. Unemployment is climbing and the economy is still struggling, he pointed out.The IMF was "trying to prepare public opinion" for missed government targets, Touati suggested."This is not really a new position," Frederique Cerisier at the French bank BNP Paribas said of Lagarde's recent remarks. She acknowledged however that some international institutions were "placing added emphasis" on the need to cut deficits more gradually.On Tuesday, the EU's 'fiscal compact,' a hard-won step towards tighter economic coordination agreed as part of efforts to tame the debilitating debt crisis, takes effect.Finalised in March, 25 of the 27 EU member states accepted a 'balanced budget rule' in the compact to ensure that governments would no longer run the massive budget deficits which drove the debt crisis and nearly sank the euro.But as the European debt crisis drags on and economies flounder, the idea of allowing governments more time to straighten out their finances has gained ground.European Economic Affairs Commissioner Ollie Rehn said last week that France needed more reforms rather than more austerity."Once you have a credible medium-term budget strategy, backed up by reforms, you can have a slower adjustment," he told French daily Le Monde.If a 3.0% French deficit remains a valid reference, "what needs to be taken into account above all is the structural budget adjustment effort which France is making with remarkable intensity," the EU official said.French officials nevertheless seem determined to stick by their targets. They insist that the public deficit will be brought down to 3.0% of GDP next year from 4.5% in 2012, based on a 2013 growth estimate of 0.8% that economists consider overly optimistic.Friday's third-quarter growth figures gave them little comfort: official statistics revised growth over that period down from 0.2% to 0.1%.French Finance Minister Pierre Moscovici wrote in the German business daily Handelsblatt that France had a duty to reverse years of budget deficits."In the past 30 years, France has not been able to pass a balanced budget. State debt rose to an unacceptable €1.7 trillion in 2011. It is our duty to reverse this," Moscovici said. On Friday he reaffirmed the goverment's 2013 growth target.Cerisier at BNP Paribas warned that France, which is nowbenefitting from exceptionally low borrowing rates, must be careful how it communicates to markets, if it wants to maintain its credibility.But, she added: "The fact that we can begin to discuss all that is proof that countries have become more credible with respect to their economic targets."

 

France's 75% tax on rich struck down

France's top constitutional body on Saturday struck down a 75% upper income tax rate, dealing a major blow to Socialist President Francois Hollande, who had made it his centrepiece tax measure.The government vowed to push ahead with the tax rate, which would apply to incomes over a million euros a year, and propose a new measure that would conform with the constitution.The tax rate had angered business leaders and prompted some wealthy French citizens to seek tax exile abroad, including actor Gerard Depardieu who recently took up residency in Belgium. The Constitutional Council said in its ruling that the temporary two-year tax rate, due to take effect next year, was unconstitutional because unlike other forms of income tax it applied to individuals instead of whole households. As a result, the council said, the tax rate "failed to recognise equality before public burdens".Though largely symbolic it would have applied to only about 1 500 individuals the Socialists said the tax rate was aimed at making the ultra-rich contribute more to tackling France's budget deficit.The move was welcomed by the French Football League (LFP) which had expressed concern at the impact on top footballers such as Paris Saint Germain's Swedish star striker Zlatan Ibrahomovic. LFP chairperson Frederic Thiriez said if the measure had reached the statute book there could have been an "exodus of the best players" in the French league.The 75% tax rate was a flagship promise of the election campaign that saw Hollande defeat right-winger Nicolas Sarkozy in May. Prime Minister Jean-Marc Ayrault said the ruling was a "symbolic but not severe censure" and pledged to ensure the measure was adopted." The government will propose a new system that conforms with the principles laid down by the decision of the Constitutional Council. It will be presented in the framework of the next Finance Act," he said in a statement. "We want to maintain" the measure "because it symbolises the need for the effort to be more fairly shared," he added.The Constitutional Council also rejected new methods for calculating a separate wealth tax, striking down a provision that would have increased the amount of taxable revenues and capital gains. Other new measures in the budget were approved, however, including an increase in some upper tax rates to 45% and the addition of capital gains to taxable income. Finance Minister Pierre Moscovici said the ruling "does not compromise" budget efforts and said the council had approved "the essential" of the government's economic policies.But government critics hailed the ruling as proof the Socialists are pursuing unfair tax policies. "While the whole world watched us in dismay, Francois Hollande deceived the French into believing that 'taxing the rich' would be enough to solve our country's problems," said the head of the right-wing opposition UMP, Jean-Francois Cope."In reality, discouraging entrepreneurs and punishing the most wealthy until they leave our country inevitably puts the tax burden on the middle class. This moral error was sanctioned today. "France is struggling to plug a €37bn hole in its public finances to meet its target of reducing the budget deficit to the EU ceiling of 3% in 2013.The 2013 budget included €12.5bn in spending cuts and €20bn in new taxes on individuals and businesses. Critics have said the new tax measures will stifle economic growth, with the French economy already expected to contract by 0.2% in the final quarter of this year. The 2013 budget is based on a government forecast of 0.8% economic growth next year a figure many economists consider too optimistic. Hollande has seen his popularity plummet in recent months as the economy stagnates and unemployment mounts.

US lawmakers seek last-gasp fiscal deal

After weeks of failed haggling, the fiscal cliffhanger is at hand as US lawmakers convene Sunday in a bid to strike a year-end deal that avoids huge tax hikes and possibly spending cuts set to kick in January 1.With the clock ticking ever closer to the New Year's time bomb, the suddenly alarmed Senate and House were holding special sessions 36 hours before the year-end deadline for a plan that would keep America from tumbling off the so-called fiscal cliff. The stakes in the game of holiday-interrupting brinkmanship are enormous. Economists agree the $500bn in fiscal pain due to hit when the new year starts would stifle the US economic recovery and send the country back into recession, spelling bad news for the global economy as well. Aides to both sides' leaders in the Democrat-controlled Senate worked feverishly behind closed doors Saturday to fashion a deal palatable to Democrats as well as to Republicans, who control the House of Representatives. The Senate convenes Sunday at 1:00 pm (18:00 GMT) while the House goes into session an hour later, with no votes expected before 23:30 GMT. Both chambers would have little time to debate and then pass a deal that has eluded the White House and Congress for weeks. President Barack Obama, who called congressional leaders to the White House on Friday, will address the crisis once more when he gives an interview on NBC's Sunday morning talk show "Meet the Press. "Amid the tense negotiations, Obama pressed lawmakers to clinch a deal, even if they must reach a compromise that lacks the significant deficit-reduction measures both sides had sought. If lawmakers fail, "every American's paycheck will get a lot smaller," the president warned. "Congress can prevent it from happening, if they act now. "Obama, sensing a mandate from his re-election last month, wants to raise taxes on the rich. Republicans want only to close tax loopholes to raise revenue and demand significant spending cuts in return, notably to federal benefit programs like Social Security. But if nothing is done by the deadline, all taxpayers will see an increase. Following the White House talks, the Senate Majority Leader Harry Reid and Republican Minority Leader Mitch McConnell are heading efforts to craft a deal. But any agreement would also have to pass the House, where there is doubt that an Obama-backed deal would win favor with restive conservatives in the Republican caucus. While each side must for the sake of appearances be seen to be seeking a deal, one way out is to go over the cliff, then fix the problem in the first days of next year. Under that scenario, Republicans who are philosophically opposed to raising taxes could vote to lower the newly raised rates on almost all Americans without formally hiking taxes. Lawmakers, while ruing the inability to work out a multi-trillion-dollar grand bargain in time, have said a pared down version dealing mainly with taxes was within reach. Citing unnamed people briefed on the talks, The Washington Post said one version under consideration would protect nearly 30 million taxpayers from paying the higher, alternative minimum tax rate for the first time and maintain unemployment benefits for two million people.The plan also would halt a steep cut in Medicare reimbursements for doctors and preserve popular tax breaks for both businesses and individuals, such as those for research and college tuition, the report said.But the two sides were still at odds over where to set the limits of wealthy - at $250 000 or $400 000 of annual income and over taxes on inherited estates. Nor has there been agreement on spending cuts so sought after by Republicans, who say excessive government spending is the main driver of US debt. Obama warned that if an agreement was not reached in time, he would ask the Senate to hold an up-or-down vote on a basic package that protects the middle class from a tax hike, extends unemployment insurance, and "lays the groundwork for future... deficit reduction. "In a weekly Republican address, Senator Roy Blunt expressed some optimism, saying that "going over the fiscal cliff is avoidable. "But he criticised Democrats for focusing mainly on taxes while setting aside government spending, arguing that such inaction "shouldn't be an option."

NEWS,24.12.2012

US fiscal cliff deal on a knife-edge

The wheels could come off the US economy even before it has shifted out of second gear unless politicians reach a last-minute deal to avoid $600bn in tax rises and spending cuts that kick in next month.The rest of the world would be unable to avoid the pile-up if America does fly off the so-called fiscal cliff.That is why, even in a holiday-shortened week, eyes will be peeled for signs that Democratic President Barack Obama and his divided Republican opponents can bury the hatchet.The White House on Friday tried to rescue the stalled talks, but there was little headway to resolve what Alan Blinder, an economics professor at Princeton University, called the biggest near-term risk facing the global economy.Seen from abroad, US policymakers were looking "clownish", the former vice-chairman of the Federal Reserve said: "This will do us a tremendous amount of damage."Until last Thursday, markets had assumed a compromise would be struck, averting the risk of a relapse into recession. The slow-motion car crash had been so well signaled that surely the drivers would swerve in time?But after Republicans abandoned a fix proposed by House of Representatives Speaker John Boehner, businesses and households head into the year-end knowing the clarity they crave on tax and spending plans could be weeks away."The longer uncertainty persists, the greater the negative impact on the economy," Lewis Alexander, chief US economist at Nomura, told clients."It may take the imminent threat of a breach of the debt limit in February, or March at the latest, to force an agreement," he added, referring to the Congressional approval that the Treasury will need to extend its borrowing authority.By sapping consumer confidence, the political brinkmanship could already be enough to sap short-term US growth.If America then does tumble over the cliff for more than a few days, triggering fiscal tightening that could reach 4% of GDP, the repercussions would be felt around the world via trade and financial links."If our economy goes into a recession, especially a serious recession, a deep recession, that's going to hit imports from the rest of the world. And to the extent that it messes up financial markets, that has a contagion effect," said Martin Feldstein, an economics professor at Harvard University.Like Blinder, he was speaking on a conference call organised by Foreign Affairs magazine. Indeed, the resulting turbulence in financial markets could end the period of relative calm enjoyed by the eurozone, said Christian Schulz, an economist at Berenberg Bank in London.Failure to put the US budget on a more sustainable path could well crush hopes that the world's largest economy is finally shaking off the effects of the financial crisis and returning to a path of steadier if not spectacular growth.Credit Suisse on Friday raised its forecast for fourth-quarter GDP growth to an annualised pace of 1.8% from 1.1% after consumer spending in November rose at the briskest rate in three years.A recovery in housing is an increasingly important motor of growth, and figures on Thursday are expected to show new home sales rose to 380 000 in November from 368 000 in October, according to economists polled by Reuters.Two of the top trading recommendations for 2013 by economists at Goldman Sachs are premised on a deepening housing market recovery. Existing homes changed hands in November at the quickest pace in three years, while confidence among home builders rose to a 6-1/2-year high in December.Edward Jamieson, chief investment officer in Franklin Templeton's equity group, said housing was benefiting from record-low interest rates, a gradual reduction in household debt and significant pent-up demand."Higher home prices have also helped reduce the number of individuals with negative equity in their homes while also providing a strong wealth effect, which we think bodes well for continued improvement in the housing sector," he said in a report.That markets in the last days of 2012 should be held hostage to events in Washington is fitting in one sense: this has been a year in which politics has shaped economic developments more than ever.In the eurozone, a commitment by paymaster Germany to keep bailing out backsliding Greece, building on a pledge by European Central Bank President Mario Draghi to do whatever it takes to preserve the euro, largely allayed market doubts about the imminent disintegration of the single currency.In Japan, Prime Minister-elect Shinzo Abe, whose cabinet will be sworn in on Wednesday, campaigned on a platform of more aggressive monetary and fiscal policy to jolt the economy out of two decades of anaemic growth and gently falling prices.The yen has weakened and Japanese stocks have risen in response even though many are sceptical that Abe will introduce the reforms Japan needs.The Bank of Japan, sensing which way the political winds are blowing, duly relaxed policy last week, and inflation figures on Friday are likely to reinforce expectations that there is more to come from the central bank. Economists polled by Reuters expect core prices to have fallen by 0.1% nationwide in the year to November and by 0.5% in Tokyo in the year to December."We expect quantitative easing to continue aggressively in the first half of 2013, especially after a new governor takes the helm from the April 26 monetary policy meeting," Izumi Devalier, an economist with HSBC, wrote in a report.

Monti unveils 'change Italy' agenda

Italian Prime Minister Mario Monti unveiled an agenda to "change Italy, reform Europe" at a year-end presser on Sunday and said the country had managed to pull itself out of the eurozone debt crisis, without having to call for aid."The agenda focuses on avoiding very dangerous steps backwards", and will take the reforms already begun forward, said Monti, who stepped down on Friday after a year in which he dragged the eurozone's third largest economy out of a fiscal mire."The financial crisis has been overcome. . . I was always sure that Italy had all the resources needed to make it on its own, and so it was," said the former eurocrat, who many European leaders hope will play a role in any future government to keep the reform accomplished on track. Monti, who took over the reins of power after Silvio Berlusconi was ousted amid a sex scandal and the financial crisis, also commented that he was 'perplexed' by the ex-premier. "I am perplexed by my predecessor. I find it difficult to follow his line of thought," he said, referring to media magnate Berlusconi's frequent changes in position over the past few weeks, first supporting Monti then attacking him.Berlusconi has said he will run in February's general election and now seems to have settled on winning votes on the back of an anti-Monti drive.

China's wealthy buy 'Rolls-Royce' bikes

Rich Chinese are buying bicycles that cost more than the average citizen makes in three years, motivated by nostalgia for the days when two wheels were the primary means of transport.China is now the world's biggest auto market, but high-end bike sales are expected to grow by 10% a year as they become a status symbol for wealthy executives.Yu Yiqun, the creative director at an advertising company in the Chinese capital, cycles to work on his favourite bike - a 100 000 yuan ($16 000) hand-made Alex Moulton."It might be the only one in Beijing. It's like the Rolls-Royce of bicycles. Very classical, purely hand-made," said the 40-year-old Yu, who has about 35 high-end bikes."I remember my father used to ride me to the city in the winter - about 40km and minus 30 degrees centigrade. Back then, it was a means of transport that fulfilled your dream of travelling afar, which was relatively cheap but required brawn."Yu symbolises a new bike culture in China, where wealthy, health-conscious executives are upgrading their lifestyle, in some cases abandoning flashy cars and taking to the road on high-end bicycles that can cost more than a car."Demand for mainstream luxury items such as premium cars,watches has come to a point of saturation. High-income groups now turn to high-end bikes to show off the uniqueness in taste and healthy lifestyle," said Zhou Jiannong, general manager of Rbike Networks Ltd in ChinaAnalysts estimate about 10% annual growth in the Chinese bicycle market over the next few years, with the high-end segment forecast to grow by as much as 15% a year.Companies are also getting in on the act, with a Hong Kong-based supplier taking an order for 1 000 pricey bikes from a Chinese financial firm as a year-end bonus for employees."People are sick of conventional gifts such as wines and tobacco. For mainlanders, a bike is a great gift that shows your unique lifestyle," said Adam Wong, managing director at Hong Kong's Komda Bicycles.Wong declined to name the bank that had ordered the bikes, but he said they had an average price tag of 3,000 yuan ($480).Fashion statementFashion label Shanghai Tang, eager for a slice of this growing pie, teamed up with Dutch bike maker Colossi Cycling to make bicycles aimed specifically at China, where bike demand is estimated at about 28 million units a year"The high-end sector is going to be the major source of growth in the Chinese market. In China, bikes are more than just a means of transportation. It has become a fashion," said Terry Liu, an analyst at Fubon Research in Taiwan.It can cost up to HK$300 000 ($38,700) for an imported limited edition of expensive brands such as Italy's Colnago or France's Look, nearly 100 times the price of a Flying Pigeon, China's official bike since it was born in 1950.But the cost as no object for many high-income Chinese looking for the best two-wheeled vehicle."For businessmen, they are not looking at the price. They are looking at the quality. They assemble their bike with import components in accordance to their taste and needs," said Zhang Lei, a director of a Zhuhai paper products supplier, who plans to spend 10,000 yuan to upgrade his current bikeYu, the advertising executive in Beijing, has orders in for four more hand-made bikes, expanding his vast collection which includes brands such as Trek, Bianchi and Colnago.He and his wife have two cars but he says he doesn't drive."I always bring my bike when I go on a business trip," Yu said. "When I go to Harbin, I bring a small, folding bicycle since it's easier for me to get around the city. When I go to Dalian, I bring a bigger bike since it's a mountainous city."

China to crackdown on brand violations

China plans to change the law to crackdown on "malicious" trademark registrations, state media said on Monday, after a series of cases in which well-known international brands and individuals have had their names or copyright misused.Foreign governments, including the United States, have for years urged China to take a stronger stand against intellectual property rights violations on products ranging from medicines to software to DVD movies. Basketball legend Michael Jordan is one of the latest to accuse a company of using his name without permission, and French luxury group Hermes International SCA and Apple Inc have faced trademark problems too. The proposed amendment will offer protection to major international brands, giving copyright owners the right to ban others from registering their trademarks or from using similar ones, even if such trademarks are not registered, the official Xinhua news agency reported. "The draft is intended to curb the malicious registration of trademarks," Xinhua said.The country's legislature - which performs a largely rubber stamp role will discuss the amendment this week, it said, without saying when the new rules could be put in place or providing other details. The move comes after basketball star Michael Jordan filed a lawsuit in China in February against a Chinese sportswear company, accusing the firm of unauthorised use of his name. The Naismith Memorial Basketball Hall of Fame recipient and former Chicago Bulls star said that Qiaodan Sports, a company located in the southern Fujian province, had built its business around his Chinese name "Qiaodan" and jersey number without his permission. The lawsuit has yet to go to trial, Chinese media have reported. France's Hermes International SCA has also had problems in China with its trademark, and in July Apple Inc agreed to pay $60 million to Proview Technology (Shenzhen) to end a protracted legal dispute over the iPad trademark in China. China has insisted it is serious about tackling intellectual property violations. Incoming Japan PM to review Fukushima Japan's incoming pro-nuclear premier Shinzo Abe said on Sunday his government will again investigate the Fukushima atomic crisis, after which the country's reactors could be restarted, reports said.His comments will add to speculation that plans to ditch atomic power in disaster-scarred Japan will be shelved by his Liberal Democratic Party (LDP) when it takes power after scoring a landslide election win last week."We are yet to completely clarify what went wrong (in Fukushima)," he told a political show on Fuji TV on Sunday. "As a government, we want to once again analyse why Fukushima Daiichi failed," he said. He gave no further details and did not set out a timeframe for a probe."After that, I wish to think of next steps, including the restart of reactors," he said on the programme, according to broadcaster NHK."Could it have been avoided? Was it a man-made disaster? As a government, we must study that," said Abe, according to Jiji Press. He has previously derided the zero-nuclear goal of the ousted Democratic Party of Japan as unrealistic. All but two of Japan's 50 reactors remain switched off after the worst atomic accident in a generation and anti-nuclear sentiment has run high, but that failed to translate into support at the polls for anti-atomic parties.Several probes have already been conducted into the accident in March last year, which saw the Fukushima plant suffer meltdowns and explosions after being hit by an earthquake-triggered tsunami. A damning parliamentary report in July concluded that the Fukushima accident was a man-made disaster caused by Japan's culture of "reflexive obedience" and not just the tsunami that hit the plant. Shares in Fukushima operator Tepco have soared since Abe's election win.

NEWS,11.12.2012

  Italy petrol strike threatens to hit economy

Italian petrol stations began a 60-hour strike today to protest against rising costs and falling profits, causing long queues as drivers rushed to fill up before pumps closed.Hitting at the peak shopping period before Christmas, the strike comes at unwelcome time for retailers.Weak consumer spending has been a key factor in Italy's sluggish economy, which has been dipping in and out of recession since 2008."It is incredible, with all that petrol costs us nowadays, that they can even think of going on strike," Rome resident Ida Lauro said as she queued in her car.Unions have agreed to maintain minimum service on motorways, with at least one station open every 100 km.In a joint statement, unions said they called the strike to combat "a true aggression against the roughly 24,000 small businesses and 120,000 workers in the sector".They say oil companies have forced stations to absorb the costs of discounting campaigns, allowing them a profit of just one euro for every 100 euros ($155) or 55 litres of petrol sold.Oil distributors in Italy Esso and Shell were not immediately available for comment. A government attempt to come to an agreement with the unions this week fell through.Workers will demonstrate outside government buildings in Rome later today to pressure the state to intervene.The strike will end on Friday morning on ordinary roads and late on Thursday on motorways.Between December 17 and 22 the petrol stations will refuse to pay oil companies for refills. Then, between Christmas and New Year, they will refuse credit and debit card payments in protest at bank charges on electronic payments.Mario Monti's technocrat government has cut spending and raised taxes since it was appointed last year to pull Italy out of a debt crisis, and is the focus of increasing protests.The government was thrown into crisis last week when the party of former Prime Minister Silvio Berlusconi withdrew its support, prompting Monti to announce he would resign once the 2013 budget bill is passed before Christmas.

US to keep strong presence in Mideast

The US military will retain a "strong presence" in the Middle East despite a strategic shift to Asia, Defence Secretary Leon Panetta said on Tuesday during a visit to Kuwait. The US plans to deploy a majority of its naval fleet to the Asia-Pacific along with other advanced weaponry but Panetta insisted that a robust American force would remain in place in the Middle East.Panetta spoke to journalists aboard his plane travelling to Kuwait City on a two-day visit to discuss bolstering security ties amid tumult in the region and tensions with Iran."Let me assure you that the United States is strong enough that we can maintain a strong presence in the Middle East as well as in the Pacific," he said.He acknowledged that the US had to be "flexible" in managing its forces in a more austere era and that it would have only one aircraft carrier in the Middle East for about two months to allow for maintenance work on another carrier, the USS Nimitz.The American military still had nearly 50 000 troops and warships positioned across the region, he said."But in the end, I am very confident that we're going to be able to maintain the ships and forces we need in order to respond to any contingency."The US has deployed more ships and aircraft in the strategic Gulf over the past year after Iran threatened to close the strategic Strait of Hormuz if Western countries boycotted Iranian oil exports.Kuwait's emir, Sheikh Sabah al Ahmad al Sabah, held talks at his residence with Panetta in the presence of the crown prince, the prime minister, defence minister and senior officials, the state-run Kuna news agency reported.Kuna provided no details about the talks.During the visit, which ends on Wednesday, Panetta also plans to meet some of the 13 500 US troops stationed in the Gulf state to thank them for their service ahead of the Christmas holidays.His visit is the first to the emirate by a Pentagon chief in five years."We share a history of co-operation that goes back to the first Gulf War," in 1991 that ousted Iraqi occupation forces, Panetta said of Kuwait, calling the country an "important partner"."I look forward to discussing with the government of Kuwait how can we enhance that co-operation in the face of regional security challenges in the area," he said."Our presence in Kuwait and throughout the Gulf helps enhance the capabilities of partner nations, deters aggression and helps ensure that we're better able to respond to crises in the region."Panetta's visit coincides with a wave of protests in the oil-rich Gulf state, with thousands of opposition demonstrators demanding fresh elections due to a bitter dispute over amendments to the country's electoral law.Kuwaiti activists have called for protesters to camp outside parliament next Saturday on the eve of its opening session.

N Korea removes rocket from launch pad

North Korea has removed a long-range rocket from its launch pad for repair, South Korean media reported on Tuesday, a day after Pyongyang extended the widely-criticised mission's launch window.According to analysis of the latest satellite imagery, the entire three-stage Unha-3 carrier has been removed to a nearby assembly facility, Yonhap news agency quoted a military source as saying."It seems that North Korea has pulled down the rocket from the launch pad to fix technical problems," the source said.The defence ministry refused to confirm the report which, if true, would signal a lengthy delay in the launch schedule.North Korea says the rocket is being used to put a satellite into orbit, but the United States and its allies insist the launch is a disguised ballistic missile test.North Korea had originally provided a 10-22 December window for launching the rocket, but that was extended by another week on Monday when a "technical deficiency" was discovered in the first-stage engine.Yonhap's military source said Pyongyang was expected to go ahead with a launch after repair works are completed.The North's decision to try and launch the rocket in winter has led analysts to suggest a political imperative behind the timing, which may have overruled technical considerations.New leader Kim Jong-Un is believed to be extremely keen that the launch falls around the first anniversary of the death of his father and former leader Kim Jong-Il on 17 December.The possibility that the launch has been rushed has been backed by missile experts, sceptical that the problem which resulted in the failure of the North's last rocket launch in April could have been resolved in just eight months.North Korea is banned from conducting missile tests under UN resolutions triggered by Pyongyang's two nuclear tests in 2006 and 2009.The latest planned launch has been condemned by the United Nations, as well as the United States and its main military allies in Asia, Japan and South Korea.Russia has joined international calls for Pyongyang to cancel the mission, while China, North Korea's sole major ally and its biggest trade partner and aid provider, has expressed concern.EU foreign ministers said on Monday that an eventual launch would be a "provocative act" in breach of UN resolutions and require an international response.UN diplomats inside and outside the Security Council have started consultations behind the scenes on what action to take if Pyongyang goes ahead with the launch.According to Japanese reports, Japan, the United States and South Korea have agreed to demand the UN Security Council strengthen sanctions on North Korea to levels that match those on Iran.That would include increasing the list of financial institutions, entities and individuals already subject to asset freezes.

Berlusconi, Monti set fiery campaign tone

Italy's Silvio Berlusconi on Tuesday set the tone for his election campaign saying nobody should care about bond spreads, and accusing Mario Monti of being "German-centric" as the prime minister said he had spared Italy from the same fate as Greece."Who cares about the spread?" the 76-year-old Berlusconi, who is running for the sixth time in two decades, said in an interview with Canale 5 television part of his media empire."The spread is a trick and an invention with which they tried to bring down the majority that ruled this country," said the three-time prime minister and billionaire, referring to his last government which collapsed in November 2011 following a parliamentary revolt and panic on the markets.The spread is the differential between Italian and benchmark German 10-year sovereign bonds  a closely watched measure of investor confidence.The spread had narrowed to below 300 points last week but has widened since Berlusconi's People of Freedom (PDL) party said on Thursday that it was withdrawing its support for Monti's government.Berlusconi then announced he would run for prime minister and Monti said he would resign as soon as parliament approves next year's budget, bringing forward the likely date for elections to February.There is growing speculation that Monti will also decide to run in the election although he has so far declined to comment, saying only that he is not considering the option "at this stage".The spread was around 349 points on Tuesday, while the stock market inched up 0.64% in afternoon trading - a day after it trailed other European bourses reacting to the weekend of political drama and the re-emergence of Berlusconi.Polls say the favourite to win is centre-left leader Pier Luigi Bersani, a cigar-chomping former communist and two-time minister who spearheaded a liberalisation drive when he was in office.Berlusconi on Tuesday also criticised Monti as "too German-centric" and said that all the main economic indicators had worsened since the former Eurocrat was installed in power.He continued saying that Italy's record-high public debt of nearly $2.6 trillion, or around 120% of gross domestic product, was "not as high as they want to make you think".Monti also gave an interview to Rai public television in which he said that the government had to be "very careful" and "calm" about bond spreads.In a rare moment of candour on his personal life, he revealed his own grandson had been nicknamed "spread" at his kindergarten and recognised the word as his own name when he heard it on television.Monti also warned about rising populism ahead of the elections, saying: "There is a tendency to over-simplify things, to present magical solutions."And he defended his record in government saying: "We have made great progress but at a cost. In the short term, there has not been growth."I would appreciate it if someone could explain to me how it would have been possible financially to spare Italy from suffering the same fate as Greece and make it grow at a rapid rate," he said.Newspaper Il Fatto Quotidiano's online edition said the contrasting interviews with Monti and Berlusconi on Tuesday were a "head-on clash"."Each one used their own language, but this really is a challenge at a distance," the paper said.Berlusconi also announced that only 10% of the party's candidates in elections now expected in February would be chosen from current lawmakers.Fifty percent of the candidates will come from the business community, 20% from local government and 10% from the world of culture, he said, without explaining where the remaining 10% would come from.The PDL has been riven by infighting and hit by a series of fraud investigations since Berlusconi stepped down last year and retreated from the political fray before suddenly returning last week to the dismay of several dissident party members. Berlusconi also said he would be holding talks later on Tuesday with Roberto Maroni, leader of the populist Northern League party, on forming a possible coalition.Berlusconi's PDL and the Northern League won the last general election in 2008 but there have been tensions between the two parties in recent years.