NEWS,02.11.2012

How many presidential campaign ads is too many?

It's 6:10pm on a Thursday in October, just days before the US elections. Before the clock hits 6.29pm, 11 political ads will have aired on the local NBC channel in Columbus, Ohio.One tells voters that Democratic President Barack Obama has not proposed a legitimate economic plan for the country.Another suggests that policies of Republican candidate Mitt Romney would undermine the future for America's children.Yet another says Romney would effectively deny many women crucial cancer screenings by proposing cuts to Planned Parenthood.The very next ad calls Obama an extremist on abortion who supports leaving babies "out to die."Ohio is being inundated with such dueling ads in the final days before the November 6 presidential election, as Obama and Romney both look to the state's 18 electoral votes as a crucial step toward the 270 electoral votes needed to win the White House.The presidential race is now a fight in eight or so politically divided "swing" states, but nowhere more so than Ohio.Amid the chaos of the campaign's closing days, the state has become an arena for credibility-stretching banter, and a testing center for the growing science of political advertising.New research predicts that total spending in this election could reach $US6 billion , making it the most expensive in US history.The campaigns and free-spending independent groups have poured close to $US1 billion into political ads - many of those ads directed at Ohio - and have given analysts a high-profile chance to examine some simmering questions about such ads.Among them: How many ads is too many, before viewers tune them out? And what do campaign ads lead voters to do, exactly?Election-year political ads are a meticulously studied subject, and increasingly are used to target specific groups and encourage specific outcomes.Some research, for example, suggests that pro-Democrat ads are particularly effective at swaying voters' opinions, while pro-Republican ads typically are more effective at getting party supporters to show up at the polls.For all the analysis that has been done on campaign ads, academic and commercial research has yielded few answers on the precise impact that ads have in determining who wins an election.That is especially true, analysts said, in the type of advertising free-for-all that Ohio residents are seeing on their televisions now - wave after wave of ads with overlapping and similarly dark, daunting messages.Campaign ads became tiresome long ago for many Ohio residents, but some viewers figure that the ads must be working, or the campaigns wouldn't keep running them."I think poorly of those ads and don't think they work, but there are so many of them I think it must be not so," said JoAnne Harvey, a Columbus small business owner who, as an undecided female voter, is much coveted by both campaigns.In a reflection of how so many ads can essentially nullify one another, Harvey and another dozen Ohioans interviewed generally could not recall the details of a single campaign ad that stood above the others.Those who could acknowledged that they weren't sure which side the ad was meant to benefit.Political advertising has become a multibillion-dollar market that some television station sales managers predict soon could be a year-round category of advertising.It has become increasingly sophisticated in "micro-targeting," the art of going after specific groups of viewers.For example, Democrats have been found to be more frequent television watchers than Republicans, and Democrats candidates in 2008 ran more than twice as many ads as Republicans during science-fiction shows, reality dating programs and telenovelas, according to research by Washington State University professor Travis Ridout and others.Those programs as well as talk shows and court shows tended to skew Democratic in viewership while crime and sports programs skewed Republican, Ridout's study found.But does the science of political advertising work?One study completed last month found Obama's ads moving voters away from Romney, while Romney's ads were much more likely to encourage Republicans to vote, rather than shift preferences among voters.The findings were based on a survey of more than 2,300 registered voters who said they were independents or not deeply committed to one party.They were shown one or several of the campaigns' ads by the research software company Qualtrics and the research firm Evolving Strategies."Romney doesn't seem to have a lot of ability to have people moving in and out of the independent pool, but he has a lot of room to change the equation in determining who turns out to vote," said Adam Schaeffer of Evolving Strategies.If the targets of this year's ads are any guide, the presidential election will be decided by middle-aged and older white women, according to a survey of more than 1,000 buying agencies done by STRATA, a software firm whose systems help air some $US50 billion worth of ads a year.The question is whether the barrage of ads - the vast majority of them attacking a candidate, rather than promoting one will become so overwhelming that they provoke a backlash.Such ads "did work on me at first, and then I became a lot more cynical and realized that a lot of it is political warfare," said Harvey, who added that she voted for Obama in 2008 but was leaning toward Romney now."It seems almost epidemic; they can't stop now that they've started."A rule of thumb in advertising is that an ad needs to be viewed at least three times and up to 10 to be effective, said STRATA Chief Executive John Shelton."There's no question that once you start to go over (10), you start to, well, at least bore people," he said. "Then they might tune out. Then they might actually get ticked off."Barbara Berry, a healthcare professional and Obama supporter from Columbus, said she pre-records TV programs and skips ads."I don't pay attention anymore," she said.Since late August, more than 915,000 presidential campaign ads have aired on broadcast and national cable TV, according to the Wesleyan Media Project. In Columbus during October, ads by the campaigns and outside groups aired more than 7,000 times."Some of them just disappear in the noise," said Dan Bradley, general manager at the Columbus NBC affiliate WCMH-TV.Each presidential campaign has been producing about a dozen new ads a week, basing them on daily news events a practice that ensures that most of the ads have a short shelf life.Romney in particular tends to place and replace ads at the spur of the moment, often in response to the news of the day.Obama's campaign runs two ad tracks: one that changes every one or two days, the other every couple of weeks.Ads this year "just seem to be rushed," said John Geer, a political ad researcher at Vanderbilt University.It's "almost like they've fallen prey to the fact that the campaigns have so much money, and the ability to make all these ads."

New York fuel 'panic' grows even as ports open

A third day of "panic buying" of gasoline among Sandy-struck New York area motorists on Friday has prompted action from authorities.The US government waived the Jones Act barring foreign-flagged vessels from carrying fuel between US ports in a bid to boost supplies from the Gulf Coast to the Northeast. New York Governor Andrew Cuomo said he would temporarily lift tax and registration requirements on tankers docking in the New York Harbor, which had just reopened to oil vessels.While the waivers sent benchmark New York gasoline futures 2% lower, they will do little to address the biggest obstacle to getting fuel to consumers: the power outages that have shut nearly two-thirds of the service stations in the New Jersey and New York City area and are still hindering service at major oil terminals and refineries along the harbour.Faced with the prospect of another day of hunting for fuel or losing out on business, New York City cab driver Mohammad Sultan parked his yellow taxi at a Hess station on Coney Island Avenue, Brooklyn at midnight on Thursday so he could be first in line when a rumoured fuel shipment arrived at 6 am.At 9 am with 180 vehicles behind him, the pumps were still empty. Officials said the number of cabs on the road by Friday morning was down 24% from last week."Because of the gas problem, there are thousands of yellow cabs sitting around wasting time and money," Sultan said.There were some signs that the complex New York Harbor network of storage tanks and pipelines was finally returning to service after Sandy dealt it a direct hit, crippling the ability to fuel the nation's most dense consumer population.The region's biggest pipeline, Colonial, restarted much of its northern line, and an oil tanker carrying 2 million gallons of gasoline docked overnight in Newburgh, New York, 60 miles north of New York city. Other ships were finally offloading cargoes in the harbor after being stuck at anchor for the past week.But those measures were cold comfort for residents stuck in hours-long queues, often with no guarantee that supplies would be available when they got to the front of the line or that enough power would be restored to get more stations open.The situation is wearing on New Yorkers. Juliana Smith, a full-time student, spent 2-1/2 hours in line to fill two five-gallon containers on Friday, an hour more than on Thursday."It's psychotic," she said. "People are angry. We have no power. No heat. We need gas for the generator and our Ford Explorer, which is a monster."Prices at the pump have remained steady despite the shortages, motorist group AAA said, averaging just below $4 a gallon in New York City, 2 cents lower than last week.However, on Long Island, where only a third of all stations were working, average gasoline prices jumped 5 cents from a day earlier.But online, Craigslist users started offering gasoline at as much as $15 a gallon to motorists and homeowners not wishing to brave the lines.There were signs the situation could improve in the coming days as wholesale markets begin to work again.Colonial Pipeline, a 5,500-mile (8,900-km) network that runs from the Gulf Coast refining center up the eastern seaboard, said late on Thursday it had resumed fuel deliveries at its Linden facility in New Jersey, the terminus of the line.It expects to pump around 700,000 barrels a day into the area, which is a normal volume, spokesman Steve Baker said.Fuel barge shipments into New York Harbor will be allowed on Friday, the Coast Guard said, if they have a place to offload.Environmental Protection Agency waivers for clean diesel and gasoline specifications, granted earlier this week, should make it easier for suppliers to meet demand in the days ahead.News of the Jones Act waiver sent NYMEX gasoline prices sharply lower. The December RBOB contract fell 6 cents, or 2.3%, to close at $2.5736 a gallon, just below where it was trading last week prior to Sandy's arrival.Rates to charter fuel tankers to the Northeast nearly doubled as traders scrambled to sell to the region, where supplies were constricted by the closure of two New Jersey refineries that make up one-third of the region's capacity.The Phillips 66 Bayway refinery in New Jersey, known as "the gasoline machine" by oil traders, may be shut for weeks due to flood damage, although the company has said internally it is "optimistic of restarting soon," a source familiar with operations said. The company has said that a decision on when to reopen will be made "once all assessments are complete."Phillips' Linden fuel terminal was supplying only emergency response vehicles as of Friday afternoon.

Obama, Romney return to attack

President Barack Obama and Republican Mitt Romney went back on the attack on Thursday, breaking a storm-induced campaign truce to hit the road and pound home their closing messages in the final stretch of a tight battle for the White House.With five days left until Tuesday's election, Obama received an endorsement from New York Mayor Michael Bloomberg, resurrected his 2008 "change" slogan and said he was the only candidate who had actually fought for it.Romney criticised Obama as a lover of big government who would expand the federal bureaucracy.National polls show the race deadlocked, and Obama and Romney will spend the final days in eight swing states that will decide who wins the 270 electoral votes needed to capture the White House.Obama made Wisconsin the first stop on a four-state swing on Thursday that also took him to rallies in Nevada and Colorado before going to Ohio for the night. Romney had a full day of campaigning across Virginia."You may be frustrated at the pace of change, but you know what I believe, you know where I stand," Obama told a crowd of 2 600 people on an airport tarmac in Wisconsin, a state that is a vital piece of his electoral strategy. "I know what change looks like because I've fought for it."At a rally in Doswell, Virginia, Romney criticised Obama's comment that he would like to consolidate government agencies that deal with business issues in a new department under a secretary of business."I don't think adding a new chair to his Cabinet will help add millions of jobs on Main Street," Romney said.Jobs will again be the focus of fierce debate on Friday when the government releases the unemployment figures for October. Any big change from the 7.8% number in September could potentially sway voters.Obama and Romney had put campaigning on hold for several days as the historic storm Sandy pounded the eastern seaboard, leaving a trail of destruction and forcing Obama to turn his attention to storm relief.That pause produced some unexpected political benefits for Obama, who won warm praise from Republican Governor Chris Christie of New Jersey, a Romney supporter, and he spent days directing federal relief efforts in a show of presidential leadership that largely sidelined Romney.New York's Bloomberg a Republican-turned-independent who did not back a candidate in 2008 endorsed Obama and cited the Democrat's record on climate change, an issue that has gained more attention since the storm.Bloomberg said Obama had taken significant steps to reduce carbon consumption, while Romney had backtracked on earlier positions he took as governor of Massachusetts to battle climate change. Obama said he was "honoured" by the backing of Bloomberg, who flirted with White House runs in the past.On their first day back on the trail, both Obama and Romney returned to political attacks but struck a slightly more positive tone than usual in trying to woo undecided voters and push their own supporters to vote.In Doswell, Romney proclaimed his faith in the future and said, "The American people have what it takes to come out of these tough times."In Wisconsin, Obama drew distinctions with Romney but dropped his usual reference to "Romnesia" the term he uses to describe what he calls Romney's tendency to shift positions.Obama has a somewhat easier path to 270 electoral votes than Romney, fueled primarily by a small but steady lead in the vital battleground of Ohio a crucial piece of any winning scenario for either candidate - and slight leads in Wisconsin, Iowa and Nevada.Barring any surprises elsewhere, Obama can win a second term by capturing the Midwestern bastions of Ohio, Wisconsin and Iowa, and his schedule was aimed at shoring up his safety net there.Obama plans to visit Ohio on each of the last four days of the campaign, and plans two more trips to Wisconsin and Iowa. He will conclude his campaign on Monday night with rock singer Bruce Springsteen in Iowa, where a 2008 caucus win launched his run to the presidency.So far, Obama has planned just one visit each in the final days to Florida and Virginia, where most polls give Romney a slight lead. Romney will hit Wisconsin and Ohio on Friday, and New Hampshire, Iowa and Colorado on Saturday.Romney plans to finish up his campaign on Monday night in New Hampshire, the state where he launched his bid last year.Romney's campaign has aired ads in recent days in the Democratic-leaning states of Michigan, Pennsylvania and Minnesota, hoping to put them in play after polls showed the races tightening but Obama still ahead.The campaign said Romney would visit Pennsylvania on Sunday, marking his first campaign visit since the nominating convention to one of his new target states. A win in Pennsylvania would be a crippling blow to Obama, but most public polls still show Obama leading there.Romney aides said the moves into those three new states were a sign of their growing momentum, although Obama aides described them as a desperate ploy to find new paths to 270 electoral votes.A  online poll on Thursday showed the race remained effectively deadlocked, with Obama at 47% to Romney's 46%. Most national polls showed roughly similar results.Most swing-state polls have found Obama clinging to slender leads in five of the eight most heavily contested states - Ohio, Wisconsin, Iowa, Nevada and New Hampshire. In most polls, Romney has a slight lead in Florida, while Virginia and Colorado were effectively tied.Online poll on Thursday showed Obama with a 5-point lead in Virginia, and 2-point leads among likely voters in both Ohio and Florida. Romney led by 1 point in Colorado in the polls.

NEWS,22.09.2012

Afghanistan in flux as U.S. surge troops exit

The U.S. military says it has now fully withdrawn the last of the 33,000 "surge troops" sent to pacify Afghanistan two years ago, but they are leaving behind an uncertain landscape of rising violence and political instability that threaten to undo considerable gains in security, particularly in the former Taliban strongholds in the south and southwest.As the troops head for home, a good week ahead of schedule, the U.S. coalition and its Afghan partners are bedeviled by a host of problems.The tempo and audacity of Taliban attacks have increased. Insider killings of Americans by Afghan troops have raised tensions between the allies, forcing severe cutbacks in strategically vital training programs. Both governments are arguing publicly over whether to keep battlefield prisoners locked up without trial, while nervous officials on all sides are worrying that riots over an inflammatory anti-Muslim video, which have killed dozens in other countries, will break out in Afghanistan.Friday's milestone, which still leaves 68,000 U.S. troops in Afghanistan, was announced on the other side of the planet by Defense Secretary Leon Panetta, during a trip to New Zealand, while both U.S. and Afghan officials in Kabul studiously ignored the moment, at least in public.Some pro-government Afghans boasted it showed their own forces were ready to take over, while pro-Taliban forces exulted that they were not, but most Afghans just worried about what it would really mean for the final two years of the U.S. presence in the country."What did the surge give us?" a senior U.S. official reflected Friday, speaking anonymously as a matter of military policy. "We're going to hit a point where, I won't say that's as good as it gets, but now it's up to them to hold what we gave them. Now, really, it's Karzai's turn."No one claimed there was not a great deal yet to be done against an insurgency that its foes describe as tenacious and determined. "They're not going to go away for years," the senior official said. "Every fighting season the Taliban, or some number of them, come out of the corner and they're ready to fight again."Both U.S. and Afghan officials have acknowledged the seriousness of the green on blue attacks, which this year have seen the killings of more than 50 U.S. soldiers at the hands of their Afghan allies.

US Navy's new floating base gets a workout in Gulf 

A new, key addition to American-led naval efforts to ensure Mideast oil keeps flowing has emerged as an unusual mix of a ship combining decades' worth of wear and tear with state-of-the-art technology and a largely civilian crew.After winning a reprieve from the scrapyard, the USS Ponce was reborn through a rush retrofit earlier this year and turned into a floating base prowling the waters of the Persian Gulf. It is now getting its biggest workout since refurbishment as the centerpiece for sweeping naval exercises under way that serve as a very public warning to Iran. The Islamic Republic has threatened to shut the Gulf's entrance at the Strait of Hormuz, the route for a fifth of the world's oil supplies, and would likely use mines to do so.Anti-mine divers on practice drills deployed in small boats off the Ponce's stern gate early Saturday, and MH-53 minesweeping helicopters launched from the ship kicked up sea spray as they hauled mine-detecting equipment through the water. Later in the day, a U.S. destroyer pulled alongside, fighter jets roared past and gunners fired thunderous rounds from .50 caliber machine guns during a simulated encounter with a hostile vessel.Senior Navy officials in the Gulf are quick to downplay talk of conflict with Iran, which is locked in a dispute with the U.S. and its allies over Tehran's disputed nuclear program. The West suspects Iran aims to develop a nuclear weapon; Tehran denies the charges.U.S. military officials in the region insist the exercises, which include forces from more than 30 countries, are defensive and not directed at any country. They prefer to focus instead on the Ponce's role as an innovative new tool to help ensure security in the region, and on the need to train with allies to keep sea lanes open.Still, the message is clear."Any extremist group, any country that puts mines in the water would be cautioned" by the exercises, said Marine Gen. James R. Mattis, the U.S. Central Command chief, during his first visit onboard the Ponce since it deployed June 1. "We do have the means to take mines out of the water if they go in. We will open the waterways to freedom of navigation."Military leaders believe the Norfolk, Va.-based Ponce is central to that mission.More than half the length of most U.S. aircraft carriers, the Ponce can accommodate multiple helicopters on deck and small boats in a well deck below.The ship was originally an amphibious transport dock built at the height of the Vietnam War. Those types of vessels are typically used to carry landing forces of Marines.It's now known as the Navy's first "afloat forward staging base-interim," a name given because the Ponce is meant to be a stopgap until a similar base built from scratch is delivered. That won't happen until at least 2015."This will more or less act as a test for using floating platforms in the sea for military operations," Riad Kahwaji, chief executive of the Dubai-based Institute for Near East and Gulf Military Analysis, said of the reconfigured Ponce. "There'll be a lot of defense industry officials observing the performance of this."Much of the original ship remains, including the tight Marine-style bunks stacked four high from floor to ceiling in some parts of the ship. But there are plenty of 21st Century additions too.Berths for around 100 people were removed and replaced with a high-tech joint operations center, where streaming video and data feeds can be shown on flat-screen displays.Powerful MK-38 guns installed during conversion include remotely controlled digital cameras that let operators zoom in on far-off targets of interest. And a ScanEagle surveillance drone launched from and recovered by the ship keeps an eye on the sea for miles around all day long.In its new role, the Ponce is initially intended to be a close-to-the-action support hub for mine-clearing ships, coastal patrol vessels and helicopters. Ships can take on fuel and supplies without having to return to port, and a wide range of repairs can be handled by machinists onboard. That means far less downtime for minesweepers and other vessels using the Ponce as a stopping-off point, according to analysts and Navy officials.The Ponce's Spartan accommodation can also handle hundreds of additional personnel, such as the French anti-mine divers in distinctive camouflage shorts currently onboard. In theory, special operations forces could also fill bunks aboard the Ponce, which is able to launch the small boats and helicopters they often use.There is also the benefit of not needing to secure approval from allied countries where U.S. troops are based before conducting operations from an offshore staging base such as the Ponce."A country that's believed to be friendly to the U.S. could overnight become hostile to the U.S., and this could pose a threat to U.S. operations," Kahwaji said, citing recent violence directed at American embassies in response to an anti-Islam film.Although it is under the command of a Navy captain, most of the Ponce's crew are civilians. It has more than 155 civilian crew members from the Military Sealift Command and 55 Navy sailors, according to the ship's commanding officer, Capt. Jon Rodgers. The number of civilian crew can fluctuate depending on who is onboard.The MSC is normally responsible for running about 110 supply ships and other non-combat vessels for the Navy, but the Ponce's hybrid crew is unusual.Visitors arriving by helicopter are met on the flight deck by some crew in uniform and others in civilian coveralls. Civilian employees keep the floors and toilets clean, and dish out corned beef hash and French toast on the mess deck. Some of the MSC crew members have dreadlocks  a no-no for enlisted sailors and many are in their 40s or beyond. A handful are older than 60.It's not just the civilian crew that's showing its age. The Ponce is among the Navy's oldest ships. Construction began in 1966, and it was commissioned during the Nixon administration in 1971.Rust is prevalent throughout the ship, and many of the fittings retain a Cold War feel."Just walk around and you can see," said Kevin Chavis, 45, a retired Navy electronics specialist from Brooklyn who is now part of the Ponce's civilian crew. "Yeah, it's old. But just like a car, if you change the filters and the oil, it'll keep running."

Chavez's record: an oil bonanza squandered?

 

On the streets of Caracas, vast slums blanket the hillsides while squatters hang laundry in the windows of abandoned buildings. Trash-strewn alleys are riddled with potholes and lined with broken streetlamps. The city's main waterway, the polluted Guaire River, is known more for sewage than swimming.While oil has ushered in spectacular construction projects for glittering Middle Eastern cities, including the world's tallest building in Dubai and plans for branches of the Louvre and Guggenheim museums in Abu Dhabi, it's brought relatively meager changes to Venezuela, which holds the world's largest proven oil reserves.Nearly 14 years after President Hugo Chavez took office, and despite the biggest oil bonanza in Venezuela's history, there's little outward sign of the nearly one trillion petrodollars that have flowed into the country.Venezuela has undoubtedly changed during Chavez's tenure. The populist president has used the oil wealth to buttress his support through cash handouts, state-run grocery stores and a gamut of other social programs. With more money in the economy, incomes are higher and the number of people living in poverty has fallen.Unemployment has dropped from more than 13 percent in 1999 to about 8 percent. The country has also achieved rapid improvement on the U.N. Human Development Index, which measures a range of indicators from living standards to life expectancy."We're applying a successful program successful politically, successful socially, successful economically," Chavez said at a news conference. "With flaws, of course, but it's successful. We're laying the foundations of a historic project that will take our entire lifetime."All of which makes him a tough incumbent to beat in the upcoming Oct. 7 election.Yet some experts say Chavez could have done much more to improve the country's infrastructure, boost its economy and invest in the very oil industry that keeps Venezuela afloat."It's overwhelmingly clear that Venezuela has wasted the windfall," said Francisco Monaldi, an economist and director of the International Center of Energy and the Environment at Caracas' IESA business school. "You should have had much greater economic growth, much greater reduction of poverty."Among Latin American countries, the economies of Brazil, Chile, Peru and Argentina all have expanded more rapidly than Venezuela's since Chavez took office in 1999, recording average growth between 3 and 5 percent a year.Venezuela, by contrast, averaged a 2.8 percent annual increase of gross domestic product between 1999 and 2011, according to International Monetary Fund figures. By that measure, the country was outperformed by every other member of the Organization of Petroleum Exporting Countries except Libya. Even war-torn Iraq posted higher growth.Some Venezuelans, such as tennis instructor Naybeth Figueroa, say Chavez has simply channeled money toward his "Chavista" supporters while neglecting deeply ingrained problems such as soaring murder rates, inflation, crumbling infrastructure and poor government services. Venezuela now ranks among the most violent and corrupt places on earth."The country is falling to pieces," Figueroa said. "Where is the oil money going?"On a rutted unpaved road in the countryside outside Caracas, unemployed housewife Moreli Gonzalez lives in a shack with a dirt floor and walls made of rusting sheets of zinc. She is thankful to Chavez that she now receives a $280-a-month cash benefit through a program called "Mothers of the Neighborhood Mission.""Now we have everything," said Gonzalez, who credits a government education program with helping her learn to read and a state-run grocery down the road that has made food more affordable."We eat better," she said, showing off cupboards filled with bags of rice and pasta. "My children didn't used to eat snacks. Now they eat well."

Finding Poland's sunken royal treasures

Capitalizing on low water levels in Warsaw's Vistula River, police are teaming up with archaeologists to recover gigantic marble and alabaster treasures that apparently were stolen from royals in Poland by Swedish invaders in the mid-17th century.A police Mi-8 helicopter hovered over a riverbed on Thursday, lifting ornaments such as the centerpiece of a fountain with water outlets decorated with satyr-like faces.For police, it was gratifying to provide the chopper and assist Warsaw University archaeologists in "this very important mission of retrievingpriceless national treasures,"saidMariusz Mrozek, a spokesman for Warsaw police.Archaeologists have long known that such well-preserved treasures were located in the riverbed in the Warsaw area, but not exactly where.The archaeologists and frogmen, led by Hubert Kowalski, have previously retrieved some of the stolen stone ornaments from the Vistula riverbed in three years of searching for the sunken treasures. Butonly now, with the river much lower than normal, thanks to recent heat waves and droughts, their findings have become spectacular."This is a precious find. These elements were stolen from Warsaw's royal residences and palaces," said Marek Wrede, a historian at the Royal Castle.The valuable artistic objects marble floor tiles, parts of archways and columns  were robbed from Warsaw by the Swedes who overran the nation in mid-17th century and took heavy loads of spoils from across the country. Today's items probably came from the Royal Castle and from a royal country residence, the Kazimierz Palace.The artifacts probably were being carried by a barge that sank, one of the many such vessels that ferried loot down the river to the Baltic Sea and to Sweden.The find is precious for Poland, which has been repeatedly plundered by neighboring armies over the centuries, including Nazi Germany and the Soviet Red Army during World War II.Kowalski said he knew about the hidden artifacts from 17th century letters that mentioned barges that had sunk in the area.First word of where the treasures might be came in 1906 when sand barge operators discovered some items, but could retrieve only a few.Kowalski said his team is now busy cleaning the newly retrieved items, which are "very well preserved, given the 350 years in water."

Iran accuses Siemens of nuclear sabotage

Iran accused Germany's Siemens on Saturday of implanting tiny explosives inside equipment the Islamic Republic purchased for its disputed nuclear program, a charge the technology giant denied.Prominent lawmaker Alaeddin Boroujerdi said Iranian security experts discovered the explosives and removed them before detonation, adding that authorities believe the booby-trapped equipment was sold to derail uranium enrichment efforts."The equipment was supposed to explode after being put to work, in order to dismantle all our systems," he said. "But the wisdom of our experts thwarted the enemy conspiracy."Siemens denied the charge and said its nuclear division has had no business with Iran since the 1979 revolution that led to its current clerical state."Siemens rejects the allegations and stresses that we have no business ties to the Iranian nuclear program," spokesman for the Munich-based company Alexander Machowetz said.Boroujerdi, who heads the parliamentary security committee, alleged that the explosives were implanted at a Siemens factory and demanded the company take responsibility.Any sale of nuclear equipment to Iran is banned under U.N. sanctions, raising the possibility that if it indeed has some, it may have been acquired through third parties. Boroujerdi did not say when or how Iran obtained Siemens equipment. Despite a wide array of international sanctions, Germany remains one of Iran's most important trading partners.The U.S. and its allies suspect Iran's nuclear work is aimed at producing weapons. Iran says it only wants to enrich uranium for peaceful purposes, and asserts it has been the target of a concerted campaign by Israel, the U.S. and their allies to undermine its nuclear efforts through covert operations.Some Iranian officials have also suggested in the past that specific European companies may have sold faulty equipment to Iran with the knowledge of American intelligence agencies and their own governments, since the sales would have harmed, rather than helped, the country's nuclear program.According to Iran, the alleged campaign has included the abduction of scientists, the sale of faulty equipment and the planting of a destructive computer worm known as Stuxnet, which briefly brought Iran's uranium enrichment activity to a halt in 2010.Iran's nuclear chief, Fereidoun Abbasi, said Monday that separate attacks on Iran's centrifuges through tiny explosives meant to disable key parts of the machines were discovered before the blasts could go off on timers.Abbasi also told the U.N. nuclear agency in Vienna that "terrorists and saboteurs" might have infiltrated the International Atomic Energy Agency, after the watchdog's inspectors arrived at the Fordo underground enrichment facility shortly after power lines were blown up through sabotage on Aug. 17.Iran has repeatedly accused the IAEA of sending spies in the guise of inspectors to collect information about its nuclear activities, pointing to alleged leaks of information by inspectors to U.S. and other officials.Five nuclear scientists and researchers have been killed in Iran since 2010. Tehran blames the deaths on Israel's Mossad spy agency as well as the CIA and Britain's MI-6. Washington and London have denied any roles. Israel has not commented.Boroujerdi said the alleged leaks of nuclear information to its adversaries by the IAEA may finally push Tehran to end all cooperation with the agency."Iran has the right to cut its cooperation with the IAEA should such violations continue," he said.

NEWS,16.09.2012

JPMorgan, Bank Of America Probed Over Money-Laundering Allegations: New York Times

Regulators are investigating whether several major U.S. banks failed to monitor transactions properly, allowing criminals to launder money, according to a New York Times story. The newspaper cited officials who it said spoke on the condition of anonymity.The Office of the Comptroller of the Currency, the federal agency that oversees the biggest banks, is leading the money-laundering investigation, according to the Times. The report said the OCC could soon take action against JPMorgan Chase & Co., and that it is also investigating Bank of America Corp. Money laundering allows people to make money often obtained illegally appear like it came from another source.The OCC, JPMorgan and Bank of America declined to comment.The financial industry is struggling to mend its public image. Four years after the financial crisis, banks are getting closer scrutiny. And regulators are under pressure to show that they're not missing any questionable activity.This summer, British bank Barclays PLC settled charges that it had manipulated a key global interest rate. Standard Chartered PLC, also based in the U.K., agreed to settle charges that it had improperly processed money for Iran, brought by the New York Department of Financial Services after the bank voluntarily informed regulators that it was reviewing relevant practices. In the spring, JPMorgan surprised shareholders with an unexpected trading loss.If the OCC takes action, it could be similar to a cease-and-desist order that it filed against Citigroup in April. At the time, the OCC said that Citi had deficient internal controls and anti-money laundering procedures. In bank regulation, a cease-and-desist order doesn't mean that a bank has to shut down, but it is a serious sanction that requires a bank to change its practices. Citi had already told the regulator that from 2006 to 2010, it had "failed to adequately monitor" some of its transactions connected to "foreign correspondent banking."The order in April didn't make any new, specific accusations. But it did instruct Citigroup to tighten its rules so it could improve compliance with the Bank Secrecy Act and related regulations. The act requires financial institutions to report suspicious activity and to put rules in place to try to make money laundering impossible for customers.Last year, JPMorgan paid $88 million to settle charges from the Treasury that it had unlawfully processed money for Cuba, Iran, Sudan and Liberia.At the time, JPMorgan said it had had no intent to violate regulations. It pointed out that it oversaw "hundreds of millions of transactions and customer records per day, and annual error rates are a tiny fraction of a percent."It's not expected that banks would be accused of trying to show support for countries like Cuba and Iran. It's more likely that they would be accused of faulty oversight that made any unlawful transactions possible. The industry has maintained that such violations are almost always unintentional.According to the Times, the Justice Department and the Manhattan district attorney's office are also involved. The Manhattan U.S. attorney's office and the Manhattan district attorney's office declined to comment.

 

Iran's Nuclear Timeline

 

Iran is nuclear capable. If Iran's leaders decided they wanted a nuclear bomb, they could build one. They have the material, the technical ability, and likely have a design. They have had these capabilities for at least five years, when they accumulated enough raw material that could be converted into the core of a bomb.But Iran does not have a bomb now. U.S. intelligence officials have high confidence that Iranian leaders have not made the decision to build a bomb. There is much confusion  some of it intentionally spread about how long it would take Iran to build a weapon.An outstanding team of seasoned national security experts has just published a clear, detailed explanation of Iran's nuclear timeline. The report of the Iran Project was endorsed by 34 security leaders, including Brent Scowcroft, Sam Nunn, Gen. Tony Zinni, Adm. James Fallon, Gen. Frank Kearney, Carla Hills, Anne Marie Slaughter, Chuck Hagel, Adm. Joe Sestak, Jessica Mathews, Zbigniew Brezinski, Nicholas Burns and this author.Here is an excerpt from the report (on p. 22) that provides a sound basis for debating what actions should be taken to convince Iran not to build nuclear weapons. This report is intentionally conservative. There may be serious technical problems that make the timeline much longer. I have highlighted in bold key phrases.While there are differences of opinion on this issue, we believe it would be extremely difficult for Iran to hide a nuclear program devoted to weapons development. No monitoring and detection system is failure-proof, but Iran has little reason to be confident that it could get away with creating a secret program to produce fissile material for a weapon.Were Iran to attempt to produce a single bomb's worth of highly enriched uranium (HEU), it would take at least one month (although some experts believe the timeline could be as long as four months or more). It is important to note that while the ability to build a single bomb is a somewhat useful theoretical construct, it has little or no correspondence to how nuclear weapons programs function in the real world.Historically, no country in the nuclear age has sought as its goal to build one nuclear weapon; nor has any country adopted a strategy of building one weapon knowing that as a consequence, its program would be exposed. The timeline for producing a single bomb's worth of HEU is subject to change, depending on the number and type of operational centrifuges available as well as the size of Iran's stockpile of already enriched uranium, particularly 20% enriched uranium. Conservatively, it would take Iran a year or more to build a military-grade weapon, with at least two years or more required to create a nuclear warhead that would be reliably deliverable by a missile.In short, it is likely that the United States would receive some warning and have at least a month to make a decision on action -- military or other. Understanding the difference between the one-month timeline of producing sufficient fissile material in order to produce a weapon, and the two-year timeline of creating a nuclear warhead, is critical when considering the likely success of military action.After a month, the weapons-grade uranium (WGU) could be reduced significantly in size (25 kilograms); if properly encased, it could be easily hidden and would be highly mobile. This would be a very hard target to detect and destroy. While it would take some additional time for Iran to translate the WGU into a meaningful military capability, the ability for the United States or others to launch preventive military strikes would be reduced. In contrast, the facility used to enrich the WGU is immobile and large and therefore an easier and somewhat vulnerable target (unless deeply buried)....The more apparent the decision to make a weapon, the more persuasive the justification for military action would be to the international community, including the United Nations Security Council. While Israel's more limited military capabilities and earlier "red line" create a closing window of opportunity to take military action, the U.S. could afford to wait for its red line to be crossed Iran undertaking a dedicated weapons program before deciding whether to take preventive military action....Given the deepening mutual distrust between the U.S. and Iran; congressional sympathy for Israel's perspective on a nuclear-capable Iran; and the conviction among some parties that Iran has already secretly decided to build a nuclear weapon, we believe the most likely military scenario is one in which preemptive, unilateral action against Iran is initiated by the U.S. and/or Israel, under conditions of some uncertainty about Iran's real intentions.

NEWS,14.07.2012

JPMorgan Traders May Have Hidden Losses, Could Face Criminal Charges

 

JPMorgan Chase & Co said its traders may have deliberately hidden losses that have since climbed to $5.8 billion for the year, in a development that may result in criminal charges against traders at the bank.The losses came from bets on corporate debt now known as the "London Whale" trades made at JPMorgan's Chief Investment Office. Chief Executive Jamie Dimon said that in the worst-case scenario the derivatives trades would lose another $1.7 billion, and that the bank has fixed the CIO problems.Investors cheered the bank for capping losses and taking steps to ensure it avoids similar bad bets in the future. JPMorgan's shares rose nearly 6 percent on Friday.Even with the trading losses, JPMorgan earned nearly $5 billion overall in the second quarter, thanks to its strong performance in areas such as mortgage lending.The trading losses may be mostly over, but with the disclosure that traders may have lied about their losses, regulatory and legal consequences will linger for some time. Blame for the problems at the CIO office may go further up the management chain to some of the most senior executives at the firm, lawyers said.A source said that federal criminal investigators are looking at people at JPMorgan in London, where the CIO's risky bets were placed. The criminal investigation began in earnest in the past few weeks after JP Morgan's internal investigation uncovered that CIO traders may have intentionally masked losses, the source said."I see little doubt that someone is going to get charged with fraud," said Bill Singer, a lawyer at Herskovits in New York who provides legal counsel to securities industry firms, and publishes the BrokeandBroker website.Authorities ranging from the FBI to the U.S. Securities and Exchange Commission are probing the bank. The SEC could charge JPMorgan with weaknesses in oversight and internal controls, said James Cox, a securities law expert at Duke University."I think the SEC will continue to look at 'What exactly did Jamie Dimon know and when did he know it?'" Cox said.An internal review found that some of the CIO traders appear to have deliberately ignored the massive size of their trades - and the difficulty in liquidating them - when valuing their positions. The result was not reporting the full declines in the value of positions, which is forcing JPMorgan to restate its first-quarter results. The bank is cooperating with authorities.The trading losses and possible deception from traders are a black eye for Dimon, who was respected for keeping his bank consistently profitable during the financial crisis. Dimon, who has criticized regulators for meddling too much with banks, has lost credibility because of difficulties in his own house."How do we know there are not more roaches in the kitchen?" said Paul Miller, an analyst at FBR Capital Markets, referring to the maxim that seeing a single roach typically means there are far more hiding in the woodwork.The Chief Investment Office became infamous in May when JPMorgan said bad derivatives bets had triggered about $2 billion of paper losses, a figure that turned into $4.4 billion of actual losses in the second quarter.One trader in the CIO, Bruno Iksil, took big enough positions in the credit derivatives markets to earn the nickname "The London Whale." He made at least some of the big bets that caused trouble for the bank, and has since left JPMorgan, a source said on Friday.Ina Drew, who headed the CIO, has also left, and offered to give back as much of her pay as the bank was contractually entitled take back, said Dimon, whose pay could be taken back as well. A spokesman for the bank said JPMorgan had accepted Drew's offer.The bank said it had moved the bad trades from the CIO, which invests some of the company's excess funds, to its investment bank. JPMorgan was one of the inventors of credit derivatives, and its investment bank is one of the biggest traders of the product on Wall Street.The CIO will now focus on conservative investments, JPMorgan said. The bank has taken a number of other steps to prevent these types of losses from repeating, including changing the way it limits risk taking in the CIO's office."People feel good that the loss is largely contained at this point," said Nancy Bush, a banking analyst at independent research firm NAB Research.JPMorgan said later on Friday that its former CIO risk officer, Irvin Goldman, had resigned. Goldman "behaved with integrity and we wish him well," JPMorgan said.JPMorgan's shares rose $2.03 to close at $36.07 on the New York Stock Exchange.THE TEMPEST LEAVES THE TEAPOT The bank posted second-quarter net income of $4.96 billion, or $1.21 a share, compared with $5.43 billion, or $1.27 a share, a year earlier.The derivative loss after taxes reduced earnings per share by 69 cents, the company said.JPMorgan said it expected to file new, restated first-quarter results in the coming weeks, reflecting a $459 million reduction of income because of bad valuations on some of its trading positions. The bank found material problems with its financial controls during the period.The bank said its internal investigation combed through over a million emails, tens of thousands of taped conversations, and other evidence. It learned that some traders may have intended not to value their trading positions at the proper levels.In particular, the traders recorded the value of their trades at current market prices, rather than prices they would get if they liquidated their large positions, in an effort to avoid reporting their full paper losses.The bank made trades that were intended to protect it against the credit markets tanking, but allowed those positions to morph into bets on credit markets getting better.Friday's financial report came three months to the day after Dimon, 56, told stock analysts that news reports about Iksil and looming losses in London were a "tempest in a teapot."That remark, which Dimon told Congress last month was "dead wrong," added to the damage the loss has done to his reputation and his argument that his bank is not too big to be managed safely.A host of international regulators and agencies are probing the trading mishap. Besides the FBI and the SEC, they the UK's Financial Services Authority, the U.S. Federal Deposit Insurance Corp, the U.S. Commodity Futures Trading Commission, the U.S. Treasury's Office for the Comptroller of the Currency, and the Federal Reserve Bank of New York.

Libor Scandal May Hit U.S. Banks Harder Than Their British Counterparts

 

Barclays Plc and other UK banks may escape lighter than their U.S. rivals if shareholders seek damages in the wake of an interest rate-rigging scandal, because such cases are costlier and harder to win in Britain.Cases pursued in America by investors alleging they suffered a loss because of the wrongdoing of a financial institution, will often be deemed ineligible to be heard in U.S. courts when the bank in question is foreign, legal experts said.But if investors opt to take their cases to UK courts, they will find Britain's legal structures make such claims harder to win, costlier and riskier."Would we like to sue Barclays in the New York courts weknow well and we're very good at prosecuting in? Sure. But we're not going to because this is a UK situation," said Dominic Auld, a litigation expert at U.S. law firm Labaton Sucharow.Since Barclays admitted its role in manipulating the London interbank offered rate (Libor), lawyers on both sides of the Atlantic are taking calls from investors."I did take a call this morning from an institutional investor who is interested in looking at litigation both from a UK perspective and the U.S ... I expect there will be a good deal of similar interest," said Owen Watkins, a barrister in the corporate department of London law firm Lewis Silkin.More than a dozen banks are being investigated for their roles in setting Libor, including Citigroup, JPMorgan Chase & Co, Deutsche Bank, HSBC Holdings Plc , UBS and Royal Bank of Scotland..Morgan Stanley analysts have calculated the litigation risk to each of the 16 banks involved in setting Libor, an estimate of the rate at which banks could lend to each other and a benchmark for setting many other types of loans, at between $60 million to $1.1 billion. But lawyers say that while it was once commonplace for European investors to issue proceedings in the States, this transatlantic "legal tourism" was brought to an effective end in 2010 by a Supreme Court ruling in the United States.In a case brought against National Australia Bank, the court ruled U.S. securities laws do not have jurisdiction over so-called "F cubed" cases involving foreign investors and a foreign company traded on a non-U.S. market In the case of Barclays, only about 4 percent of its market capitalisation is traded in the U.S. in the form of American Depository Receipts. Any pursuit of meaningful damages from investment losses related to falls in Barclays' share price caused by the scandal will have to be carried out in Britain."Bringing proceedings here is not easy because there are various questions about causation. But most importantly Barclays would fight hard and you take a substantial risk in relation to costs that you would have to pay if you lost," said David Greene, senior partner at London-based law firm Edwin Coe.Furthermore, proceedings by institutional investors are rare and run against the traditions of the City of London financial district which had in part prompted disgruntled investors to make claims in the United States until it was halted by the F-cubed ruling."I don't think that sort of thing would be held in a UK court. I think they would just say the nature of the capital markets is shares go down as well as up. It's the guiding principle here," said one institutional investor who declined to be named because he is a major Barclays shareholder.

NEWS,01.07.2012

Investors' eyes on European Central Bank

The month of June finished on a high note, with investors opting to trust that the most recent agreement by European leaders on dealing with the 2 1/2-year-old sovereign debt crisis will finally stem the bleeding for both the region's and the global economy.The European Central Bank this week might help sustain the momentum of optimism by opting to ease interest rates, already at a record low. Most economists polled by Reuters expect the central bank to lower borrowing costs at its meeting on Thursday.Investors will closely watch for the latest indicators on the strength of the US economy including the Labor Department's report on nonfarm payrolls in June, due on Friday, though expectations are low.Economists forecast an increase of 90,000 jobs and the US unemployment rate holding steady at 8.2%. Estimates in a Bloomberg survey of 59 economists ranged between 35,000 and 165,000 more jobs.Other US data due in the coming days include the Institute for Supply Management's manufacturing index and construction spending on Monday, as well as weekly jobless claims and mortgage data, ADP's private-sector payrolls report and the ISM's services-sector index on Thursday."We really need to see job creation pick up, which is the only thing that's going to get households spending on a sustained basis," Paul Dales, a senior US economist at Capital Economics in London, told Bloomberg News. "The economy isn't going to get exceptionally weak from here, but neither is it going to get much stronger."Wall Street will be closed on Wednesday, the Fourth of July, in observance of Independence Day.In the past five days on Wall Street, the Dow Jones Industrial Average advanced 1.9%, the Standard & Poor's 500 Index gained 2%, while the Nasdaq Composite Index rose 1.5%.For the month of June, the Dow gained 3.9% while the S&P 500 climbed 4% and the Nasdaq added 3.8%. In Europe, the Stoxx 600 Index posted a gain of 1.9% for the week, as national benchmark indexes advanced in all 18 western European markets. London rose 1%, Paris increased 3.4% and Frankfurt moved 2.4% higher in the past five days.Some analysts warned that the optimism and the gains might be short-lived."Investors have to be cautious because the market may be getting ahead of itself. We really don't have any details. The big question is still what direction the ECB takes [this] week," Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, told Reuters. On Friday, euro-zone leaders agreed to allow their joint emergency funds to be tapped by the region's banks, aimed at reducing the pressure on sovereign debt. They also pledged to create a single banking supervisor for euro-zone banks based around the ECB in a move toward a European banking union."[The EU deal] is certainly not a silver bullet for the debt crisis, but the market is kind of acting like it is. It may set us up for another push down in the weeks ahead," Esiner said.Others agreed. "People had pretty low expectations of the summit and are a little bit more optimistic now," Ira Jersey, an interest-rate strategist in New York at Credit Suisse Group, told Bloomberg News. "The devil is in the details on most of this stuff."In the coming days, Spain and France will test investors' appetite for their debt again. Spain is set to auction three-year, four-year and 10-year bonds on Thursday, the same day as France who is planning to sell between 7 billion and 8 billion euros in long-term bonds.

ECB official: Greece must deliver '100 pct'

 

Greece must fulfill the targets of its austerity and reform program "100 percent" to stay in the euro, a top European Central Bank official said Sunday offering little hope of substantial wiggle room for Athens and questioning whether it can be given more time to comply.Greece's new government wants to lower some taxes, freeze public sector layoffs and extend by two years the mid-2014 deadline for austerity measures demanded by creditors in exchange for loans that are keeping the country afloat, conditions that are hugely unpopular in the country.But ECB executive board member Joerg Asmussen told Germany's ARD television that there can be no departure from the aims of consolidating Greece's budget and restoring its competitiveness."The so-called mix of measures in other words, how do I reach the target one can talk about that," he said. But that, he added, means that "if the government intends to lower a tax, it will have to increase another tax by the same amount."Asked whether Greece would get more time to comply, Asmussen replied: "I don't think so." He noted that any extension would lead to a need for more external financial help "that means that the other 16 eurozone states and the IMF would then have to provide more financing."The ECB is part of the so-called "troika" of debt inspectors overseeing the Greek program, along with the European Commission and the International Monetary Fund. On Monday, the inspectors are expected to start their review of the country's finances and meet with the new government. Their conclusions will be critical to whether Greece will be able to renegotiate parts of its international bailout conditions."My preference and the preference of the ECB is very clearly that Greece remain in the eurozone," Asmussen said. "For that, the country must implement 100 percent the program targets that were agreed."An exit, he said, would make things economically difficult not just for the country leaving the eurozone but also for all the others.Other eurozone countries in particular Germany, the bloc's biggest economy have appeared cool to giving Greece much of a break on its targets or timeline."From Germany's point of view, a substantial loosening of the program, of the reform agreements, does not come into consideration," Foreign Minister Guido Westerwelle said Sunday. He insisted that Greece must implement those agreements "step by step, solidly and reliably."At a European Union summit last week, German Chancellor Angela Merkel made concessions to Italy and Spain notably agreeing to allow countries that pledge to implement reforms demanded by the EU's executive Commission to tap rescue funds without having to go through the kind of tough austerity measures demanded of Greece.But officials insist that help to struggling countries and banks will still come with strings attached, and that Germany has no intention of agreeing to share government debt through jointly issued eurobonds in the foreseeable future. Berlin fears that would cut struggling countries' borrowing costs at its expense and also take pressure off them to get their finances and economies in order.Westerwelle, a member of the pro-market Free Democrats the junior partner in Merkel's coalition insisted Sunday that eurobonds should stay off the table permanently."Too little solidarity endangers Europe, but too much solidarity does not endanger Europe any less," he said."Even if we already lived in a European federal state, I would be strictly against us Germans taking on liability for all debts in all of Europe."

NEWS,27.06.2012

Europe's leaders at odds before summit

 

European leaders sound unusually divided before a high-stakes summit, with Germany's Angela Merkel saying total debt liability would not be shared in her lifetime and giving little support to Italian and Spanish pleas for immediate crisis action. Rome and Madrid have seen their borrowing costs spiral to a level which for Spain at least would not be sustainable as it battles to recapitalise banks ravaged by a burst property bubble and cut a towering government deficit. Spanish Prime Minister Mariano Rajoy said on Wednesday he would ask other European Union leaders to allow the bloc's bailout funds or the European Central Bank (ECB) to stabilise financial markets. Speaking in parliament before a meeting of European heads in Brussels on Thursday and Friday, Rajoy warned that Spain would not be able to finance itself indefinitely with 10-year bond yields near 7%. "The most urgent issue is the one of financing. We can’t keep funding ourselves for a long time at the prices we’re currently funding ourselves,” he told parliament. Even when there are profound disagreements, EU leaders have been burned by the markets enough times to generally make sure they sound united before major gatherings. But divisions have been exposed by the ousting of Nicolas Sarkozy by socialist Francois Hollande as French president and the fact that Rome and Madrid have muscled into the traditional Franco-German axis. The leaders held an unusually discordant news conference in Rome on Friday. Hollande said there must be more solidarity in Europe before countries hand over more sovereignty over their national budgets, while Merkel said she would not accept extra liabilities without overarching budget control. The pair will have a working dinner in Paris on Thursday evening, an opportunity to repair the damage. An initial attempt to smooth over differences came at a meeting of the four countries' finance ministers late on Tuesday after which nothing was said. In Rome, Italian Prime Minister Mario Monti said he would not simply rubber stamp conclusions at the EU summit and said he was ready to go on negotiating into Sunday evening if necessary to agree on measures to calm markets. With Hollande's support, Monti is pushing for the eurozone’s rescue funds to be used to help limit the spreads over German Bunds on bonds issued by countries that respect EU budget rules. Rajoy would settle for that or the ECB doing the same job by reviving its bond-buying programme. The proposal has run into stiff opposition from Germany, the largest economy in the EU and the bloc’s effective paymaster, and has been rejected by Jens Weidmann, the powerful head of the German central bank, the Bundesbank. Stock markets perked up last week on the hope that the 20th EU summit since the bloc’s debt crisis exploded into the open in Greece would come up with dramatic measures. Investors have since thought better of that view. European shares edged up on Wednesday and the euro was flat, with many investors out of the markets before the Brussels meeting. “People are waiting for the inevitable - which is that policymakers will probably fail to do what is necessary,” said Neil Mellor, currency analyst at Bank of New York Mellon.Borrowing costs Merkel stomped on the idea of mutualising debt - favoured by France, Italy and Spain - at a meeting of lawmakers from her Free Democratic coalition partners in Berlin on Tuesday, according to people who attended the closed-door session. “I don’t see total debt liability as long as I live,” she was quoted as saying, a day after branding the idea of euro bonds “economically wrong and counterproductive”. The words may have been carefully chosen and do not at face value rule out mutualising some portion of eurozone members’ debts as the end point of a drive towards fiscal union. Merkel finds herself in a dwindling minority but holds the eurozone’s purse strings and therefore nearly all the cards. German opposition SPD leader Sigmar Gabriel told the Financial Times that urgent measures were needed to lower eurozone sovereign borrowing costs, otherwise the currency bloc could “simply explode”. Italy and Spain argue that they are stretching every sinew to cut their debt mountains and need some support from their currency area peers to keep the markets at bay. Monti won the first two of four confidence votes on Tuesday called to accelerate the passage of his labour reform that has been criticised by both by labour unions and the business establishment. The final two votes, and definitive approval, are due on Wednesday. Spain which has been offered loans of up to €100bn to recapitalise its banks but is determined not to ask for a sovereign bailout - is considering raising consumer, energy and property taxes. Spanish Economy Minister Luis de Guindos said he had talked with the finance ministers of Germany, France and Italy already on Wednesday with further discussions planned. Eurozone finance ministers will also hold a conference call on the bailout of Spanish banks and this week’s request for aid from Cyprus, EU officials said. The request made Cyprus the fifth of the eurozone’s 17 states to seek aid from EU rescue funds after Greece, Ireland, Portugal and Spain. Underlining the parlous state of Spanish finances, figures showed the central government’s deficit had already reached 3.41% of annual gross domestic product through just the first five months of the year, close to its target for the whole year of 3.5%. Spain’s central bank said on Wednesday it expected recession to deepen in the second quarter of the year. The Brussels summit is expected to agree on a growth package pushed by France worth around €130bn in infrastructure project bonds, reallocated regional aid funds and European Investment Bank loans. Leaders will also discuss proposals for a banking union, but while they are likely to agree to give the ECB power to supervise big cross-border banks, Merkel is resisting any joint deposit guarantee or common bank resolution fund.

Italy to pass new labour laws ahead of EU forum

Italy’s Parliament is on Thursday set to approve a controversial labour market reform so Prime Minister Mario Monti can go to a key Brussels summit with it in hand to reassure his EU partners.The reform, which Mr Monti’s government says is key to restarting growth in the recession-hit economy, was to get final approval the day before the summit, as Italy races to prove it is doing what it takes to stave off the debt crisis. The summit starts on Thursday, June 28.Rome had called on Parliament to make sure the reform is approved in time, but Prime Minister Monti whose technocratic government depends on the support of bickering coalition parties has had to compromise on the details.Addressing Parliament on Wednesday, he said it was “important that Italy arrives at the summit with the force of a parliament-government tandem.”The project, which was unveiled in March after months of bitter disputes with trade unions, is based on the Danish “flexicurity” model, which aims to ensure both flexibility and security in the labour market.It includes incentives for employers to hire workers but also eases the procedure for letting them go in case of a downturn, and will help young people get jobs though apprenticeships, in a country hit by high youth unemployment. Workers will also all be eligible for a modernised welfare scheme from 2017.Greater labour flexibility is one of the so-called structural reforms that the European Commission, International Monetary Fund and Organisation for Economic Cooperation and Development have long advised Italy to adopt to invigorate its economy.Watered downBut Mr Monti’s original package was watered down as parties, trade unions and employer groups fought to defend their turf, leaving many economists fearing the reform is too timid to shake up the labour market.The centre-right insisted businesses be left wiggle room to give people shorter-term contracts, while the left demanded greater measures be included to protect workers.The country’s biggest union, the left-wing CGIL, says the reform risks increasing unemployment, while the Confindustria association says it does not go far enough in strengthening employers’ rights.