NEWS,03.12.2012

Europe canes Israel over settlements

Four European nations summoned their Israeli ambassadors on Monday to denounce Israel's latest settlement construction push, deepening the rift between the Jewish state and European allies that has cracked open over the Palestinians' successful UN statehood bid.Although Europe considers all Israeli settlement construction illegal, the summoning of ambassadors in France, Britain, Sweden and Spain to accuse Israel of undermining already troubled peace efforts was an unusually strong expression of displeasure. It came at a time when Israel was already smarting over Europe's failure to back the Jewish state in its campaign against the statehood move.The Europeans were furious over Israel's announcement Friday that it would move ahead on plans to build 3,000 settler homes to punish the Palestinians for winning UN recognition of a state of Palestine in territories Israel captured in 1967.Israel also said it would begin planning work on an especially sensitive piece of land outside Jerusalem that it has refrained from developing because of US pressure. A meeting with developers and other interested parties was to take place on Wednesday, though officials have stressed that it could be years before actual construction begins.After a flurry of angry phone calls from European capitals to Israel over the weekend, France summoned the Israeli envoy to Paris late on Monday morning.France, the first major European country to announce support for the Palestinian statehood effort, also sent a letter to the Israeli government, calling the settlement decision "a considerable obstacle to the two-state solution."Britain, which abstained in the UN vote, urged Israel to reverse the decision as it summoned Israeli Ambassador Daniel Taub to the Foreign Office. Swedish Foreign Minister Carl Bildt told parliament that "together with other EU countries we will discuss other potential steps," but he would not elaborate.British officials said London was looking to Washington to take the lead, and that British diplomats were meeting with American counterparts on Monday.None of the four European governments openly threatened any concrete measures to punish Israel."Our ambassadors were called in and the countries protested about the announcement about the intention to do further construction in settlements," Israeli Foreign Ministry spokesperson Paul Hirschson said.Israel's Haaretz newspaper reported earlier on Monday that Britain and France were considering recalling their ambassadors to Israel in a symbolic but potent expression of dissent. Hirschson said no such intention had been communicated to Israel, and French and British officials denied the report.Palestinian President Mahmoud Abbas met on Monday with the consul general of France in the West Bank and asked that France exert pressure on Israel to halt settlement activity, according to the official Palestinian news agency, Wafa.Senior Palestinian official Nabil Shaath praised the Europeans for taking action."We've been expecting this kind of behaviour for a long time," Shaath said. "For this to come from France and England is very beneficial to us. We highly appreciate it and we are hoping the US will follow their lead."US Secretary of State Hillary Clinton said on Friday that the settlement activities "set back the cause of a negotiated peace," but nothing harsher has emerged from Washington, the only world power to side with the Israelis against the Palestinians' statehood measure.Germany, which abstained in the UN vote, expressed concern on Monday over the Israeli move but wouldn't say whether it had taken any direct measures in response. Israeli Prime Minister Benjamin Netanyahu is due in Berlin on Wednesday for a previously scheduled meeting with Chancellor Angela Merkel.Steffen Seibert, Merkel's spokespeson, said Germany took a "very negative view" of the settlement announcement, which he said undermined peace efforts.The growth of settlements, now home to half a million Israelis, is at the heart of the four-year breakdown in negotiations.The Palestinians view continued settlement expansion as a show of bad faith and refuse to return to talks unless construction is frozen. Netanyahu notes a 10-month settlement slowdown in 2010 failed to jump-start negotiations, and rejects calls for a new construction freeze.The UN General Assembly voted overwhelmingly on Thursday to recognize a Palestinian state in the West Bank, east Jerusalem and the Gaza Strip, territories Israel captured in the 1967 Mideast war. Israel still occupies those first two territories and restricts access to Gaza, though it withdrew all settlers and soldiers in 2005.Netanyahu rejects a return to Israel's 1967 lines. His government campaigned against the UN measure, saying only direct negotiations could produce a Palestinian state.But in a stinging diplomatic defeat, just eight other countries, including the US, opposed the Palestinian bid. Israel's closest allies in Europe, including Germany, Italy, France and Britain, either abstained or voted with the Palestinians in what amounted to a sweeping condemnation of Israeli settlements. Israel retaliated by announcing the next day that it would start drawing up plans to build 3 000 settlement homes in the West Bank and east Jerusalem. More explosively, from the Palestinian point of view, it said it would begin planning work for a chunk of land east of Jerusalem known as E1.Building there would sever the link between the West Bank and east Jerusalem, which the Palestinians claim for a future capital. It would also cut off the northern part of the West Bank from its southern flank.The Palestinians say construction in that territory would kill any hope for establishing a viable state of Palestine. Successive US governments have agreed, and under intense American pressure, Israel has avoided building settlements in the area. It has, however, developed roads and infrastructure and built a police station.On Wednesday, Israel's planning and construction committee for the area is scheduled to hold a first-ever meeting to discuss developing the E1 area, a defence official said.The session, described by the official as a "very, very preliminary" step, would be open to Jewish politicians in the West Bank and developers, as well as Palestinians with any claims to parts of the land. This would be the first step in a planning process that could take months, if not years, before ground is actually broken. The official spoke on condition of anonymity because he was not authorized to discuss the project.Actual settlement construction remains far from certain and may have been announced by Netanyahu to appeal to hawkish voters ahead of Israel's 22 January election.

 

North Korea warned against second rocket launch

Russia urged North Korea today not to go ahead with a plan for its second rocket launch of 2012, saying the launch would violate restrictions imposed by the UN Security Council."We urgently appeal to the government[of North Korea to reconsider the decision to launch a rocket," the Russian Foreign Ministry said in a statement. North Korea's state news agency on Saturday announced the decision to launch another space satellite and reportedly told neighbours it would take a similar path to a failed rocket launch in April. Echoing its criticism of the April launch, Russia said Pyongyang had been warned not to ignore a UN Security Council resolution that "unambiguously prohibits [North Korea] from launching rockets using ballistic technology."North Korea says its rockets are used to put satellites into orbit for peaceful purposes. The Russian statement said North Korea would be allowed only to exercise its right to peaceful activity in space if the UN-imposed restrictions were lifted.Russia has often balanced criticism of Soviet-era client state North Korea's nuclear activities and missile launches with calls on other powers to refrain from belligerent actions against Pyongyang, which it says can be counterproductive.Russia is a permanent member of the UN Security Council and is upset by any defiance of council resolutions. Past launches by Pyongyang have caused concern among Russians living near the country's border with North Korea.

 

Euro rises to six-week high against US dollar

 

The euro rose to a six-week high against the US dollar after Greece offered to buy back 10 billion euros of bonds in what is seen as a sign of progress in tackling its debt mountain.As talks in Washington aimed at averting the fiscal cliff appear stalled, a chink of light has flowed into markets from Europe. The euro traded recently at $US1.3065 from $US1.3006 in late New York trading on Friday. The Dollar Index, which tracks the greenback against six major currencies, fell to 79.819, the lowest since late October.Greece's Public Debt Management Agency is offering a maximum purchase price of 34.1% bonds maturing from 2023 to 2042, higher than expected.Greek bonds rose on the news, pushing the 10-year yield below 15 percent for the first time since March.The February 2023 bond price is at 39.31% of face value, according to Bloomberg.The buyback will be via a swap into six- month bills from the European Financial Stability Facility, which last week had its provisional debt rating cut to (P)Aa1 from (P)Aaa with a negative outlook by Moody's Investors Service.It is part of plans to reduce Greece's debt to 124 % of gross domestic product by 2020.The buyback was one of the conditions of the financial aid approved by euro zone finance ministers and the International Monetary Fund last week and comes as German Chancellor Angela Merkel appears to be softening her stance on conditions for a bailout, saying her country may accept a write-off of Greek debt."If Greece one day can rely once again on its own revenue, without having to borrow, then we'll have to look at this situation and make an evaluation," Merkel said in an interview with Germany's Bild newspaper. Equity markets were generally higher in Europe though they pared gains after an unexpectedly weak US manufacturing report.The Stoxx Europe 600 Index rose 0.1%, Germany's DAX 30 climbed 0.4% and France's CAC 40 rose 0.3%."If Greece can manage the buyback and get a new tranche of aid, then the Greece problem will be out of the way until the end of 2013," Philippe Gijsels, head of fixed-income research at BNP Paribas Fortis in Brussels, told Bloomberg. Manufacturing in the US unexpectedly contracted last month.The Institute for Supply Management's factory index fell to a three-year low of 49.5 in November from 51.7 in October, surprising economists who had expected manufacturing to expand. Manufacturing in the euro zone was also weaker, shrinking for a 16th straight month for a reading of 46.2.Stocks on Wall Street weakened after the manufacturing data.The Dow Jones Industrial Average was recently 0.3% lower, with manufacturers such as DuPont and General Electric leading the decline.The Standard & Poor's 500 Index was down 0.1%.Adding to America's economic woes, Fitch Ratings said warned that the $US607 billion of tax increases and federal spending cuts that kick in on January 1 are the biggest threat to the credit rating of US states in 2013."The risk that the fiscal cliff presents to the overall economy is the biggest concern for state credit, as state revenue systems quickly reflect changing economic conditions," Fitch managing director Laura Porter said in a statement yesterday. US Treasury Secretary Timothy Geithner told CNN's State of the Union that Republicans will "own the responsibility for the damage" to the US economy if they don't cede ground and agree to tax hikes for the wealthiest Americans.

World economy in deep trouble

The global economy is on edge - and that's without the US "fiscal cliff." Among rich nations, the US outlook remains the least troublesome. But given a recession in the eurozone and a recent contraction in Japan, that's not saying a lot. At the same time, many emerging markets are hurting. India is likely to log its weakest growth in a decade this year and Brazil's economy is also sputtering. Luckily, growth in China appears to be firming. In the United States, the economy faces growing challenges even without the ongoing political wrangling over the $600bn in government spending reductions and expiring tax cuts set to kick in at the start of next year.The coming week brings a slew of reports expected to show the US economy struggling. Data on Friday will likely show employment growth slowed to just 100 000 jobs last month from 171 000 in October, according to a poll of economists. US manufacturing data this week is also likely to suggest a fourth-quarter slowdown is at hand. Indeed, some worry the fourth quarter, which has been affected by the impact of superstorm Sandy, will bring the world's largest economy remarkably close to stall speed. "The risk of seeing a negative sign in front of fourth-quarter GDP is nontrivial, to say the least," said Tom Porcelli, economist at RBC Capital Markets. Following figures showing consumer spending fell in October for the first time in five months, Porcelli revised down his forecast for fourth-quarter US GDP growth to a 0.2% annual pace from 1%t.The United States' travails come against a troubling global backdrop. Europe is still a mess. Greece's latest debt deal quelled immediate concerns of a financial market meltdown, with terms of the country's bond buy-back plan likely to be announced early this week. But the country remains mired in a deep depression, with little prospect for recovery, and not everyone is convinced it will be able to remain a part of the single currency. "We expect the euro to come under pressure again soon, and continue to forecast that the exchange rate against the dollar will tumble to parity next year as Greece eventually leaves the eurozone," said John Higgins, economist at Capital Economics in London. The attention of financial markets has also quickly returned to Spain, where the economy continues to worsen despite an improvement in credit market conditions prompted by hopes of eventual help from the European Central Bank. Spanish retail sales plunged 9.7% in October, pointing to a further sharp contraction for a country that has been in recession for more than a year. The trouble for Spanish Prime Minister Mariano Rajoy is that ECB help, in the form of purchases of Spanish bonds, will not come unless Spain formally applies for sovereign aid, a highly unpalatable choice politically. Still, it is one the government may eventually have to stomach, as evidenced by its willingness last week to break with a key campaign promise and forego inflation adjustments for retirees' pensions in order to meet its deficit targets. Other global engines of growth also look to be softening. Not only did growth slow in India and Brazil in the third quarter, but it braked in Canada as well. China now may be the exception, with a gauge of factory activity hitting a seven-month high in November. Hovering over this rather dispiriting global scene, Washington's bickering appears to be nowhere near over, with both Democrats and Republicans holding firm to their positions. US House Speaker John Boehner, the top Republican in Congress, said on Friday that talks were at a stalemate. In an interview that aired on Sunday, he dismissed a proposal presented by the Obama administration last week as "nonsense." The biggest sticking point is whether to extend low tax rates on household income above $250 000 established under former President George W. Bush. Boehner said Republicans still oppose raising tax rates on any income group. Hopes for a deal now hinge on the growing number of Republicans in the House, including a handful of Tea Party-backed conservatives, who have begun signaling greater flexibility than their leaders in softening their opposition to higher taxes for the wealthy. Obama is hoping to appeal to more potential renegades to get a deal to avoid the budget crunch that economists say would tip the economy back into recession.

Tough talk as US 'fiscal cliff' looms

A sense of deja vu gripped Washington on Monday as Democrats and Republicans locked in who-blinks-first brinkmanship over taxes and spending, with pundits warning of economic chaos unless a deal is struck.The White House will not budge on tax hikes and Republicans call the president's opening gambit ridiculous, but without a deal by the year's end the fragile US economy will plunge off what is being called "the fiscal cliff.""I think we're going over the cliff," grimly predicted Republican Senator Lindsey Graham of South Carolina.He said he was ready to consider closing tax loopholes for the richest Americans, but only in conjunction with entitlement reform aimed at saving such programs as Medicare, Medicaid and Social Security from bankruptcy.But Graham insisted that the president's plan when it comes to entitlement reform "is just, quite frankly a joke."In April 2011, there were less than two hours to go to avert a government shutdown when the same protagonists, Democratic President Barack Obama and Republican House Speaker John Boehner, struck a tentative budget deal.The hard-fought accord that eventually raised the debt ceiling later that summer came too late to prevent Standard & Poor's from downgrading the credit rating of US government bonds for the first time in the country's history.Despite international criticism then for playing a dangerously irresponsible game of chicken, both sides are at it again refusing to compromise and counting down the clock as financial disaster looms.The debt ceiling deal signed into law in August 2011 included a poison pill provision that would usher in across-the-board spending cuts unless Congress passed a $1.2bn deficit reduction bill by the end of 2012.Combined with the expiry on December 31 of a raft of tax cuts, including reduced Bush-era rates for nearly all Americans and Obama's two percent cut in payroll taxes, the risk of a new recession is very real.The point of the "fiscal cliff" provision was to force a fiercely divided Congress and White House to stop kicking the can down the road and get serious about tackling the $16.3 trillion public debt and arcane tax laws.Obama called in the tough-talking Timothy Geithner to be his pointman on the crisis, hoping the outgoing Treasury secretary had enough respect on Capitol Hill and economic expertise to get the job done.But, if the Republican leadership is to be believed, things got off to a rocky start when Geithner got negotiations rolling on Thursday by laying out Obama's initial offer.It called for nearly $1.6 trillion in new tax revenue over the next decade and $600bn in spending cuts, including from programs Democrats cherish like Medicare, which covers health insurance for the elderly."I was flabbergasted. I looked him and said, 'You can't be serious,'" Boehner told .""I've just never seen anything like it. You know, we've got seven weeks between election day and the end of the year. And three of those weeks have been wasted with this nonsense."Republicans said the offer doubled the amount of revenue Obama had been asking for, included new stimulus spending to offset the spending cuts, and made no specific commitments to slash costly government welfare programs. They also balked at a provision that would see a permanent end to congressional control over federal borrowing limits, the issue that set this crisis in motion.Boehner, whose party controls one of the chambers through which any crisis-solving bill must pass, dismissed the notion that Congress would give up powers to vote on future debt limit increases as "silliness. ""They must have forgotten Republicans continue to hold a majority in the House," he said, adding bitterly: "The president's idea of a negotiation is: roll over and do what I ask."Budget negotiations go right to the heart of ideological differences between Democrats and Republicans on the size and scope of government. The biggest sticking point has been on tax rates for high-earners. Obama won re-election on a platform of raising taxes on individuals who make more than $200 000 per year and on families that rake in more than $250 000, as a way of raising extra revenue to tame the deficit.Republicans insist that raising taxes on the wealthy would hurt small business owners, slow economic growth and dampen job creation."There's not going to be an agreement without rates going up. There's not," Geithner told . Republicans say they are ready to extract more revenue from wealthy Americans, but want to do so by closing tax loopholes and limiting deductions rather than by raising income tax rates.Besides resisting tax hikes, Republicans want action on Medicare and Social Security. Geithner insisted that Social Security, which provides government funds to the elderly, the disabled, widows and the poor, should not be on the table in the current negotiations.

 

Greece to unveil terms of bond buy-back

 

Greece will unveil details of a bond buy-back crucial to efforts by foreign lenders to trim the country's ballooning debt, hoping the terms will draw enough investors and unblock vital aid. Since plans for the buy-back were announced on Tuesday, questions have swirled about whether it will tempt enough bondholders to cut Greek debt by a net €20bn. Under the plan, Greece aims to cut its overall indebtedness by spending €10bn from its rescue package to buy back about €30bn of bonds for less than it would have to pay if its creditors held them to maturity. A senior government official said Athens would unveil the terms of the deal on Monday before a meeting of eurozone finance ministers, at which Greek minister Yannis Stournaras would brief his counterparts. "There will be a debriefing by the Greek minister on the steps he will have taken by then," said a senior EU official. "On Monday you will see it all." Eurozone officials said the bloc hoped Greece would be able to repurchase at least €40bn of its own bonds. The price that Athens will offer bondholders is likely to vary depending on the bond rather than be a uniform rate for all holders, a senior Greek finance official has told. On the secondary market, Greek bonds eligible under the buy-back ranged from 25.15 to 34.41 cents in the euro at the close of trading on November 23,data showed. Greece's lenders agreed this week that the bonds, which have a nominal value of €63bn, would not be purchased for more than the closing price on that date. The offer goes in theory also to holders of about €4bn of old Greek bonds, who refused to take part in a debt cut scheme in March. A  calculator on the buy-back shows that if the buy-back price was set at the November 23 closing prices, even a 50% participation rate would be enough for a successful deal - in this instance, Athens would have to spend just €8.7bn to buy back debt worth €31.5bn. For Athens to spend €10bn, it would have to buy back around 60% of the outstanding bonds. This could save Greece €39bn gross on the face value of the bonds and the interest payments due on them. Athens has pressed its banks which hold nearly €17bn of the bonds to take part in the deal, saying it was the "patriotic duty" of Greeks to ensure the buy-back is a success. "The buy-back must succeed. It's our patriotic duty to succeed, it is important for the country's credibility," Stournaras said last week. Despite fears that Greek banks already battered by the country's deep economic crisis would be forced to book losses from the buy-back there have been growing indications they are likely to participate. Prime Minister Antonis Samaras said Greek banks would benefit from the voluntary debt buy-back which is crucial to unlocking aid that will largely be used to recapitalise them since they held Greek bonds at lower prices on their books. "They won't lose any of their capital but will end up with more liquidity," he was quoted as saying in an interview with Sunday's Proto Thema newspaper. The deal is seen as a golden opportunity for hedge funds which have bought the bonds at rock-bottom prices. Athens must complete the buy-backs by December 13 to receive more than €30bn in bailout payments. Greek pension funds holding more than €8bn of the bonds will not take part, Samaras said. "The debt buy-back does not concern the pension funds," he said. "We wouldn't erase the debt even if we took the funds' bonds. These are seen as arrears of the state to itself."  

Greece launches bond buyback offer

Greece said on Monday it would buy back bonds through a Dutch auction as part of efforts to cut its ballooning debt, allowing it to assess the level of demand before setting a final price for the deal. The bond buyback is central to the efforts of its foreign lenders to put Greece's debt back on sustainable footing, and its success will pave the way for the country to get long-delayed funding to avoid bankruptcy. Since plans for the buyback were announced last week, questions have swirled about whether it will tempt enough bondholders to cut Greek debt by a net €20bn - the target set by eurozone finance ministers and the International Monetary Fund. The buyback will be conducted through a modified Dutch auction that allows it to introduce an element of competition among investors to get the best price.Greece set a price range to buy back each of its 20 series of outstanding bonds with a spread of two percentage points - from a minimum of 30.2 to 38.1% and a maximum of 32.2 to 40.1% depending on the bond maturities. In such an auction, if a bondholder tries to get a price close to the upper limit there is a risk he or she may be left out if the buyback amount is filled at lower prices. There will be one settlement price for each series of bonds. Greek bonds eligible under the buy-back ranged from 25.15 to 34.41 cents in the euro at the close of trading on November 23, data showed. Athens said it would not spend more than €10bn on the buyback. Investors must declare their interest by December 7 and the expected settlement date is December 17. Eurozone officials said the bloc hoped Greece would be able to repurchase at least €40bn of its own bonds. Athens unveiled the structure of the buyback before a meeting of eurozone finance ministers, at which Greek Finance Minister Yannis Stournaras will brief his counterparts. Greece's lenders agreed last week that the bonds, which have a nominal value of €63bn, would not be purchased for more than the closing price on that date. The offer goes in theory also to holders of about €4bn of old Greek bonds, who refused to take part in a debt cut scheme in March. A  calculator on the buy-back shows that if the buy-back price was set at the November 23 closing prices, even a 50% participation rate would be enough for a successful deal  in this instance, Athens would have to spend just €8.7bn to buy back debt worth €31.5bn. For Athens to spend €10bn, it would have to buy back around 60% of the outstanding bonds. This could save Greece €39bn gross on the face value of the bonds and the interest payments due on them.

NEWS,02.12.2012

Osborne sticking with UK austerity plan

British finance minister George Osborne said on Sunday that he would stick with his deficit-reduction programme when he presents a half-yearly fiscal statement on Wednesday. The Chancellor of the Exchequer declined to comment more specifically on whether he would be able to meet debt targets, but stressed he did not believe Britain should borrow more or increase spending. At his "Autumn statement" on Wednesday, Osborne is expected to defend his stringent economic policies as the only credible way of solving the government's biggest political problem - its failure to deliver a strong recovery. "It's clearly taking longer to deal with Britain's debts, it's clearly taking longer to recover from the financial crisis than anyone would have hoped, but ... to turn back now ... would be a complete disaster for our country," he said in a BBC television interview. British media reported on Sunday that Osborne plans to cap the amount of tax relief high earners receive on their pension contributions alongside reining in the welfare budget. Osborne declined to comment on the reports, but did not reject the proposals directly when questioned in the interview. He also declined to say if the country's independent fiscal watchdog would show him still on track to eliminate Britain's underlying budget deficit within the next five years, or to have debt as a share of national income on a downward path by the 2015/16 tax year.

Merkel not ruling out Greek 'haircut'

German Chancellor Angela Merkel has not ruled out a so-called "haircut", or write-down, on Greek debt in the next few years, in an interview with a Sunday newspaper, marking an apparent softening in position.After being vehemently opposed to accepting a "haircut," Merkel told Bild am Sonntag that it could be considered from 2014 if Greece's financial situation improves, according to a pre-released article."If Greece one day again manages with its revenue without getting new debt, then we must look at and assess the situation. That is not the case before 2014/15 if everything goes according to plan," she told the paper.Opposition politicians have accused Merkel of playing down the need for a write-down of Greek debt holdings by public institutions such as other eurozone governments and the European Central Bank, because of federal elections expected to take place on September 22.In the Bild interview, Merkel contested that she had refused a "haircut" due to the looming elections."The current aid programme for Greece runs until 2014, for the achievement of certain budgetary goals we have given the Greeks two years more time until 2016," she said.Many in Germany consider a write-down of Greek debt holdings inevitable.But on Friday, Finance Minister Wolfgang Schaeuble said speculation on a "haircut" sent "the wrong incentive" to Greece because it reduced the pressure on the Athens government to enact structural economic reforms.Some eurozone states have said they would "not exclude" the possibility of writing off some debt from 2015 onwards.Merkel also said she favoured considering tougher sanctions for indebted eurozone states."In the long term I am definitely of the opinion that we consider how we develop in our law procedures for states which do not comply with their commitments," she said.Merkel also told Bild that she understood the scepticism of many of her compatriots over Greece but that she saw a determination in Athens to reorganise the country and that rescuing Greece from economic collapse was in Germany's best interests.On Friday she secured the vote from German lawmakers to release €43.7bn in aid to debt-wracked Greece agreed after tortuous talks between eurozone finance ministers.

UK over-50s ignorant about retirement

Britain's over-50s are in blissful ignorance of how little their pension pots will pay out and need an urgent financial health check if their retirements are to be as comfortable as they expect, an industry report said. Workers approaching retirement in the next 15 years need to see their pension pots grow by almost 80% to meet their expectations, the National Association of Pension Funds (NAPF) said on Friday. "Millions of people are within a decade of their state pension but have still not thought about how long their retirement might last," Joanne Segars, chief executive of the NAPF, said in a statement. The burden of managing a pension at retirement has increasingly fallen on employees, as defined contribution (DC) pensions, rather than final-salary schemes, become the more dominant form of retirement saving. The introduction of the government-backed auto-enrolment scheme where people are required to opt out rather than opt into retirement saving could lead up to 8 million additional workers being signed up for pensions, which will likely be DC pension memberships. Yet a third of workers aged 52 to 64 remain ignorant about what their private pension income may provide in retirement, while 59% of workers have never thought about how many years of retirement they need to finance, a report by the Institute for Fiscal Studies and supported by the NAPF said. Women in their 50s are living to an average of 88 - four years longer than expected - while men are living to 85, overshooting life expectancy by around two years, when compared with national projections of life expectancy, the report said. Annuities, which many British retirees buy to ensure a steady income, are meanwhile becoming more expensive, meaning people will expect their savings pots to generate a higher annuity income than it actually does. Private pension firms have also been accused of failing to disclose some of the costs they levy on customers' investment funds, leaving people unaware that their pension savings were being eroded by the charges. The NAPF represents 1 300 pension schemes in the UK with 16 million members and assets of around £900bn.

North Korea plans new rocket launch

North Korea said it would carry out its second rocket launch of 2012 as its youthful leader Kim Jong-un flexes his muscles a year after his father's death, in a move that South Korea and the US swiftly condemned as a provocation.North Korea's state news agency announced the decision to launch another space satellite on Saturday, just a day after Kim met a senior delegation from China's Communist Party in the North Korean capital of Pyongyang.China, under new leadership, is North Korea's only major political backer and has continually urged peace on the Korean peninsula, where the North and South remain technically at war after an armistice, rather than a peace treaty, ended the 1950 - 1953 conflict.No comment on the planned launch was available from Beijing's foreign ministry.In Washington, US State Department spokesperson Victoria Nuland condemned the launch plan as a provocative threat to the Asia-Pacific region that would violate UN resolutions imposed on Pyongyang after past missile tests."A North Korean 'satellite' launch would be a highly provocative act that threatens peace and security in the region," she said in a written statement."North Korea must abide by its international obligations under UN Security Council resolutions that clearly articulate what it can and cannot do with respect to missile technologies," said Pentagon spokesperson George Little.Seoul's foreign ministry called the move a "grave provocation". Japan's Kyodo news agency said Prime Minister Yoshihiko Noda had ordered ministries to be on alert for the launch."North Korea wants to tell China that it is an independent state by staging the rocket launch and it wants to see if the United States will drop its hostile policies," said Chang Yong-seok, a senior researcher at the Institute for Peace Affairs at Seoul National University.North Korea is banned from conducting missile or nuclear-related activities under UN resolutions imposed after earlier nuclear and missile tests. The country says its rockets are used to put satellites into orbit for peaceful purposes, but that assertion is not widely accepted outside of Pyongyang.Washington and Seoul believe that the impoverished North is testing long-range missile technology with the aim of developing an intercontinental ballistic missile capable of carrying a nuclear warhead.Pyongyang's threats are aimed, in part, at winning concessions and aid from Washington, analysts say.The failed April rocket launch took place to celebrate the 100th anniversary of the birth of North Korea founder Kim Il Sung and the latest test will take place close to the 17 December date of the death of former leader Kim Jong-il.It will also come as South Korea gears up for a 19 December presidential election in a vote that pits a supporter of closer engagement with Pyongyang against the daughter of South Korean dictator Park Chung-hee.The April test was condemned by the UN, although taking action against the North is hard as China refuses to endorse further sanctions against Pyongyang.North Korea is already one of the most heavily sanctioned states on earth thanks to its nuclear programme.Pyongyang has few tools to pressure the outside world to take it seriously due to its diplomatic isolation and its puny economy.The state that Kim Jong-un inherited last December after the death of his father boasts a 1.2 million-member military, but its population of 23 million, many malnourished, supports an economy worth just $40bn annually in purchasing power parity terms, the US Central Intelligence Agency asserts."The North's calculation may be that they have little to lose by going ahead with it at this point," said Baek Seung-joo of the Korea Institute for Defence Analyses in Seoul.Baek said the test planned for December would likely be no more successful in launching a satellite than the April one that crashed into the sea between China and North Korea after flying just 120km. "Kim Jong-un may be taking a big gamble trying to come back from the humiliating failure in April and in the process trying to raise the morale for the military," Baek said.North Korea's space agency said on Saturday that it had worked on "improving the reliability and precision of the satellite and carrier rocket" since April's launch.

NEWS,01.12.2012

Little apparent progress in US 'fiscal cliff' talks

With barely a month left before the 'fiscal cliff', US Republicans and Democrats have remained far apart in talks to avoid the across-the-board tax hikes and spending cuts that threaten to throw the country back into recession. While President Barack Obama visited a Pennsylvania toy factory to muster public support for tax hikes on the rich, portraying Republicans as scrooges at Christmas time, his primary adversary in negotiations, Republican House Speaker John Boehner, continued to describe the situation as a stalemate. The argument will resume on Sunday when Boehner, along with Obama's Treasury secretary, Timothy Geithner, and others, take to weekly political talk shows and pick up further steam next week with a possible confrontation in the House of Representatives between Democrats and Republicans over the timing of a vote on tax hikes. Lawmakers are nervously eyeing the markets as the deadline approaches, with gyrations likely to intensify pressure to bring the drama to a close. The markets, in turn watching the politicians, fell as Boehner spoke, but recovered afterward. It was a repeat of the pattern earlier in the week when the speaker offered a similarly gloomy assessment. The latest round of high-stakes gamesmanship focuses on whether to extend the temporary tax cuts that originated under former President George W Bush beyond their December 31 expiration date for all taxpayers, as Republicans want, or just for those with incomes under $US 250,000 , as Obama and his fellow Democrats want. After five days of increasingly confrontational exchanges, the work week drew to a close with an announcement by Democrats of a long-shot effort next week to force an early tax-hike vote in the Republican-controlled US House to break the deadlock. House Minority Leader Nancy Pelosi said she would undertake the rarely successful effort unless Boehner agreed by Tuesday to bring a bill to the floor allowing taxes on the wealthy to rise, something Boehner is highly unlikely to do until he is ready. "The clock is ticking," Pelosi said at a news conference. "The year is ending. It's really important with tax legislation for it to happen now. "We're calling upon the Republican leadership in the House to bring this legislation to the floor next week. "While Boehner offered no immediate response to Pelosi's threat, Cathy McMorris Rodgers of Washington state, recently elected by Republicans to be the fourth-ranking party leader in the House,in an interview not to expect any tax vote next week.Amid the competing statements from the two sides, there were some actual, albeit modest, signs of potential movement. Senate Minority Leader Mitch McConnell threw Republican proposals into the mix for reform of Medicare, the government health insurance program for seniors, which has exploded in cost in recent years and is a major contributor to the country's soaring deficit. McConnell of Kentucky told the Wall Street Journal in an interview that Republicans would agree to more revenue although not higher tax rates if Democrats agreed to such changes as raising the eligibility age for Medicare and slowing cost-of-living increases in the Social Security retirement program.Rodgers, in her Fox News interview, declined to completely rule out a much-discussed potential compromise in which Republicans would accept some increase in tax rates on the rich, but not to the level desired by Obama.More House Republicans although still just a handful expressed flexibility beyond that of their party leaders about considering an increase in tax rates for the wealthy, as long as they are accompanied by significant spending cuts. Most House Republicans refuse to back higher rates, preferring to raise revenue through tax reform. Obama, speaking in Pennsylvania, said he was encouraged by the shifting views of some Republicans, and urged House approval of a bill that has already cleared the Democratic-controlled Senate that would lock in the middle-class tax cuts and raise the rates for the rich. "If we can get a few House Republicans on board, we can pass the bill. I'm ready to sign it," Obama said. But neither he nor the other principals in the debate budged from their basic positions. Instead, Obama turned up the pressure on Friday, hitting the road to drum up support for his drive to raise taxes on the wealthy and warning Americans that Republicans were offering them "a lump of coal" for Christmas. In a visit to the Pennsylvania toy factory, Obama portrayed congressional Republicans as scrooges who risked sending the country over the fiscal cliff rather than strike a deal to avert the tax increases and spending cuts that begin in January unless Congress intervenes. "We already all agree, we say, on making sure middle-class taxes don't go up. So let's get that done. Let's go ahead and take the fear out for the vast majority of American families so they don't have to worry," Obama said at the Rodon Group factory, which makes K'NEX building toy systems as well as Tinkertoys and consumer products.In Washington, Boehner said Obama's plan to raise taxes on the rich was the wrong approach. "There is a stalemate. Let's not kid ourselves," the Ohio Republican said. "Right now we are almost nowhere."

Europe Is Divided AGAIN THIS Time It's Creditors vs. Debtors

The European Union used to be what psychologists call a "fantastic object," a desirable goal that fires people's imagination. I saw it as the embodiment of an open society -an association of nations which gave up part of their sovereignty for the common good and formed a union in which no nation would have a dominant position. The euro crisis is now threatening to turn the European Union into something fundamentally different. The member countries are divided into two classes creditors and debtors with the creditors in charge. Germany, as the largest and most creditworthy country, occupies a dominant position. As a result of current policies, debtor countries pay substantial risk premiums for financing their debt and this is reflected in their cost of financing in general. This has pushed the debtor countries into depression and put them at a substantial competitive disadvantage that threatens to become permanent. This is the result not of a deliberate plan but of a series of policy mistakes. Germany did not seek to occupy a dominant position and is reluctant to accept the obligations and liabilities that it entails. I have called this the tragedy of the European Union. Now, some recent developments give grounds for hope. The authorities are taking steps to correct their mistakes. I have in mind the June summit's decision to form a banking union, and the EU Central Bank's plan for unlimited intervention in government bond markets. Financial markets have been reassured that the euro is here to stay. This could be a turning point if it were reinforced by additional positive steps. Unfortunately, it has merely reinforced German resistance to further concessions. A distinguishing feature of the tragedy I am talking about is that it feeds on hope. Germany is willing to do the minimum but nothing more to hold the euro together. That is how the eurozone becomes permanently divided between creditors and debtors. This is such a dismal prospect that it must not be allowed to become reality. There must be a way to avoid it after all, history is not predetermined. When the European Union was only an idea, a fantastic object, it was conceived as an instrument of solidarity. Today, Europe hangs together out of grim necessity. That is not conducive to a harmonious partnership. The only way to reverse this seemingly inexorable fate is to recapture the spirit of solidarity.Since I am a fervent believer in the European Union as the embodiment of an open society, I have set up an Open Society Initiative for Europe OSIFE for short  and I have been looking for ways to achieve this goal.I realized that the best place to start would be where current policies have created the greatest human suffering. Clearly, that place is Greece. Within Greece, the fate of the many migrants and asylum seekers stuck there particularly resonated with me. Clearly, their plight cannot be separated from that of the Greeks themselves. An initiative confined to migrants would reinforce the hostility they face from some in the majority. The problem seemed intractable, and I couldn't figure out how to approach it. But I was in Stockholm recently to commemorate the centenary of Raoul Wallenberg's birth. This reawakened my memories of the Second World War the calamity that eventually gave birth to the European Union.Wallenberg was a heroic figure who saved the lives of many Jews by establishing Swedish protected houses in Budapest. During the German occupation of Hungary, my father was also a heroic figure. He helped to save his family and friends and others. He taught me to confront harsh reality rather than to passively submit to it. That is what gave me the idea. We could set up solidarity houses in Greece which could serve as community centers for the local population where migrants could also find food and shelter. There are already many efforts under way, and civil society is already heavily engaged, but the scale of the problem is overwhelming. I am talking about reinforcing existing efforts. The asylum policy of the European Union has broken down. Refugees have to apply in the country where they enter the EU, but the Greek government cannot process the cases, and some 60,000 refugees who sought to register have been put into detention camps here conditions are inhumane. Migrants who avoid registering and live in the streets are attacked by the hooligans of the Golden Dawn.Norway has expressed an interest in the fate of refugees in Greece and within the European Union. Sweden has made migration and asylum policy a priority. So Norway and Sweden are the primary candidates for supporting solidarity houses. Hopefully they would be joined by Germany and other member countries.Currently, the Golden Dawn is providing social services to Greeks while attacking the migrants. The initiative I propose would offer a positive alternative. It would be based on solidarity solidarity of Europeans with Greeks and Greeks with migrants. This would be a powerful demonstration of the spirit of solidarity that ought to infuse the European Union.

Walmart's New Health Care Policy Shifts Burden To Medicaid, Obamacare

 

Walmart, the nation’s largest private employer, plans to begin denying health insurance to newly hired employees who work fewer than 30 hours a week, according to a copy of the company’s policy.Under the policy, slated to take effect in January, Walmart also reserves the right to eliminate health care coverage for certain workers if their average workweek dips below 30 hours  something that happens with regularity and at the direction of company managers.Walmart declined to disclose how many of its roughly 1.4 million U.S. workers are vulnerable to losing medical insurance under its new policy. In an emailed statement, company spokesman David Tovar said Walmart had “made a business decision” not to respond to questions from and accused the publication of unfair coverage. Labor and health care experts portrayed Walmart’s decision to exclude workers from its medical plans as an attempt to limit costs while taking advantage of the national health care reform known as Obamacare. Among the key features of Obamacare is an expansion of Medicaid, the taxpayer-financed health insurance program for poor people. Many of the Walmart workers who might be dropped from the company’s health care plans earn so little that they would qualify for the expanded Medicaid program, these experts said.“Walmart is effectively shifting the costs of paying for its employees onto the federal government with this new plan, which is one of the problems with the way the law is structured,” said Ken Jacobs, chairman of the Labor Research Center at the University of California, Berkeley. For Walmart, this latest policy represents a step back in time. Almost seven years ago, as Walmart confronted public criticism that its emplyees coudn't afford its benefits, the company announced with much fanfare that it would expand health coverage for part-time workers. But last year, the company eliminated coverage for some part-time workers those new hires working 24 hours a week or less. Now, Walmart is going further. “Walmart likely thought it didn’t need to offer this part-time coverage anymore with Obamacare,” said Nelson Lichtenstein, director of the Center for the Study of Work, Labor and Democracy at the University of California, Santa Barbara. “This is another example of a tremendous government subsidy to Walmart via its workers.”In pursuing lower health care costs, Walmart is following the same course as many other large employers. But given its unrivaled scale, Walmart’s policies tend to influence American working conditions more broadly. Tom Billet, a senior consultant at Towers Watson, a professional services firm that works with large companies to develop benefit plans, said other companies are also crafting policies that will exclude some part-time workers from medical coverage. Billet portrayed the growing corporate interest in separating out part-time workers as a reaction to another aspect of Obamacare the new rules that require companies with at least 50 full-time workers to offer health coverage to all employees who work 30 or more hours a week or pay penalties.Several employers in recent months, including Darden Restaurants,owner of Olive Garden and Red Lobster, and a New York area Applebee's franchise owner, said they are considering cutting employee hours to push more workers below the 30-hour threshold.“In the past, firms were less careful about monitoring whether someone was full- or part-time,” Billet said, noting that some of his clients were planning to track workers’ hours more carefully. “I expect health plans like Walmart’s won’t be uncommon as firms adjust to this law.” For Walmart employees, the new system raises the risk that they could lose their health coverage in large part because they have little control over their schedules. Walmart uses an advanced scheduling system to constantly alter workers’ shifts according to store traffic and sales figures. The company has said the scheduling system improves flexibility and efficiency. But in recent interviews with The several workers described their oft-changing schedules as a source of fear that they might earn too little to pay their bills. Many said they have begged managers to assign them additional hours only to see their shifts cut further as new workers were hired.The new plan detailed in the 2013 "Associate’s Benefits Book" adds another element to that fear: the risk of losing health coverage. According to the plan, part-time workers hired in or after 2011 are now subject to an “Annual Benefits Eligibility Check” each August, during which managers will review the average number of hours per week that workers have logged over the past year. If part-time workers hired after Feb. 1, 2012, fail to reach the 30-hour threshold, they will lose benefits the following January, according to the book. Part-time workers hired after Jan. 15, 2011, but before Feb. 1, 2012, must work at least 24 hours a week to retain coverage and will also be subject to an eligibility check each year. Those hired before 2011 aren’t subject to the minimum hours requirements or eligibility checks.As for full-time workers under the plan, those who lose hours and slip to part-time at any point during the year will see their spouses’ health coverage dropped immediately. Those workers will also lose their dental and life insurance policies in the following pay period, according to the plan.Some Walmart workers who are excluded from the company’s health care plans are likely to become eligible for Medicaid under the Obamacare expansion, which aims to replace a patchwork of standards now set by individual states with one minimum federal threshold income below 133 percent of the federal poverty line, which for an individual currently comes to $14,856. However, the Supreme Court ruled earlier this year that the decision to expand the program is voluntary for the states. At least eight states, including Texas, have said they will not expand the program, which would leave Walmart workers there with one less option. Part-time workers who lose their Walmart insurance but earn too much to qualify for Medicaid should be able to buy insurance through the health care exchanges to be established under Obamacare  essentially, online marketplaces offering an array of health care plans. For workers who do qualify for health coverage under Walmart's new policy, the latest package represents an upgrade over previous plans. Walmart’s health plans began covering 100 percent of spine and heart surgeries this year at select hospitals and medical centers. They also include a smattering of preventative care services required by Obamacare. But the company’s plans still leave many workers facing significant financial distress in the event of major illness. Under the new policy, one major offering, the so-called Health Reimbursement Account Plan, costs nonsmoking workers $34.80 a month a seemingly affordable sum. Yet it comes with an annual deductible of $2,750, a hefty expense given that half of Walmart’s hourly workforce earns no more than $10 an hour. While a shifting of Walmart employees to Medicaid rolls may increase the burden on American taxpayers, it is likely to be a better deal for the workers themselves. “The packages Walmart is providing for low-income people aren’t offering very much coverage except for catastrophes,” said Linda Blumberg, a senior fellow at the Urban Institute, a left-leaning think tank. “It’s likely they’ll be better off going with a government-sponsored plan.”

NEWS,30.11.2012

US 'fiscal cliff': No deal in sight

Washington politicians have one month to step back from the so-called "fiscal cliff," across-the-board tax hikes and austerity-driven spending cuts likely to return the country to recession, and a top Republican declares there has been no real progress after two weeks of talks between President Barack Obama and a divided Congress. The president has called for settling the issue before Christmas and headed on Friday to Pennsylvania to campaign for his demand that any deal include higher tax rates on US couples earning more than $250,000 a year. He also wants to keep in place the smaller tax burden that lower income earners have had for about a decade. But Republican House Speaker John Boehner, after receiving details of the Obama plan in a private meeting on Thursday with Treasury Secretary Tim Geithner, said "no substantive progress has been made" in negotiations since Congress returned to work after the 6 November election. "Much to my disappointment, it wasn't a serious one," Boehner said on Friday of the proposal. Democrats have said that any delay was the fault of Republicans who refuse to accept Obama's call to raise tax rates on the richest Americans."There can be no deal without rates on top earners going up," White House press secretary Jay Carney said Thursday. The austerity measures that automatically would take effect 1 January unless a deal is made is the looming punishment for Washington's inability, or unwillingness, in recent years to deal decisively with the country's spending far more than it has been taking in. Politicians in both major US parties are showing no signs of giving up on the deep partisan divisions that have crippled legislative action in Washington despite Obama's strong victory for a second White House term.White House officials believe Obama's trip on Friday would build momentum for his case, even as Republicans describe it as an irritant and an obstacle to productive talks. Obama insists on higher taxes for the top 2% of earners and casts Republicans as an obstacle to a deal. Republicans have said they are open to new tax revenue but not higher rates. Obama said both sides need to "get out of our comfort zones" to reach an agreement. Obama toured and spoke at the Rodon Group manufacturing facility, showcasing the company as an example of a business that depends on middle-class consumers during the holiday season. The company manufactures parts for K'NEX Brands, a construction toy company.The uncertainty over whether the US can resolve the critical budget deadlock is beginning to increase jitters in stock markets in Europe, where eurozone countries have already returned to recessionary economies. European investor sentiment had been buoyed this week by upbeat reports on the US economy, including economic growth and consumer confidence. But markets failed to sustain their rally on Friday as trading became increasingly focused on the difficult talks between the White House and Congress.Economists warn that sending the US economy over the "fiscal cliff" would trigger a recession and cause a spike in already stubbornly high unemployment.To avoid the danger, Obama and Congress are hoping to devise a plan that can reduce future deficits by as much as $4 trillion in a decade, cancel the tax increases and automatic spending cuts and expand the government's ability to borrow beyond the current limit of $16.4 trillion.Officials on Thursday said the White House is seeking $1.6 trillion in higher taxes over a decade and an immediate infusion of money to aid the jobless and help hard-pressed homeowners.In exchange, the officials said, Obama would support an unspecified amount of spending cuts this year, to be followed by legislation in 2013 producing savings of as much as $400bn from popular benefit programs over a decade.In political terms, the White House proposal are nearly opposite what Republicans earlier lay down as their first offer, including a permanent extension of income tax cuts at all levels.Senate Majority Leader Harry Reid told reporters, "We're still waiting for a serious offer from Republicans."The White House also circulated a memo that said closing tax loopholes and limiting tax deductions a preferred Republican alternative to Obama's call to raise high-end tax rates would be likely to depress charitable donations and wind up leading to a middle-class tax increase in the near future.

EU set to fight internet tax at summit

European Union member states are preparing to fight as a bloc alongside the United States to prevent a move by Russia and countries in Africa to impose a levy on internet traffic and make it easier to track users' activities.The showdown over the policing and administration of the internet will take place at a meeting of the International Telecommunications Union in Dubai from Dec. 3-14, when the ITU's 193 member countries will meet to debate new net rules.The EU's 27 states are staunchly opposed to sweeping plans to regulate the internet, including proposals from Africa, Asia and the Middle East that governments should be able to trace the flow of Web-based traffic and introduce a tax on companies such as Google and Yahoo! if they deliver content to networks abroad.The United States, which plays a dominant role in administering the internet via ICANN, the Internet Corporation for Assigned Names and Numbers, is firmly opposed to any new restrictions, which it fears will limit innovation and commerce.It is backed in its stance by the EU, Canada, Australia, New Zealand, Mexico and other ITU-member countries. As well as having support from African countries, officials say Russia has backing for some of its proposals from China."The EU believes that there is no justification for such proposals," the European Commission, the EU's executive, said on Friday, saying it was the view of all 27 member states.Neelie Kroes, the European commissioner responsible for internet policy, says some of the proposals being made ahead of the ITU conference risk damaging the internet's evolution as a critical piece of global commercial infrastructure and a network for the free flow of information and data."The European Union's firm view is that the internet works," she said this week. "If it ain't broke, don't fix it."Leaked drafts of a proposal from Russia show it would like to have more say over internet traffic entering its networks, a proposal the United States has said is most troubling to them."Member states shall have the sovereign right to regulate... the national internet segment," Russia's proposal says.The US ambassador to the ITU, Terry Kramer, said Moscow's plans would give governments "the right to route traffic, to review content, and say that's all a completely national matter", a potentially profound limitation on speech and trade.Any agreements which would allow governments to shepherd traffic at their will threaten US business interests because most content on the internet either originates from, is stored in or routed via the United States.With some of the world's biggest and most innovative Web-based companies, from Google to Facebook, Twitter and Yahoo!, based in the United States, the country has the most to lose.While countries like Russia cite cyber attacks as a reason to monitor traffic, the EU see it as an excuse. "Some countries treat this as a euphemism for controlling freedom of expression," said a commission official.The EU is also alarmed by proposals to make content providers pay for having their services delivered abroad.As traditional phone revenues decline and internet access prices remain high, some countries argue that Google, Skype and Facebook ought to pay to have their traffic routed to that country, helping them fund the expansion of their networks.A leaked proposal from Cameroon says traffic reaching a network operator would incur "full payment." Kramer said some Arab states were also favourable to the idea.However, such proposals, known as 'sender party pays', are a potential boon to European telecoms companies, some of which annnounced in October that they supported such fees. Some European telecoms operators have or would like to have operations in developing countries such as Cameroon.The German operator Deutsche Telekom tried to promote the principle by comparing it to the first postage stamp. But in practical terms, extending the way the postal service makes money to the internet could mean that Google would pay each time someone in Cameroon read their Google-based email. Critics say such proposals are unworkable because traffic usually crosses half a dozen networks in several countries before it lands in a person's browser."The idea that you trace and bill all of this is ludicrous," said James Waterworth of the Computer and Communications Industry Association, a US group whose members include Facebook and Microsoft and which has an office in Brussels.Internet activists say such fees would 'Balkanise' the internet and cause an information black out in poorer countries."Who would be interested in providing content, if they have to pay for doing so?" said Markus Kummer of the Internet Society, a think-tank with offices in Geneva."And developing countries might be shooting themselves in the foot, as reversing the economic internet model might cut them off from accessing vital information."

Unemployment hits 19 million Europeans

Eurozone joblessness has reached a new high and the poor state of the economy is reducing inflation to near two-year lows, raising the prospect of further interest cuts by the European Central Bank. As the eurozone sinks into its second recession since 2009, the number of people out of work in the eurozone rose by 173 000 people in October to almost 19 million people unemployed, the EU's statistics office Eurostat said on Friday. That pushed joblessness to the highest level since the euro was introduced in 1999, at 11.7% of the working population, illustrating the human impact of a public debt and banking crisis that has reverberated across the world. Struggling companies and indebted households have also lost the confidence to spend and invest, evident in the annual consumer price inflation reading for November, which dropped to 2.2% in November from 2.5% in October. Consumer price inflation was at its lowest level since December 2010. One of the smallest rises in energy price inflation in a year helped to bring inflation to near the ECB's target of near, but just under 2%, opening the door to more rate cuts by the bank. The ECB last cut its main refinancing rate in July, to a record low of 0.75%, and economists in a Reuters poll this week were more divided than ever on whether there will be another rate cut early next year. "The outlook is still bleak," said Thomas Costerg, an economist at Standard Chartered in London, who sees an ECB rate cut in the first three months of next year. "We think that ECB President Mario Draghi will leave the door open for more stimulus in the coming months," he said. The cost of borrowing for banks and households in the eurozone is already at a record low of 0.75% and economists question whether further rate cuts will do much good, because of a lack of confidence among banks to lend. The central bank may decide to postpone a rate cut until after its next meeting on December 6 as it tries to keep markets focused on the benefits of its recently-announced plan to buy the bonds of governments in distress and keep their borrowing costs down. The bond-buying programme has calmed nervy investors who predicted the break-up of the eurozone just a few months ago and many are moving back into Italian and Spanish bond markets. But the eurozone's economic reality is one of a slowing German economy, stagnation in France, recession for Italy and Spain and an outright depression in Greece, with no signs of a quick recovery. Many economists blame the spending cuts implemented by almost all governments in the past three years to try to bring down their deficits that ballooned over the past decade. Portugal, for instance, shed more than one in 20 public sector jobs in the first nine months of 2012. But in a shift in tone, the International Monetary Fund and the European Commission say now that they may have been too aggressive in pushing for government cutbacks. The Commission is now advocating "growth-friendly fiscal consolidation". Draghi, speaking on French radio on Friday, tried to sound cautiously upbeat and has avoided the word "recession" in his public comments in recent weeks. "The recovery for most of the eurozone will certainly begin in the second half of 2013," he told Europe 1 radio. Yet even the European Commission's forecast of 0.1% growth next year looks optimistic and many banks, from Citigroup to Standard Chartered, expect the recession to continue and unemployment to keep rising. There are also wide divergences in unemployment in the eurozone, with the jobless rate at around 4% in Austria, 16% in Portugal and above 25% in Spain and Greece. "The number of unemployed, which better captures the shorter-term dynamics, is showing little sign of abating," said JP Morgan economist Greg Fuzesi. "Even with our expectation of a modest recovery next year, the unemployment rate could reach 12% quite soon," he said.