NEWS,14.11.2012

Anti-austerity strikes sweep Europe

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

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

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

Who will be on Obama's new dream team?

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