NEWS,19.1.2013

Obama kicks off inauguration weekend

President Barack Obama on Saturday was heading up a national day of service, kicking off a whirlwind weekend of inauguration events that mark the end of his historic first term and the start of his second. Obama added the day of service projects in 2009 and hopes it will become a tradition for future presidents. He and first lady Michelle Obama planned to volunteer in the Washington area, as did Vice President Joe Biden and his wife, Jill.The president will be officially sworn in for his second term on Sunday in a small ceremony at the White House. He'll take the oath of office again on Monday before hundreds of thousands of people on the National Mall, followed by the traditional parade and formal balls. Thousands of workers and volunteers were making final preparations for the celebration. Hotels and government buildings along the parade route were adorned with red, white and blue bunting. White tents, trailers and generators lined the Mall.Yet there is decidedly less energy surrounding Obama's second inauguration than there was in 2009. That history-making event drew 1.8 million people for the swearing-in of the nation's first black president. This time, Obama takes the oath of office following a bruising presidential campaign and four years of partisan fighting. He's more experienced in the ways of Washington. He has the gray hair and lower approval ratings to show for it.For at least the inauguration weekend, the fiscal fights and legislative wrangling will be put aside in favour of pomp and circumstance.The White House did not say in advance what Obama's service project would be. In 2009, he helped spruce up a shelter for homeless teens in one of Washington's porter neighbourhoods then visited wounded soldiers at Walter Reed Army Medical Centre.In an effort to expand the day of service, former first daughter Chelsea Clinton was headlining a volunteer summit on the Mall. The inaugural committee organised volunteer events in all 50 states.

The Re-emergence of Europe: Why Exiting the Euro Is a Bad Idea

At the height of Europe's debt and banking crisis it seemed temptingly easy to simply jettison the euro altogether and opt for national devaluation. Sometimes, if a country's currency is overvalued in real terms and it looks like the current account is going to be in deficit for the foreseeable future, devaluation can make sense. But the fallacy put about was that this process would be relatively easy and could be done without too much collateral damage to the rest of Europe. This fallacy only served to exacerbate the crisis in 2010 and 2011, creating unnecessary, time-wasting and distracting noise around the policy options. An overwhelming number of economists, international civil servants and policy-makers argue that a fragmentation of the Eurozone would cause a new depression and massive wealth destruction around the world. It would also end the period of economic integration that has characterized world politics since the end of the Cold War. All banks that have looked at the implications of a euro break-up reach roughly similar conclusions. For example, Swiss bank UBS estimates that it would cost each southern European economy up to 40 percent of their gross domestic product (GDP) in the first year. And ING predicts that the Eurozone as a whole, including Germany, could see a 9 percent drop in GDP in the first year following break-up. In short, the cost of devaluation would far exceed the supposed benefits. Here is why:If even one country, large or small, were to leave the euro, the Eurozone would effectively rupture. The important founding notion of solidarity would be broken. Old rivalries could be reignited. If a highly productive economy such as Germany were to exit, it would mark the end of a 60-year commitment to a stable Europe. If a less productive economy exited, it would almost instantly become a pariah, exporting its pain to its neighbours.Switching back to an old currency would also be a technical challenge and have to be done quickly. Who would set the exchange rate? New coins would have to be minted, new currency printed and new interest rates set by the central bank. Everything that was paid in euros from national debt to teachers' salaries would have to be switched back as quickly as possible to avoid financial chaos. Unravelling a system that took three years to put in place would be much harder than people think. There would probably be a run on the banks, as depositors stampeded to withdraw their money, fearing for the value of their savings. Governments would be forced to impose withdrawal limits. Legal challenges and a likely credit crunch would follow, if Argentina's forced devaluation in 2002 is anything to go by. Investors would sell off assets and dump the country's bonds.In addition, the government would almost certainly default on its foreign euro-denominated debt, leading to possible bank collapses at home and across the rest of Europe; such is the interdependence of the banking system. Access to international capital markets would be denied possibly for years forcing the country to bring its budget into balance immediately. The one potential advantage is that its debt, now redenominated in the new currency, might be significantly lower. But while a devalued currency might make exports cheaper and therefore more attractive to foreign buyers, imports would become more expensive and cause a decrease in real incomes. It may improve the current account position temporarily, but it will not necessarily lead to longer term growth. Devaluation does not address the fundamentals of competitiveness. Restructuring the economy over the long term cannot be avoided.Apart from all this, there is no legal framework for a member country to re-establish its own currency or for one member to expel another. Leaving would have far-reaching implications for a country's politics, finances, economy, society and future.

Maduro active in Chavez's absence

Venezuela's vice president stepped into the shoes of ailing President Hugo Chavez in a flurry of public events on Friday, working to maintain an image of government continuity after more than five weeks of unprecedented silence from the normally garrulous president.Vice President Nicolas Maduro and other Cabinet ministers have striven to assure a nervous public that Chavez's administration is firmly in charge even as the opposition challenges its legitimacy. Chavez has been out of sight in Cuba since undergoing cancer surgery on December 11.Among three televised events held nationwide on Friday, Maduro helped opened a school in Chavez's home state of Barinas alongside the president's elder brother, Adan, who is the state's governor."We're all Chavez. We have to feel that way," Maduro said during the school visit. "We all love Chavez from our hearts."The vice president, whom Chavez designated last month as his chosen successor, also visited an agricultural training centre in Lara state, where he insisted on the importance of "socialist efficiency". He then spoke to National Guard troops in western Zulia state, blaming materialistic values for exacerbating crime. A day earlier on Thursday, Maduro presided over the inauguration of a housing project in Caracas.Oil Minister Rafael Ramirez gave an update on the government's efforts to build new public housing for the poor, saying more than 400 000 homes are currently under construction nationwide. "All the programmes of the revolution continue and will continue," Ramirez told reporters on Friday. "The revolutionary government hasn't stopped, not one minute. "Opposition leaders have said the government violated the constitution by indefinitely postponing Chavez's swearing-in past January 10, a stance that has been dismissed in a ruling by the Supreme Court. Meanwhile, a president known for speaking and singing on television for hours at a time has not uttered a word or appeared on television since December 10. Even his popular and normally busy Twitter account has gone dark since early November. Maduro and other government leaders don't enjoy anywhere near the level of public adoration that Chavez does, but the president's followers have still embraced him as his anointed stand-ins. Critics note that while many Venezuelans remain on edge awaiting news of Chavez's condition, the government faces serious challenges ahead. The opposition newspaper Tal Cual headlined an editorial by journalist Fernando Rodriguez on Monday saying Venezuela is now a "headless country"."Who's in charge in this country?" Rodriguez asked. He noted that Venezuela is being battered by 20 percent inflation, shortages of some types of food and that hundreds were murdered last month during the holidays.Rodriguez wrote that as he sees it, "The country is standing still."