NEWS,28.01.2013

Sweden directs jobless youth to Greece

Sweden's government-funded employment agency on Monday launched a campaign encouraging unemployed Swedish youths to look for summer jobs in crisis-stricken Mediterranean countries including Spain and Greece.The jobs, most of them in the hotel and entertainment sectors, will mainly serve Swedish tourists."We hope our Swedish youths will get every single one of these jobs. These companies have had good experience of young Swedish workers," said Kristina Gaerdebro Johansson, a European Employment Services (EURES) advisor at the Swedish agency.Hundreds of jobs in Greece, Spain, Italy and Cyprus - all popular tourist destinations for Swedes - will be marketed at a special event organised by the country's employment agency and EURES in the southern city of Malmoe next week.The positions include football coaches, aerobics instructors and dancers at hotels and resorts around the Mediterranean. Some of the jobs require Scandinavian language skills, but not all of them, said Gaerdebro Johansson.Youth unemployment in Greece and Spain currently stands at more than 50%.Although Sweden's export-driven economy is beginning to feel the effects of Europe's economic woes, it has posted strong growth since making a quick recovery from the 2008 recession. It also has a low level of government debt.But youth unemployment has remained above the European average, reaching a seasonally adjusted 23.9% in December.Sweden's employment agency is offering to reimburse those who want to travel to the Mediterranean job fair from other parts of the country."This is a great opportunity if you want to enter the job market," Gaerdebro Johansson said.

WTO to probe Argentina trade disputes

The World Trade Organization on Monday established a dispute resolution panel to probe allegations of unfair trade practices lodged against Argentina by the United States, the EU and Japan.It also created a panel to look into Argentina's claim that the United States has imposed unfair barriers to its meat exports.In the first case, the three complainants have attacked Argentina's import licencing rules, which among other things require firms eager to export goods to the country to import Argentinian goods in exchange.One of the most well-known examples is that of German car maker Porsche, which was forced to commit to purchasing Argentinian wine and olive oil in order to get around 100 of its cars into the country.Canadian mobile phone maker RIM, which makes Blackberry, was meanwhile forced to open a production unit in southern Argentina in order to continue selling its phones.On Monday, Argentina told the WTO's Dispute Settlement Board that it had taken measures since January 25 to calm the tensions, stressing that it had repealed "all non-automatic import licences".The complainants however told the board they were "not convinced" by the measures taken by Argentina, a source close to the matter said. The WTO's dispute settlement board also established a second panel Monday to look into Argentina's claims that Washington has blocked meat imports.Buenos Aires has accused the United States of imposing measures over the past 11 years that have in effect closed off the US market to Argentinian beef.Argentina has also criticised the US for not recognising that the Patagonia region is free of the foot and mouth disease, despite a clean bill of health from the World Organization for Animal Health.The United States meanwhile insisted Monday that it was fully compliant with its obligations under the WTO agreements, but said US authorities were in the process of evaluating sanitary issues related to Argentinian products.According to WTO rules, the panels each have up to six months to report their findings.

Eurozone break up fades - survey

The prospects of a country being forced to leave the euro zone have all but vanished since the middle of last year, a survey released on Monday showed. The poll of 956 investors by research group Sentix showed just 17.2% expected one or more states to leave the 17-state bloc over the next 12 months.This was down from 25% in December, and a high of 73% in July 2012, a month after the index began."A euro breakup is almost no issue anymore," Sentix said in a statement. Since the start of the index, the European Central Bank has unveiled a plan to buy the bonds of stricken euro members, and Greece successfully completed a debt buyback, easing financial market tension and prompting policymakers to say the worst was over. Greece remained the country deemed most likely to exit the eurozone in the survey but the percentage of those who expect a "Grexit" within the next year fell to 13.9% from 22.5%  in December. For Cyprus, which applied for a bailout in June last year, the percentage fell by 2% points to 7.5%.

 

Gas drilling boon for ordinary US folks

Private landowners are reaping billions of dollars in royalties each year from the boom in natural gas drilling in some US states, transforming lives and livelihoods even as the windfall provides only a modest boost to the broader economy.In Pennsylvania alone, royalty payments could top $1.2bn for 2012, according to an analysis by The Associated Press that looked at state tax information, production records and estimates from the National Association of Royalty Owners.For some landowners, the unexpected royalties have made a big difference."We used to have to put stuff on credit cards. It was basically living from paycheck to paycheck," said Shawn Georgetti, who runs a family dairy farm in Avella, about 50 kilometers southwest of Pittsburgh.Natural gas production has boomed in many states over the past few years as advances in drilling opened up vast reserves buried in deep shale rock, such as the Marcellus formation in Pennsylvania and the Barnett in Texas.Nationwide, the royalty owners association estimates, natural gas royalties totaled $21bn in 2010, the last year for which it has done a full analysis. Texas landowners received the most in gas royalties that year, about $6.7bn, followed by Wyoming at $2bn and Alaska at $1.9bn.Exact estimates of natural gas royalty payments aren't possible because contracts and wholesale prices of gas vary, and specific tax information is private. But some states release estimates of the total revenue collected for all royalties, and feedback on thousands of contracts has led the royalty owners association to conclude that the average royalty is 18.5% of gas production."Our fastest-growing state chapter is our Pennsylvania chapter, and we just formed a North Dakota chapter. We've seen a lot of new people, and new questions," said Jerry Simmons, director of the royalty owners association, which was founded in 1980 and is based in Oklahoma.Simmons said he hasn't heard of anyone getting less than 12.5%, and that's also the minimum rate set by law in Pennsylvania. Simmons knows of one contract in another state where the owner received 25% of production, but that's unusual.By comparison, a 10 to 25% range is similar to what a top recording artist might get in royalties from CD sales, while a novelist normally gets a 12.5% to 15% royalty on hardcover book sales.Simmons added that for oil and gas "there is no industry standard," since the royalty is often adjusted based on the per-acre signing bonus a landowner receives. While many people are lured by higher upfront bonuses, a higher royalty rate can generate more total income over the life of a well, which can stretch for 25 years.Before Range Resources drilled a well on the family property in 2012, Georgetti said, he was stuck using 30-year-old equipment, with no way to upgrade without going seriously into debt."You don't have that problem anymore. It's a lot more fun to farm," Georgetti said, since he has been able to buy newer equipment that's bigger, faster and more fuel-efficient. The drilling hasn't caused any problems for the farm, he said.Range spokesman Matt Pitzarella said the Fort Worth, Texas-based company has paid "well over" $1bn to Pennsylvania landowners, with most of that coming since 2008.One economist noted that the windfall payments from the natural gas boom are wonderful for individuals, but that they represent just a tiny portion of total economic activity.For example, the $1bn for Pennsylvania landowners sounds like a lot, but "it's just not going to have a big impact on the overall vitality of the overall economy," said Robert Inman, a professor of economics and public policy at the University of Pennsylvania's Wharton business school."I think the issue is, what difference does it make for the individual families? "Pennsylvania's total gross domestic product in 2011 was about $500bn, according to the US Department of Commerce.Inman noted that total gas industry hiring and investment can have a far bigger effect on a state or region, and companies have invested tens of billions of dollars just in Pennsylvania on pipelines, infrastructure, and drilling in recent years.For example, in North Dakota the shale oil and minerals boom contributed 2.8% of GDP growth to the entire state economy in 2011, according to Commerce Department data.Another variable in how much royalty owners actually receive is the wholesale price of gas. That has dropped significantly over the past two years even as production has boomed in Pennsylvania and many other states. Average wholesale prices went from about $4.50 per unit of gas in 2010 to about $3 in 2012. For many leaseholders, that meant a decline in royalties.The boom in natural gas royalties has even led to niche spinoff companies that look for lease heirs who don't even know they're owed money.Michael Zwick is president of Assets International, a Michigan company that searches for missing heirs."It was an underserved niche," Zwick said of oil and gas leases. When a company can't find an heir to lease royalties, the money often goes to state unclaimed property funds.Zwick said he has found a few dozen people whose gas lease money was being held in escrow, including one who was owed about $250 000 in drilling royalties. But the average amount, he said, is far lower.

Wall Street execs fret about talent drain

As the titans of Wall Street banks gathered to network, gossip and consider the future of their beleaguered industry in Davos over the past week, one common worry emerged: who is going to take over when we leave?Some of the most ambitious minds in finance are leaving the industry after years of losses, scandals, bad press - and perhaps most importantly new regulations that have curbed some previously free-wheeling ways. The issue, executives say, is not pay, but how much scope there is to innovate and build businesses, which is why more bankers and traders are leaving the big Wall Street firms for Silicon Valley, joining private investment partnerships like hedge funds and private equity funds, or going into energy and other industries. David Boehmer, head of financial services in the Americas for the recruiting firm Heidrick & Struggles, said he hears this message from Wall Street employees looking to leave the industry. "I get people saying, 'I'm bored and I need to do something about it - this isn't a challenge anymore,'" he said. The problem is particularly acute for big banks such as Goldman Sachs Group or JPMorgan Chase & Co, several senior bank chief executives, managers and consultants told Reuters in interviews at the World Economic Forum here. "There is a massive talent drain in our business," said a senior Wall Street executive, who declined to be identified. For some of Wall Street's harshest critics this is likely to be perceived as good news. Former US Federal Reserve chairperson Paul Volcker and other experts have argued for years that innovation has little place in the financial sector, and having more conservative bankers and fewer heavy risk takers running Wall Street will reduce the chances of another blow-up like the financial crisis. It will also help to increase wealth generation in more important parts of the economy, such as manufacturing and software, they argue. The financial implosion in 2008 was partly triggered by the best and the brightest on Wall Street engineering products that helped inflate a massive housing bubble, and then magnified the losses that resulted. The financial sector globally received trillions of dollars of government support during the worst of the crisis, and new regulations are designed to ensure that bailouts are not necessary in the future. But many of the biggest global banks have gotten only bigger, making them potentially even more dangerous to the financial system. And having talented executives who understand complicated financial products and know how to control risks will become even more important, executives say. "It will become more of a problem five or 10 years down the road, but ultimately someone is going to have to manage these beasts," the Wall Street executive said. It isn't difficult to find examples of the exodus from big banks. After nearly 15 years in finance- with stints at American International Group, Barclays Capital and PineBridge Investments- Jacques-Philippe Piverger left Wall Street in 2011 to launch a company called Micro Power Design, which makes solar-powered lamps. Piverger's ultimate goal is to get the devices into the hands of poor people in developing countries whose access to electricity is limited. "Isn't it cool?" he asked as one of the lamps was placed on the bar of the posh Belvedere Hotel in Davos. Piverger was well-paid in finance but said his career had left him wanting. His startup gives him the ability to "address business and societal and environmental imperatives from under one roof," he said. Another example is the Twitter-linked tech startup Dataminr, which is staffed by ex-employees from Wall Street firms, including Mark Dimont, who left Morgan Stanley last year to head a business development team there. Of course, there have been previous waves of departures to hedge funds as bankers and traders have sought to strike out on their own - or to make more money - but this time the departures appear to be broader in nature. The departure of employees may force Wall Street to consider a wider range of people for positions. Heidrick & Struggles' Boehmer gave a presentation to a group of young professionals in Davos about his biggest challenge recruiting for big banks these days: getting executives to think creatively when filling positions. In the presentation - called "Hiring an oddball" - Boehmer described how hard it is to get bank executives to hire creative and "quirky" leaders who do not "fit in" with the prototypical suited-up Wall Street mold, but who could help revolutionise the industry. Instead, those quirky types are sought by Silicon Valley, and they may be happier there. Many prefer the laid back atmosphere, not to mention the challenges of building a business, and the promise of lucrative rewards at companies like Google, Facebook and smaller startups, Boehmer said. "Banks are not getting top-level talent out of universities anymore, so in 10 to 15 years, there could be a big problem when it comes to leadership at the senior level of these firms," Boehmer said. "They're seeing big gaps in talent." Boehmer said he performed a search for a technology position at a major investment bank, calling on candidates from Silicon Valley who might be lured to New York with mega-paychecks. He was denied by everyone he approached, he said. On the flip side, Heidrick & Struggles also did a search for a mobile-payments company on the West Coast that was looking for someone with financial expertise but offered just one-quarter of the pay. In that case, "we got tons of applicants," said Boehmer. Jack Dunn, president and CEO of FTI Consulting, recalled a recent conversation with a friend's son who is about 35 years old and works at a major Wall Street bank. Despite having a lucrative pay package and senior title, all the son talked about was finding an exit strategy, Dunn said. "When I was young and didn't know any better, I would have thought it was a dream job," said Dunn, a former investment banker. "It's a problem because we're going to need someone to pick up the pieces, and a lot of the best people are leaving these firms."

Japan forecasts 2.5% growth in 2013

Japan on Monday said the world's number three economy was on track to expand 2.5 percent in the fiscal year starting in April, thanks to fresh stimulus and a recovery in overseas markets.Prime Minister Shinzo Abe's cabinet approved the forecast higher than an estimate of one-percent growth for the current year to March on Monday morning, government officials said.The estimate is slightly higher than those from economists who have also upped their outlook on the back of a weaker yen and new stimulus measures, Dow Jones Newswires reported."We are forecasting that the economy will recover as the global economy is expected to pick up gradually, while we're also expecting a steady recovery in demand and an increase in jobs" at home, Chief Cabinet Secretary Yoshihide Suga told a press briefing.The government's top spokesman warned that several factors could impact the final growth figure, including swelling public debt and fluctuations in the yen, a key factor for the country's trade picture.But Economic revitalisation minister Akira Amari said he was confident the new target would be hit, telling Jiji Press: "Overseas risks are decreasing."Last week, the Bank of Japan raised its growth forecast for the same fiscal year to 2.3 percent from a previous 1.6 percent estimate, as it announced an open-ended asset buying programme and new inflation target aimed at ending the deflation that has haunted the economy for years.Abe, who took office late December after a landslide national election victory, unveiled a 20.2 trillion yen ($222 billion) stimulus package this month in the latest bid to stoke growth in the limp economy. The figure also includes local government and private-sector spending.Tokyo's new forecast will be used to produce a fresh budget, with Abe's cabinet set to endorse 92.6 trillion yen in spending on Tuesday, Japanese media reported.