NEWS,30.09.2012

Wall Street: Spain, central bankers, US jobs

Wall Street will open October with a busy week, highlighted by low expectations for global manufacturing data and the US jobs report. Any positive surprises may help lift the market.Spain is the wild card. And if it's played well, then the bulls might dance.The S&P 500 finished its third positive quarter in the last four on Friday, despite suffering its largest weekly percentage decline since June. For the past three months, the S&P 500 gained 5.9% - its best third quarter since 2010. In contrast, the index was down 1.3% for the week.The benchmark S&P 500 earlier this month reached its highest level since late 2007. Yet uncertainty remains over whether stocks can hold their gains against the headwinds of a struggling economy. That explains, in part, the retreat over the last several days.The S&P 500 hit a high of 1474.51 in mid-September before pulling back by a bit more than 2%. A run at 1500 seems possible, but the flurry of economic and world events ahead probably will prevent a major advance in the coming week.Bulls are betting that last week's Spanish budget proposals will be a preamble to a bailout request by Mariano Rajoy's government. The move would be seen as a first step to get the finances of the euro zone's fourth-largest economy in order and would clear some of the market uncertainty regarding the euro zone crisis.Monetary policy is also on the list of market catalysts this week. Federal Reserve Chairman Ben Bernanke is scheduled to speak today and the minutes of the latest FOMC meeting are set for release on Thursday. The week's agenda includes meetings of the European Central Bank, the Bank of England and the Bank of Japan.Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin, said he believes "we could see a rebound" this week "if we get some of the stars aligning and have Spain ask for a bailout, the ECB announcing favourable terms for that bailout, and if we see the Bank of Japan announce further monetary intervention."If Spain and the ECB don't deliver, we could set ourselves up for a further lateral move in the markets," Jacobsen added. "A negative would be if Rajoy flat-out denies that they need a bailout."The ECB and BOJ are set to meet on Thursday, with the Bank of Japan's meeting extending until Friday.Factories, jobs and the US election Chinese factory and business conditions data will kick off a numbers-heavy calendar for markets. Manufacturing PMI, due on Monday, is expected to show a second straight month of contraction.A snapshot of US manufacturing activity will be provided today when the Institute for Supply Management releases its September index. The September ISM reading is expected to show another month of contraction, but at a slightly slower pace than in August. On Wednesday, the ISM will release its US services-sector Purchasing Managers' Index, which could show a slight deceleration in the pace of growth in the non-manufacturing sector."We have Chinese economic data over the weekend, and we'll see how markets react on Monday," said Wasif Latif, vice president of equity investments at San Antonio, Texas-based USAA Investment Management."It seems like the market is bracing for bad numbers, meaning if they're not as bad, it could be market-positive," Latif said.Non-farm payrolls for September, due on Friday, are forecast to gain 115,000, while the US unemployment rate is seen ticking up 0.1% from August to 8.2% in September.The jobs data will come on the heels of the first of three US presidential debates, scheduled for Wednesday night.With just one month to go before election day on November 6, Wall Street will watch the economic data more closely than it usually does. In a year when the incumbent president is campaigning for a second term, the country's economic numbers tend to become more positive as election day approaches.The US stock market also tends to gain in years when incumbents are re-elected, according to the Stock Trader's Almanac.For the year, the Dow Jones industrial average is up 10%, while the Standard & Poor's 500 Index is up 14.6% and the Nasdaq Composite Index is up 19.6%.Recent poll numbers point to a strengthening lead by President Barack Obama, but a weak payrolls reading could give some hope to Republican challenger Mitt Romney."If Romney doesn't turn the ship with a very strong (debate) performance, the president is going to win," said Jack de Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire.He said the trend in the polls has taken away some of the market uncertainty regarding the presidential election. He added that an ECB- or Spain-related headline out of Europe on Thursday could overcome almost anything that would happen Wednesday night during the debate."I think the market is coming to terms with the fact the president is ahead, and unless something significant changes, (he) will prevail.

France's Hollande faces protests over EU fiscal pact

Thousands have marched through Paris to protest against a European fiscal pact, the first major display of public anger to face President Francois Hollande since his May election.The march organised by the Left Front coalition drew trade unionists, far-left sympathisers and other opponents of the EU accord, two days before lawmakers start to debate a draft law of the budget pact in the lower house of parliament.The budget discipline pact, which Hollande supports, is expected to pass in both houses of parliament thanks to support from Socialist lawmakers helped by advocates of fiscal discipline in the centre-right opposition.But the vote has exposed rifts in Hollande's ruling coalition, with far-left allies and Greens planning to vote against it in a challenge to the increasingly unpopular Socialist leader's authority.If Hollande has to rely on opponents to pass the pact, the vote could deepen the rift in his alliance and embolden left-wing allies seeking a change of course from strict adherence to European deficit targets."To him (Hollande), this vote was a formality that simply needed to be rushed through," said Jean-Luc Melenchon, a fiery leftist orator who ranked fourth in an April presidential vote."Now he will understand this is not the case, that in France and in the rest of Europe there is an organised opposition to this pact and to all austerity policies."Wearing his signature red scarf, Melenchon marched at the head of protesters among giant banners bearing slogans such as "Francois Hollande, We Don't Want Your Treaty" and "In Greece and in France, Let's Fight Against Finance".It was the latest in a series of protests across southern Europe this week as tens of thousands took to streets in Spain, Italy, Greece and Portugal to voice their anger over hardship imposed by austerity policies.For Hollande, the outcry from many people who voted him into power highlights the difficulty of pleasing a largely left-wing support base even as he shuns painful cuts to welfare programmes.A 2013 budget unveiled on Friday shaves 30 billion euros off the public deficit, largely through tax increases on big businesses and the wealthy. But it avoids the type of painful austerity measures imposed elsewhere in Europe.Efforts to preserve the generous public safety net have done little to preserve Hollande's approval rating, which has plummeted since his election, hitting a low of 43 percent in one poll last week."This treaty will considerably worsen the situation in the European Union and in France," said one protester, Pierre Khalfa. "We can already see that austerity policies in Europe are leading to recession, so we need to start a movement against these policies, which will lead our country into a wall."Left Front organisers said some 40,000 people joined the Paris protest. Police declined to provide an estimate.

Economic protests in Spain, Portugal

Tens of thousands of Spaniards and Portuguese rallied in the streets of their countries' capitals on Saturday to protest enduring deep economic pain from austerity measure, and the demonstration in Madrid turned violent after Spaniards enraged over a long-lasting recession and sky-high unemployment clashed with riot police for the third time in less than a week near Parliament.The latest violence came after thousands of Spaniards who had marched close to the Parliament building in downtown Madrid protested peacefully for hours. Police with batons later moved in just before midnight to clear out those who remained late because no permission had been obtained from authorities to hold the demonstration.Some protesters responded by throwing bottles and rocks. An Associated Press photographer saw police severely beat one protester who was taken away in an ambulance.Spain's state TV said early on Sunday that two people were hurt and 12 detained near the barricades erected in downtown Madrid to shield the Parliament building. Television images showed police charging protesters and hitting them with their batons, but the violence did not appear as severe as a protest on Tuesday when 38 people were arrested and 64 injured.Earlier, the boisterous crowds let off ear-splitting whistles and yelled "Fire them, fire them!" referring to the conservative government of Prime Minister Mariano Rajoy, and venting their anger against tax hikes, government spending cuts and the highest unemployment rate among the 17 nations that use the euro currency.Freezing salariesOn Friday, Rajoy's administration presented a 2013 draft budget that will cut overall spending by $51.7bn, freezing the salaries of public workers, cutting spending for unemployment benefits and even reducing spending for Spain's royal family next year by 4%.Pablo Rodriguez, a 24-year-old student doing a master's in agricultural development in Denmark, said the austerity measures and bad economy mean most of his friends in Spain are unemployed or doing work they didn't train for.He doubts he will put his education to use in Spain until he is 35 or 40, if ever, will probably get job abroad and stay."I would love to work here, but there is nothing for me here," Rodriguez said. "By the time the economy improves it will be too late. I will be settled somewhere else with a family. One of the disasters in Spain is they spent so much to educate me and so many others and they will lose us."Madrid authorities put the number of protesters at 4 500 though demonstrators said the crowd was larger. In neighbouring Portugal, tens of thousands took to the streets of Lisbon on Saturday afternoon to peacefully protest against even deeper austerity cutbacks than Spain has imposed.Retired banker Antonio Trinidade said the budget cuts Portugal is locked into in return for the nation's $101bn bailout are making the country's economy the worst he has seen in his lifetime. His pension has been cut, and he said countless young Portuguese are increasingly heading abroad because they can't make a living at home.Robbing the people"The government and the troika controlling what we do because of the bailout just want to cut more and more and rob from us," Trinidade said, referring to the troika of creditors -the European Commission, the European Central Bank and the International Monetary Fund. "The young don't have any future, and the country is on the edge of an abyss. I'm getting toward the end of my life, but these people in their 20s or 30s don't have jobs, or a future."In Spain, Rajoy has an absolute majority and has pushed through waves of austerity measures over the last nine months - trying to prevent Spain from being forced into the same kind of bailouts taken by Portugal, Ireland and Greece. But the country has an unemployment rate of nearly 25%, and the jobless rate is more than 50% for those under age 25.Investors worried about Spain's economic viability have forced up the interest rate they are willing to pay to buy Spanish bonds.Finance Minister Cristobal Montoro said on Saturday that the budget cuts for next year were necessary to ease market tensions and try to bring down high interest rates Spain must pay to get investors to buy its bonds.

NEWS,29.09.2012

US embassy warning: Philippines on alert

Philippine security forces were on stepped-up alert on Saturday after the US embassy issued an emergency advisory about an alleged threat against Americans in the capital."As a matter of precaution, we have augmented security," deputy presidential spokesperson Abigail Valte said. "Police visibility has been heightened."The US embassy said in its advisory that the "threat against American citizens in metropolitan Manila ... has been detected by reliable security forces" but it did not give details on the nature of a possible attack."This threat remains in effect until October 10," the embassy said in the advisory posted on its website on Friday.Britain, Australia and Canada also issued warnings to their citizens, citing the US advisory."Any attack could be indiscriminate, and we advise British nationals to exercise particular caution and extra vigilance in places frequented by expatriates and foreign nations," Britain's advisory said.Australia stressed the need for its citizens to avoid travelling to the conflict-wracked southern region of Mindanao, and Canada urged its citizens to be "extremely vigilant and increase their personal security awareness"."Bomb attacks could occur at any time in Manila and other key cities," Canada said in its advisory. "Targets could include places frequented by foreigners, such as large shopping malls and convention centres."Philippine police earlier stepped up security at the US embassy in Manila after violent protests in several countries over a US amateur film considered insulting to Islam.

Last Western detainee leaves Gitmo

The last Western detainee held at the Guantanamo Bay US military prison has returned to Canada after a decade in custody and has been transferred to a maximum security prison in Canada where he awaits parole, Canada's public safety minister said on Saturday.Vic Toews said that 26-year-old Omar Khadr arrived at a Canadian military base on a US government plane early on Saturday and was transferred to the Millhaven maximum security prison in Bath, Ontario.Khadr pleaded guilty in 2010 to killing a US soldier in Afghanistan and was eligible to return to Canada from Guantanamo Bay last October under terms of a plea deal. Khadr was 15 when he was captured in 2002 in Afghanistan, and has spent a decade at the Guantanamo prison set up on the US naval base in Cuba to hold suspected terrorists after the September 11, 2001 attacks. He received an eight-year sentence in 2010 after being convicted of throwing a grenade that killed Army Sergeant 1st Class Christopher Speer during a 2002 firefight.Toews noted that the US government initiated the transfer and suggested that Canada had little choice but to accept him under Canadian law."Omar Khadr is a known supporter of the al-Qaeda terrorist network and a convicted terrorist," Toews said. "Omar Khadr was born in Canada and is a Canadian citizen. As a Canadian citizen, he has a right to enter Canada after the completion of his sentence."John Norris, Khadr's Canadian lawyer, has said Khadr would be eligible for parole as early as the spring of 2013. It will be up to Canada's national parole board to release him, Toews said."I am satisfied the Correctional Service of Canada can administer Omar Khadr's sentence in a manner which recognises the serious nature of the crimes that he has committed and ensure the safety of Canadians is protected during incarceration," Toews said.

Iran condemns US for taking group off terror list

Maryam Rajavi, President-elect of Iranian opposition party National Council of Resistance of Iran, smiles as she attends an international conference on Iran policy in Brussels. Maryam Rajavi, the Paris-based head of the exiled opposition group, said in an interview that she hopes the organization can now have the ear of the world's diplomats to help bolster its bid to overthrow Iran's clerical regime. She stressed that its goal was to replace the Islamic Republic with a democratic government Iran condemned on Saturday the Obama administration for taking an Iranian militant group formerly allied with Hussein off the U.S. terrorism list, saying it shows Washington's "double standards."The Mujahedeen-e-Khalq (MEK), which began as a guerrilla movement fighting Shah Mohammed Reza Pahlavi, helped overthrow the monarch in 1979 then quickly fell out with the Islamic Republic's first leader, Khomeini. It fought in the 1980s alongside Saddam's forces in the eight-year Iran-Iraq war but disarmed after the U.S. invasion of Iraq in 2003.The State Department delisted the group on Friday, meaning that any assets the MEK has in the United States are unblocked and Americans can do business with the organization. On Saturday, at their Paris headquarters, MEK members gathered to celebrate, tossing flower petals and displaying photos of members killed in the past 15 years."We call on the international community to respect the will of the Iranian people for a regime change in Iran," Maryam Rajavi, the Paris-based head of the exiled opposition group, said Saturday.Iranian State TV criticized the decision, saying that the U.S. considered the MEK "good terrorists" and claims Washington is using the group to work against Tehran. State radio said the move highlights President Barack Obama's anti-Iranian sentiments."There is much evidence of the group being involved in terrorist activities. Delisting them shows America's double standard policy on terrorism," state TV said. The U.S. distinguishes between "good and bad terrorists" and the MEK are now "good terrorists because the U.S. is using them against Iran," the report also said, adding that Washington and Israel use the group to spy on Iran's nuclear program.The U.S. and its allies accuse Iran of using its civilian nuclear program as a cover to develop nuclear weapons. Iran has denied the claims, saying the program is peaceful and is intended for electricity generation and scientific research.The State Department said the MEK hasn't committed terror for more than a decade. The group has also complied with demands that over 3,000 of its once-armed members abandon their base in Iraq near the Iranian border for a camp outside Baghdad, an essential step to ending their decades-long presence in Iraq.The group claims it is seeking regime change through peaceful means, aiming to replace Tehran's clerical system with a secular government.However, a senior State Department official suggested that removing MEK from the U.S. terrorist list does not translate into a shared common front against the Islamic Republic. The official said Washington does not view MEK as an opposition movement that can promote democratic values in Iran. The official on Friday briefed reporters on condition of anonymity because he wasn't authorized to speak publicly on the matter.In a rare interview on Friday, Rajavi said "the most important impact ... will be seen inside Iran.""The balance of power is going to change. For example, the first message for the Iranian people will be they won't fear increasing their activity and increasing their demonstrations," she said. The fear "will evaporate ... and that will lead to the expansion of anti-regime activities within Iran."Iran says MEK is responsible for the deaths of more than 12,000 Iranians over the past three decades, including senior government officials.The MEK spent huge sums of money over years lobbying for removal from the U.S. terror list, holding rallies in European capitals and elsewhere that featured luminaries like former Homeland Security Secretary Tom Ridge from the administration of George W. Bush. Former House Speaker and presidential candidate Newt Gingrich was among those recently welcomed by the MEK to Paris.The group was protected in Iraq under Saddam Hussein, but its members are disliked by the new Iraqi government, dominated by Shiite Muslims like those in Iran.The United States had insisted the MEK's members leave Camp Ashraf, their home in Iraq, as a condition for removal from the terrorist list. All but several hundred militants are now located in Camp Liberty, a former U.S. base outside Baghdad, looking for placement in third countries.The MEK was removed from the European Union's terrorist list in 2009.

NEWS,25.09.2012

Spain prepares further austerity measures

Protesters clashed with police in Spain's capital today as the government prepares a new round of unpopular austerity measures for the 2013 budget that will be announced tomorrow. Thousands gathered in Neptune plaza where they planned to form a human chain around parliament, surrounded by barricades, police trucks and more than 1500 police in riot gear.Television images showed the police beating some protesters with truncheons, in a brief, tense stand-off one block from parliament as police trucks tried to divide the crowd in two.The protest, promoted over the Internet by different activist groups, was younger and more rowdy than recent marches called by labour unions. Protesters said they were fed up with cuts to public salaries and health and education."My annual salary has dropped by 8000 euros and if it falls much further I won't be able to make ends meet," said Luis Rodriguez, 36, a firefighter who joined the protest. He said he is considering leaving Spain to find a better quality of life.With this year's budget deficit target looking untenable, the conservative government is now looking at such things as cuts in inflation-linked pensions, taxes on stock transactions, "green taxes" on emissions or eliminating tax breaks.The 2013 budget is the second one conservative Prime Minister Mariano Rajoy has had to pass since he took office in December. Spain must persuade its European partners that it can cut the budget shortfall by more than 60 billion euros by 2014.Rajoy has already passed spending cuts and tax hikes worth slightly more than that over the next two years, but half-year figures show the 2012 deficit target slipping from view as tax income forecasts will not be hit due to economic contraction.Spain is at the centre of the euro zone debt crisis on concerns the government cannot control its finances and those of highly indebted regions, bitten by a second recession since 2009 which has put one in four workers out of a job.Running out of options Half-year deficit data indicate national accounts are already on a slope that will drive Spain into a bailout. The deficit to end-June stands at over 4.3% of gross domestic product, including transfers to bailed out banks, making meeting the 6.3 percent target by the end of the year almost impossible.Yesterday, the treasury ministry said the central government deficit to end-August had reached 4.77% of GDP, already above its year-end target of 4.5% of GDP."Its going to be difficult keeping the deficit to around 2% in the second half, when the first half was closer to 4%, especially since traditionally, the second half deficit is higher than the first," said Juan Ignacio Conde-Ruiz, economist at Madrid's Complutense University.For 2012, the measures aim to reap savings of over 13 billion euros, but economists see the deficit missing the target by almost 1 percentage points implies further saving needs of up to 10 billion euros for this year alone.Rajoy has been careful to highlight the importance of next year's deficit target of 4.5% of GDP though any shortfall this year will weigh on 2013's accounts.After slashing civil servants' wages, raising value added tax by 3 percentage points - the main VAT has gone from 16% to 21% since 2010 - and cutting health and education spending, Rajoy is running out of options.More than 60% of government spending goes to pensions, unemployment benefits and servicing debt, making further cuts on the revenue side difficult without hitting 6 million jobless people.

Spain's parliament on protest alert

Spain's parliament took on the appearance of a heavily guarded fortress on Tuesday, hours ahead of a protest against the conservative government's handling of the economic crisis.The demonstration, organised behind the slogan "Occupy Congress", is expected to draw thousands of people from around Spain and was due to start around 17:30 GMT.Madrid's regional interior ministry delegation said some 1 300 police would be deployed though protesters say they have no intention of storming the chamber, only of marching around it.They are calling for fresh elections, claiming the government's austerity measures show the ruling Popular Party misled voters to get elected last November.The protest comes as Spain struggles in its second recession in three years and with unemployment near 25%.Spain has introduced austerity measures and economic reforms in a bid to convince its euro partners and investors that it is serious about reducing its bloated deficit to 6.3% of gross domestic product in 2012 to 4.5% next year.Concerns over the country's public finances was evident earlier when the Treasury sold €3.98bn in short-term debt but at a higher cost.It sold €1.39bn in three-month bills at an average interest rate of 1.2%, up from 0.95% in the last such auction on August 28, and €2.58bn in six-month bills on a yield of 2.21%, up from 2.03%.The government is expected to present a new batch of reforms on Thursday as it unveils a draft budget for 2013. A day later the results of bank stress tests carried out by an international auditing company are to be released.Spain has already been granted a €100bn loan by its 16 partner nations using the euro currency to help bail out those of its banks worst hit by the collapse of the country's real estate sector in 2008.Spain has yet to tap the fund and initial estimates say the banks will need some €60bn.

China and Japan (and U.S.) Island Dispute: It's All About Oil

The dispute over the territory known as the Senkaku Islands in Japan (and the U.S.) and as the Diaoyu Islands in China has all the makings of a Tom Clancy thriller. The 73-year-old Japanese Finance Minister, Tadahiro Matsushita was found hanged  not death by seppuku  in his home on suicide prevention day. The newly appointed Ambassador to China for Japan was found dead on a street in Japan at age 60 before he could take up his duties in China. The wife of Bo Xilai, a top contender for the top seat in the Chinese Politboro, is in prison facing a death sentence for the murder of a British businessman. The murder was revealed when one of his top aides, now sentenced to 15 years in prison, tried to defect to the United States and revealed his role in the cover-up. Governor of Tokyo, Shintaro Ishihara (79) and author of the controversial late 1980s book The Japan That Can Say No: Why Japan Will Be the First Among Equals (irreverently known as "get lost America, we can covertly rearm, develop nuclear capabilities, close U.S. bases, and handle our own defense") inflamed relations between China and Japan by engineering the government's purchase of the Senkaku Islands from a private Japanese citizen. Isihara's son Nobuteru (55) is the one of the candidates for leadership of Japan's Liberal Democratic Party, and if the party wins the election, he could possibly become Prime Minister of Japan if he can win out over Ishiba and Abe, the former Prime Minister of Japan.The car of the U.S. Ambassador to China was swarmed by protesters, and the melee was quickly broken up by Chinese security forces.U.S. Presidential candidates are silent on Asian tensions, seemingly engrossed in an adolescent battle of embarrassing sound bites.Riots have broken out in China over the disputed Islands, even though the islands were never under Chinese rule. The Japanese believe the islands belong to Japan. The Japanese Defense Minister takes comfort from U.S. Assistant Secretary of State Kurt Campbell's acknowledgement that the islands fall under the umbrella of the U.S.'s security pact with Japan.All this is happening when there's a power vacuum in China (between elections), a power vacuum in Japan (same reason), and a power vacuum in the U.S. (our elections are in November).Oil Islands As it happens, it appears that the dispute is really all about the right to explore for potential oil reserves around the islands' waters. The Japanese Finance Minister had prostate cancer and was investigating insider trading. He may or may not have had a say in whether the government should buy the islands. But his alleged suicide seemed to stem from an extra-marital affair he had with a 70 year-old Ginza bar hostess. She was retired, asked him for money, and when he refused, she sold her story to the tabloids.The death of the newly appointed ambassador to China for Japan appears for now to be just a sad coincidence of timing.China's Bo Xilai scandal is a tawdry story of corruption and greed.Sentiment within Japan's business community seems to be (based on my limited and unscientific sampling) that provoking war with China is insane, and the purchase of the islands was an unnecessary irritant. Yet the Japanese government provoked tensions with the purchase of the Islands, and the political spin in China is that this is about national integrity rather than oil exploration rights. If the Chinese invade the islands, Japan will likely fight for them, and the U.S. would be dragged into the conflict.If there is a conflict, it won't matter whether you call them the Senkaku Islands or the Diaoyo Islands. The important thing to remember is that everyone hopes they are the Oil islands.

NEWS,22.09.2012

Afghanistan in flux as U.S. surge troops exit

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

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

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

Chavez's record: an oil bonanza squandered?

 

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

Finding Poland's sunken royal treasures

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

Iran accuses Siemens of nuclear sabotage

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

NEWS,21.09.2012

What Business Is Wall Street In? 

 

Wall Street doesn't know what business it is in. Regulators don't know what the business of Wall Street is. Investor/shareholders don't know what business Wall Street is in.The only people who know what business Wall Street is in are the high frequency and automated traders. They know what business Wall Street is in better than everyone else. To traders, whether day traders or high frequency or somewhere in between, Wall Street has nothing to do with creating capital for businesses, its original goal. Wall Street is a platform. It's a platform to be exploited by every technological and intellectual means possible.The best analogy for traders? They are hackers. Just as hackers search for and exploit operating system and application shortcomings, high frequency traders do the same thing. A hacker wants to jump in front of your shopping cart and grab your credit card and then sell it. A high frequency trader wants to jump in front of your trade and then sell that stock to you. A hacker will tell you that they are serving a purpose by identifying the weak links in your system. A trader will tell you they deserve the pennies they are making on the trade or the rebate they are getting from the exchange because they provide liquidity to the market.I recognize that one is illegal, the other is not. That isn't the important issue.The important issue is recognizing that Wall Street is no longer serving the purpose that it was designed to. Wall Street was designed to be a market to which companies provide securities (stocks/bonds), from which they received capital that would help them start/grow/sell businesses. Investors made their money by recognizing value where others did not, or by simply committing to a company and growing with it as a shareholder, receiving dividends or appreciation in their holdings. What percentage of the market is driven by investors these days?I started actively trading stocks in 1992. I traded a lot. Over the years I've written quite a bit about the market. I have always thought I had a good handle on the market. Until recently.Over just the past five years, the market has changed. It is getting increasingly difficult to just invest in companies you believe in. Discussion in the market place is not about the performance of specific companies and their returns. Discussion is about macro issues that impact all stocks. And those macro issues impact automated trading decisions, which impact any and every stock that is part of any and every index or ETF. Combine that with the leverage of derivatives tracking companies, indexes and other packages or the leveraged ETFs, and individual stocks become pawns in a much bigger game that I feel increasingly less comfortable playing. It is a game fraught with ever increasing risk.So back to the original question. What business is Wall Street in?Its primary business is no longer creating capital for business. Creating capital for business has to be less than one percent of the volume on Wall Street in any given period. (I would be curious if anyone out there knows what percentage of transactions actually return money to a company for any reason). It wouldn't shock me that even in this environment that more money flows from companies to the market in the form of buybacks (which I think are always a mistake), than flows into companies in the form of equity.My two cents is that it is important for this country to push Wall Street back to the business of creating capital for business. Whether it's through a use of taxes on trades (hit every trade on a stock held less than one hour with a 10 cent tax and all these problems go away), or changing the capital gains tax structure so that there is no capital gains tax on any shares of stock (private or public company) held for one year or more, and no tax on dividends paid to shareholders who have held stock in the company for more than five years. However we need to do it, we need to get the smart money on Wall Street back to thinking about ways to use their capital to help start and grow companies. That is what will create jobs. That is where we will find the next big thing that will accelerate the world economy. It won't come from traders trying to hack the financial system for a few pennies per trade.And solutions won't come from bureaucrats trying to prevent the traders from hacking the system. The only certainty when bureaucrats step in is that the law of unintended consequences will smack us all in the head and the trader/hackers will find new ways to exploit the system that makes them big money and even more money for the big institutions that develop products for the other institutions that are desperate to play the game.Regulators have got to start to recognize that traders are not investors and vice versa and treat them differently. Different regulations. Different tax structure. Different oversight. Individual investors and the funds that just invest in stocks and bonds are not going to crash the market. Big traders who are always leveraging up and maximizing the number of trades/hacks theymake will always put the system at risk. We need to recognize that they do not serve much of a purpose other than to add substantial risk to the global economy. That their stated value add of liquidity does not compensate the U.S. and world economy nearly enough for the risk of collapse they introduce into the system.Wall Street as a whole needs to be in the business of creating capital for companies and selling shares to investors who believe they are shareholders. The government needs to create simple and obvious incentives for this business and extract compensation from the traders/hackers for the systemic failure risk they introduce.There will be another flash crash, and probably a crash far worse than the May 2010 flash crash simply because there are too many players looking for the trillion dollar score. They can't all win, yet how many do you think wouldn't risk everything, even what is not theirs, for that remote chance to score big? Put another way, there is zero moral hazard attached to any trade. So why wouldn't traders take the biggest risk possible? There is value to trading automation. It is here to stay. There is absolutely NO VALUE to high frequency trading. None. We need to bring our markets back to their original goals of creating capital for business. It's impossible to guess how many small to medium size companies have been held back from growing and creating jobs and wealth because of lack of access to capital from the stock market. It's not impossible to know that our economy has suffered because Wall Street equity markets are no longer a source of equity for helping companies grow, it is not a platform for hackers and that needs to change. Quickly.

Iran parades military, warns Israel

Iran warned Israel and the United States against any aggression, as it proudly paraded its troops and military hardware on Friday under the gaze of President Mahmoud Ahmadinejad and top brass.The Tehran parade, involving thousands of military personnel, dozens of tanks and missiles borne on trucks, marked the anniversary of the start of the 1980-1988 Iran-Iraq war.Ahmadinejad, in a speech broadcast on state television, said that Iran was using "the same spirit and belief in itself" shown in that war to "stand and defend its rights" today against pressure from world powers.Top Iranian generals said the show of military might should be digested by Israel, which in recent weeks has ramped up threats that it could hit Iranian nuclear facilities."We do not feel threatened by the nonsense uttered by that regime's leaders," the chief of Iran's armed forces, General Hassan Firouzabadi, told the Fars news agency, adding that Iran's response to any attack would be "immediate and unstoppable".General Ataollah Selehi, the commander of Iran's army, told the ISNA news agency that "us holding a military parade is for deterrence and not a threat".US Navy war games He and other military leaders renewed their pledge that Israel would be annihilated if attacked.The head of the Revolutionary Guards' aerospace division in charge of missile defence, Brigadier General Amir Ali Hahjizadeh, repeated Iran's promise to close the strategic Strait of Hormuz if the Islamic republic were attacked or Western sanctions halted its crude exports."If one day the Strait of Hormuz has no benefit for us, then we will deprive others from benefiting from it," he said.However he added that "under current conditions, there is no problem".Hahjizadeh also dismissed navy war games currently being held by the United States and 30 other nations in the Gulf as "no threat to us".Iran is locked in a showdown with the UN Security Council over its controversial nuclear programme.Ahmadinejad on anti-Islam filmThe West, led by the United States, has tightened the vice on Iran by implementing crippling economic sanctions, while Israel - the Middle East's sole if undeclared nuclear weapons state - has underlined its threats of possible air strikes on Iranian atomic facilities, with or without US help.In his speech, Ahmadinejad also touched on an anti-Islam film made in America by an extremist Christian group that has fuelled violent protests in parts of the Muslim world.He said US government claims it could do nothing to censor the film was a "deception" exploiting the pretext of freedom of expression.He called the film an Israeli-hatched plot "to divide [Muslims] and spark sectarian conflict".Ahmadinejad implicitly referred to his often expressed opinion that the Holocaust never happened to lambast the West for perceived selective censorship."They stand against a question about a historical incident... they threaten and put pressure on nations for posing the question while at the same time in regards to the obscenest insults to the human sanctities and prophets... they shout adherence to freedom [of expression]," he said.Ahmadinejad's stance challenging the facts surrounding the killing of six million Jews by the Nazi regime during World War II is shared by Iran's supreme leader, Ayatollah Ali Khamenei, who is the country's commander-in-chief.Early this week, Khamenei told naval cadets: "In some Western countries, no one dares to question the unknown incident of the Holocaust or for that matter some of the morally obscene policies like homosexuality... but insulting Islam and its sanctities under the pretext of freedom of expression is allowed."