NEWS,23.05.2013

Eurozone slump eases in May

The downturn across eurozone businesses eased slightly this month, although a dearth of new orders means the bloc's economy is likely to contract again in the second quarter, business surveys showed on Thursday.

Markit's flash eurozone Services PMI, which surveys around 2 000 companies ranging from major banks to caterers, rose in May to 47.5, a three-month high, from 47.0 in April.

While that was a little better than economists polled expected, the PMI has now spent 16 straight months below the 50 mark that divides growth and contraction.

French companies continued to fare poorly this month, while activity in German firms effectively stagnated.

Overall, survey compiler Markit said the surveys pointed to a similar economic performance in the second quarter as the 0.3% contraction the eurozone logged in the January-March period.

"There are signs the rate of decline is easing, which does suggest we may be moving into a period of stabilisation, but it's taking a lot longer than most people anticipated," said Chris Williamson, chief economist at Markit.

"It's looking more like the end of the year (until) we're going to see the numbers start to show signs of stabilising."

The new orders services index fell to 45.3 from 46.2, meaning a big upturn in the PMI next month looks unlikely. 

Williamson said there were signs that the rate of decline eased this month in the "peripheral" eurozone countries outside Germany and France.

"But against that we've seen a worrying steep deterioration in service sector expectations for the year ahead."

Although business expectations for the year ahead hit an 11-month high in April, it plummeted in May to its lowest point since December.

The PMI for the manufacturing sector rose to 47.8 this month from 46.7 in April, while showing new orders and output declined at a slower pace, comfortably beating expectations of 47.0 predicted by economists.

Combining both the services and manufacturing reports, the composite PMI hit a three-month high of 47.7 in May, compared with April's 46.9, while showing continuing job losses.

Both the input and output prices index stayed below the 50 mark this month, indicating deflationary pressures.

"The European Central Bank doesn't have anything to worry about in relation to inflation," said Williamson. 

"More likely, it's going to find it difficult to get inflation up to the level it wants," he added, referring to the central bank's target of close to 2%.

Bernanke: No Fed stimulus pullback yet

The Federal Reserve's monetary stimulus is helping the US economy recover but the central bank needs to see further signs of traction before taking its foot off the gas pedal, Fed Chairperson Ben Bernanke said on Wednesday.
A decision to scale back the $85bn in bonds the Fed is buying each month could come at one of the central bank's "next few meetings" if the economy looked set to maintain momentum, Bernanke told Congress.
But minutes from the Fed's most recent meeting released on Wednesday showed the bar was still relatively high.
"Many participants indicated that continued (job market) progress, more confidence in the outlook, or diminished downside risks would be required before slowing the pace of purchases," according to minutes from the April 30-May 1 meeting.
In testimony that showed little immediate desire to retreat from the Fed's third and latest round of bond buying, Bernanke emphasized the high costs of both unemployment and inflation, which respectively continue to run above and below the Fed's targets.
"Monetary policy is providing significant benefits," he told the congressional Joint Economic Committee, citing strong consumer spending on autos and housing, as well as increases in household wealth.
"Monetary policy has also helped offset incipient deflationary pressures and kept inflation from falling even further below the (Fed's) 2% longer-run objective."
Still, financial markets focused on the possibility that Fed purchases will be scaled back later this year. The S&P 500 closed 0.8% lower, the dollar hit a near three-year peak against a broad basket of currencies, and the bond market sold off sharply. Yields on 10-year Treasury notes jumped back above 2% to their highest levels since mid-March.
The central bank is currently buying $45bn in Treasury bonds and $40bn in mortgage-backed debt each month to keep borrowing costs low and encourage investment, hiring and economic growth. It is the third round of asset purchases, or quantitative easing, since the Fed drove interest rates to near zero in late 2008.
"I believe the Fed, while feeling more confident in the economy bottoming, is not yet comfortable with ending QE and the US economic crutch it offers," said Douglas Borthwick, managing director of Chapdelaine Foreign Exchange in New York.
Missing the target
Bernanke noted that the main inflation gauge the Fed monitors rose just 1% in the 12 months through March, just half the central bank's 2% target.
Part of the reason, he said, was a decline in energy prices. But there were also indications of more broad-based disinflation, Bernanke said.
He said the Fed was prepared either to increase or reduce the pace of its bond buys depending on economic conditions, as the central bank stated on May 1 after its last policy meeting.
"If we see continued improvement and we have confidence that that's going to be sustained then we could in the next few meetings ... take a step down in our pace of purchases," he said.
"If we do that it would not mean that we are automatically aiming toward a complete wind down. Rather, we would be looking beyond that to see how the economy evolves and we could either raise or lower our pace of purchases going forward."
US economic growth rose to a 2.5% annual rate in the first quarter following an anemic end to 2012. The unemployment rate has fallen to 7.5% from a peak of 10%, but remains, as Bernanke put it, "well above its longer-run normal level."
Recent economic data have been mixed. Job growth, retail sales and housing have all shown some vigor, but factory output has been contracting.
Bernanke said some headwinds facing the economy, including the debt crisis in Europe, have been dissipating. But he said a sharp tightening of the US government's budget had become too big of a drag on growth for the central bank to offset fully.
Bernanke told the committee the Fed was aware of the risk that keeping monetary policy too easy for too long could fuel asset price bubbles. However, he said the central bank believed major asset prices were justified by the economy's fundamentals.
Further, he warned of the risks to pulling back on stimulus too early.
"A premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further," Bernanke said.
He also suggested the Fed could refrain from selling off some of the mortgage-backed securities it has acquired when the time finally came to tighten monetary policy. "I personally believe that we could exit without selling any MBS," he said.
Too soon to taper
In separate remarks, New York Fed President William Dudley stressed that uncertain economic conditions meant it was too early to determine whether to taper the Fed's bond purchases.
"I think three or four months from now you'll have a much better sense of 'Is the economy healthy enough to overcome the fiscal drag or not?'" Dudley said in a Bloomberg TV interview that took place on Tuesday but aired on Wednesday.
Dudley added that it would be possible to dial down the program by the fall "if the economy does better and if the labor market continues to improve."
The minutes of the last Fed meeting said a number of officials expressed a willingness to taper bond purchases as early as the upcoming meeting on June 18-19 if there were signs of "sufficiently strong and sustained growth." But views differed both on how to gauge progress and on how likely it was that that threshold would be met.
Asked whether the Fed would curtail the pace of its bond purchases by the September 2 Labour Day holiday, Bernanke said simply: "I don't know."

US shares recover, but dollar extends losses

US stocks and bonds were little changed on Thursday, with equities rebounding from what traders considered an excessive drop on Wednesday, though concerns remained over the pace of global economic growth.
The midday strength in US equities bucked a worldwide trend of weakness. European shares ended down 2 percent while Japan plummeted 7.2 percent on weak data from China and Europe.
US shares opened sharply lower, extending a sharp decline on Wednesday that came after Federal Reserve chief Ben Bernanke broached the possibility of reducing stimulus if economic conditions improve.
While Fed officials stressed that no action was likely for months, investors are anxious about the timing to any change in monetary policy, which is widely credited with fueling massive gains in stocks and high-yield corporate bonds this year.
"The commentary was very benign and wasn't anything unexpected, the sell-off came because we were looking for an excuse to correct after the big moves this year," said Eric Green, senior portfolio manager at Penn Capital Management in Philadelphia.
The Dow Jones industrial average was up 2.64 points, or 0.02 percent, at 15,309.81. The Standard & Poor's 500 Index was down 4.45 points, or 0.27 percent, at 1,650.90. The Nasdaq Composite Index was down 4.24 points, or 0.12 percent, at 3,459.06.
Thursday's equity rebound continued a recent trend of investors using any market decline as a buying opportunity. A rally in Hewlett-Packard Co, which jumped 14 percent to $24.18 a day after raising its profit outlook, helped limit losses and keep the Dow in mildly positive territory.

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Still, overseas markets were sharply lower, driving investors to safe-haven currencies. At the session peak, the yen rose more than 2 percent against the dollar and the euro, which both lost 1 percent against the Swiss franc , also seen as a safe haven.
Chinese factory activity shrank for the first time in seven months, adding to concerns that the world's second-biggest economy had stalled. European factory sentiment dropped, suggested that the euro zone's economy was likely to contract again in the second quarter.
Japanese shares were hit hardest in overnight action, with the Nikkei losing 7.3 percent, its biggest one-day fall in two years. European shares ended 2.1 percent lower and MSCI's world equity index lost 1.3 percent.
"Even though we were overdue for a correction, the Chinese data certainly didn't help things. If it proves to be part of a trend, that's very concerning for the global economy," said Green, who helps oversee $7 billion in funds.
US light crude oil, which is closely tied to the pace of economic growth, fell 0.5 percent. The U.S. dollar index fell 0.8 percent.
The Euro STOXX 50 Volatility Index, Europe's widely used measure of investor risk aversion, surged nearly 15 percent to a three-week high. The CBOE Volatility Index rose 3 percent.
Concern the Fed will wind down its stimulus initially took its toll on bonds, but investors' sales of equities caused money to flow into safer government debt, leaving yields on US Treasuries and German Bunds down from their highs. The benchmark 10-year U.S. Treasury note was down 2/32 in price, the yield at 2.0281 percent.
Investors expect the bond market will adjust to changing Fed policy, and that suggests higher yields in the coming months.
Demand for riskier euro zone debt softened, although bonds remained underpinned by expectations the European Central Bank may yet ease monetary policy further. That would contrast with any tightening by the Fed but follow a massive stimulus package launched by the Bank of Japan.

Apple has enjoyed Irish tax holiday since 80s

Apple has operated almost tax-free in Ireland since 1980, welcomed by a government keen to bring jobs to what was then one of Europe's poorest countries, former company executives and Irish officials have said.
Chief Executive Tim Cook faced criticism from a Senate subcommittee in Washington over the iPad and iPhone maker's tax practices, which had been shrouded from full view behind secretive tax-exempt Irish-based corporate entities.
Apple, one of Ireland's top multinational employers, denied avoiding billions of dollars in US taxes and said its arrangements helped fund research jobs in the United States.
The committee revealed that Apple's Irish companies, some of which are not tax resident in any jurisdiction, allowed the group to pay no tax on much of its overseas earnings in recent years.
Senator Carl Levin, chairman of the subcommittee, said Apple had sought "the Holy Grail of tax avoidance".
A former company executive and Irish officials the almost tax-free status dates all the way back to Apple's arrival in County Cork 32 years ago.
Apple must have seemed attractive to Ireland and to Cork. Amid a generally moribund Irish economy, Cork had been hard hit by the closure of its shipyards and a Ford car plant, and in 1986 nearly one in four were out of work in the city.
In the early days, Apple's staff sat down to meals together. Now the company employs 4,000 in Ireland and is the country's biggest multinational employer.
"There were tax concessions for us to go there," said Del Yocam, who was Vice President of manufacturing at Apple in the early 1980s.

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"It was a big concession."
In fact, the deal was about as good as a company can get.
"We had a tax holiday for the first 10 years in Ireland. We paid no taxes to the Irish government," one former finance executive, who asked not to be named, said.
Apple wasn't an exception, although it was among the last to enjoy such favourable treatment.
From 1956 to 1980, Ireland attracted foreign companies by offering a zero rate of tax, according to the Irish government's website. Eligible companies arriving in 1980 were given holidays until 1990.
"Any multinational attracted into Ireland that was focusing on the export market paid zero percent corporation tax," said Barry O'Leary, CEO of IDA Ireland, which is charged with attracting investment into Ireland.
Apple said it pays all the tax due in every country where it operates. It declined to comment on the tax treatment it received in the 1980s.
As part of Ireland's accession to the European Economic Community, precursor to the European Union, in 1973, it was forced to stop offering tax holidays to exporters.
From 1981, companies arriving in Ireland had to pay tax, albeit at a low 10 percent rate, providing they qualified for manufacturing status.
Economic coup
Apple's investment was a major coup for Ireland. At the time, the country was struggling with high and rising unemployment, double-digit inflation and a brain drain of the young and educated through emigration.
"We were the first technology company to establish a manufacturing operation in Ireland," recalled John Sculley, Apple's CEO from 1983 to 1993.
He said government subsidies had also played a role in deciding to set up a base in Ireland.
Ireland also offered low wage rates - a big attraction when it came to hiring hundreds of people for the relatively low-skilled work of assembling electronic equipment.
Apple told the subcommittee it could not answer questions about why it chose Ireland as a base since it had lost the paperwork from the period.
The operation in Cork built the company's Apple II computer and would later build disc drives, 'Mac' computers and others. These would be sold in Europe, the Middle East, Africa and Asia.
But having a tax holiday in Ireland would not, in itself, have allowed Apple to operate tax free in these markets.
Equipment assembly is not the kind of activity that economists or tax authorities usually credit with generating a large share of a technology company's profits.
More value has been associated with generating the intellectual property behind the technology - which Apple did in the United States - and with the selling of goods, which was to be done on the ground in France, Britain and India.
But none of these countries offered the tax advantages Ireland did. The key to minimising Apple's tax bill was maximising the amount of profit that could be ascribed to Apple's Irish operations.
Holiday over
In 1990, Apple's tax holiday came to an end, and in that year, the Irish operation's tax rate hit 4 percent, accounts from the period show.
At the same time, Apple's Irish manufacturing activities came under question as the company looked to cut costs by outsourcing.
In 1992, the company announced plans to cut hundreds of jobs after deciding to shift some work to Singapore, which at this time was attracting increasing investment by offering tax holidays.
"They nearly left Ireland altogether," O'Leary said.
By this stage, the European Community had banned tax holidays of the kind given to Apple, so the company and Dublin negotiated an arrangement which had a similar outcome but fell within European rules.

Cautious calm returns to Wall Street

Wall Street has been had mixed trading today, paring sharp early losses after disappointing data from China and a slump in Japanese stocks outweighed better-than-expected reports on US jobs and housing.
In China, the preliminary reading for a Purchasing Managers' Index of manufacturing was 49.6 in May, according to HSBC and Markit Economics data. In Japan, the Topix plunged 6.9%.
Yesterday's comments by US Federal Reserve Chairman Ben Bernanke suggested the central bank might ease back its bond-buying programme as soon as at its next meeting, while also stressing the risk of withdrawing stimulus measures too soon.
Fed officials today sought to soothe investors' concerns. James Bullard, president of the St Louis Fed, said he did not think the bank's policy committee was "that close" to tapering bond purchases and when it did start to pull back it would be slowly.
"The market is struggling with conflicting language from Fed officials as to the timing of potential tapering of asset purchases, slowing growth in China and after Japan's decline in equities," Ryan Larson, the Chicago-based head of US equity trading at RBC Global Asset Management, told Bloomberg News.
In late afternoon trading in New York, the Dow Jones Industrial Average gained 0.18%, while the Standard & Poor's 500 Index fell 0.22% and the Nasdaq Composite Index edged up 0.04%.
US economic data released today were better than anticipated, though failed to brighten the mood. Initial claims for state unemployment benefits fell 23,000 to a seasonally adjusted 340,000 last week, according to Labor Department data.

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New single family home sales increased 2.3% in April to a 454,000-unit pace, while the median sales price for a new home rose 14.9% from a year ago to a record US$271,600.
"All the eggs are in housing and the consumers' baskets this quarter. Outside that, there is going to be little support to growth," Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania.
Bucking the trend today, shares of Hewlett-Packard jumped, last up 14.7%, after the computer maker lifted its 2013 earnings outlook.
"She [Chief Executive Officer Meg Whitman] clearly has the company focused on profit and cash flow and that's coming through in the earnings," Shannon Cross, an analyst at Cross Research in Millburn, New Jersey, who rates the stock a hold, told Bloomberg. "It shows they're able to drive margin at businesses that are under significant revenue pressure."
Europe's benchmark Stoxx 600 Index shed 2.1%. Yesterday European shares had closed higher, ending the session before Bernanke suggested the US central bank could taper its bond-buying as soon as next month.
The UK's FTSE 100, France's CAC 40 and Germany's DAX each also closed with declines of 2.1%.

NEWS,10.2.2013

Obama to devote state address to jobs

President Barack Obama will build his annual state of the union address on Tuesday around a push for job creation as the fragile economy, which dogged his first term, threatens to hamper his second.Obama will lay out a governing program that he hopes to squeeze through a divided US Congress, so as to complement the soaring progressive vision he sketched for history in his inaugural address last month.Aides said Obama will seek to build support for new laws to curb gun violence, as the horror of December's massacre of 20 school kids begins to fade, at least outside the town of Newtown, Connecticut that it blighted.The president also told Democratic lawmakers last week he would focus on job creation, new forms of energy and education reform in his ceremonial annual address delivered from the House of Representatives.And he will make a pitch for immigration reform, the centerpiece of his second-term agenda, amid signs that Republicans keen to ease the distrust they suffer from among Hispanic voters may be ready for some rare cross-party compromise.With political capital renewed by his re-election triumph in November, Obama will retool some old suggestions for jobs programs that never made it past Republicans in Congress and add some new ideas, advisers said.After a sluggish economic recovery, there are new signs of alarm in the flat economy, after GDP contracted at an annual rate of 0.1% in the last quarter of 2012 and the unemployment rate has ticked up to 7.9%.Obama will not shun conflict with Republicans over taxes and spending, a spat currently being waged over huge budget cuts due to come into force on March 1, with potential to hammer the economy."We're going to talk about, yes, deficits and taxes and sequesters and potential government shutdowns and (the) debt ceiling," Obama told the Democrats."But all from the perspective of how are we making sure that somebody who works hard in this country a cop, or a teacher, or a construction worker, or a receptionist - that they can make it if they work hard?"Obama has fashioned his crusade for a more equitable economy for the middle class around higher taxes for the rich a stance which Republicans oppose, arguing unsustainable public spending should be issue number one.The president barely mentioned foreign policy in the inaugural address which enshrined his second White House term on January 21.But the watching world may get a window into his thinking on Tuesday night.Aides expect Obama to note the impending return home of the remaining 60 000 US troops in Afghanistan in 2014, but it is unclear if he will offer more details on the pace of their withdrawal.Vice President Joe Biden gave a few hints on the State of the Union address on a recent trip to Munich, Germany.He said Obama would mention his bid to reduce global nuclear stockpiles and halt the proliferation of the components of weapons of mass destruction.Biden also previewed initiatives on climate change, global poverty and a new effort to reduce trade barriers, including with Europe, plus a commitment to Middle East peace and the US pivot to Asia.Obama's speech will also be watched for any response to Iran's Supreme leader Ayatollah Ali Khamenei who just rejected a US offer for direct nuclear talks.The US president is required by the Constitution to report to the Congress on the State of the Union "from time to time."In the 20th century, the event evolved into today's ceremonial address, punctuated by multiple standing ovations.Obama sees this speech as part two of a dialogue with the American people."I think that Obama's second inaugural address will go down in history as the last speech of his election campaign," William Galston, a former advisor to president Bill Clinton, now with the Brookings Institution, told AFPTV."I think the 2013 State of the Union address will be regarded as the framing speech for his second term."Obama has a thorny challenge in getting an ambitious second term agenda through the gridlocked Congress."If President Obama wants to be a transformational president and be regarded in history in that way, he's going to have to build on this new vision of government that he's advancing," Galston said. Republicans have nominated rising star Senator Marco Rubio, a possible 2016 presidential candidate, for the tricky assignment of responding to the president's address.Response speeches, robbed of the euphoric power of the State of the Union, can come across as flat and are a risk for the person delivering them.The stakes for Rubio are particularly high, given his rising prospects, epitomized by a Time magazine cover dubbing him the "Republican Savior."

UK rejects Argentina bullying

Foreign Secretary William Hague said Britain could never be bullied by Argentina into giving up the Falkland Islands, in an interview published on Sunday. Hague told The Sun newspaper that Argentina's "intimidatory" behaviour only fortified the 2 500-odd Falkland Islanders in their determination to remain a self-governing British overseas territory.He also branded his Argentine counterpart Hector Timerman's claims that the South Atlantic archipelago would be under the control of Buenos Aires within 20 years as "fantasy"."There should never be a reward for bullying or threatening behaviour in international affairs," Hague said."This is a community that is nearly 200 years old. They seem very determined to remain British."If there's any chance they would change their minds, the approach by Argentina is completely counter-productive."It only fortifies the islanders' determination to stay British. It is only going to add to the decades and centuries that the Falklands will remain British."Britain has held the barren, windswept islands since 1833, but Argentine forces invaded in 1982, prompting London to send a naval task force to reclaim control in a brief but bloody conflict. Buenos Aires claims the islands are occupied Argentinian territory. Timerman visited London last week but refused to meet Hague as the British minister insisted on Falklands government representatives being present.On his visit, Timerman shook hands with a strangerwho gave him a letter, only to learn it was one of the Falklands representatives."You would think the poor minister had suffered an electric shock judging by the way he recoiled," Hague said."These are people who have rights just like those in the UK and Argentina. "There are families in the Falklands who are in their ninth generation."The Falklands have been there longer than Argentina has had its current boundaries or existed in its current form."He hinted that Argentina's President Cristina Kirchner was using the Falklands as a way to divert from domestic problems.Buenos Aires has rejected the dialogue of the 1990s in favour of "a pattern of bullying and intimidatory behaviour", he said."It would be better to talk to the islanders rather than deny their existence or claim Argentina will have the islands within 20 years. These things are fantasy."It would be far better for their country to be realistic."Hague accused Kirchner and Timerman of "misreading the character" of British and Falklands people."Everything we have seen and heard in the last week is the last thing that would ever work."A referendum is to be held on the Falklands on 10 and 11 March, asking the islanders whether they wish to retain their current status.

Storm hammers US

A blizzard packing hurricane-force winds hammered the northeastern United States on Saturday, cutting power to 700 000 homes and businesses, shutting down travel and leaving at least nine people dead.The mammoth storm that stretched from the Great Lakes to the Atlantic dumped more than 90cm of snow across the Northeast, the National Weather Service said.Coastal blizzard and flood warnings were in effect, but Massachusetts and Connecticut lifted vehicle travel bans as the storm slowly moved eastward on Saturday evening.Stratford, Connecticut, Mayor John Harkins said he had never seen such a heavy snowfall, with rates reaching 15cm an hour."Even the ploughs are getting stuck," Harkins told local WTNH television.The storm centred its fury on Connecticut, Rhode Island and Massachusetts, with the highest snowfall total, 102cm in Hamden, Connecticut.About 2 200 flights were cancelled on Saturday, for a total of more than 5 800 over the past two days, according to FlightAware, which tracks airline delays. A few hundred additional cancellations are possible for Sunday, it said.Boston's Logan International Airport and Bradley International Airport in Windsor Locks, Connecticut, were shut down. Logan, hit by nearly 56cm of snow, was expected to reopen at least partly later on Saturday.The storm dumped 74cm of snow on Portland, Maine, breaking a 1979 record, the weather service said. Winds gusted to 134km/h at Cuttyhunk, New York, and brought down trees across the region.The storm contributed to at least five deaths in Connecticut, according to Governor Dannel Malloy and police.An 80-year-old woman was killed by a hit-and-run driver while clearing her driveway, and a 40-year-old man collapsed while shovelling snow. One man, 73, slipped outside his home and was found dead on Saturday, Malloy said.A 53-year-old Bridgeport man was found dead in the snow on Saturday morning outside his home, and a 49-year-old man died while shovelling snow in Shelton, police said.Two people died of carbon monoxide poisoning in separate incidents in Boston. One of the victims was an 11-year-old boy who was overcome by fumes as he sat in an idling car to keep warm, a fire official said. The other victim was a man in his early 20s who was found unresponsive in his car, police said. In Poughkeepsie, New York, a man in his 70s was struck and killed on a snowy roadway, local media reported. A 23-year-old man was killed in Germantown, New York, when the tractor he was using to plough his driveway rolled down an embankment, according to local media. A 30-year-old motorist in New Hampshire died when his car went off the road, but the man's health might have been a factor in the accident, state authorities said.Police in New York's Suffolk County, some using snowmobiles, rescued hundreds of motorists stuck overnight on the Long Island Expressway, said police spokesperson Rich Glanzer.Emergency medical services personnel in Worcester, Massachusetts, delivered a baby girl at her mother's home at about 03:00 on Saturday with the aid of National Guard soldiers.Even as the big storm's force was slackening, the National Weather Service warned of blizzard conditions developing in the Great Plains on Saturday and continuing into Monday.Utility companies reported about 700 000 customers without electricity across nine states as the wet, heavy snow brought down tree branches and power lines.

700 000 without power in US

A record-breaking blizzard packing hurricane-force winds pummeled the northeastern United States on Saturday, causing at least two storm-related deaths, cutting power to 700 000 homes and businesses and shutting down travel.The mammoth storm that stretched from the Great Lakes to the Atlantic coast dumped more than 90 cm of snow across the Northeast, the National Weather Service said. Blizzard and flood warnings were in effect for the coast.In Stratford, Connecticut, Mayor John Harkins said he had never seen such a heavy snowfall, with rates of 12.5 cm an hour at times overnight, he told local WTNH television."Even the plows are getting stuck," Harkins said.The storm concentrated its fury on Connecticut, Rhode Island and Massachusetts, with the top snowfall 95 cm in Milford, Connecticut.Rhode Island Governor Lincoln Chafee banned all travel on roads in order to aid snow plow crews. He told CNN that National Guard troops were rescuing stranded motorists, especially at uncleared on-ramps.The mammoth storm dumped 73.2 cm of snow on Portland, Maine, breaking a 1979 record, and the weather service said there is more on the way.Police in New York's Suffolk County turned to snowmobiles in some cases to rescue hundreds of motorists stuck overnight on the Long Island Expressway, said police spokesperson Rich Glanzer. Some spent the night in their cars.In Poughkeepsie, New York, a man in his 70s was killed when a driver lost control of her car and hit him, media reported. An 80-year-old woman clearing her driveway in Prospect, Rhode Island, died on Friday when she was struck by a hit-and-run driver, a spokesperson for state emergency services said.A 30-year-old motorist in Auburn, New Hampshire, died when his car went off the road, but the man's health, and not the weather, might have been a factor in the accident, state authorities said.Utility companies reported about 700 000 customers without electricity across Massachusetts, Rhode Island and Connecticut as the wet, heavy snow brought down tree branches and power lines.The Pilgrim Nuclear Power Plant in Plymouth, Massachusetts, lost power and shut down automatically late on Friday, but there was no threat to the public, the Nuclear Regulatory Commission said. Almost 2 000 flights were canceled on Saturday, according to FlightAware, which tracks airline delays. Boston's Logan International Airport and Bradley International Airport in Windsor Locks, Connecticut, were shut down.The National Weather Service said the storm was expected to taper off from West to East into the afternoon. Snowfall is forecast to total from 60 to 90 cm in eastern Massachusetts, Rhode Island and Connecticut.

Chavez still absent after 2 months

Two months have passed since Venezuelan President Hugo Chavez climbed the stairs of the presidential jet, blew kisses to supporters and flew to Cuba to undergo cancer surgery.Chavez hasn't been seen or spoken publicly since that departure to Havana on 10 December, and the mystery surrounding his condition has deepened even as the government's updates have remained optimistic but have lately offered few specifics.Foreign Minister Elias Jaua said on Saturday that Chavez is recovering slowly but that he is convinced he "is also going to win this battle".Some analysts say they expect that sooner or later, Chavez's delicate health could make necessary a new presidential election. Chavez's allies, however, insist the 58-year-old president remains in charge and they express optimism he will be able to return home.

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."

NEWS,26.11.2012

Obama drafts Geithner to crack budget

US President Barack Obama has made Treasury Secretary Timothy Geithner lead White House negotiator in budget talks with Congress aimed at averting the fiscal cliff, a report said Monday The Wall Street Journal said Geithner was viewed on Capitol Hill as a straight-shooter who had a better chance of brokering a deal than Jacob Lew, Obama's former budget chief who has burnt his bridges with some Republicans.If no deal is reached before the end of the year, a poison pill law of tax hikes and massive spending cuts, including slashes to the military, comes into effect with potentially catastrophic effects for the fragile US economy.The report said Geithner, who is preparing to leave his post as treasury secretary early in Obama's second term, has spent months already preparing for the fiscal talks, which will begin this week in earnest in Washington.Geithner will be joined by White House budget and tax experts, including Lew, now Obama's chief of staff, and National Economic Council Director Gene Sperling, the Wall Street Journal said.They will try to hammer out an elusive compromise with congressional aides but final decisions will be made by political leaders such as Obama and Republican House Speaker John Boehner, the report said.In recent days, several leading Republicans have indicated a willingness to accept a deal that includes more revenue from ending loopholes in the tax code in return for cuts in funding to Democrats' beloved welfare programs.Geithner, 51, is not affiliated with any party and has spent his career in government finance and on the political sidelines.He first joined the Treasury at age 27. When George W. Bush became president in 2001, he went to work for the Council on Foreign Relations and the International Monetary Fund.At 42, he was tapped to be head of the Federal Reserve Bank of New York, considered the Fed's second-most influential post because the New York bank interacts directly with a powerful constituency that includes Wall Street.Despite holding high office in the years leading up to the 2008 financial collapse, when regulatory authorities are accused of having been asleep at the wheel, he was tapped by Obama to lead the recovery.Upon assuming office in early 2009, he was charged with overseeing two major bailout packages worth more than $1.5 trillion and aimed at shoring up the country's distressed banking sector.The administration has said that the stimulus, while costly, averted another Great Depression, while conservative critics have branded it a costly expansion of government that has failed to revive the economy.

 

Medvedev does not rule out Kremlin return

Prime Minister Dmitry Medvedev said he is not ruling out a return to the Kremlin after his 2008-2012 single term as Russian head of state but was happy working as premier under his mentor Vladimir Putin."If I have sufficient strength and health, if our people trust me in the future with such a position, then of course I do not rule such a turn of events," Medvedev said in an interview with Agence France-Presse and Le Figaro when asked if he had the ambition for another Kremlin term.Medvedev, who on Monday embarks on a working visit to France, served as president after Putin stepped aside following the maximum two consecutive terms allowed by the constitution after his 2000-2008 stint.But Putin, aged 60, stayed on as a powerful prime minister and Medvedev, aged 47, never fully emerged from the shadow of his fellow Saint Petersburg native, an impression strongly reinforced when Putin returned to the Kremlin in May 2012.Medvedev, who in turn was then appointed prime minister in May, failed to bring about lasting change through a much-trumpeted modernisation programme in his one term as president.But in his interview with AFP, he revealed he had not lost his political ambition. "This returning to the presidency depends on a whole range of factors." "Never say never, especially as I swam in that river once and this is a river that you can swim in twice," he said.Russia will only go to the polls to vote for a president again in March 2018 and in the next half decade society is expected to see major change as the middle class grows and internet use explodes. Putin has also not ruled out standing again.This year's tightly choreographed job swap was criticised for being played out far from the public, and frustration over the return of Putin to the Kremlin fuelled the opposition protests that rocked Russia in the last year.Medvedev acknowledged the protests that began last December had shown a transformation in Russian society that the authorities could no longer ignore."Our society changed, it had become more active and the authorities needed to take account of this and react," said Medvedev, saying the government had done this by introducing electoral reform.Some of Medvedev's supporters who saw him as a possible champion of a refreshed, innovative and more pro-Western Russia were hugely disappointed by his apparent surrender of the Kremlin back to Putin.But Medvedev played up the tight links between the two men, saying he would find it impossible to work under anyone else."I would hardly have become prime minister under another president, I cannot imagine it at all," he said."If there is someone you can work with comfortably as prime minister after being president it is just one person, Vladimir Putin."However Medvedev has distanced himself from Putin on some issues, notably the case of feminist punk rockers Pussy Riot, two of whom have been sent to prison camps for performing a song against the Russian strongman in a church.Reaffirming his belief that they should be released, he said: "I think they have already tasted what prison is... So further punishment in the form of prison is not necessary. This is my personal position."On the case of Russia's best known prisoner, the former tycoon Mikhail Khodorkovsky, Medvedev said court decisions had to be respected but noted that the convict had never made a bid for clemency from the Kremlin.Medvedev admitted that his modernisation drive had so far fallen short but expressed hope there was still time to put his ideas into place."It's true that for the moment modernisation has not turned into a national idea and there has been no kind of radical progress reached."

 

Euro zone to seek Greek aid deal without write-off

Euro zone finance ministers and the International Monetary Fund made their third attempt in as many weeks to agree on releasing emergency aid for Greece today, with policymakers saying a write-down of Greek debt is off the table for now.Greek Finance Minister Yannis Stournaras said he was confident the ministers would reach a deal after Greece fulfilled its part of the deal by enacting tough austerity measures and economic reforms."I'm certain we will find a mutually beneficial solution today," he said on arrival for what was set to be another marathon meeting.Greece, where the euro zone's debt crisis erupted in late 2009, is the currency area's most heavily indebted country, despite a big "haircut" this year on privately-held bonds. Its economy has shrunk by nearly 25% in five years.EU Economic and Monetary Affairs Olli Rehn said it was vital to disburse the next 31 billion euro tranche of aid "to end the uncertainty that is still hanging over Greece". He urged all sides to "go the last centimetre because we are so close to an agreement".Negotiations have been stalled over how Greece's debt, forecast to peak at 190-200% of GDP in the coming two years, can be cut to a more sustainable 120% by 2020.Without agreement on how to reduce the debt, the IMF has held up payments to Athens because there is no guarantee of when the need for emergency financing will end.The key question is: Can Greek debt become sustainable without the euro zone writing off some of the loans to Athens?IMF Managing Director Christine Lagarde said on arrival that the solution must be "credible for Greece".A source familiar with IMF thinking said the global lender was demanding immediate measures to cut Greece's debt by 20 percentage points of GDP, with a commitment to do more to reduce the debt stock in a few years if Greece fulfills its programme.Under the source's scenario, Greece's debt could be reduced to around 125% of GDP by 2020 using a variety of methods including a debt buyback, reducing the interest rate on loans and returning euro zone central bank 'profits' to Greece, but further steps would still be needed to hit the 120% goal.The ministers took an extended break in mid-afternoon while experts worked on how to formulate a link between short-term measures and a credible assurance of eventual debt relief.Germany and its northern European allies have so far rejected any idea of forgiving official loans to Athens.German Finance Minister Wolfgang Schaeuble told reporters on arrival that a debt cut now was legally impossible, not just for Germany but for other euro zone countries, if it was linked to a new guarantee of loans."You cannot guarantee something if you're cutting debt at the same time," he said. That might not preclude debt relief at a later stage if Greece has completed its adjustment programme and no longer needs new loans.The source familiar with IMF thinking said a loan write-off once Greece has established a track record of compliance would be the simplest way to make its debt viable, but other methods such as foregoing interest payments, or lending at below market rates and extending maturities could all help.The German banking association (BDB) said a fresh "haircut" or forced reduction in the value of Greek sovereign debt, must only happen as a last resort.Two European Central Bank policymakers, vice-president Vitor Constancio and executive board member Joerg Asmussen, said debt forgiveness was not on the agenda for now.Asmussen told Germany's Bild newspaper the package of measures would include a substantial reduction of interest rates on loans to Greece and a debt buy-back by Greece, funded by loans from a euro zone rescue fund.So far, the options under consideration include reducing interest on already extended bilateral loans to Greece from the current 150 basis points above financing costs.How much lower is not yet decided - France and Italy would like to reduce the rate to 30 basis points (bps), while Germany and some other countries insist on a 90 bps margin.Another option, which could cut Greek debt by almost 17% of GDP, is to defer interest payments on loans to Greece from the EFSF, a temporary bailout fund, by 10 years.The European Central Bank could forego profits on its Greek bond portfolio, bought at a deep discount, cutting the debt pile by a further 4.6% by 2020, a document prepared for the ministers' talks last week showed.Not all euro zone central banks are willing to forego their profits, however, the German Bundesbank among them.Greece could also buy back its privately-held bonds on the market at a deep discount, with gains from the operation depending on the scope and price. Officials have spoken of a 10 billion euro buy-back at around 30 cents on the euro, that would retire around 30 billion euros of debt, although since the idea was raised the potential gain has fallen as prices have risen.But the preparatory document from last week said that the 120% target could not be reached in 2020, only two years later, unless ministers accept losses on their loans to Athens, provide additional financing or force private creditors into selling Greek debt at a discount.The latest analysis for the ministers showed the debt could come down to 125% of GDP in 2020, one euro zone official with insight into the talks said.