NEWS,18.12.2012

Global jobs crisis recovery to 'take five years' - UN

Global economic growth is expected to remain sluggish in the coming year and will be insufficient to pull countries out the unemployment crisis many are facing, the United Nations said in a report released today.It said under policies now in place it may take at least five years to recover from the job losses in Europe and the United States in the 2008-2009 recession."A worsening of the euro area crisis, the 'fiscal cliff' in the United States and a hard landing in China could cause a new global recession," said Rob Vos, head of the UN Development Policy and Analysis Division. "Each of these risks could cause global output losses of between 1% and 3%," he said. US President Barack Obama, a Democrat, is working with Republicans to avert steep tax hikes and deep spending cuts duet to take effect next month. Known as the "fiscal cliff," the measures could trigger another recession.The global economy is expected to grow at 2.2% in 2012, 2.4% in 2013 and 3.2% in 2014, the United Nations said in a report titled World Economic Situation and Prospects 2013.It said that 2.4% "world gross product" growth in 2013 would be "well below potential.""This pace of growth will be far from sufficient to overcome the continued jobs crisis that many countries are still facing," the United Nations said."With existing policies and growth trends, it may take at least another five years for Europe and the United States to make up for the job losses caused by the Great Recession of 2008-2009," it added.

Hopes rise for US fiscal cliff deal

The differences over how to resolve the fiscal cliff narrowed significantly on Monday night as President Barack Obama made a counter-offer to Republicans that included a major change in position on tax hikes for the wealthy, according to a source familiar with the talks.The move, which the source stressed was not Obama's final offer, was welcomed, albeit withreservations, by a spokesman for Republican House of Representatives Speaker John Boehner, who met earlier in the day with Obama as the two hammered out a way to avert steep tax hikes and indiscriminate spending reductions set for the beginning of 2013.Considerable work remains as both sides now try to bridge the gaps between them and then sell a package to their respective allies in the US Congress.In its most dramatic change in position yet, the White House proposed leaving lower tax rates in place for everyone except those earning $400 000 and above, the source said on condition of anonymity. That's up from the $250 000 threshold the president has been demanding for months, but still far from Boehner's preference of $1m. Obama also moved closer to Boehner on the proportion of a ten-year deficit reduction package that should come from increased revenue, as opposed to cuts in government spending. Obama is now willing to accept a revenue figure of $1.2 trillion, down from his previous $1.4 trillion proposal.Boehner's latest proposal calls for $1 trillion in new tax revenue, which would come from raising rates and limiting deductions that the wealthiest can take. Some of the savings in spending proposed by Obama would come from reducing the size of cost-of-living increases for all but the most "vulnerable" recipients of the Social Security retirement program, the source said, through the use of a different formula to calculate the regular raises called "chained Consumer Price Index." Obama and Boehner remained apart on the politically explosive issue of how and when to raise the government debt ceiling to permit the government to borrow more money.Boehner has proposed a one-year boost in the debt ceiling, tied to spending cuts. Obama, as of Monday night, was pushing for a two-year increase, potentially a major concession that many congressional conservatives may find hard to swallow since they have used it to extract spending cuts from the White House.Missing entirely from Obama's offer was an extension of the so-called "payroll tax holiday," which comes to an end on January 1 with an immediate negative impact on wage earners. Introduced by Obama two years ago as an economic stimulus, the tax holiday reduced an employee's share of the payroll tax from 6.2% to 4.2%. Because the tax supports the Social Security programme, however, there have been divisions in both parties over continuing the holiday.Because the details were incomplete and specifics vague, particularly on such issues as cutting the Medicare, the government health insurance program for seniors, it was uncertain how much resistance might come from Congress.But the source stressed that Monday's offer was by no means the final one from the White House.The response from Boehner's spokesman was also a positive signal. "Any movement away from the unrealistic offers the president has made previously is a step in the right direction," the spokesperson said, emphasising that differences remain on spending levels in particular."We hope to continue discussions with the president so we can reach an agreement that is truly balanced and begins to solve our spending problem." The rapid developments on Monday evening put a deal realistically within reach.Obama and Boehner held talks at the White House earlier on Monday, and aides from both parties said they were optimistic an agreement was shaping up. Rank-and-file Republicans, however, could have trouble with the tax increases on the wealthiest Americans that are likely to be part of any deal, while Obama could have a tough time selling spending cuts to his fellow Democrats. Investors were cheered earlier on Monday, before news broke of Obama's counter-offer, by signs of progress and the Standard & Poor's 500 index of US stocks rose 1.19%. Economists warn that going over the fiscal cliff could push the economy into recession. Senate Democratic leader Harry Reid said his chamber will wrap up work on the issue after Christmas." It appears that we're going to be coming back the day after Christmas to complete work on the 'fiscal cliff,'" he said on the Senate floor.Boehner faces a crucial test on Tuesday morning when he is expected to brief his party's lawmakers in the Republican-controlled House. He is not expected to bring any deal up for a vote unless a majority of the 241 House Republicans support it. Republicans have campaigned for decades on a promise to keep taxes low, but Boehner in recent days has edged closer to Obama's demand to raise tax rates on top earners. In return, Obama could back a measure that would slow the rate of growth of Social Security benefits by changing the way they are measured against inflation, according to a Senate Democratic aide.If there are no strong objections, he could try to finalise the deal with Obama on Wednesday, a Republican aide said.Both sides declined to say what Boehner and Obama discussed at the meeting, which was also attended by Treasury Secretary Timothy Geithner.The White House said Boehner's latest proposal does not meet its standards."Thus far, the president's proposal is the only proposal that we have seen that achieves the balance that is so necessary," White House spokesperson Jay Carney said at a news briefing.Republicans understand that the clock is ticking and they are confident that Boehner will get a deal they can support in the coming days, a senior House Republican aide said.Republicans want substantial spending cuts in return for increased tax revenue, but any proposal to trim popular benefit programs like Medicare will face fierce resistance from liberal Democrats, whose votes will be needed to get a deal passed. Obama could also face strong opposition from Democrats if he agrees to Boehner's proposal to slow the growth of Social Security benefits by changing the way the cost-of-living increases are measured against inflation, an approach that could save $200bn over 10 years. Obama also wants to head off another confrontation over the US debt limit, which will need to be raised in the coming months. Republicans insist that any increase in the government's $16.4 trillion borrowing authority must be paired with an equal reduction in spending.

Coal set to overtake oil as top fuel

Oil prices rose on Tuesday as hopes grew of a US deal to avert a "fiscal cliff" of tax hikes and spending cuts in the United States, the world's biggest consumer of crude, analysts said.New York's main contract, light sweet crude for delivery in January, increased by 49 cents to $87.69 a barrel.Brent North Sea crude for February advanced 58 cents to $108.22 per barrel in London midday deals."Crude oil prices rebounded on Tuesday amid hopes about the US budget details after the meeting between US President (Barack) Obama and House Speaker John Boehner provided some optimistic signs about the US economy, showing potential for a rebound in the US oil demand," said Sucden brokers analyst Myrto Sokou.Obama hosted top Republican lawmaker John Boehner in the White House for 45 minutes on Monday in the latest effort to keep the US economy from going over the fiscal cliff.The meeting follows news that Boehner had changed his position on not allowing any more taxes, saying at the weekend that he would agree to some hikes for people earning more than $1m.Originally Obama insisted higher taxes kick in for households earning more than $250 000, but has since offered to increase the threshold to $400 000.Analysts say the development shows the outline of a tentative deal is being formed.Elsewhere on Tuesday, a report said coal was set to surpass oil as the world's top fuel within a decade, driven by growth in emerging market giants China and India, with even Europe finding it hard to cut use despite pollution concerns."Thanks to abundant supplies and insatiable demand for power from emerging markets, coal met nearly half of the rise in global energy demand during the first decade of the 21st century," said Maria van der Hoeven, head of the International Energy Agency.Economic growth is expected to push up further coal's share of the global energy mix, "and if no changes are made to current policies, coal will catch oil within a decade", she said in a statement.The latest IEA projections see coal consumption nearly matching oil consumption in four years time, rising to 4.32 billion tonnes of oil equivalent in 2017 against 4.4 billion tonnes for oil.That has consequences for climate change as coal produces far more carbon emissions responsible for global warming than other fuels.

Indian central bank holds rates

India's central bank kept interest rates on hold on Tuesday, ignoring government pressure to reduce borrowing costs, but said it was shifting its focus towards boosting a flagging economy, raising the odds of a rate cut as early as January.The Reserve Bank of India (RBI) reiterated guidance from its last policy meeting in October that it was likely to resume monetary policy easing in the January-March quarter, as inflation pressures are expected to ease in the next few months.Wary of stubbornly high inflation, the RBI has kept its key policy rates on hold since a 50 basis point cut in April, in contrast to other big emerging market central banks in China, Brazil and South Korea that have been more aggressive in easing policy to support growth.On Tuesday, the central held the repo rate at 8% and also kept its cash reserve ratio (CRR) for banks steady at 4.25%, its lowest level since 1974. The CRR is the share of deposits that lenders must keep with the central bank."In view of inflation pressures ebbing, monetary policy has to increasingly shift focus and respond to the threats to growth from this point onwards," the central bank wrote in its mid-quarter monetary policy review.A Reuters poll last week showed 37 of 41 economists had expected the RBI to hold the policy repo rate steady, while respondents were roughly evenly split over the likelihood of a cut in the CRR.A lower-than-expected headline inflation reading in data released on Friday, after the polling was completed, had been seen in some quarters as raising the chances of a rate cut."Whatever the RBI spelt out in October seems to have got support from the inflation trajectory," said Abheek Barua, chief economist at HDFC Bank, in New Delhi. "Net of the base effect, we see the current trend continuing and a case for a rate cut strengthening, which they could do in January."The central bank has repeatedly resisted pressure from the finance ministry to cut rates to prop up an economy that has posted GDP growth below 6% for the past three quarters and is on track for its weakest annual performance in a decade in the fiscal year ending March.Whilst such a growth rate is still robust by the standards of developed economies, it is worryingly sluggish for a country that aspires to annual expansion of at least 8.5% to provide jobs for it burgeoning population."I think it is good that RBI sees there is room to ease and clearly they are taking a decision, keeping in mind their main job is combating inflation," said Raghuram Rajan, chief economic adviser to the finance ministry. "But they also have some incentive to seek growth in the country." The 10-year bond yield fell 3 basis points to 8.14% from levels before the decision, reflecting somewhat heightened expectations of a rate cut early in 2013. The benchmark stock index was flat."Liquidity conditions will be managed with a view to supporting growth ... thereby preparing the ground for further shifting the policy stance to support growth," the RBI said.The Congress-led minority government, faced with threats of sovereign rating downgrades due to a widening fiscal deficit, is trying to pass key reform bills allowing greater access to foreign investors in the retail, banking and insurance sectors.Appreciating the government's recent policy initiatives, the central bank said such moves along with further reforms should boost business activity and investment climate.Standard & Poor's last week issued another warning to India's credit rating, saying a wide fiscal deficit and a heavy debt burden were the most significant rating constraints. The wholesale price index (WPI), India's main gauge for inflation, softened to a 10-month low of 7.24% in November. It has remained above 7% for the past three years."Signs in softening RBI guidance is apparent as focus has shifted to growth, and odds for a rate cut in the January-March quarter are likely to gather considerable momentum here on," said Radhika Rao, an economist at Forecast Pte in Singapore."Barring a sharp acceleration in December WPI, we look for a 50 basis points reduction in Q1 2013, possibly front-loaded in the January meeting."

Saudi follows SA ban on Brazil beef

Saudi Arabia has suspended imports of Brazilian beef, Brazil's agriculture ministry said on Tuesday, and became the largest country to stop purchases after confirmation of a 2010 case of atypical mad cow disease.The decision, confirmed by a ministry press official in Brasilia, follows Egypt's ban of beef on Monday from Parana state, where a cow that died two years ago had developed atypical bovine spongiform encephalopathy (BSE), or mad cow disease. Egypt will continue to import from other states. Between January and October, Saudi Arabia imported 31,300 tonnes of beef, putting it among the top 10 largest importers from Brazil, the world's largest beef exporter. But top buyers Russia, Hong Kong and Egypt - which took more than half of the 896,000 tonnes of beef that Brazil has exported this year through September continue to import its beef, suggesting the impact could be limited. Prior to Saudi Arabia, only Japan, China and South Africa had halted imports of all Brazilian beef since Brazil announced on Dec. 7 that a 13-year-old cow that died in 2010 in Parana tested positive for the protein linked to the development of BSE.The countries are all minor importers of Brazilian beef.The cow, which was kept for breeding purposes, never developed BSE and died of other causes. But it tested positive for the causal agent for BSE, a protein called a prion, which can arise spontaneously in elderly cattle.A similar case of atypical BSE occurred in the United States in April. Like the Brazilian cow, that animal never entered the food chain and there was no major effect on U.S. beef exports.Brazilian companies like JBS SA, the world's biggest meats producer, as well as rival Minerva SA and food processor Marfrig Alimentos SA have played down the impact of the case on their operations.After it confirmed the case of atypical BSE, the World Animal Health Organization issued a statement maintaining Brazil's status as a low-risk country for mad cow disease."This classification has been followed by important countries, blocks and consumers," Minerva said in a statement on Tuesday, adding that sales to Saudi Arabia accounted for approximately 2.5% of gross sales so far this year.

NEWS,17.12.2012

Putin touts record Russian arms sales

Russian arms exports reached a record $14 billion this year, President Vladimir Putin said today, extending a run of record-breaking sales in recent years. The world's second biggest exporter has cultivated new weapons clients in Southeast Asia and Africa, despite criticism that it is failing to deliver the technological benefits of Western suppliers or the low costs of emerging weapons exporter China. "Let's talk about our results they are positive. We are reaching a record level of weapons exports. Their total volume was above $14 billion," Putin said in a televised meeting with officials. He said Russia had signed over $15 billion in new export contracts this year alone. He did not spell out when deliveries on those deals were expected.Russia has faced Western criticism over its weapons sales to the Syrian government, worth nearly $1 billion in 2011.Moscow says its arms deliveries to Syria, a long-time ally, do not violate international law and are not intended to help President Bashar al-Assad's government fight a 21-month-old uprising, but rather to fulfil Soviet-era commitments. Russia has made clear it would use its UN Security Council Vote to veto an arms embargo against Damascus, contending such a move would be one-sided when rebels are able to obtain weapons via smuggling into territory they now control. Moscow has reported no major arms deals with Syria this year. A major order of fighter jets was not completed, although it remains unclear as to why. Putin gave no specifics on Russia's main weapons buyers.Top weapons clients also include Soviet-era client and regional Asian heavyweight India, as well as Vietnam and other Southeast Asian nations wary of China's growing military might.Putin said a major part of Russia's weapons business includes upgrades and refurbishment of Soviet-era technology and hardware. "We understand that competition in this sector of the international economy is very high and very serious," he said. Exports from the world's top producer, the United States, have hovered around $30 billion annually in recent years.State arms exporter Rosoboron export accounts for around 80% of all Russian arms sales in a given year and nearly 20 independent firms comprise the rest with sales of spare parts and upgrades.

EU holds back on eurozone overhaul

European leaders doused hopes of a radical eurozone overhaul on Friday, after brokering deals to control banks and refloat Greece seen as adequate to stem the immediate crisis.The last EU summit of a year that saw Greece close to bankruptcy and bigger Latin countries pressured to overhaul their economies in line with German demands saw a series of ambitious proposals effectively kicked into the long grass.Despite worries over political uncertainty in Italy, flagship plans to fix fundamental flaws criticised since the introduction of the single currency were put to one side until late 2014 at the earliest.Europe's effective paymaster, German Chancellor Angela Merkel, hinted that "financial aid" could in the future be given to countries committing to reforms as part of moves towards greater economic co-ordination in the bloc.In the eurozone alone, joblessness is heading towards the 20 million mark after a year of devastation and with recession set to last throughout much of 2013.However, the sense of imminent panic on financial markets that dominated much of 2012 decision-making has receded significantly since the European Central Bank (ECB) issued a long-resisted but near-unlimited guarantee in the summer to stand behind countries in financial difficulty." No doors were closed," said Jose Manuel Barroso, the head of the executive European Commission. Yet ideas heavily promoted by EU President Herman Van Rompuy over the last six months, including a central eurozone budget, seemed to fizzle out.Van Rompuy said he would present another report to leaders in June 2013, as well as proposing that national governments sign up to contracts with the EU on reforms."All the hard work is beginning to pay off. A lot has been achieved over the course of a year," he insisted. "This work is not over: the dynamic will carry on in the coming year," pledged Van Rompuy. French President Francois Hollande said that late-2014, when a new Commission is installed, "would be the time we could envisage a new phase with a modification of the treaties. "The resumption of loans to Greece followed a successful plan to wipe tens of billions of euros from the country's debt pile.A first payment of €34.3bn would be flowing to Athens "as early as next week," said outgoing Eurogroup chair and Luxembourg Prime Minister Jean-Claude Juncker.The accord prompted Greek Prime Minister Antonis Samaras to declare that "Grexit", the idea that Greece would be forced out of the 17-nation bloc, was "dead." "Greece is back on its feet," declared an ecstatic Samaras, who has pushed through painful economic reforms demanded by international creditors, sometimes in the face of violent street protests. Meanwhile, the deal for the eurozone's largest banks to come under the aegis of the ECB from March 2014 was hailed by its head Mario Draghi as "an important step towards a stable economic and monetary union, and towards further European integration".Despite a noticeably more bullish tone at the summit, fears over Italy lurked in the background, after Prime Minister Mario Monti, credited with important reforms there, said he was stepping down soon. Former leader Silvio Berlusconi had hinted that he might stand for a fourth time but appeared to row back, telling Belgian television that he had "so much to do" outside politics. Hollande downplayed the chance Berlusconi would run in a future election, saying: "I don't think there is a very serious likelihood" of this."Merkel underlined a closing of ranks at the summit. "I made clear that the government of Mario Monti has done a great deal of helpful work for the confidence that Italy is now enjoying again," she said. Leaders were to reconvene later Friday at 10:00am (09:00 GMT) to discuss moves towards a common security and defence policy as well as to take a position on the Syria crisis.

Greece's lenders warn of 'very large' risks to bailout

Political resistance and potential court challenges are among "very large" risks to reforms required for Greece's bailout programme, the country's European lenders said today. The long-awaited report from the European Commission and the European Central Bank details the findings of the "troika" of the EC, ECB and the International Monetary Fund on Athens' efforts to meet targets under its latest rescue package.The report formally confirmed that Greece deserved further aid under the 130 billion euro ($202-billion) bailout, and a Greek finance ministry source said Athens had received a long-delayed instalment of over 34 billion euros in aid today. But the lenders warned Athens still risked falling short on its commitments. "The key risks concern the overall policy implementation, given that the coalition supporting the government appears fragile and some components of the programme face political resistance, despite the determination of the government," the report said." Important budgetary measures are likely to be challenged in courts, which could lead to the need to fill a fiscal gap emerging as a consequence." Greece, which has been bailed out twice by the EU and IMF since the debt crisis erupted, has a long history of missed targets and failure to meet promises to overhaul its bloated state sector and liberalise its recession-hit economy. A separate report by an EU task force today said by the end of October Greece had completed only 88 of the targeted 300 audits of large tax payers and 467 of 1300 audits of high-wealth individuals. Despite the lingering doubts on Greece's commitment and ability to reform, the country's lenders last week agreed to disburse aid to Athens after it bought back its own debt at a fraction of face value, cutting its debt burden. The decision to unlock aid - expected to total over 52 billion euros by the end of March removed the spectre of a Greek bankruptcy and euro zone exit. Even so, Moody's ratings agency said only further debt relief from official creditors, such as governments, would put its debt back on sustainable footing. The agency classified the bond buyback scheme as a "distressed exchange" and, as a result, a default on the Greek government debt held by private bondholders. Prime Minister Antonis Samaras's conservative-led government has promised to restore the country's credibility but his coalition has faced attacks both from within and outside on its plan to push through a new round of austerity. The troika's report warned those spending cuts next year could hurt the weak economy more than expected, though that could be stemmed by the government paying bills that have been in arrears. Greece's economy will contract by about 6% this year its fifth in recession and by a further 4.2% next year before growing 0.6% in 2014, the report said. But growth would not return without a business reform drive. Criticising influential business lobbies, it said reviving the economy would require "breaking the resistance (to reform) of vested interests and the prevailing rent-seeking mentality of powerful pressure groups".The report acknowledged that privatisation proceeds had been disappointing so far but that the programme had gained some momentum since September. It forecast revenue of 8.5 billion euros by 2016 from the asset sales, roughly a billion lower than Athens' own estimates in a mid-term fiscal plan. "Doubts on the effectiveness of the governance of the privatisation process however continue to persist," it said.

Wall Street gains as Obama and Boehner meet

Wall Street gained as a meeting between US President Barack Obama and House Speaker John Boehner at the White House today bolstered optimism a budget agreement will be reached soon Wall Street took heart from the 45 minute gathering about which no further details were released. In afternoon trading in New York, the Dow Jones Industrial Average rose 0.62 %, the Standard & Poor's 500 Index gained 1.03%, while the Nasdaq Composite Index advanced 1.01%. The stakes are high for the budget talks aimed at avoiding US$600 billion of tax increases and spending cuts from taking effect on January 1; failure to reach an agreement might push the US into recession in the first half of next year.Indeed, a report today showed that manufacturing in the New York region contracted more than expected in December, underpinning the fragility of the economy that prompted the US Federal Reserve to expand its stimulus program last week."It's a historic tug of war: pulling on one side is the fiscal cliff, pulling the other side is continued global monetary easing," David Sowerby, a portfolio manager at Boston based Loomis Sayles & Co, told Bloomberg News. "The most positive thing for the market is valuation and an accommodative Fed policy. "In Europe, the Stoxx 600 Index finished the session with a 0.1% decline from the previous close. European Central Bank President Mario Draghi reminded investors of the challenges ahead, even as he predicted a recovery in the second half of 2013 in comments at the European Parliament's Economic and Monetary Affairs Committee. "We expect economic weakness to extend into next year with a very gradual recovery in the second half of the year," Draghi said. Still, "the medium-term outlook for economic activity remains challenging."The central bank's new supervisory powers over banks in the region will help restore confidence, Draghi said. Equity investors in Japan applauded the Liberal Democratic Party's victory as leader Abe Shinzo plans aggressive fiscal and monetary stimulus measures to revive the nation's economy that just tipped into recession. The Nikkei 225 closed with a 0.9% gain.It's considered bad news for the yen, however, which was last 0.4% weaker against the US dollar. Earlier in the session, the yen dropped as low as 84.48 per dollar, the weakest since April 12, 2011, according to Bloomberg. The Bank of Japan is scheduled to start a two-day policy meeting on Wednesday. Switzerland's UBS will pay around US$1.5 billion to settle charges that a group of traders at its Japanese unit rigged Libor interest rates, Reuters reported, citing a source familiar with the matter. UBS will admit that about 36 of its traders around the globe manipulated yen Libor between 2005 and 2010, according to the source, with a final deal not expected before Wednesday. Shares of Apple fell initially after Citigroup cut its rating for the stock amid concern about tapering demand for its iPhone 5. The stock rebounded, last up 1.2%.

NEWS,23.11.2012

US can't afford Obamacare - Boehner

New comments from top Republican lawmaker John Boehner slamming healthcare reforms illustrate how hard it will be for Washington to reach a deficit reduction deal when talks resume next week, analysts say.President Barack Obama and the US Congress will begin negotiating next week on a plan that could avert tax hikes and spending cuts due to begin in January that economists worry could push the US economy over the "fiscal cliff" and into recession.Boehner did not explicitly mention the "fiscal cliff" talks in an opinion piece published in the Cincinnati Enquirer this week. But he argued the nation cannot afford the costs of Obama's 2010 healthcare reform law, given America's sluggish economy and massive $16 trillion (NZ$19.6 trillion) debt."That's why I've been clear that the law has to stay on the table as both parties discuss ways to solve our nation's massive debt challenge," said Boehner, who is a key player in the talks.Boehner's comments show it won't be easy to reach a deal on the thorny tax and spending issues, said Greg Valliere, chief political strategist at Potomac Research Group in Washington."There's an enormous gulf between the two parties on the details," he said, noting it is still possible that Obama and Congress may agree by January to broad spending and tax measures, and then take months afterwards to iron out details."Plunging off the cliff, then passing a tax cut in January that excludes the rich  is still a very live option," Valliere said. Analysts said Boehner's renewed critique of the healthcare law is designed to appeal to Republicans in the House of Representatives who have voted more than 30 times to repeal it.The law aims to extend health coverage to more than 30 million uninsured Americans starting in 2014. It also contains measures designed to contain the costs of America's $2.6 trillion (NZ$3.18 trillion) healthcare system, the most expensive in the world.Republicans promised to repeal the law, which they call "Obamacare", if they won the November presidential elections.But Obama's victory meant the Democrats kept their majority in the Senate. Last June, the US Supreme Court upheld the reforms.Boehner's comments were "not constructive" for the fiscal talks ahead because there is little chance negotiations will lead to changes in the healthcare law, said Jim Kessler, senior vice president for policy at centrist think-tank Third Way."This is a complete non-starter and a clumsy starting point for negotiations," Kessler said.Larry Sabato, political scientist at the University of Virginia, said he thought Boehner's comments seemed like a "bargaining chip" for the talks ahead."Just as President Obama is insisting that taxes must go up for everyone making $250,000 or more, the Republicans are saying that Obamacare is on the table," he said, noting he expects the income trigger for tax increases will end up being much higher and that the healthcare law will stay untouched.After the election, Boehner acknowledged in an ABC News interview that "Obamacare is the law of the land", although he also said the law had to be "on the table" as legislators work toward balancing the nation's budget.Julie Barnes, director of healthcare policy at the Bipartisan Policy Center, said the costs associated with getting the new health reforms in place pale in comparison to the much-larger costs of tax and spending issues before lawmakers."Small businesses and large businesses are not going to view Obamacare as what's really causing the problem for their competitiveness. The problem is healthcare costs," Barnes said.

German business sentiment surprises

German business morale surprised with its first rise in seven months in November as exports outside the euro zone and the prospect of strong Christmas sales offered hope Europe's largest economy can regain some momentum.The Munich-based Ifo think tank said on Friday its business climate index, based on a monthly survey of some 7 000 firms, rose to 101.4 from 100.0 in October, far surpassing even the highest estimate in a Reuters poll.Germany proved largely immune to the first two years of the European debt crisis but recent data has suggested its resilience is wearing thin, with growth slowing to 0.2% in the third quarter.Yet while economists expect the economy to contract in the fourth quarter, they had already expected the first quarter to be better and the IFO numbers added to hopes that it could stave off the recession plaguing euro zone members further south."That was a positive surprise," said Ralph Solveen of Commerzbank. "The brightening climate raises hopes that the economy will stabilise after what will likely be a weak fourth quarter. (One) increase now is nevertheless not a sign of a turnaround."He pointed to reduced fears of a euro-zone break-up as well as positive signals from Asia and the United States, where Germany's strength in high-added value exports like cars, electronics and machinery make it well-placed to take advantage of any economic improvement.The euro rose to a three-week high against the dollar and European stocks trimmed losses after the IFO numbers.Asia-basedFirms were more upbeat about their business outlook, with an IFO sub-index rising to 108.1 from a revised 107.2 in October. They were also less pessimistic about current business, with the current conditions index up to 95.2 from 93.2.That came as a surprise after data this month showed the private sector shrinking, unemployment up, industrial orders and output down and exports falling at their fastest pace since late last year.IFO economist Klaus Wohlrabe said exporters' outlook had improved but firms were still delaying investment due to the uncertainty caused by the unresolved euro zone crisis."Export expectations rose strongly and are back in the positive area now. The orders situation and demand are stabilising. Exports to the United States and Asia seem to be going well,". "The uncertainty (on investment) is still present. ... There has been no turnaround yet. "Seasonally-adjusted GDP data showed gross capital investment made no contribution to growth while investment in plant and equipment fell by 2.0%.Chipmaker Infineon has already said it will cut planned investments. "Businesses are investing less in machines and other equipment. The only explanation for that is a crisis of confidence - which means the German economy will lose more speed," said economist Holger Schmieding of Berenberg Bank.Europe has been unable to contain the euro zone crisis with no agreement yet on how to get Greece's debt down to sustainable levels. France, Germany's single largest trading partner, lost a second AAA credit rating on Monday on concerns over its fiscal outlook and deteriorating economy.

Greece says lenders closer to compromise

 

The International Monetary Fund has relaxed its debt-cutting target for Greece and only a €10bn gap remains to be filled for a vital aid tranche to be paid, Greece's finance minister said on Friday.But other sources involved in the talks cautioned that the funding gap was far bigger than that suggested by Greece and that the two sides were not on the verge of striking a deal to resolve the euro zone's most intractable problem.Greece's finance minister signalled that a compromise was near by saying the International Monetary Fund had agreed to deem the country's debt viable if it falls to 124% of GDP in 2020, giving ground on its earlier target of 120%.The Eurogroup has already agreed on measures to reduce Greek debt to 130% of GDP in 2020, Yannis Stournaras said."That leaves a gap of 5-6 percentage points of GDP to be covered  about €10bn," he told reporters in Brussels.The EU and IMF are considering bringing the debt down through a combination of interest rate cuts and extension of maturities on the country's loans, a debt buyback and having the ECB forego profits on its Greek bond holdings, a Greek finance ministry official told Reuters.Teetering on the verge of bankruptcy, Greece is increasingly frustrated that its lenders are still squabbling over a deal to unlock fresh aid despite the country pushing through unpopular austerity cuts that brought thousands on to the streets.Athens says time is running out and that it needs its next tranches of almost €44bn in aid to recapitalise banks and stabilize its recession-hit economy. Its next big debt repayment falls due in mid-December.It expects the aid to be paid out in one installment, Greece's government spokesman told Greek radio, playing down recent speculation that it could be dribbled out in bits.The euro hit a three-week high against the dollar on growing optimism that Greece's lenders were close to an agreement."Too optimistic"Euro zone finance ministers, the IMF and European Central Bank failed earlier this week to agree how to get the country's debt down to a sustainable level and will have a third go at resolving the issue on Monday.A senior source involved in the negotiations confirmed that the IMF would now accept 124% as a target but was dismissive of the gap amounting to only €10bn."There are still things missing to an agreement," the source said. "The 10 billion is too optimistic."A Greek finance ministry official said the ECB could relinquish €9bn of profits on the Greek bonds it holds, as part of the measures to bring debt in 2020 down from a previous estimate of 144% of GDP.Other options include saving €8bn from cutting the interest rate, extending maturities on Greek debt and spending €10bn to buy back around €30bn of debt.Greece has already begun preparations for the debt buyback, which could be completed by the end of the year if euro zone finance ministers approve the move, the official said.According to current government projections, Greek debt is seen at €340.6bn, or 175.6% of GDP at the end of 2012. It is expected to peak at €357.7bn, almost 191%, in 2015.According to a document circulated at the Eurogroup meeting, Greece's debt cannot be cut to 120% of GDP by 2020 unless euro zone member states write off a portion of their loans to Greece, which Germany has said would be illegal.The document prepared for the meeting of euro zone finance ministers and seen by Reuters spelled out several options now cited by Greek officials - including using about 10 billion euros to buy back bonds at between 30 and 35 cents in the euro.Many Greek retail bondholders are still angry from a debt restructuring earlier this year that imposed heavy losses on private holders of Greek debt.About 40 retail bondholders pushed past security at the co-ruling conservative New Democracy party's offices in Athens on Friday, defaced a portrait of party founder Constantinos Karamanlis and scuffled with guards.

EU budget summit edges towards collapse

EU leaders looked set to throw in the towel Friday as talks on a trillion euro budget for the 27-member bloc faltered over tensions between rich and poor states and Britain's "virulent" demands for austerity.British Prime Minister David Cameron kept up his defiant stance as he arrived for a second day of bitter negotiations on the European Union budget for the seven years from 2014-2020."There really is a problem that there hasn't been the progress in cutting back proposals for additional spending," Cameron, who back home has to pander to the powerful eurosceptic wing of his Conservative party, told reporters.Britain, like many countries across Europe, is responding to economic crisis with major public spending cuts and Cameron argues that at a time of austerity at home the EU must also make deep cuts.His bleak assessment of the state of the budget talks was shared by other EU leaders, who arrived one by one at European Council building in Brussels for bilateral meetings before the summit proper resumed at midday."I believe that also in this round, we won't be where have to get to, which is a unanimous decision," said German Chancellor Angela Merkel, repeating a line she had taken even before arriving in the Belgian capital."If we need a second round, then we will take the time necessary for it," se added, referring to the prospect of a second summit in the coming months to nail down a deal.Nearly a year after he angered his European counterparts by vetoing a pact to resolve the eurozone crisis, Cameron was again at odds with them by demanding cuts to the perks enjoyed by so-called "eurocrats" the well-paid EU civil servants who are frequently targeted by the British press. British officials insisted that other countries including Sweden, the Netherlands and Germany largely backed Cameron's position for a reduction in the planned trillion dollar budget for the seven years from 2014-2020.But an EU diplomat said the main obstacle was Cameron's demand for cuts adding: "The most virulent were the British, the Swedish and the Dutch."Cameron had vowed to bring down the budget from a proposed €1.047 trillion to €886bn.The summit was scheduled to resume at 11:00 on Friday once delegates from the 27 member nations have had time to examine new proposals on the budget submitted by EU President Herman Van Rompuy.The proposals reintroduce his own earlier figure of €972bn in spending, which comes to just over one percent of the EU's total economic output, the usual benchmark used in Brussels budget talks.The latest blueprint which negotiators will work from Friday spreads the funds more generously to sensitive envelopes like the "cohesion" funds for regional development, and the Common Agricultural Policy, the farm subsidy programme cherished by France that is the budget's biggest single item."We will not accept the unacceptable," warned Prime Minister Mario of Italy, which like France defends farm subsidies, but also backs cohesion funds which have vastly aided Italy's less developed south.Italy is among the countries that contribute more to the EU budget than they get back, known as the "net contributors", while once mighty Spain, rocked by the eurozone debt crisis, rejoined the camp of those who get more cash than they put in.Cohesion funds billions of euros outlayed each year to the EU's poorer members so they can catch up with richer neighbours are being defended tooth and nail by the 15 "Friends of Cohesion" nations, led by Poland and Portugal."Cohesion is an issue of competitiveness and growth for the whole European Union, not just for the countries with the greatest needs," argued Prime Minister Antonis Samaras of debt-stricken Greece.

Volkswagen to invest €14bn in China

Volkswagen AG plans to invest €14bn in China over the next four years, its China chief was quoted by the China Daily newspaper as saying, as it speeds up its expansion in the world's largest autos market. Volkswagen, which produces cars in China in partnership with SAIC Motor Corp and FAW Group, is building four plants in the country, the newspaper said, citing the German automaker's China chief Jochem Heizmann. Volkswagen sold 2 million cars in China in January-September, up 18.3% and more than double the overall industry growth.By 2018, Volkswagen's China annual capacity will reach at least 4 million vehicles, Heizmann told the China Daily, adding the group's workforce, including those at joint ventures, would rise to 85 000 within 3-5 years from 50 000 now. Heizmann was at the Guangzhou autoshow on Thursday.The German automaker will also build plug-in hybrid cars in China within 2-3 years and make plug-in hybrid powertrains, he added. Encouraged by Beijing's initiative to put 5 million electric and plug-in hybrids on the road by 2020, foreign automakers are gearing up to tap the potential for green cars in China.General Motors Co, which already sells its plug-in hybrid Chevrolet Volt in China, this week rolled out its first China-developed electric car, the Sail Springo EV. Nissan Motor Co Ltd is also promoting its Leaf electric car with local governments and will expand the effort to include its Venucia e30 China-only electric car  made at its joint venture with Dongfeng Automobile Co Ltd - next year.Globally, Volkswagen, jostling with Toyota Motor Corp as the world's number-one automaker, is expected to increase spending by 12% to as much as €70bn for its 12 brands over the next five years, compared with €62.4bn for 2012-16 agreed a year ago, analysts have said.That would be a record, but also represent a slowdown. The €62.4bn target was more than a fifth higher than over the 2011-15 period.

Brits top the whisteblowers list

 

More than one in ten tip-offs about corporate wrongdoing received by the US Securities and Exchange Commission (SEC) came from overseas, with British whistleblowers topping the list, said a global investigations firm on Thursday.Nearly one in four of the 324 overseas tip-offs came from Britain with Canada second and India third, according to Kroll's analysis of the annual report from the US body responsible for regulating the securities market.Under new US regulation introduced in 2010, the SEC starting paying whistleblowers, both at home and abroad, for coming forward with information that results in successful prosecutions."The bounties offered to whistleblowers by the SEC are likely to have huge repercussions for companies, particularly international ones, as they mean whistleblowers based anywhere in the world are more likely to go to the regulator rather than their company," said Kroll Managing Director, Benedict Hamilton.Britain's 74 tip-offs were well above second-placed Canada which had 46, according to data from the fiscal year 2012.Regulators in Britain do not offer similar rewards at the moment but Kroll said Britain's Parliamentary commission on banking standards has asked the Financial Services Authority regulator to consider the move.Data released last month showed the number of whistleblowing cases reported to the FSA were up 276% in four years.The SEC received nearly 1 000 calls to its helpline from June 2007 to May 2008 compared to 3 733 in the same 2011 to 2012 period.