NEWS,21.11.2012

Debt deal for Greece fails again

International lenders failed for the second week to reach a deal to release emergency aid for Greece and will try again next week, but Germany signalled that significant divisions remain.Euro zone finance ministers, the International Monetary Fund and the European Central Bank were unable to agree in 12 hours of overnight talks in Brussels on how to make the country's debt sustainable.They want a solution before paying the next loan tranche which is urgently needed to keep Greece afloat.Several European officials played down the delay, saying the disagreements were technical and a deal would be reached when they meet again on November 26.German Finance Minister Wolfgang Schaeuble said he was confident the funding gap could be filled by a mixture of letting Greece buy back its own debt at a discount, tapping ECB profits on Greek bond purchases, and lowering interest rates on government loans to Athens, but not below the cost to lenders."Additional measures are needed and we have spoken about this intensively with the International Monetary Fund. We agree essentially that the gap can and will be filled, that a buyback programme of Greek debt on the market will be carried out," he told reporters.Schaeuble earlier told conservative lawmakers at a closed-door briefing that the lenders were split over how to define debt sustainability and fill a hole in Greek finances."He sees the extension of the debt sustainability goal as one of the main bones of contention. The other is how to cover the Greek financing gap of 14 billion euros through 2014," said one lawmaker who attended the meeting of Chancellor Angela Merkel's centre-right Christian Democrats in parliament.European governments want to give Greece an extra two years, until 2022, to cut its debt to a sustainable level of 120% of GDP but the IMF does not agree.The Europeans, led by Germany, are refusing to write off any loans. Both options would make it easier for Greece to meet the targets in the bailout programme.Merkel told the lawmakers the gap could be plugged by lowering interest rates on loans to Greece, extending their maturity to 30 years from 15, and increasing guarantees provided to the euro zone's temporary EFSF bailout fund, in which Germany would take its share, a participant said."I believe there are chances, one doesn't know for sure, but there are chances to get a solution on Monday," she told the Bundestag lower house of parliament during a debate.Any options that cost the German taxpayer more money come with a heavy political price tag with elections less than a year away and would have to voted through by an increasingly restive Bundestag."If we get the impression we are being cheated, we won't come to the rescue anymore when you need our support," Social Democrat leader Peer Steinbrueck warned in a speech to the chamber just before Merkel took the podium.Until now Merkel has been able to count on the support of parties like the SPD and Greens to help push through controversial bailout votes in the lower house.Greece needs the next 31 billion euro aid tranche to keep servicing its debt and avoid bankruptcy. Its next major repayment is in mid-December.Athens says it has carried out the tough reforms required in the bailout programme but needs more time to reach fiscal targets agreed with lenders because its economy keeps shrinking.French Finance Minister Pierre Moscovici said agreement was close, echoing overnight comments from Eurogroup chairman Jean-Claude Juncker, who said talks were stuck on technicalities."We are a whisker away from a deal. I am very confident we will get there on Monday," Moscovici told Europe 1 radio.GREEK ANGERGreece is increasingly frustrated about the repeated delays in releasing the aid and says it has done what is necessary."Greece did what it had committed it would do. Our partners, together with the IMF, also have to do what they have taken on to do," Prime Minister Antonis Samaras said in a statement."Any technical difficulties in finding a technical solution do not justify any negligence or delays."Samaras will meet Juncker in Brussels on Thursday and has cancelled a trip to Qatar next week to monitor the talks, a government spokesman said.The prime minister is under growing pressure from his own coalition allies and the opposition after pushing through deeply unpopular austerity measures that he said were the only way to get more aid to avert bankruptcy."The euro zone cannot use Greece as an alibi to justify its weakness in dealing effectively and definitively with the crisis," said Evangelos Venizelos, head of the co-ruling PASOK party. Opposition leader Alexis Tsipras, whose party is rising in polls, said Samaras had lost all credibility.Investors were disappointed with the news. Greek banking stocks fell nearly 6% in morning trade. Most of Greece's next aid instalment has been earmarked to shore up the country's tottering banks.The euro, European shares and the prices of higher-yielding euro zone debt lost ground but later recovered some of the losses.NO WRITE DOWNA document prepared for the Brussels meeting and seen by Reuters showed Greece's debt cannot be cut from 170% of GDP to 120%, the level deemed sustainable by the IMF, unless either euro zone member states write off a portion of their loans to Greece or the IMF extends its deadline by two years.Germany and other EU states say writing down their loans would be illegal. The European Central Bank, a major holder of Greek bonds, has refused to take a "haircut" on its holdings.Berlin contends a debt haircut would not tackle the roots of Greece's debt problems and would be unfair to other euro zone countries that have taken tough steps to improve their finances."It would cost money, it would be a fatal signal to Ireland, Portugal and possibly Spain, as they would immediately ask why they should accept difficult conditions and push through difficult measures ... and it would have consequences under budget law," Norbert Barthle, budget spokesman forMerkel's Christian Democrats said.Without corrective measures, the Eurogroup document said, Greek debt would be 144% in 2020 and 133% in 2022.Juncker said after a meeting a week ago that he wanted to extend the target date to reduce Greek debt by two years to 2022, but Lagarde insists the 2020 goal should stand. She is believed to favour euro zone member states taking a writedown.Under a buy-back plan, Greece would offer to purchase bonds from private investors at a sharp discount to their face value. Options are under consideration including using about 10 billion euros of EFSF money to buy back bonds at between 30 and 35 cents on the euro.There are also proposals to reduce the interest rate on loans already extended by euro zone countries to Greece, to allow a long moratorium on interest payments and lengthen the maturities on loans, all of which would cut the debt burden.

Shares climb amid hope for Greece

World shares advanced as policymakers in Europe reassured markets that a deal on releasing emergency aid to Greece was close, although the failure of lenders to come to an agreement on their own kept investors cautious.Euro zone finance ministers, the International Monetary Fund and the European Central Bank will gather again next week, after nearly 12 hours of talks overnight in Brussels failed to produce a consensus on how to shrink Greece's debts.After the meeting ended, French Finance Minister Pierre Moscovici said a deal was just "a whisker away," while European paymaster Germany said a plan was being developed to provide Greece with funding until 2016.Shares in Europe rebounded from early losses. The FTSEurofirst 300 index of top shares closed 0.3% higher, while the Euro STOXX 50 recouped from an earlier drop to add 0.5%."European exchanges themselves are doing okay, so investors are saying 'we didn't really expect a resolution (on Greece),' just kind of learning to live with it," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.US stocks gained in trading thinned by a national holiday Thursday for Thanksgiving. The Dow Jones industrial average was up 53.21 points, or 0.42%, at 12,841.72.The Standard & Poor's 500 Index was up 3.27 points, or 0.24%, at 1,391.08. The Nasdaq Composite Index was up 9.56 points, or 0.33%, at 2,926.24.Investors in the US digested the latest data, including weekly jobless claims that met expectations and a final read on November consumer sentiment that was below forecasts.Market participants remained anxious about tax and spending changes - known as the fiscal cliff poised to come into effect in the new year, though policymakers are not expected to get back to negotiations until after Thanksgiving.The benchmark 10-year US Treasury note was down 6/32, with the yield at 1.6882%.The euro rose 0.1% to $1.28, also rebounding from earlier weakness of as much as 0.5%.Prices for German debt, the safest in the euro zone, had eased slightly, sending 10-year yields down modestly to 1.431%.However, a sale of 3.25 billion euros ($4.2 billion) of new German 10-year debt, which paid an interest rate of 1.5%, drew solid demand from investors worried about the outlook.Before the Greek impasse, world equity markets had come under pressure after Federal Reserve Chairman Ben Bernanke warned that the central bank lacked the tools to cushion the impact of a potential US fiscal crisis.Bernanke said worries over fiscal negotiations, aimed at preventing a series of mandatory tax increases and spending cuts early next year, had already damaged growth in the world's largest economy.His comments snapped a two-day rally on Wall Street Tuesday, but the MSCI world equity index later rose 0.3%.Asian shares had initially fallen Wednesday in reaction to the Greek aid payment delay, but closed modestly higher, buoyed by gains in mainland Chinese markets and in Tokyo.MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.2%, while Japan's Nikkei stock average closed up 0.9% at a two month-high.The Nikkei's gains came as shares of exporters rose, after the yen hit a seven-month low against the dollar, on expectations a new government will aggressively push the Bank of Japan to expand monetary stimulus.Japan's opposition Liberal Democratic Party, tipped to win next month's general election, also promised to boost spending as it emerged that exports had fallen in annual terms for a fifth straight month in October.The yen rose 0.9% to the dollar, rebounding from its weakest level since early April. The US dollar was off 0.1 against a basket of currencies, while Brent crude erased earlier losses to trade flat at $109.91 per barrel.Oil was flat, after earlier having been supported by mounting tensions in the Middle East amid days of fighting between Israel and Hamas, which many feared could disrupt oil flows.Concerns about Greece and the impact that could have on international growth, however, weighed on crude prices."There are opposing forces where the uncertainty in Europe and the United States meets with the bullish uncertainty in the Middle East ... so I think we're going to see a volatile market," said Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong.

NEWS,14.10.2012

Eyes peeled on US earnings

The central bank-induced highs of September have given way to concern about the depressed outlook for corporate earnings and the global economy.After the International Monetary Fund kicked off the week with a downgrade of its forecast for worldwide economic growth, US companies including Alcoa reminded investors that the headwinds facing Europe and China make corporate smooth sailing increasingly challenging.Indeed, Thomson Reuters data showed 11 negative outlooks for fourth-quarter results so far from Standard & Poor's 500 companies, while none are positive.Investors are anxiously awaiting results of Bank of America, Citigroup, Goldman Sachs and Morgan Stanley released in coming days after those of JPMorgan Chase and Wells Fargo failed to inspire on Friday."We need to see big banks doing well, and JPMorgan or Wells didn't give us the boost we were hoping for," Wayne Kaufman, chief market analyst at John Thomas Financial in New York, told Reuters. "Citigroup is the one we're looking for. If profits come in worse than expected there, that would make me more bearish about the economy in general."Among the slew of other US companies reporting this week are McDonald's, Microsoft, IBM, Intel and Johnson & Johnson.In the past five days, the Standard & Poor's 500 Index shed 2.2%, while the Dow Jones Industrial Average dropped 2.1%.There were some unexpected bright spots as reports showed that US jobless claims dropped to the lowest since 2008, while confidence among American consumers rose in October to the highest level in five years.Also, data showed that China's exports increased at the fastest pace in three months in September, fuelling hope the world's second-largest economy might be holding up better than expected after all.US data due in the coming days include retail sales, the consumer price index, industrial production, housing starts, and existing home sales.By and large, the appeal of the relative safe-haven of US Treasuries remained strong in the past week, bolstering demand for the US$66 billion of notes auctioned. The yield on 30-year bonds dropped 14 basis points last week, while the yield on 10-year debt yield declined nine basis points."The IMF brought everybody back to the global economic situation," Jim Vogel, head of agency-debt research at FTN Financial in Memphis, Tennessee, told Bloomberg. "We went through roughly six weeks where everything looked more attractive than Treasuries."On Thursday, the US is scheduled to auction US$7 billion in 30-year Treasury Inflation Protected Securities.In Europe, investors will eye a meeting of EU finance ministers.Euro zone officials are considering new ways to lower Greece's debts because delays to reforms by Athens and continued recession have put the target of a debt to GDP ratio of 120 % in 2020 out of reach, Reuters reported.Europe's Stoxx 600 Index declined 1.7% last week. The euro also suffered, weakening 0.7% against the greenback in the past five days, and losing 0.9% against the yen.The region's debt crisis remains a key concern for investors.BlackRock chief executive Laurence Fink said he was still bullish on US equities but warned that the stock market could lose 5 to 10% in a correction in the final months of the year amid uncertainty over the euro zone's current key problem-child, Spain."The next three to four months we are going to probably have greater uncertainty and the market may test itself one more time," Fink said.

Germany and Singapore to co-operate over tax evasion

Germany and Singapore have agreed to co-operate more closely to reduce tax evasion, the German Finance Ministry said, amid signs that German tax evaders are moving funds to Asia's prominent wealth management centre.Recent media reports have suggested said that wealthy German citizens were shifting funds to Singapore from Switzerland, which signed a tax deal with Germany earlier this year.The new agreement will come into effect once both countries have ratified it domestically and will allow the two states to obtain more information from each other.The ministry said in a statement on Sunday a 2004 tax agreement between Germany and Singapore would be amended to conform to the international standards for exchanging information laid out by the Organisation for Economic Co-operation and Development (OECD).The agreement will cover all kinds of taxes, not just capital and income tax as was previously the case. The exchange of information could apply to taxpayers not resident in Germany or Singapore and would not be hindered by banking secrecy rules, the ministry said.Switzerland and Germany hammered out a new deal in April to confront tax evasion, but the centre-left SPD opposition has said it will block the pact in the upper house of parliament, arguing it is too lenient on tax dodgers.One of the SPD's criticisms has been that the agreement would allow people to evade taxes by taking their money out of Switzerland before the deal takes effect.Norbert Walter-Borjans, finance minister of the German state of North Rhine-Westphalia and one of the most vociferous critics of the Swiss tax deal, welcomed the agreement with Singapore."Every effective agreement which prevents tax evasion helps to make the tax system fairer and state finances more stable," he said in a statement.

 

Poland to pump €15.5bn into shale gas

Poland will invest 50bn zlotys (€15.5bn) in the exploration of shale gas by 2020, Finance Minister Mikolaj Budzanowski said on Saturday.Investment over the next two years will total 5bn zlotys (€1.2bn), which includes a €409m shale gas deal agreed in July by five Polish energy and mining groups, Budzanowski told the press."With the Russian gas accord terminating at the end of 2022, we must be well prepared to noticeably boost the exploitation of our own gas fields three years earlier," he said, adding that state money as well as private investment would be involved.Poland which has a population of 38 million has extractable shale gas deposits estimated at 1 920 billion cubic metres, according to an official report published in March.The National Geological Institute (PIG) said Poland's shale gas deposits are the third largest in Europe after those of Norway and the Netherlands.Its extraction could make the country independent of Russian imports.Poland burns 14 billion cubic metres of gas a year, two-thirds of which come from Russia.The government expects extraction to begin in 2014.The gas is extracted from rock through hydraulic fracturing or fracking, the drilling of underground shale rock formations by injecting chemicals and water to release the trapped natural gas.Opponents say it causes pollution of the ground water but energy groups say it provides access to considerable gas reserves and drives down the price.

 

Finance leaders back shielding growth

World finance leaders on Saturday endorsed a checklist of policy reforms aimed at pressuring Europe and the United States to tackle debt troubles that threaten to choke off global growth.To hold each others’ feet to the fire, the nations - meeting under the aegis of the International Monetary Fund - agreed to review progress in six months.Their 10-page agenda, however, largely summarised previously planned steps, such as deploying a new European Central Bank bond-buying programme and avoiding the US “fiscal cliff” of spending cuts and tax hikes set to take hold early next year.The checklist and checkup were an acknowledgement of frustration within the IMF and among many emerging market economies over a sluggish and piecemeal policy response to the major risks facing the world economy.IMF chief Christine Lagarde said nations had narrowed their differences over how to implement policy, seeking to downplay disagreements between the Fund and Germany over how quickly debt-laden countries such as Greece should cut budgets.“There was no objection to the recommendation that we gave to the membership, which was A-C-T,” Lagarde said, spelling out the word letter by letter.“We might not always agree on everything, but I think there is a general consensus that collective action is going to produce results,” she told reporters.  In a communique released after two days of talks, IMF members warned that global economic growth was decelerating and that substantial uncertainties and risks remained.But the IMF’s governing panel, representing the 188 member countries, praised steps that had already been taken, particularly in Europe, to make the world financial system safer, even if they had not yet gone far enough.“Members all agreed that we are in a better position today than we were six months ago,” said Singapore Deputy Prime Minister Tharman Shanmugaratnam, the chairperson of the committee.Spain’s economy minister, Luis de Guindos, said he felt the mood toward his country lifting too. Spain is under pressure to seek a bailout as it struggles to cope with high government debt and the cost of recapitalising its banks. “The atmosphere, from International Monetary Fund policymakers or from the private sector, is much more positive than it was before the summer,” de Guindos said.Euro zone sources said they expected Spain to seek financial aid from the euro zone in November.Still, finance leaders leave Tokyo with little concrete evidence that fresh progress was being made in the world’s debt trouble spots, hamstrung by political considerations.US presidential elections and a once-a-decade leadership change in China are just weeks away. The euro area has to navigate decisions through several national governments, which Russian Finance Minister Anton Siluanov likened to manoeuvring a supertanker with 17 captains at the helm.“If you decide to turn it in one direction, it happens very slowly,” he said.Emerging strainsReports from the IMF this week downgraded global economic growth forecasts for the second time since April and warned of the need for action in advanced economies to treat a debt hangover that stems in part from earlier efforts to quell the global financial crisis.To replenish its crisis-fighting war chest, the IMF has taken in $461bn in contributions from member countries, with Algeria and Brunei the newest members of the donor group, Lagarde said. The United States is among the notable absences from the list of contributors.Frustration over what many nations see as plodding progress in Europe and in Washington spilled into public view during the meetings.“Asia alone can’t carry the global economy,” said Australian Treasurer Wayne Swan. “It is time for the other players to get off the benches and start to pull their weight on global economic growth again.”Emerging markets, which have been caught in the downdraft created by weak economies in Europe and the United States, were disappointed that the IMF missed its target for enacting voting reforms that would make China the third most influential country within the lending institution. Lagarde said there were “one or two countries” that had not finalised the reforms, which were agreed in 2010, a thinly veiled reference to the United States. The Obama administration does not want to seek congressional approval for more IMF funding before the November presidential election.European leaders argued this week they had taken big strides toward building a stronger fiscal and banking union, and they earned at least some recognition from the rest of the world.“This broad framework offers a more promising strategy for addressing the crisis,” US Treasury Secretary Timothy Geithner said. “However, what is important is how it will be applied.”German Finance Minister Wolfgang Schaeuble pointed out that euro zone decision-making does take time given the number of national governments involved.“If we are not fast enough for markets, sorry, but markets have to wait,” he said.

NEWS,11.10.2012

Spain comfortable with waiting game on aid

Spain is comfortable putting off an international aid request for weeks or even months as it waits out German political obstacles, analysts and sources say.In the meantime, Spanish Prime Minister Mariano Rajoy is focusing on measures such as intensifying labour market reforms, as well as pushing for a European banking union that would help rebuild confidence in Spain's tarnished banking sector.Spain's borrowing costs spiked in July, the yield on the benchmark 10-year bond jumped over an unsustainable 7%, but tumbled after ECB head Mario Draghi unveiled a bond-buying scheme to lower Spanish borrowing costs.Spain must first sign up for a European rescue plan to trigger the bond buying. Given its debt position, the Spanish government still sees that step as inevitable but pressure has eased as investors are less willing to bet against Spain with the ECB waiting in the wings.Germany has sent Spain strong signals that it should hold off because German Chancellor Angela Merkel is wary of presenting a fresh aid request to her parliament, euro zone sources say.Sources familiar with Rajoy's thinking say he also wants the ECB to indicate exactly what it will achieve with the bond-buying. "We will end up there, with ECB action, but the ECB is still designing the instrument in more accurate terms," said a source close to the government. "The markets understand that we have the fire extinguisher. We'll see how it evolves in the coming weeks."Turmoil over Greece, a fresh spike in Spanish yields or a credit rating downgrade to junk status for Spanish government bonds could accelerate the process, but for now Madrid is comfortable taking it slow, the source said.Spanish officials see more risks to moving ahead quickly without assured German backing, than in delaying a request.Meanwhile, they think things are moving in the right direction. For example, criticism of Draghi's plan has died down after strident objections from European Central Bank Governing Council Member Jens Weidmann, who heads the German Bundesbank."We think that the current period of vacillation might last for several months if events don't intervene," Alex White, an economist with JP Morgan in London, wrote in a research note.White said he saw little on the horizon to change Germany's desire to avoid a Bundestag vote on Spain in the near-term.Then there is Rajoy's personality to consider."Rajoy has infinite patience to put up with tension where others would break down," said a senior banker in Spain.Although Rajoy has said he is studying conditions for seeking European aid, there is no mystery over what the European Commission would demand of Spain in terms of structural reforms and spending cuts.Euro zone sources have said conditions are likely to be largely in line with measures the country has already taken, since Spain would not be applying for a full rescue programme that would cover all of its financing needs.The International Monetary Fund has sent a strong message to European policymakers to focus on growth even as they try to correct deficits, a line Spain applauds.With the economy in a deep recession and unemployment close to 25 percent, Spanish officials point out that ECB intervention might bring liquidity, but won't revive economic growth."With or without liquidity we have a growth problem globally, that we must start discussing," said the source close to the government.Banking reform Rajoy has concentrated on moving forward with banking union - under which the ECB would supervise European banks and the region would set up a deposit guarantee fund - which he sees as key to improving Spanish banks' access to liquidity.After meeting French President Francois Hollande on Wednesday the two leaders called for rapid progress toward banking union at a European leaders' summit next week. However, Germany and others do not expect agreement even on cross-border supervision for a year or more.Originally, Spain was pushing for the banking union because it would have allowed the ESM rescue fund to directly recapitalise Spanish banks, keeping the cost of a financial sector rescue off the country's public accounts.However, Spain is less concerned about that impact now, since it estimates it will use only 40 billion euros of the 100 billion euros of bank rescue funds lined up, equivalent to only 4 points of gross domestic product.Treasury Minister Cristobal Montoro calculated the deficit would swell to 7.4% of GDP this year when taking the bank rescue into account, but he said the European Commission would not consider that as non-compliance with targets, since it is a one-off.But banking union is still paramount for Spain since it would foster some confidence in its financial sector, which was crippled by a decade-long building boom that collapsed four years ago leaving the banks with 184 billion euros of bad debt.Rajoy has announced 65 billion euros in budget savings by the end of 2014 to try to bring Spain's deficit down drastically, in line with European Union targets.But rising unemployment, falling tax revenue and the recession are undermining his efforts.The Spanish government is acutely aware that next door, Portugal's severe spending cuts have failed to revive the economy.In Madrid, the source close to the government said under European rules if the government misses is deficit target because of recession, the European Commission would not apply sanctions for a missed deficit.

S&P downgrades Spain two notches

Standard & Poor's cut Spain's sovereign debt rating on Wednesday by two notches to just above junk level, citing the deepening recession and strains from the country's troubled banks.S&P cut the rating to BBB- from BBB+, just one level above "speculative" or "junk" grade debt, which could have sent Madrid's borrowing costs skyrocketing to untenable levels."The downgrade reflects our view of mounting risks to Spain's public finances, due to rising economic and political pressures," S&P said."The deepening economic recession is limiting the Spanish government's policy options," it said, adding that rising joblessness and tighter spending will likely intensify social conflict and tensions between the country's regions and Madrid.Moreover, S&P expressed doubts that all of the eurozone governments will give their backing to the bloc's effort to recapitalize Spain's banks, leaving more of the burden at least on the Spanish government and forcing its debt burden to balloon."Against the backdrop of a deepening economic recession, we believe that the government's resolve will be repeatedly tested by domestic constituencies that are being adversely affected by its policies," S&P said."Accordingly, we think the government's room to maneuver to contain the crisis has diminished."The ratings agency also attached a "negative outlook" to the rating, a warning of a possible further downgrade over the medium term.Such a downgrade would come, S&P said, if political support for the government's reform agenda weakens, if eurozone support fails to prevent Spain's borrowing costs from jumping above sustainable levels, or if debt tops100 percent of economic output or debt payments surpass 10% of general government revenues.

Greece's biggest company flees

Greece's biggest company, Coca Cola Hellenic, is leaving the country, the drinks bottler announced today. The immediate material impact on Greece is limited - its Greek plants stay open and CCH said the small portion of it activity that the world's second-ranked Coke bottler has in Greece will be unaffected. But analysts quickly saw it as bad news for a nation struggling to compete inside the euro zone.CCH, which has said it fears the Greek crisis could disrupt its multinational business, said in a bourse filing in Athens that shareholders, most of whom are abroad, will exchange their stock for shares in Coca Cola HBC AG, based in Switzerland and effectively shorn of the Greek tag "Hellenic".That stock will be primarily quoted on London's LSE."A primary listing on Europe's biggest and most liquid stock exchange reflects better the international character of Coca Cola Hellenic's business activities and shareholder base," the company said in its regulatory statement.The firm, in which The Coca-Cola of the United States has a 23% stake, bottles Coke and other produce in 28 countries from Russia to Nigeria. About 95% of its shareholders and business activity are outside Greece."This transaction makes clear business sense," chief executive Dimitris Lois told analysts in a conference call. An overwhelming majority of shareholders have already accepted moving a company which has long complained about Greek taxes.Analyst Manos Hatzidakis of Beta Securities in Athens said that the move made sense for the firm, which follows Greek dairy group FAGE this month in seeking a low-tax, low-volatility haven for its corporate base - in FAGE's case Luxembourg."The Greek bourse is losing a very good company and the London Stock Exchange is gaining a very important group," said Hatzidakis. "It's very bad news for the Greek economy and bourse."For brokers on the stock exchange, losing a stock that made up 8% of daily turnover this year will be unwelcome - especially since total volumes are down by half since last year.For the Greek treasury, the loss of tax revenue is unclear. Though CCH officials did not detail tax savings from moving the registered office to Switzerland, it has complained of high - and increasingly unpredictable - taxation in crisis-hit Athens.But the move may further discourage investment in Greece.Trade unionists saw the corporate exodus as immoral and one, Stathis Anestis, spokesman for the biggest labour group GSEE, suggested a boycott of Coke: "This is unacceptable," he said."CCH and FAGE are speculating at the most crucial moment for the Greek economy and the Greek people. Consumers should use their power to punish these companies."Country risk One analyst said CCH, which rose to the top of corporate rankings as the values of Greek banks collapsed, was out to rid its share price of such risks associated with Greece; the country is mired in recession and facing mass discontent as its leaders slash budgets to meet international creditors' terms for loans intended to keep Athens inside Europe's single currency."This is a healthy company that does not want to suffer from Greece's high country risk," said the analyst, who spoke on condition of anonymity.Foreign investors have been steadily reducing their investment in the Athens Stock Exchange since the country was engulfed by the sovereign debt crisis in 2009. Greece's future in the 17-nation euro zone still remains in doubt.Aided by the fact that it is doing most of its business outside Greece, CCH consistently outperformed the general Athens stock market index, which has slumped to 20-year lows.CCH has become the country's biggest firm by market value with a capitalisation of around 6 billion euros, representing about a fifth of the Athens bourse's total.The company, which last year made net profit of 330 million euros on sales of 6.85 billion, has complained of taxes imposed under Greek government austerity measures.A US filing shows it paid about 20 million euros in both 2009 and 2010 for one-off "social responsibility" levies in Greece.Profits at operating units in other countries are generally taxed locally. The Greek parent company reported 32 million euros in Greek taxes in 2010 and none last year. New withholding tax on dividends in Greece might have affected CCH in future.In its US filing for 2011, the company said: "Greece, which accounted for approximately 6% of our unit case sales volume and approximately 8% of our net sales revenue in 2011, is currently facing a severe economic crisis resulting from significant government fiscal deficits and high levels of government borrowing.""The ... Greek government debt crisis may have impacts on our liquidity that currently cannot be predicted."CCH said it would delist from the Athens Stock Exchange and then seek to re-enter that bourse with a secondary listing.Coca Cola Hellenic shares closed down 4.9% at 15.66 euros in Athens. Analysts explained the drop by the low cash price of 13.58 euros the company is offering to those shareholders who refuse the offer of new Swiss shares.

NEWS,04.10.2012

Spain central bank undercuts budget as rescue looms

Spain's central bank chief undercut the government's proposed 2013 budget today, saying it was based on over-rosy forecasts for economic growth and tax revenue.Speaking to a parliamentary budget committee, newly-appointed Central Bank Governor Luis Maria Linde delivered a blunt message as Prime Minister Mariano Rajoy weighs when to seek an international bailout."This outlook ... is certainly optimistic in comparison with the outlook shared by the majority of international organisations and analysts," he said.Linde said the government, which has already hiked taxes and cut tens of billions of euros in costs, should consider further steps this year to meet next year's deficit target of 4.5% of gross domestic product agreed with the European Union.Expectations that Rajoy will request a euro zone rescue package before the end of the year lowered Spain's borrowing costs at a Treasury auction on Thursday of 4 billion euros in government bonds.The yield on bonds due in 2014 dropped significantly to 3.282% from 5.204% when it was last sold in July.But market pressure could return if Rajoy drags his feet on seeking a bailout or is held back by German reluctance to put more assistance for Spain to its parliament.The European Central Bank has pledged to support Spain by buying its short-term debt on the open market, but only once Madrid signs up to the conditions attached to European aid."Markets are giving Spain the benefit of the doubt in anticipation of a rescue. Foreign investors need to see some sort of conditional backstop in place before seriously thinking about buying Spanish debt again," said Sassan Ghahramani, head of New York-based hedge fund consultancy SGH Macro.The euro zone is considering aiding Spain by providing insurance for investors who buy government bonds in a move designed to maintain Spanish access to capital markets, shaping a rescue differently than the previous full bailouts of Greece, Ireland and Portugal.The bond gaurantee scheme, which is under consideration and has not been decided yet, would achieve two important aims. Spain would be rescued without draining Europe's entire bailout fund and there would be no contagion to Italy.ECB head Mario Draghi praised Spain's fiscal consolidation and economic reforms but reiterated that countries would have to make a formal application and sign up to strict conditions to benefit from the bank's bond-buying programme.Central banker warns A rescue looks increasingly on the cards, as a prolonged recession complicates efforts to cut government spending.Tens of thousands of protesters gathered near parliament in Madrid on three nights last week, demonstrating against the austerity measures and demanding changes in government.Anger over costly rescue plans for banks has increased with one in four workers jobless. The shrinking economy has eaten into tax revenue and also pushed up unemployment benefit costs.Much of the savings from aggressive cost-cutting have gone to servicing debt due to high borrowing costs.Linde said most independent forecasters expect a 1.5% economic contraction in Spain next year, rather than the 0.5% fall on which the government based its calculations.Rajoy sent a tough budget to parliament on Saturday with 13 billion euros in savings from spending cuts and tax increases.The budget included a 1% increase in state pensions next year but Rajoy has not yet said whether he will maintain an inflation-pegged rise in pension payments as well.Linde said an inflation adjustment to pensions would be so costly as to endanger budget execution.The government is also taking on additional debt - some of it from European rescue funds - to bail out troubled banks and cash-strapped regional governments.The central bank chief also urged ministers to make a prudent forecast for revenue next year, saying the tax-take outlook in the 2013 budget was subject to downside risks.Fitch ratings agency also flagged the budget as unrealistic but said it would not downgrade Spanish bonds to junk status if the country sought a bailout and unlocked ECB bond-buying."Some of the assumptions certainly are optimistic in terms of the Spanish budget, nonetheless we do think that they're putting in place a programme which is consistent with giving support. And we'll give some tine to see how that will evolve," Fitch's head of sovereign ratings David Riley said in an interview with Reuters on Thursday.Fellow credit watchdog Moody's is due to decide this month whether to downgrade Spain's sovereign rating to junk.The yield on Spain's benchmark 10-year bond traded slightly higher on Thursday at 5.8% . In July, before Draghi announced the ECB's bond-buying programme, the Spanish 10-year yield spiked above 7%, a level seen as unsustainable.

Russia dismisses talk of new spy scandal with US

Russia said today that the Kremlin had nothing to do with a network alleged by the United States to be smuggling military technology to Moscow.The US Justice Department said on Wednesday it had broken up an elaborate network aimed at illegally acquiring US-made microelectronic components for Russian military and spy agencies.It charged 11 people with taking part.The Russian Foreign Ministry expressed surprise at the allegations."The charges are of a criminal nature and have nothing to do with intelligence activity," Deputy Foreign Minister Sergei Ryabkov told Russian news agencies.The situation had caused deep concern in Russia, whose relations with its former Cold War enemy are difficult despite President Barack Obama's call for a new start.Authorities were questioning the Russian nationals who were among the accused, Ryabkov said.Foreign Ministry spokesman Alexander Lukashevich said Washington had informed Moscow that the charges were criminal and unrelated to espionage."We will look into this situation and what really happened, and what charges are being imposed on our citizens," he said.US authorities had "not properly informed" Russia of the arrest of its citizens and Russian diplomats were seeking access to them, he added. A consul had met one in a courtroom, he said.Foreign Minister Sergei Lavrov said in an interview this week that Moscow and Washington must do more to strengthen relations because the "reset" called for by Obama could not last forever.Republican candidate Mitt Romney has accused Obama of being soft on Moscow during his four-year term and described Russia as the United States' "number one geopolitical foe".In a case in 2010 that harked back to the Cold War, the United States arrested 10 suspected Russian agents who were later sent back to Russia in the biggest spy swap since the Soviet era.Security experts puzzled The US Justice Department said 11 people, and companies based in Houston, Texas and Moscow, had been accused on Wednesday of illegally exporting high-tech components to Russian security agencies.The US companies from whom the components were bought were not identified.A US official said Alexander Fishenko, a Kazakhstan native who immigrated to the United States in 1994 and has frequently travelled to Russia, had been charged with operating in the United States as an unregistered agent of the Russian government.He was being held in custody with seven others in Houston.The Justice Department said the three others were in Russia including Sergei Klinov, identified as CEO of Apex System, which it said served as a certified supplier of military equipment to Russia's government, working through subsidiaries.Klinov, reached by telephone in his office in Moscow, said he had learned about the accusations from media reports."Honestly, I am very upset. I just don't know what to say. Everyone has his own truth and it is somewhere in the middle,".Asked whether he worked either for the security services or for the Defence Ministry, he said: "I am floored by this. I don't know what I'm supposed to say."Russia's Federal Security Service, successor of the KGB, and the Defence Ministry denied immediate comment.Another person facing accusations was named as Yuri Savin and described as the marketing director of Russia-based company Atrilor. The company denied having an employee of that name.Asked about the allegations, a Russian security expert said such practices has not been unusual in Soviet times.

US: Secret chemical tests raise concerns

Doris Spates was a baby when her father died inexplicably in 1955. She has watched four siblings die of cancer, and she survived cervical cancer.After learning that the US army conducted secret chemical testing in her impoverished St Louis neighbourhood at the height of the Cold War, she wonders if her own government is to blame.In the mid-1950s, and again a decade later, the army used motorised blowers atop a low-income housing high-rise, at schools and from the backs of vehicles to send a potentially dangerous compound into the already-hazy air in predominantly black areas of St Louis.Local officials were told at the time that the government was testing a smoke screen that could shield St Louis from aerial observation in case the Russians attacked.But in 1994, the government said the tests were part of a biological weapons programme and St Louis was chosen because it bore some resemblance to Russian cities that the US might attack. The material being sprayed was zinc cadmium sulfide, a fine fluorescent powder.Now, new research is raising greater concern about the implications of those tests. St Louis Community College-Meramec sociology professor Lisa Martino-Taylor's research has raised the possibility that the army performed radiation testing by mixing radioactive particles with the zinc cadmium sulfide, though she concedes there is no direct proof.But her report, released late last month, was troubling enough that both US senators from Missouri wrote to army Secretary John McHugh demanding answers.Aides to Senators Claire McCaskill and Roy Blunt said they have received no response. Army spokesperson Dave Foster declined an interview request from The Associated Press, saying the army would first respond to the senators.The area of the secret testing is described by the army in documents obtained by Martino-Taylor through a Freedom of Information Act request as "a densely populated slum district". About three-quarters of the residents were black.Spates, now 57 and retired, was born in 1955, delivered inside her family's apartment on the top floor of the since-demolished Pruitt-Igoe housing development in north St Louis. Her family didn't know that on the roof, the army was intentionally spewing hundreds of pounds of zinc cadmium sulfide into the air.Three months after her birth, her father died. Four of her 11 siblings succumbed to cancer at relatively young ages."I'm wondering if it got into our system," Spates said. "When I heard about the testing, I thought, 'Oh my God. If they did that, there's no telling what else they're hiding.'"Mary Helen Brindell wonders, too. Now 68, her family lived in a working-class mixed-race neighbourhood where spraying occurred.The army has admitted only to using blowers to spread the chemical, but Brindell recalled a summer day playing baseball with other kids in the street when a squadron of green army planes flew close to the ground and dropped a powdery substance. She went inside, washed it off her face and arms, then went back out to play.Over the years, Brindell has battled four types of cancer - breast, thyroid, skin and uterine."I feel betrayed," said Brindell, who is white. "How could they do this? We pointed our fingers during the Holocaust, and we do something like this?"Martino-Taylor said she wasn't aware of any lawsuits filed by anyone affected by the military tests. She also said there have been no payouts "or even an apology" from the government to those affected.The secret testing in St Louis was exposed to Congress in 1994, prompting a demand for a health study. A committee of the National Research Council determined in 1997 that the testing did not expose residents to harmful levels of the chemical. But the committee said research was sparse and the finding relied on limited data from animal testing.It also noted that high doses of cadmium over long periods of exposure could cause bone and kidney problems and lung cancer. The committee recommended that the army conduct follow-up studies "to determine whether inhaled zinc cadmium sulfide breaks down into toxic cadmium compounds, which can be absorbed into the blood to produce toxicity in the lungs and other organs".But it isn't clear if follow-up studies were ever performed. Martino-Taylor said she has gotten no answer from the army and her research has turned up no additional studies. Foster, the army spokesperson, declined comment.Martino-Taylor became involved years ago when a colleague who grew up in the targeted area wondered if the testing was the cause of her cancer. That same day, a second colleague confided to Martino-Taylor that she, too, lived in the test area and had cancer.Martino-Taylor decided to research the testing for her doctoral thesis at the University of Missouri. She believes the St Louis study was linked to the Manhattan Atomic Bomb Project and a small group of scientists from that project who were developing radiological weapons. A congressional study in 1993 confirmed radiological testing in Tennessee and parts of the West during the Cold War."There are strong lines of evidence that there was a radiological component to the St Louis study," Martino-Taylor said.Blunt, in his letter to the army secretary, questioned whether radioactive testing was performed."The idea that thousands of Missourians were unwillingly exposed to harmful materials in order to determine their health effects is absolutely shocking," the senator wrote.McCaskill agreed. "Given the nature of these experiments, it's not surprising that Missouri citizens still have questions and concerns about what exactly occurred and if there may have been any negative health effects," she said in a statement.Martino-Taylor said a follow-up health study should be performed in St Louis, but it must involve direct input from people who lived in the targeted areas."Their voices have not been heard," Martino-Taylor said.

NEWS,02.10.2012

One step forward, two back for Greece on debt

Every step Greece takes to shore up its finances seems to make it harder for Athens to make the numbers add up in the long-term, especially when it comes to its spiralling debt.Monday's 2013 budget plan contained some positive news - for example, the expectation that Greece will have a primary budget surplus, before debt financing costs, for the first time since 2002 - as well as some more alarming forecasts.Chief among those was an acknowledgement that the economy will shrink again next year, by 3.8%, the sixth annual contraction in succession, and that the debt-to-GDP ratio will rise to 179.3% in 2013, a dauntingly high figure.The bottom line is that Greece is in a worse state now than even the most pessimistic forecast just six months ago.The relationship between growth and debt is the focus of the European Commission, the European Central Bank and the International Monetary Fund - the troika of inspectors currently in Athens poring over the government's projections.In the coming 4-6 weeks, the troika will publish its latest report assessing whether Greece's debt is sustainable in the longer-term, something many private sector economists have already concluded is not the case.In its last analysis published in March, the troika said Greece needed to get its debts down to 120% of GDP by 2020 for the situation to be manageable and concluded the goal was achievable under certain optimistic assumptions.But as so often with the Greek economy in the past three years, most of the assumptions are already way off-target and the likelihood of Athens meeting the 2020 goal is now even slimmer than it was then.That makes it all the more likely that Athens will have to go through another debt restructuring, involving further losses for bondholders, if it is to return to solvency. And this time it is the official sector - mostly European governments and their taxpayers - who will have to take a hit rather than the private sector.That would be a major blow to German Chancellor Angela Merkel, whose country is the biggest contributor to euro zone rescue funds, and diplomats say she would be eager to avoid such an event before a September 2013 German general election."Debt reduction will still require a herculean domestic fiscal adjustment," JP Morgan said in an analysis of Greece's deteriorating debt predicament back in July."The upshot of this arrangement is that the inevitable decisions on burden-sharing that lie ahead will relate to official creditors and Greek citizens," it said, noting 70% of Greek debt would be in official sector hands by 2014."Ugly picture" Perhaps the clearest illustration of how far Greece has strayed in the past six months - during which time it has held two elections and so far failed to push through the legislation needed to cut spending and raise revenue - is set out in black and white in the troika's 10-page analysis from March.In that report, written just after private investors took a 70% writedown on their Greek bond portfolios, the EU/IMF inspectors said they expected public debt to peak at 170% of GDP in 2014 under a worst-case scenario.Wisely, they added a proviso: "The debt trajectory is extremely sensitive to programme delays, suggesting that the programme could be accident prone, where sustainability could come into question."Indeed, the debt next year is now forecast to be 10 percentage points higher than even the worst-case figure, and could go on rising in 2014, depending on whether grow returns."It's an extremely ugly picture," said an EU economic adviser responsible for coming up with solutions to the crisis."The truth is, everyone knows Greece needs another debt restructuring but no one wants to acknowledge it right now because the contagion impact remains."A further concern is that even if Greece were magically to get its debt down to 120 percent of GDP by 2020 - an adjustment of around 120 billion euros in seven years - there is no hard-and-fast rule that says it will then be sustainable.For some countries with low growth, a debt level of 90% of GDP is hard to sustain. Others, such as Japan, can survive with debts approaching 200% of GDP."When it comes to Greece, we just used 120% because that's where Italy's debt level was at the time and Italy had managed to sustain it," an EU official closely familiar with the troika's work

Sanctions failing to halt Iran: Israel

 

International sanctions against Iran are biting but are not slowing the country's nuclear programme, Israel's strategic affairs minister Moshe Yaalon said on Tuesday."The sanctions and the pressure in place against Iran for around the past two years are effective, but the centrifuges continue to turn," Yaalon told Israeli public radio."There is a sanctions clock, and the Iranian nuclear programme is getting closer and closer to the red line," he added."We think it is necessary to impose harsh sanctions, economic, political or otherwise, against Iran, and we retain the military option," Yaalon said."But the fact is that diplomacy is not working and the sanctions have not had the desired effect because Iran is continuing its nuclear programme."Israel, the Middle East's sole if undeclared nuclear power, and much of the international community, believe Iran's nuclear programme masks a weapons drive Tehran says the programme is for peaceful energy and medical purposes, but has been slammed with increasingly harsh sanctions that have squeezed the country's economy.On Monday, Iran's currency plummeted at least 17% in trading, prompting the US State Department to describe the freefall as evidence that sanctions were putting pressure on the Iranian government."From our perspective this speaks to the unrelenting and increasingly successful international pressure that we are all bringing to bear on the Iranian economy. It's under incredible strain," State Department spokesperson Victoria Nuland said.

Russia tells Nato to stay away from Syria

Russia told Nato and world powers on Tuesday they should not seek ways to intervene in Syria's civil war or set up buffer zones between rebels and government forces.Moscow further called for restraint between Nato-member Turkey and Syria, where violence along their shared border has strained relations between the former allies.Tensions have flared since a mortar round fired from inside Syria struck the territory of Turkey. Ankara has threatened to respond if the strike were repeated.When asked by Interfax if Moscow worried whether the tense border situation could prompt Nato to intervene to defend Turkey, its easternmost member, Deputy Foreign Minister Gennady Gatilov warned against any such step."In our contacts with partners in Nato and in the region, we are calling on them not to seek pretexts for carrying out a military scenario or to introduce initiatives such as humanitarian corridors or buffer zones." Turkish Prime Minister Tayyip Erdogan, one of Assad's most caustic critics, recently lashed out at Russia for blocking efforts at the UN Security Council to exert pressure on Assad and said Moscow's stance allowed massacres in Syria to continue.Turkey has floated the idea of setting up "safe zones" inside Syria to protect civilians from the conflict but that would also have to be approved by the Security Council.Russia and China have vetoed three Security Council resolutions condemning Syrian President Bashar Assad and have blocked attempts to impose further sanctions on his government or intervene more directly in the conflict.Ankara has repeatedly complained of artillery and gunfire spilling over the border into Turkey, leading to threats of retaliation.Assad may cling to power"We believe both Syrian and Turkish authorities should exercise maximum restraint in this situation, taking into account the rising number of radicals among the Syrian opposition who can intentionally provoke conflicts on the border," Gatilov was quoted as saying.The West accuses Russia of supporting Assad in the bloody 18-month conflict and imposing a stalemate in the Security Council as violence in Syria has spiralled.Moscow says Syrians themselves should decide their fate and says it will veto any Security Council resolution that could serve as a springboard for military intervention.Russia accuses the West of overstepping its mandate when it set up a no-fly zone in Libya last year, leading to the fall of Muammar Gaddafi to a popular uprising and insurgency.Western diplomats in Moscow say Russia seems to believe Assad may still successfully cling to power though they see Russia's dialogue with some Syrian opposition groups as an attempt to secure its interests there if he were overthrown.

NEWS,01.10.2012

Greek 2013 budget sees 6th year of recession

Greece will bring forward painful budget cuts to end a decade of primary deficits while grappling with a sixth year of recession, according to a 2013 budget draft aimed at satisfying international lenders.The government unveiled a tough austerity budget after Finance Minister Yannis Stournaras met the so-called "troika" of International Monetary Fund, European Commission and European Central Bank inspectors, whose approval is vital to unlock the next instalment of aid, urgently needed to avoid bankruptcy.Greece will aim for a primary surplus before debt servicing of 1.1% of GDP next year, the first positive balance since 2002, after a 1.5% deficit in 2012. But the economy will shrink for a sixth year, by 3.8%.There was no immediate comment from either EU authorities or the IMF on the budget, but Greek Finance Ministry officials said the troika still objected to some of the measures.Economic output will have declined by a quarter since 2008 in a vicious spiral of austerity and recession, with the most heavily indebted euro zone nation repeatedly missing targets set under its EU/IMF bailouts and at risk of being forced out of the single currency bloc.Analysts said even the recession scenario set out in the budget appeared optimistic, given Greece's slow reform efforts and a weakening euro zone economy."Chances are the budget targets will be missed because of the deeper recession which the cuts will bring and the inability to meet privatisation targets," said Xenofon Damalas, head of investment services at Marfin Egnatia Bank.The general government deficit, including debt servicing costs, will come to 4.2% of GDP next year from 6.6% in 2012, while unemployment will rise to 24.7%.The draft gave no target for privatisation revenues. In a sign of the daunting scale of Greece's problems, public debt is projected to reach 179.3% of GDP next year despite a major writedown of debt owed to private investors this year.Painful cuts The budget will make more cuts to public sector pay, pensions and welfare benefits as part of an 11.5 billion euro austerity package of savings spread out over the next two years."We must hold on tight to the helm to make the difficult turn," Stournaras said. "It's the only way for the Greek economy to return to the righteous cycle of fiscal stability and growth."Labour unions were quick to respond, vowing new strikes this month after a crippling walkout marked by clashes last week."We don't have any other option. We can't just sit around doing nothing," said Nikos Kioutsoukis, general secretary of the largest private sector union GSEE.Austerity-weary Greeks have taken to the streets in often violent protests against waves of salary and pension cuts that have driven many to the edge.Prime Minister Antonis Samaras, who has vowed this is the last round of cuts, also met the troika chiefs later on Monday to convince them to lift their last objections, but there appeared to be little progress."There are discussions on the measures. The troika wants clarifications," Stournaras told reporters after the meeting. Officials said inspectors doubt about 2 billion worth of measures would actually be delivered.Dozens of protesters waving Greek flags and shouting "out with the troika" jeered the international creditors' envoys as they entered the finance ministry on Monday.At stake is a 31.5 billion euro instalment from a 130 billion euro second bailout keeping Greece afloat. Lenders have made clear no money will be disbursed without credible measures.However, two German magazines reported on Saturday that Athens would receive its next aid tranche despite budget shortfalls and slow progress on reforms because the euro zone does not want any country to leave the common currency.Lenders are coming to terms with the fact Greece will need more time, more funding or a restructuring of official debt - that owed to European governments - to survive. Sources have told the IMF would prefer bondholders to take another haircut, but EU governments, which would incur most of the losses, would rather give Athens more time."Those who accept Greece's optimistic predictions want to gain time to resolve the debt crisis overall," Damalas said. "But talk has already begun that the austerity measures are not enough and a new, official haircut will be needed, which explains the tension between the IMF and the EU."

Italy fights tax evasion on YouTube

Italy's tax agency on Monday launched its own channel on YouTube to tell Italians how to pay their taxes, as the government pursues a sweeping crackdown against evasion aimed at boosting public finances. Videos lasting one or two minutes inform viewers fed up with bureaucracy in clear and simple language on questions like how to obtain a card for health services, how to register a house rental contract or how to pay taxes online.Eight videos were visible on the website  on Monday but the tax agency said that new videos would be posted soon.The agency specified that the clips had been produced at no extra cost.Italy's tax authorities have long been criticised for using overly complex bureaucratic language and methods, making it hard to fulfil all requirements.Since coming to power last year, Prime Minister Mario Monti has stressed Italians must see paying taxes as a sign of civility. Tax evasion is estimated at between €120bn and €150bn ($150bn - $194bn) a year.With high-profile raids on luxury resorts and bars, tax authorities managed to recover €12.7bn in unpaid taxes last year - a 15.5 percentage point increase from 2010 - and are intending to claw back even more this year.

New finance minister for Japan

Japanese Prime Minister Yoshihiko Noda appointed as finance minister on Monday a veteran lawmaker expected to follow his line on budget reform and currency intervention in a new cabinet unveiled ahead of an election due in months.Koriki Jojima, 65, who served as the parliamentary affairs chief for the ruling Democratic Party of Japan (DPJ), will take charge of the world's third largest economy as it teeters on the brink of recession, hurt by a global slowdown and a strong yen.Noda, who took office in September 2011 as the Democrats' third prime minister in as many years, had changed his cabinet line-up twice before. The third reshuffle is seen as a last-ditch effort to boost the Democrats' sagging ratings.Analysts said neither Jojima nor the other nine new ministers would have much impact on government policy, with the shake-up mainly designed to give those with greatest voter appeal more prominent roles within the party or cabinet.Jojima replaced Jun Azumi, 50, an eloquent and experienced campaigner who once worked as a presenter at public broadcaster NHK and who took over a senior party post.Similarly, photogenic Goshi Hosono, 41, left his post as environment minister to become party policy chief.Jojima is likely to toe Noda's line on the need for fiscal reforms given he was instrumental in securing a political deal on the prime minister's plan to double the sales tax to 10% by October 2015. "Noda clearly eyes elections in reshuffling the cabinet and party line-ups this time," said political commentator Harumi Arima.Little is known about Jojima's views on monetary and currency policies, but he is expected to stick with the government line on the need to work with the central bank to beat deflation and to act firmly against excessive yen gains. "I doubt if Noda took into account the need to put the right person in the right place," said Kyohei Morita, chief Japan economist at Barclays Capital. "The fact that he can reshuffle the cabinet so many times in a year indicates that bureaucrats, not politicians, guide policies including currency intervention.""As such, I see no change in currency policy whereby authorities give verbal warning when the dollar falls below ¥78 and stand ready to intervene in case of excessive gains," he said, adding the new minister hardly grabbed market attention.Opposition seen strongNoda retained his foreign and defence ministers in the reshuffle that comes amid heightened tension with China over a long-simmering row over a chain of East China Sea islands administered by Japan but also claimed by China and Taiwan.Noda told reporters that Japan had no plan to bring the dispute to the International Court of Justice, and that from Japan's perspective there was no question of its sovereignty over the islands. Japan has taken a separate dispute with South Korea to the court.Some commentators took Noda's appointment as education minister of Makiko Tanaka, a former foreign minister and the daughter of Kakuei Tanaka, who normalised diplomatic relations with China four decades ago, as a move to improve ties with Beijing.Noda told reporters the sole purpose of the shake-up was to improve the functioning of the cabinet.Opinion polls show the main opposition Liberal Democratic Party, ousted in 2009 after half a century of almost non-stop rule, will likely come first in the election, meaning Jojima's time in office could be short.Noda, 55, promised in August to call general elections "soon" in return for backing on his contentious sales tax plan. But the former finance minister remains coy on the timing of the vote.

NEWS,30.09.2012

Wall Street: Spain, central bankers, US jobs

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

France's Hollande faces protests over EU fiscal pact

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

Economic protests in Spain, Portugal

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