NEWS,31.07. AND 01.08.2013

UK bodies act to bolster consumer safety

Four British consumer and business bodies have taken legal steps that could compel the regulator to take swift action to end scams after years of financial product mis-selling.
In a bid to end the litany of mis-selling which stretches back to the 1980s with pensions and home loans, Britain's finance ministry said on Wednesday that four bodies have applied for "super complainant" status.
This means that if they collate enough documented evidence that consumers of financial services are being ripped off, the Financial Conduct Authority (FCA) regulator must say within 90 days what action, if any, it will take.
Banks have paid over £10bn ($15.26bn) in compensation so far for selling unsuitable loan insurance, a mounting bill that forced Barclays on Tuesday to announce plans to replenish its capital buffer.
One of the applicants for super complainant status, the Federation of Small Businesses, is representing companies who believe they were mis-sold interest rate protection by banks.
The FCA replaced the Financial Services Authority in April, which was scrapped partly because of mis-selling scandals. The FCA has a remit to protect consumers with its powers to ban products.
"By giving certain consumer and business groups the ability to make 'super-complaints' to the new regulator, the Financial Conduct Authority, we can all help to tackle bad practice more rapidly and robustly than before," UK financial services minister Greg Clark said in a statement.
The other three bodies are the Citizens Advice Bureau, consumers association and Consumer Council Northern Ireland. Others are expected and a decision on who will be granted super complainant status will be taken later this year.
Britain passed a law in 2012 making it possible for consumer bodies to become super complainants and called in March for applicants.

'Obamacare' delay to hit US workers hard

President Barack Obama's decision to delay implementation of part of his healthcare reform law will cost $12bn and leave a million fewer Americans with employer-sponsored health insurance in 2014, congressional researchers said Tuesday.
The report by the non-partisan Congressional Budget Office is the first authoritative estimate of the human and fiscal cost from the administration's unexpected one-year delay announced on  July 2 of the employer mandate - a requirement for larger businesses to provide health coverage for their workers or pay a penalty.
The analysts said the delay will add to the cost of "Obamacare's" insurance-coverage provisions over the next 10 years. Penalties paid by employers would be lower and more individuals who otherwise might have had employer coverage will need federal insurance subsidies.
"Of those who would otherwise have obtained employment-based coverage, roughly half will be uninsured (in 2014)," CBO said in a July 30 letter to Representative Paul Ryan, Republican chairperson of the House of Representatives Budget Committee.
Under Obama's healthcare reform law, employers with 50 or more full-time workers were supposed to provide healthcare coverage or incur penalties beginning on January 1. But the requirement will now begin in 2015.
The delay intensified doubts about the administration's ability to implement Obama's signature domestic policy achievement, and stirred Republican calls for a similar delay in another Obamacare mandate that requires most individuals to have health insurance in 2014.
The Republican-controlled House followed up the administration's decision by voting on July 17 for its own measures to delay the employer and individual mandates. Neither piece of legislation is expected to succeed in the Democratic-controlled Senate.
State and federal officials are racing to set up new online health insurance exchanges, where lower-to-moderate income families that lack health insurance will be able to sign up for federally subsidised coverage beginning on October 1. The poor will also be able to sign up for Medicaid coverage in 23 states that have opted to expand the programme.
Most large employers already offer health insurance and CBO said few are expected to drop coverage because of the delay.
But the change will still result in a $10bn reduction in penalty payments that some employers would have made in 2015 for failing to provide coverage next year, CBO said.
The change also means another $3bn in added costs for exchange subsidies. That is because about half of the one million workers who would have gained employer-sponsored coverage next year will now obtain insurance through the exchanges or via public programmes including Medicaid, CBO said.
Other changes, including an increase in taxable compensation resulting from fewer people enrolling in employment-based coverage, will offset those factors by about $1bn.
CBO now puts the net cost of Obamacare's insurance coverage provisions at around $1.38trn over the next 10 years, versus its May baseline projection of $1.36trn.

Obama offers 'grand jobs bargain'

President Barack Obama proposed a "grand bargain for middle-class jobs" on Tuesday that would cut the US corporate tax rate and use billions of dollars in revenues generated by a business tax overhaul to fund projects aimed at creating jobs.
The goal, as outlined in his speech to an enthusiastic audience at an Amazon.com Inc facility in southeastern Tennessee, was to break through partisan gridlock in Congress with a formula that satisfies Republicans and Democrats alike.
But there was no sign that congressional Republicans who have fought nearly every facet of Obama's domestic agenda would look favourably upon the president's proposal.
The president's plan combined a proposed corporate tax rate cut desired by Republicans with new spending on infrastructure projects like roads and bridges as well as education investment desired by his fellow Democrats.
"I've come here to offer a framework that might help break through the political logjam in Washington and get some of these proven ideas moving," Obama said.
Despite the olive branch, Obama's proposal immediately drew fire from the top Republicans in Congress. Senate Republican Leader Mitch McConnell said: "It's just a further-left version of a widely panned plan he already proposed two years ago - this time, with extra goodies for tax-and-spend liberals."
Bickering broke out as the White House said it had tried to tell aides to John Boehner, the Republican speaker of the House of Representatives, about the plan on Monday but, according to Obama spokesperson Jay Carney, "never heard back" from them.
The president in his speech also jabbed at Republicans over their support for a proposed oil pipeline from Canada and their continual opposition to his ideas.
The contretemps reflected the hyperpartisan environment that has made negotiations nearly impossible in Washington. Efforts to reach a "grand bargain" between Democrats and Republicans on deficit reduction have been at an impasse for months.
New showdowns over spending are expected in the fall, as Congress confronts an October 1 deadline to pass a bill funding the government and then a White House request to raise the federal borrowing limit, known as the "debt ceiling".
Senior administration officials said Obama is not giving up on a big deficit-cutting package, but since no agreement appears imminent, he is offering a new idea to try to follow through on his 2012 re-election campaign promises to help the middle class.
But his narrow proposal on corporate taxes suggested that Obama had all but abandoned a big deal with Republicans on deficit reduction. He argued the deficit was rapidly declining anyway and no deal seemed near with his political opponents.
'The white flag'
The president cast his latest tax proposal as part of a menu of items he is offering to help the United States pick up its economic game in a competitive world economy.
"If we don't make these investments and reforms, we might as well throw up the white flag while the rest of the world forges ahead in a global economy," he said. "And that does nothing to help the middle class."
Obama wants to cut the corporate tax rate of 35% to 28% and give manufacturers a preferred rate of 25%. He also wants a minimum tax on foreign earnings as a tool against corporate tax evasion and the use of tax havens.
In exchange for his support for a corporate tax reduction, Obama wants the money generated by a tax overhaul to be used to fund such projects as repairing roads and bridges, improving education at community colleges and promoting manufacturing, senior administration officials said.
For his part Obama, who will need Republican backing for any budget deal, had scathing words for Republican proposals on economic growth.
He spoke dismissively of the proposed Keystone XL pipeline from Canada, which Republicans have urged him to approve because of its economic benefits. The president said it would create only 50 permanent jobs, adding: "That's not a jobs plan."
Obama's plan to cut corporate taxes while also curtail some existing tax benefits would result in a one-time source of revenue. The White House did not say how much money would be raised, but Obama called for $50bn for infrastructure spending in his State of the Union speech in February.
Republicans contended that by spending the revenue, it would violate Obama's previous commitment to a "revenue-neutral" overhaul of corporate taxes.
Administration officials said they recognise that the climate is difficult in Congress, with Republicans adamantly refusing anything that is seen as increasing spending and Democrats in no mood to cut taxes and get nothing for it.
The president, who has failed in several tries to reach a comprehensive fiscal accord with Republicans, accused them of holding a personal grudge against him and called for a good-faith exchange of ideas.
"If folks in Washington really want a grand bargain, how about a grand bargain for middle-class jobs?" Obama said.
"I don't want to go through the same old arguments where I propose an idea and the Republicans just say: 'No,' because it's my idea. So I'm going to try offering something that serious people in both parties should be able to support," he added.
Boehner's spokesperson, Michael Steel, criticised the proposal even before Obama's speech, saying: "Republicans want to help families and small businesses, too.
"This proposal allows President Obama to support President Obama's position on taxes and President Obama's position on spending, while leaving small businesses and American families behind."

Iran sanctions bill to slash oil exports

The House of Representatives easily passed a bill on Wednesday to tighten sanctions on Iran, showing a strong message to Tehran over its disputed nuclear program days before President-elect Hassan Rouhani is sworn in.
The vote also highlighted a growing divide between Congress and the Obama administration on Iran policy ahead of international talks on the nuclear program in coming months. Iran insists the nuclear program is purely for civilian purposes.
The bill, which passed 400 to 20, would cut Iran's oil exports by another 1 million barrels per day over a year to near zero, in an attempt to reduce the flow of funds to the nuclear program. It is the first sanctions bill to put a number on exactly how much Iran's oil exports would be cut.
The legislation provides for heavy penalties for buyers who do not find alternative supplies, limits Iran's access to funds in overseas accounts and penalizes countries trading with Iran in other industrial sectors.
Existing US and EU measures have already reduced Iran's oil exports by more than half from pre-sanction levels of about 2.2m barrels per day (bpd), costing Tehran billions of dollars in lost revenue a month.
Most of the OPEC member's exports head to Asia, where the United States has worked with Iran's top four customers China, India, Japan and South Korea to push them towards alternative suppliers. The four have cut purchases from Iran by more than a fifth in the first half of this year, over and above the reductions made last year.
China
The success of any toughening of the sanctions will depend on China, Iran's top customer, which has repeatedly said it opposes unilateral sanctions outside the purview of the United Nations, such as those imposed by the United States.
The country reduced oil purchases from the Middle Eastern nation by 21% last year, but that was partly on account of differences in the first quarter over the renewal terms of annual contracts and shipping delays.
Chinese officials have said refiners are likely to cut shipments 5% to 10% this year from last. They cut imports 2% in the first six months of the year.
"I don't think the Chinese government will give in to this kind of pressure," said an official with a Chinese refinery that processes Iranian crude. "There is no chance that Iranian supplies would come to a halt."
For now, relatively steady oil prices have allowed the efforts to continue, but analysts say further sanctions risk pushing up prices and damaging the economies of US allies.
"This is almost like an embargo on Iranian oil imports. It is like giving Iran an ultimatum," a Seoul-based refining source said, after the vote. "I think we can find alternatives but we prefer Iranian crude as the economics are better. If very little Iranian crude is available, overall oil prices would rise."
The bill still has to be passed in the Senate and signed by President Barack Obama before becoming law. The Senate Banking Committee is expected to introduce a similar measure in September, though it is uncertain whether the language to cut exports by 1 million barrels a day will survive.
Critics of the bill said it shows an aggressive signal to Iran that last month voted in Rouhani, a cleric many see as more moderate. He will be sworn in on Sunday.
No higher priority
Rep. Ed Royce, a California Republican and Chairman of the House Foreign Affairs Committee who introduced the bill with Rep. Eliot Engel, a New York Democrat, said the United States has no higher national security priority than preventing a nuclear-armed Iran.
Royce said the Supreme Leader Ayatollah Ali Khamenei's drive to develop a nuclear arsenal was evident. "New president or not, I am convinced that Iran's Supreme Leader intends to continue on this path," he said.
The vote showed a growing disagreement between the White House and Congress on Iran policy. A senior administration official said on Wednesday the White House is not opposed to new sanctions in principle, but wants to give Rouhani a chance.
The Treasury Department last week partially eased sanctions on Iran by expanding a list of medical devices that can be exported there without special permission.
One of the 20 lawmakers to vote against the bill, Jim McDermott, a Washington-state Democrat, said shortly before the vote that the rush to sanction Iran before Rouhani takes office could hurt efforts to deflate the nuclear issue.
"It's a dangerous sign to send and it limits our ability to find a diplomatic solution to nuclear arms in Iran," McDermott said.
A supporter of harsher sanctions disagreed.
Ayatollah Ali Khamenei "doesn't see our flexibility and good faith efforts as a sign of good intentions, he sees it as a sign of weakness," said Mark Dubowitz, the head of Foundation of Defense of Democracies, an advocate of sanctions.
"If anything, it's only going to be massively intensified sanctions that get him to blink."
But Trita Parsi, the president of the National Iranian American council, said the House action undermines the US strategy which has long been one of good cop - bad cop.
The White House has taken a softer stance toward Iran's nuclear program and Congress has taken a tougher one. But now there are signs that the good cop cannot control the bad cop, he said.
"The impression on the Iranian side is not that it's good cop bad cop, but complete chaos and mayhem," Parsi said.
'Too much'
The bill also further denies Iran's government access to foreign currency reserves, and targets Iranian efforts to circumvent international sanctions against its shipping business.
"I think it's too much. Asian countries don't have much oil resources and they need to import a lot from the Middle East," said a trader with a North Asian buyer of Iranian crude. "If the United States keeps pushing further, it would be a big burden for Asian refineries."
While the bill has more steps to clear before becoming law, other buyers, apart from China, have already begun voicing their inability to reduce dependence on Iranian oil much further.
"Cuts in our imports from Iran have been the maximum as compared to other Asian countries," an Indian industry executive said. "At this moment there is no scope for further reduction."
India cut its Iranian oil imports by 43% over the first half of the year. That's more than the 27% cut by South Korea and 22.5% by Japan.
Turkey would also struggle to cut its crude oil imports from Iran any further, a Turkish official said. 

Snowden leaves Moscow airport

Fugitive former US spy agency contractor Edward Snowden left Moscow's Sheremetyevo airport on Thursday after Russia granted him refugee status, ending more than a month in limbo in the transit area.

A lawyer who has been assisting Snowden said the young American, who is wanted in the United States for leaking details of secret government intelligence programmes, had left the airport for a secure location which would remain secret.

"Edward Snowden has successfully acquired refugee status in Russia," the anti-secrecy organisation WikiLeaks, which is also assisting Snowden, confirmed on Twitter.

His lawyer, Anatoly Kucherena, told state television: "I have just seen him off. He has left for a secure location ... Security is a very serious matter for him."

Snowden, aged 30, arrived in Moscow from Hong Kong on 23 June. He had hoped to fly to Latin America, where three countries have offered to shelter him, but was concerned that the United States would prevent him reaching his destination.

Snowden's case has caused new strains in relations between Russia and the United States which wants him extradited to face espionage charges.

According to reports, Snowden, who has left the airport for an undisclosed location, will be allowed to live in Russia for a year.

US dept 'horrified' by WikiLeaks release

Prosecutors in the case of US soldier Bradley Manning are focusing on the damage done by his release through WikiLeaks of more than 250 000 US diplomatic cables.

The first witness on Thursday at Manning's sentencing hearing was former deputy assistant secretary of state Elizabeth Dibble.
She says agency officials reacted with "horror and disbelief" when WikiLeaks began publishing the leaked cables in the autumn of 2010.
The former army intelligence analyst faces up to 136 years in prison for sending the cables and more than 470 000 Iraq and Afghanistan battlefield reports to the anti-secrecy website.
The government opened its sentencing case on Wednesday with testimony that WikiLeaks' publication of the leaked battlefield reports fractured US military relationships with foreign governments and silenced some friendly Afghan villagers.

NEWS,17.01.2013

EU tax ruling a blow to health firms

Spain's decision to cut VAT on some medical products was ruled illegal by Europe's highest court on Thursday, a fresh blow to health companies already struggling to get local authorities to pay their bills, who will now have to raise product prices.The ruling means that cuts made two years ago to bring value-added tax to between 4 and 10% will have to be reversed to the standard level of 21%.Fenin, an association that represents health technology companies in Spain, warned a VAT hike would increase costs for local governments by at least €1bn and lead them to rack up even more debt with pharmaceutical companies. "This ruling is unfair for citizens and could create difficulties for patients to access products that play an important part in the prevention, diagnosis and treatment of illnesses," Fenin said in a statement. Spain's cash-strapped local authorities, which control health budgets, have racked up billions of euros in unpaid bills for medical goods, missing budget targets set by central government as it grapples with a national economic crisis.Central government settled €6bn of outstanding bills by the end of the 2011 but the regions still owed €2.3bn as of last September.Pharmaceutical companies in Spain have warned their future could be jeopardised if the government does not stop over-spending regions from racking up debts.Spain's Treasury said it would work with the European Commission to identify which products would be affected by the court ruling.Brokerage Banesto Bolsa said the EU ruling was "very bad news" for companies that provide medical products like syringes for hospitals, estimating that their earnings before interest, tax, depreciation and amortisation could fall 15%. Lobby group Farmaindustria, which represents pharmaceutical companies, said the decision would have little effect on laboratories that produce new medicines, given that tax on raw materials used in the process was a very small part of total expenditure."Of course there will be impact but it won't be major," said Julian Zabala, spokesperson for the group.Spain found itself in the dock after the European Commission said it had breached EU rules."By applying reduced rates of VAT beyond what is authorised under the VAT Directive, Spain has failed to fulfil its obligations under EU law," the Luxembourg-based EU Court of Justice ruled.The court said Spain could not set lower taxes for medical substances, which are normally used in making medicines, or for medical products used to treat illnesses.

US gun measures face tough road ahead

President Barack Obama's sweeping gun-control package faces an uncertain future in Congress, where majority Republicans in the House of Representatives are rejecting his proposals, while the president's allies in the Democratic-controlled Senate are stopping well short of pledging immediate action. Obama's plan marks the most comprehensive effort to tighten gun laws in nearly two decades as he tries to build on the high emotions over last month's school shooting in Connecticut, where a gunman with a legally purchased high-powered rifle killed 20 children and six adults. Obama has called that day the worst of his presidency.The president's announcement on Wednesday appealed to both common sense and conscience, but frustrated observers of Congress say the growing partisan divide is little swayed by either."To make a real and lasting difference, Congress must act," Obama said. "And Congress must act soon."Obama must try to push through an assault weapons ban and other sensitive measures through a Congress that is already busy preparing for fights over three looming fiscal deadlines and a debate over comprehensive immigration reform.The country's most powerful pro-gun lobby, the National Rifle Association (NRA), is already rejecting many of Obama's proposals as it insists on an absolute reading of the Constitution's Second Amendment-guaranteed right to possess and bear firearms. The group, which also represents a gun industry that since the Civil War has promoted a national gun culture, has long warned gun owners that Obama wants to take their guns away.Critics counter that the country's founding fathers never could have foreseen assault weapons more than two centuries ago, when guns were intended for the common, not individual, defence, guns were often stored in community areas and rifles fired one shot at a time.The head of the NRA on Thursday morning said the organisation has no problem with tighter background checks of gun purchasers, another key Obama proposal. But David Keene told CBS that too much emphasis has been placed on banning certain firearms and said officials should focus instead on the "devastatingly broken mental health system in this country”.The fate of Obama's gun plan could ultimately hinge on a handful of moderate Democratic senators. Although they are unlikely to endorse the president's call for banning assault weapons, they might go along with other proposals, such as requiring universal background checks on gun purchases and limiting ammunition magazines to 10 rounds or less.Several of these senators responded warily after Obama unveiled his proposals."I will look closely at all proposals on the table, but we must use common sense and respect our Constitution," said Senator Jon Tester. The Democrat told the Missoulian newspaper in his home state recently that he supports background checks but doesn't think an assault weapons ban would have stopped the Connecticut shootings.Seeking to circumvent at least some opposition in Congress, Obama signed 23 executive actions on  Wednesday that don't require lawmakers' approval, including orders to make more federal data available for background checks and end a freeze on government research on gun violence. But he acknowledged that the steps he took on his own would have less impact than the broad measures requiring approval from Congress."I will put everything I've got into this, and so will Joe," the president said, referring to his vice president. "But I tell you, the only way we can change is if the American people demand it."Republican leaders in the House of Representatives have made clear they'll wait for the Senate to act first, since they see no need to move on the contentious topic if it doesn't."House committees of jurisdiction will review these recommendations. And if the Senate passes a bill, we will also take a look at that," said Michael Steel, spokesperson for House Speaker John Boehner.Many rank-and-file Republicans criticised Obama's proposal. "The right to bear arms is a right, despite President Obama's disdain for the Second Amendment," said Republican Tim Huelskamp.Senators are expected to begin discussions on how to proceed when they return to Washington next week from a congressional recess, according to a Democratic leadership aide who requested anonymity to discuss internal deliberations. They could end up breaking the president's proposals into individual pieces, with votes possibly starting next month.While the assault weapons ban is seen as having little if any chance of passage, support may coalesce behind requiring universal background checks, which is a top priority for advocacy groups that see it as the most important step to curbing gun crimes. The Brady Campaign to Prevent Gun Violence says 40% of gun sales are conducted with no criminal background checks, such as in some instances at gun shows or by private sellers over the Internet. Obama would seek to require checks for all sales.Senator Chuck Schumer, a Democrat, already has sponsored a bill to require universal background checks that the Senate could take up, while Senator Frank Lautenberg, another Democrat, has legislation banning ammunition magazines with more than 10 rounds.Senate Majority Leader Harry Reid, a Democrat and gun-rights backer who's been supported by the NRA in the past, responded cautiously, saying he was committed to ensuring the Senate considers legislation on gun violence early this year. He didn't endorse any of Obama's proposals.Despite the uncertainty in Congress and opposition from the powerful NRA, outside groups are encouraged by polling showing public support for change.A lopsided 84% of Americans back broader background checks, according to a new AP -GfK poll. Nearly six in 10 Americans want stricter gun laws, the same poll showed, with majorities favouring a nationwide ban on military-style weapons."Now it's up to us," said Dan Gross, president of the Brady Campaign. He said his group would be working "to bring that voice to bear in this process, because without that it's not going to happen”.

Israel's voting system breeds pluralism

Israel's voting system reflects the many different political currents in society, but it has also been behind the repeated failure of governments to form stable coalitions.The proportional representation system means that any party can enter the 120-member parliament, or Knesset, if it passes a threshold of 2% of the popular vote.The number of seats that party secures is proportional to the number of votes received.In Tuesday's election to choose the country's 19th Knesset, 5.6 million citizens are eligible to vote. There are 10 133 polling stations nationwide.Thirty-eight parties on 34 lists will battle for seats in the next Knesset, reflecting the country's eclectic political map. However, polls predict that fewer than half of them are expected to enter parliament.After the official results, President Shimon Peres has seven days in which to entrust forming the next government to the party leader who says he or she is ready to do so.The party leader then has 28 days to put together a coalition. If necessary Peres can extend the deadline by another 14 days.If a coalition fails to emerge, he can assign another party leader with the task, and this person also has 28 days to form a government.If this bid fails, Peres can then assign the task to a third person, but should this person not succeed within 14 days the president then calls a new election.Whoever gets first shot at forming a coalition of at least 61 MPs is generally the leader of the party that wins the most votes, although this is not mandatory.No single party in Israel has ever been able to secure the necessary 61 seats to enable it to rule alone.Twice - in 1996 and 1999 - Israelis voted directly for a prime minister as well as for a party list. In 2001, a special prime ministerial election was held after then Labour Premier Ehud Barak was unable to win the Knesset's support.Creating a coalition can be painstaking, as the leading party must accommodate different parties demanding portfolios in the new cabinet, each with its own agenda.This is the main source of instability in most Israeli governments, with only six of the past 18 parliaments able to complete their four-year mandate.The success of the political haggling that begins immediately after the election will determine how strong and viable Israel's next government becomes.

NEWS,15.01.2013

Global economy enjoys sweeter sentiment

Global investors have entered 2013 in buoyant but not yet exuberant mood‚ according to the BofA Merrill Lynch Fund Manager Survey for January.The new year sees asset allocators assigning more funds to equities than at any time since February 2011‚ while their confidence in the world’s economic outlook has reached its most positive level since April 2010.Investors’ appetite for risk in their portfolios is now at its highest in nine years‚ while an increasing number judge equities as undervalued – particularly in Europe. Moreover‚ investors have reduced cash holdings to 3.8% from 4.2% in December.This marks the most positive reading of this measure of willingness to hold riskier investment assets since April 2011‚ though it has not reached levels that would represent a contrarian sell signal.Participants’ perception of the US fiscal crisis as the biggest “tail risk” for asset markets has calmed (down nearly 20% points in two months)‚ though it remains their largest concern. Views of China remain very positive‚ with a net 63% still anticipating a stronger economy this year‚ but one in seven sees a Chinese hard landing as their number one risk.Investors’ bullishness reflects a growing confidence in economic recovery. A net 59% now expect the global economy to strengthen this year‚ compared to a net 40% a month ago. This marks the panel’s most positive outlook since April 2010. An increasing proportion of respondents expect inflation to pick up as well.“Following the resolution of the US fiscal cliff‚ sentiment has surged. Half of investors now tell us that they would sell government bonds to buy higher-beta stocks‚ which is consistent with increasing growth and inflation expectations‚ and with our call for a ‘Great Rotation’ to start in 2013‚” said Michael Hartnett‚ chief investment strategist at BofA Merrill Lynch Global Research. “While the survey reveals pockets of exuberance‚ undemanding valuations in Europe should underpin equities unless earnings growth fails to materialize‚” added John Bilton‚ European investment strategist.49% of respondents now expect government bonds to be sold to fund purchases of higher beta equities and sustain the “risk on” rally. Last month‚ in contrast‚ only 37% saw the instrument as the likeliest source while 28% expected this to be reduction of cash balances (now 22%) and 19% expected defensive equities (now 15%).In this environment‚ the perception of Italy as a substantial “tail risk” for Europe has declined sharply. Only 17% of the panel now views the country as the biggest threat to the European story‚ compared to 26% in December. Assessments of the threats from France and Spain have worsened from last month‚ however‚ up to 34% and 29%‚ respectively.The panel has shifted its stance on financial stocks strongly‚ moving to its first net overweight in global bank names since February 2007 following a 15% move versus last month. Nevertheless‚ banks are still perceived as the global equity market’s most undervalued sector. The existing overweight in insurance has also been extended‚ particularly in Europe‚ and now stands its highest level since January 2007.In contrast‚ appetite for telecoms stocks has fallen to a net 25% underweight. This marks the sector’s lowest weighting from asset allocators since December 2005. While still in positive territory‚ pharmaceuticals have declined to a net 11% overweight. Their fall from a net 24% last month is January’s largest sectoral move.The perception that consumer staples companies are the most overvalued has also accelerated month-on-month.The new Japanese government’s policies continue to improve the country’s outlook. Its growth composite indicator now stands at a striking reading of 96.Against this background‚ global fund managers are turning more positive. A net 3% are now overweight Japanese equities‚ a sharp reversal of last month’s net 20% underweight. The proportion of investors viewing Japan as the most undervalued market increased this month as well‚ while a growing number see it as having the most favourable outlook for corporate profits.

US could lose gold-chip rating

The United States could lose its top credit rating from a leading agency for the second time if there is a delay in raising the country's debt ceiling, Fitch Ratings warned Tuesday.Congress has to increase the country's debt limit, which effectively rules how much debt the US can have, by March 1 or face a potential default.There are fears that the debate will descend into the sort of squabbling and political brinkmanship that marked the last effort to raise the ceiling in the summer of 2011. The US Treasury Department warned then that it had nearly reached a point where it would be unable "to meet our commitments securely".Standard & Poor's was so concerned by the dysfunctional nature of the 2011 debate that it stripped the US of its triple A rating for the first time in the country's history. Like Fitch, Moody's has a negative view on the US outlook."The pressure on the US rating, if anything, is increasing," said David Riley, managing director of Fitch Ratings' global sovereigns division. "We thought the 2011 crisis was a one-off event ... if we have a repeat we will place the US rating under review."Fitch already has a negative outlook on the US as the country's debt burden has risen to around 100% of its gross domestic product, and has said it will make a decision on the rating this year, regardless of how the debt ceiling discussions pan out. The US government reached its statutory debt limit of nearly $16.4 trillion at the end of 2012 but has engineered extraordinary measures that should see it through February.Riley's comments come just two weeks after US lawmakers agreed a budget deal with the White House that avoided the so-called fiscal cliff of automatic tax increases and spending cuts that many economists thought could plunge the US economy, the world's largest, back into recession. Relief that a deal was cobbled together, albeit at the final hour, is one of the reasons why sentiment in the financial markets has been buoyant in the first trading days of the new year. Many stock indexes around the world are trading at multi-year highs."The fiscal cliff bullet was dodged .... (but it's) a short-term patch," said Riley.Riley warned that the different arms of the US government still have a number of issues to address. As well as increasing the debt ceiling, they have to agree to spending cuts that were delayed as part of the fiscal cliff agreement and back measures to avoid a government shutdown, potentially in March.Though short-term fixes are more likely than not, Riley said the US political environment is not as good as it should be for a country holding the gold-chip AAA rating. The past few years, Riley said, have been marked by "self-inflicted crises" between deadlines.The major reason behind the lack of swift action in the US is that the Democrats control the White House and the Senate, while the Republicans have a solid majority in the House of Representatives. Both sides have differing visions of the role of the state in society and often varying political objectives.Despite his cautious tone on the rating, Riley said the US has a number of huge advantages and that getting the country's public finances into shape will not require the same level of austerity that many countries in Europe have had to enact over the past few years, partly because the US economy is growing at a steady rate.Other factors that support the US's AAA rating are the country's economic dynamism, lower financial sector risks, the rule of law as well as the global benchmark status of the country's bonds and the dollar, Fitch says.However it says these "fundamental credit strengths are being eroded by the large, albeit steadily declining, structural budget deficit and high and rising public debt".

US debt ceiling hike critical

Federal Reserve Chairperson Ben Bernanke on Monday urged US lawmakers to lift the country's borrowing limit to avoid a potentially disastrous debt default, warning that the economy was still at risk from political gridlock over the deficit. Likening Congress to a family arguing that it can improve its credit rating by deciding not to pay its credit card bill, Bernanke said that raising the legal borrowing limit was not the same as authorising new government spending. "It's very, very important that Congress takes the necessary action to raise the debt ceiling to avoid a situation where our government doesn't pay its bills," he told an event sponsored by the University of Michigan. The US Treasury says the country bumped into its borrowing limit on December 31, and it is now employing special measures to enable the government to meet its financial obligations. US leaders did agree at the beginning of January to extend tax cuts for all American families earning less than $450 000 a year to avoid a portion of a "fiscal cliff" of policies that Bernanke had warned would likely tip the economy into recession. But lawmakers must still navigate the debt limit as well as thrash out a deal over drastic automatic spending cuts that were postponed until March 1."We're not out of the woods because we are approaching a number of other fiscal critical watersheds coming up," Bernanke warned on Monday.The Fed last month opted to keep buying $85bn worth of Treasury bonds and mortgage-backed securities a month until it saw a significant improvement in the labor market outlook, in an aggressive bid to push down borrowing costs and spur hiring.It has held interest rates at nearly zero since December 2008 and has said it will keep them at this ultra-low level until unemployment reaches 6.5%, provided that inflation does not look likely to breach a threshold of 2.5%. US unemployment in December remained at a lofty 7.8%.The president of the San Francisco Federal Reserve Bank, John Williams, said earlier on Monday that he expected the central bank's bond buying would be needed "well into the second half of 2013." Minutes from the Fed's December 11-12 policy meeting released earlier this month showed several policy makers favored ending the bond purchases well before the end of this year, while a few officials thought the purchases would be warranted until the end of 2013.A third policy-maker who spoke on Monday, Dennis Lockhart, president of the Atlanta Federal Reserve Bank, stressed that the open-ended, or meeting-to-meeting nature, of the Fed's commitment to buy assets did not mean the policy would continue indefinitely. "'Open ended' does not mean 'without bound.' The program is not 'QE Infinity,'" he told the Rotary Club of Atlanta.

NEWS,03.01.2013

Obama signs fiscal cliff legislation

President Barack Obama has signed into law a contentious compromise bill hammered out in Congress that narrowly averted the US 'fiscal cliff of tax hikes and drastic, immediate cuts in spending, the White House said early on Thursday.  In a statement, the White House said that Obama late on Wednesday signed the "American Taxpayer Relief Act of 2012," raising taxes on households earning above $450 000 and delaying spending decisions for two months.  Officials said the US president, who is on vacation in Hawaii, signed the measure electronically by autopen.  The "fiscal cliff" crisis was finally averted on Tuesday as the House of Representatives, by a vote of 257 to 167, approved a stop-gap agreement passed one day earlier by the US Senate.  The measure dodged across-the-board tax hikes and automatic spending cuts that had threatened to unleash economic turmoil and perhaps drive America back into recession.  The hard-fought agreement, seen as a political victory for Obama, raised taxes on the very rich and delayed the threat of $109bn in automatic spending cuts for two months.  The respite will prove temporary, however: The Democratic administration and the Republican-controlled House of Representatives face several clashes in the coming months on spending cuts and raising the government debt ceiling.  Had the deal fallen apart, all Americans would have been hit by tax increases and spending cuts would have kicked in across government a combined $500bn shock that could have rocked the fragile recovery.  Relief was felt internationally and markets surged, although China's official news agency Xinhua warned: "People, or governments, can overspend for some time, but they simply cannot live on borrowed prosperity forever."

 

US CEOs pan fiscal cliff deal

 

US executives largely panned the congressional deal to steer America away from the "fiscal cliff," saying Washington wasted an opportunity to address the nation's long-term debt, but said they would continue to agitate for a better budget plan.While CEOs expressed relief that $600bn in tax hikes and spending cuts will not kick the fragile economy in the gut, their gratitude was salted with insults."I think this deal's a disaster," said Peter Huntsman, chief executive of chemical producer Huntsman Corp."We're just living in a fantasy land. We're borrowing more and more money. This did absolutely nothing to address the fundamental issue of the debt cliff."Former Wells Fargo CEO Dick Kovacevich said the agreement confirms that Washington and both parties are totally out of control."I think it's a joke," Kovacevich said of the deal. "It's stunning to me that after working on this for months and supposedly really getting to work in the last 30 days that this is what you come up with."Kovacevich and others said business leaders need to consider a different approach, one that either bypasses lawmakers or lays out a much more specific plan for deficit reduction.Corporate America had mounted a media blitz in the last two months, calling on Congress to both avert the potentially devastating fiscal cliff and replace it with a reasonable long-term plan to get the federal deficit under control. Dozens of CEOs joined a loose coalition known as the "Fix the Debt" campaign, travelled to Washington to talk directly with lawmakers, visited the White House, and made regular rounds on TV news programs.The executives scaled back their public posturing during the furious last-minute negotiations, which coincided with their holiday vacations, but some executives kept the phone lines to Washington open. They are not happy with what their efforts bought them.The final deal contained no meaningful spending cuts and adds trillions to the deficit, compared to the budget savings that would have occurred if the extreme measures of the cliff had kicked in.It also set up another cliff of sorts in two months. That's when the nation is expected to hit its borrowing limit, and when the across-the-board spending cuts known as "sequestration" are now scheduled kick in.Despite executives' distaste for the deal, they're not turning their backs on Washington and are holding out hope for a greater deficit reduction plan."We cannot give up now, that's not how a great nation acts," said Honeywell International Inc CEO David Cote, a driving force behind the Fix the Debt group. He said in a statement Wednesday that he's "encouraged" by comments made by both Democrats and Republicans saying that more work needs to be done.RegroupingSome in the business community are calling for a change in strategy due to the meager results of the fiscal cliff deal."It doesn't work talking to the politicians, obviously," former Wells CEO Kovacevich said. "What we've got to do is educate the American public that our country is going to hell."There are questions about how meaningful of a contribution Corporate America can make, especially if they do not deliver a unified voice on hard decisions such as industry-specific tax breaks.Republican Senator Bob Corker from Tennessee said on CNBC on Wednesday morning that the business community could play a great role by pushing for concrete entitlement changes.The business community appears reluctant to provide lawmakers with specific proposals.Jon Romano, a spokesman for the Fix the Debt campaign, said the group has set out principles for a long-term deal, but it doesn't want to prescribe what the policy should look like. "We're really looking to our elected leaders on both sides of Pennsylvania Avenue to come up with that solution to this issue," Romano said. Mark Kennedy, who heads George Washington University's Graduate School of Political Management and served in Congress from 2001 to 2007, said business leaders need to do more.He said executives should identify "sacred cows" that should no longer be protected, be more specific about how big a deficit reduction deal should be, and get specific about what they want included."It's more helpful to get parameters as to what should be done than to just say, do something," Kennedy said.

Bigger fights loom after fiscal deal

 

President Barack Obama and congressional Republicans looked ahead on Wednesday toward the next round of even bigger budget fights after reaching a hard-fought fiscal cliff deal that narrowly averted potentially devastating tax hikes and spending cuts.The agreement, approved late on Tuesday by the Republican-led House of Representatives after a bitter political struggle, was a victory for Obama, who had won re-election on a promise to address budget woes in part by raising taxes on the wealthiest Americans.But it set up political showdowns over the next two months on spending cuts and on raising the nation's limit on borrowing. Republicans, angry the deal did little to curb the federal deficit, promised to use the debt ceiling debate to win deep spending cuts next time."Our opportunity here is on the debt ceiling," Republican Senator Pat Toomey of Pennsylvania said on MSNBC, adding Republicans would have the political leverage against Obama in that debate. "We Republicans need to be willing to tolerate a temporary, partial government shutdown, which is what that could mean."Republicans, who acknowledged they had lost the fiscal cliff fight by agreeing to raise taxes on the wealthy without gaining much in return, vowed the next deal would have to include significant cuts in government benefit programs like Medicare and Medicaid health care for retirees and the poor that were the biggest drivers of federal debt."This is going to be much uglier to me than the tax issue ... this is going to be about entitlement reform," Republican Senator Bob Corker of Tennessee said on CNBC."This is the debate that's going to be far more serious. Hopefully, now that we have this other piece behind us - hopefully - we'll deal in a real way with the kinds of things our nation needs to face," he said.Obama urged "a little less drama" when the Congress and White House next address thorny fiscal issues like the government's rapidly mounting $16 trillion debt load.The fiscal cliff showdown had worried businesses and financial markets, and US stocks soared at the opening after lawmakers agreed to the deal.The Dow Jones industrial average surged 262.45 points, or 2.00%, at 13 366.59. The Standard & Poor's 500 Index was up 29.79 points, or 2.09%, at 1 455.98. The Nasdaq Composite Index was up 77.45 points, or 2.57%, at 3 096.97. The crisis ended when dozens of Republicans in the House of Representatives buckled and backed a bill passed by the Democratic-controlled Senate that hiked taxes on households earning more than $450 000 annually. Spending cuts of $109bn in military and domestic programs were delayed only for two months.Economists had warned the fiscal cliff of across-the-board tax hikes and spending cuts would have punched a $600bn hole in the economy this year and threatened to send the country back into recession.Reluctant republicans House Republicans had mounted a late effort to add hundreds of billions of dollars in spending cuts to the package and spark a confrontation with the Senate, but it failed.In the end, they reluctantly approved the Senate bill by a bipartisan vote of 257 to 167 and sent it on to Obama to sign into law. "We are ensuring that taxes aren't increased on 99% of our fellow Americans," said Republican Representative David Dreier of California.The vote underlined the precarious position of House Speaker John Boehner, who will ask his Republicans to re-elect him as speaker on Thursday when a new Congress is sworn in. Boehner backed the bill but most House Republicans, including his top lieutenants, voted against it. The speaker had sought to negotiate a "grand bargain" with Obama to overhaul the US tax code and rein in health and retirement programs that will balloon in coming decades as the population ages. But Boehner could not unite his members behind an alternative to Obama's tax measures.Income tax rates will now rise on individuals earning more than $400 000 and families earning more than $450 000 per year, and the amount of deductions they can take to lower their tax bill will be limited. Low temporary rates that have been in place for the past decade will be made permanent for less-affluent taxpayers, along with a range of targeted tax breaks put in place to fight the 2009 economic downturn. However, workers will see up to $2 000 more taken out of their paychecks annually with the expiration of a temporary payroll tax cut. The non-partisan Congressional Budget Office said the bill will increase budget deficits by nearly $4 trillion over the coming 10 years, compared to the budget savings that would occur if the extreme measures of the cliff were to kick in. But the measure will actually save $650bn during that time period when measured against the tax and spending policies that were in effect on Monday, according to the Committee for a Responsible Federal Budget, an independent group that has pushed for more aggressive deficit savings.

Weak productivity hammers UK economy

 

Low productivity may have been a bigger factor behind Britain's slow economic recovery than previously thought, with potentially stark implications for monetary policy, Bank of England research suggested on Thursday.Previous research had suggested one-off demand shocks were the main reason for Britain's weak economic recovery from the financial crisis, but the research - co-authored by BoE policymaker Martin Weale - suggested this conclusion was due to flawed statistical techniques.If the findings are right, they may raise the barrier to the BoE restarting bond purchases  which offer a one-off stimulus to demand but do not tackle underlying issues - and put a greater onus on government and BoE policymakers to tackle Britain's poor productivity.Weak productivity is a well-known problem for the British economy, and official data released earlier on Thursday showed that on one measure it fell to its lowest level since 2005.However, existing research referred to in the paper by Weale and two other BoE economists suggested that "temporary demand shocks" - such as headwinds from the euro zone or government austerity - were the main reasons for slow British growth.Britain's economy shrank by around 7% in the 2008/9 recession, and its recovery since then has been amongst the slowest of the six economies looked at in the study, which include the United States, Canada, Germany, France and Italy.Earlier work had failed to properly account for the links between these economies, and doing so correctly led to new conclusions about Britain, the study said."The previous conclusions are now clearly overturned. Both permanent labour productivity and temporary demand shocks now contribute roughly equal amounts to recent (2010 and 2011) weak output growth in the UK," it said."Given this stark difference in results and policy implications, future applied work should therefore not ignore these issues and there might be some merit in a re-examination of past ... research," the study added.Productivity puzzleIf weak productivity, rather than low demand and a lack of confidence, is behind much of sluggish British economic performance, this would help explain why inflation has often been above target and higher than the BoE forecast.An unexpected jump in inflation in October was one reason why the BoE decided in November to halt bond purchases once they had reached the £375bn total agreed in July, and most economists do not expect it to restart this stimulus programme .However, the cause of Britain's weak productivity - and whether it is permanent, or a temporary consequence of the financial crisis - is still largely a mystery.Part of the reason may be the effect of the financial crisis on Britain's once highly profitable financial services sector, as well as a longer-term decline in highly productive North Sea oil and gas extraction.Some BoE officials also blame a lack of bank credit stopping firms from moving into more profitable niches, and this is one reason why the BoE launched its so-called Funding for Lending Scheme in August, which offers banks cheap finance.But other officials, such as former BoE policymaker Adam Posen, have played down the idea that the financial crisis permanently damaged the productive capacity of British workers, and that this would be enough of a reason to hold back stimulus.

Tough times for world's top brokers

The world's top brokers face a fight to hold onto hundreds of millions of dollars of revenue this year when US legislation throws open the vast swaps trading market to stock exchanges.Brokers like ICAP and BGC Partners make around a third of their revenue from the $640 trillion industry for trading swaps - financial instruments used by companies to cover their exposure to changes in interest rates, foreign exchange rates and credit ratings.Exchanges like CME Group, NYSE Euronext and the IntercontinentalExchange, meanwhile, dominate the much smaller market for futures, which give similar protection, but are more standardised and so tend not to offer exact cover.However, new US swap rules enshrined in the Dodd-Frank Act, due to be finalised in the coming weeks and take effect in the middle of this year, could drive business to the exchanges and away from the brokers, and reshape the industry globally due to the size of US markets and the power of their regulators. "It is going to be tough for the brokers. The exchanges are huge with deep pockets and they are not the types of companies you'd want invading your space," said Simmy Grewal, a senior analyst at research house Aite Group.Swaps trading involves brokers matching buyers and sellers in murky over-the-counter (OTC) markets. It has historically been less tightly regulated than futures trading on exchanges.US regulators want to drive swaps trading onto electronic platforms, like those run by exchanges, to make it more transparent and easier to regulate, and to protect the global financial system from problems that arose after the collapse of US bank Lehman Brothers, one of the largest swaps traders.These changes will effectively see brokers and exchanges starting to compete directly for swaps business later in 2013, with exchanges eager to grab a chunk of a huge market. According to the Bank for International Settlements, the swaps industry was worth $639 trillion at the end of June 2012, compared with $25 trillion for futures trading.The world's top five brokers - GFI, Tradition  and Tullett Prebon as well as ICAP and BGC made a combined $2.7bn, or 35%, of their revenues in their last full financial years from interest rate swaps, the most common type. The exchanges have hinted half the swaps market could be up for grabs under Dodd-Frank, which, if true, could see hundreds of millions of dollars in revenues moving to them from brokers.Regulatory swap The US Commodity Futures Trading Commission (CFTC) wants two new categories of regulated markets called Swap Execution Facilities (SEFs) and Designated Contract Markets (DCMs).Brokers are likely to trade swaps through SEFs, while the exchanges are set to offer swap-like futures as DCMs.Analysts are reluctant to estimate the extent of likely broker losses at this stage but early research suggests the reforms will have a significant impact.Three-quarters of respondents to a Berenberg Bank survey in July predicted the reforms would cut OTC trading levels by up to 30% while one in eight saw regulation reducing swaps trading by between 31% and 50%.In a note published in November, Morgan Stanley analysts flagged potential risks to the world's largest swap broker, ICAP, which in its last financial year made £681m ($1.1 bn), or about two fifths of its revenue, from interest rate swaps."The greater certainty in the futures model ... will favour futures over swaps, leading to cannibalisation of the swaps market," they predicted.$8bn question The exchanges received a boost in October when the CFTC said any company trading more than $8bn of swaps in a year must register with it as a "swap dealer", a designation which increases capital and collateral requirements.That could encourage some swaps traders to switch to futures to avoid the hassle of registering with the CFTC. Top banks, which trade billions of dollars of swaps each day, will smash the $8bn limit and some 65 of the top swaps traders, like Goldman Sachs, Morgan Stanley and JP Morgan Chase registered as dealers on Wednesday.However the CME, the world's largest futures exchange, said it saw a definite shift to futures contracts over swaps in the weeks following the CFTC announcement. Exchanges are also doing everything they can to encourage the shift. ICE, the leading energy futures market, in October transformed its energy swaps to futures, allowing clients to continue hedging their energy exposure without adding to their swaps total. Since the CFTC's October announcement, shares in ICAP have fallen 7.5%, while Tullett's have shed 13%.But the brokers are fighting back. ICAP, Tradition and Tullett have all launched swap broking platforms in a bid to retain business. ICAP's i-Swap and Tradition's Trad-X reported strong demand late last year as clients switched to the new regulated swap systems. Analysts say these efforts should help to stem the flow of business to exchanges, though brokers concede they face a fight.

US jobless claims rise

 

The number of Americans filing new claims for unemployment benefits rose last week, but the data continues to be too distorted by the holidays to offer a clear read of labour market conditions.Initial claims for state unemployment benefits increased 10 000 to a seasonally adjusted 372 000, the labour department said on Thursday. The prior week's figure was revised to show 12 000 more applications than previously reported.Claims data reported for the week ended December 22 had been artificially depressed by the holidays, which resulted in data for 19 states being estimated.A labour department official said claims data for nine states, including California and Virginia, had been estimated last week because of the Christmas and New Year holidays. This suggests the numbers are subject to revisions next week.The four-week moving average for new claims, a better measure of labour market trends, rose 250 to 360 000. The claims data has no bearing on December's employment report, scheduled for release on Friday.Employers are expected to have added 150 000 jobs to their payrolls last month, little changed from 146 000 in November, according to a Reuters survey of economists.Job gains in the first 11 months of last year averaged about 151 000 per month, not enough to significantly lower unemployment. Employers' hesitancy to ramp up hiring had been blamed on the so-called fiscal cliff, a combination of sharp government spending cuts and higher taxes.Although Congress this week approved a deal to avoid the fiscal cliff, the budget problems are far from resolved. That could continue to cast a shadow of uncertainty and hurt job growth.The claims report showed the number of people still receiving benefits under regular state programs after an initial week of aid increased 44 000 to 3.25 million in the week ended December 22.

Job market grows despite fiscal crisis

 

Private-sector employers added more new jobs than expected last month even as a possible budget crisis loomed, helping the job market end 2012 on a high note, a report by a payrolls processor showed on Thursday.The ADP National Employment Report showed the private sector added 215 000 jobs last month, comfortably above economists' expectation of a 133 000 gain. The report is jointly developed with Moody's Analytics.The increase came even as companies worried the economy might fall off the fiscal cliff at year end, which would have meant higher taxes and, some predicted, suppressed hiring."All the labour market data has held up very, very well so (there is) no sign of the fiscal cliff impact on the job market," Mark Zandi, chief economist at Moody's Analytics, told CNBC televisionA last-minute deal to avoid going over the fiscal cliff was struck on New Year's day."The underlying economy has momentum and the employment data confirms that," said John Brady, managing director at R.J. O'Brien & Associates in Chicago."The hope and prayer of the market is that our political leaders don't screw it up."A revival in new construction jobs was also a hopeful sign, Zandi said, though the gains were likely boosted by rebuilding efforts after Superstorm Sandy hit the east coast in October.November's private payrolls tally was also revised upward to show a gain of 148 000 from the previously reported 118 000.The Bureau of Labour Statistics' more comprehensive payrolls report due on Friday is expected to show the economy added 150 000 jobs last month after adding 146 000 in November.

Vatican suspends bank card payments

 

The Bank of Italy has suspended all bank card payments in the Vatican including for tickets to its famous museum until further notice because of a failure to fully implement anti money laundering legislation, Italian media reported on Thursday.The payments have been suspended since January 1 after the Bank of Italy ordered Deutsche Bank Italia, which handles bank card payments on Vatican territory, to deactivate its terminals because of a lack of authorisation for the transactions.The Vatican museum, which was visited by five million tourists last year who paid a total of €91.3m ($120m), will now be asking for payments in cash, La Repubblica daily reported.The reports quoted Italian central bank sources saying the Vatican does not respect international anti money laundering norms and an Italian-registered bank such as Deutsche Bank Italia can therefore not operate on its territory.The suspension also includes payments at the Vatican pharmacy, the post office and a few shops that operate in the world's tiniest state.Vatican spokesman Federico Lombardi said contacts were underway with other operators and the suspension of bank card payments should be "short-lived", Corriere della Sera reported.Pope Benedict XVI has vowed greater transparency in Vatican finances and the operations of its bank, the Institute for Works of Religion (IOR), which has been infiltrated by organised crime in the past.Moneyval, a group of experts from the Council of Europe, said last year that the Vatican had made huge strides in adapting its legislation to new rules but that a lot of work remained to be done.

Worldwide IT spend to rise in 2013

Worldwide IT spending was expected to rise 4.2% in 2013 to $3.7 trillion, a pick-up from 1.2% growth forecast for last year as the gloom hanging over businesses and consumers starts to lift, industry research firm Gartner said.Much of the uncertainty surrounding prospects for an upturn in global economic growth is nearing resolution, managing vice president Richard Gordon said. "As it does, we look for accelerated spending growth in 2013 compared to 2012."Spending on devices like PCs, tablets, mobile phones and printers was forecast to reach $666bn, up 6.3%.The rise was below the 7.9% Gartner previously forecast, partly due to increased price competition from android devices in the tablet market.Worldwide enterprise software spending would rise 6.4% to $296bn, Gartner said on Thursday, driven by the security, storage management and customer relationship management sectors.Telecom services, which continue to be the largest IT market, would be flat over the next few years as higher revenue from mobile data services was offset by declines in fixed and mobile voice services markets, Gartner said.