NEWS,14.,15.,16. AND 17.03.2013

1.7 m applications for 1 500 jobs

India's largest state-run bank has received 1.7 million applications for just 1 500 entry-level clerk jobs and has promised to examine all of them, a report said this week.State Bank of India chairperson Pratip Chaudhuri attributed the huge interest to good arketing and attractive employment terms, with the number of applications  underlining the appeal of "jobs for life" in the Indian public sector. "This time, we had given the advertisement a good profile, highlighting the position of SBI and describing the compensation package in detail, which attracted a lot of attention," Chaudhuri told The Times of India.For positions in Mumbai, the bank offered a starting package of 69 000 rupees ($1 270) a month for the "probationary officers" including a housing allowance - an attractive perk in the expensive local real estate market.Job opportunities in the Indian private sector have fallen in the last 18 months as economic growth has dropped to its lowest level in a decade due to declining business confidence and high interest rates.The government forecasts that India's once-booming economy will grow by just 5% in the current financial year to March 31.Last year, it grew by 6.2% but even that rate - while enviable by anaemic Western standards is insufficient to create the jobs India needs for its fast-growing young population.India's Prime Minister Manmohan Singh, a former economist, believes that India requires at least 8% growth to create enough jobs for its expanding population, with the government keen to promote the industrial sector.Chaudhuri said all 1.7 million applicants more than 1 100 per position available - would be assessed."We have conducted such examinations in the past by hiring schools across the country. This time, we may have to do two shifts," he told the newspaper. Nine out of ten Indians are currently employed in the "informal" sector in jobs that offer no security, few perks and often illegal working conditions, government data shows.

London's gold, silver in price fix probe

 

London's gold and silver markets face the possibility of a probe alongside other benchmarks into price setting, putting a century-old practice under the spotlight after the Libor rigging scandal that exposed widespread interest rate manipulation by banks.The US Commodity Futures Trading Commission has engaged in "a couple" of conversations about whether the daily setting of gold and silver prices in London is open to manipulation, Commissioner Scott O'Malia said on Thursday, although he said the situation is "fairly immature in its development."The Wall Street Journal, citing unnamed sources, reported on Wednesday that the CFTC was examining various aspects of gold and silver price-setting, including whether it is sufficiently transparent "What was stated in that story was more than I think we're doing," O'Malia told reporters at the annual Futures Industry Association conference in Florida on Thursday."I think we've had a couple of conversations. We're looking at energy, indexes, prices, how they're set. We'll look at all of the range of index-setting," O'Malia said.The CFTC declined to provide an official comment, while the chairs of the London Gold Fixing Company and London Silver Fixing Company were not available for comment.Another CFTC Commissioner Bart Chilton, known as an outspoken proponent of regulation to protect investors and consumers, declined to specifically address the report, saying: "Given the clubby manipulation efforts we saw in Libor benchmarks, I assume other benchmarks - many other benchmarks are legit areas of inquiry."Britain's Financial Services Authority (FSA) also declined to comment on whether it was looking into gold and silver price setting, but said on Thursday it is feeding into a wider review of price benchmarks run by the International Organisation of Securities Commissions (Iosco) a global umbrella group for markets regulators.Iosco is set to publish a report in May with principles on how to compile important benchmarks to avoid rigging.The setting, or "fix", of the gold price in London dates back to 1919, originally involving NM Rothschild & Sons, Mocatta & Goldsmid, Samuel Montagu & Co, Pixley & Abell and Sharps & Wilkins. Silver price setting started in 1897.Currently, gold fixing happens twice a day by teleconference with five banks: Bank of Nova Scotia-ScotiaMocatta, Barclays Bank Plc, Deutsche Bank AG, HSBC Bank USA, NA and Société Générale. The fixings are used to determine prices globally.Chairmanship of the Gold Fixing rotates annually among the member banks.At the start of each gold price-fixing, the chairperson announces an opening price to the other four members who relay that to their customers, and based on orders received from them, instruct their representatives to declare themselves as buyers or sellers at that price.The gold price is adjusted up and down until demand and supply is matched at which point the price is declared "Fixed".The fixings are used to determine spot prices for the billions of dollars of the two precious metals traded each day.Buyers and sellers can get insight on price changes and the level of interest during the fixing process. They can cancel, increase or decrease their interest based on that information.Gold and silver price setting has long been the subject of debate, and the CFTC looked at complaints about the silver market in 2008.But most believe that the process is transparent."The fix is open, consequential, transparent and has stood the test of time. It's not open to manipulation in the same way as Libor," said Ross Norman, chief executive of bullion broker Sharps Pixley.

Japan's PM set to push trade pact

Japan's hard-charging prime minister on Friday said he wanted in on talks to forge a huge trade pact, the latest bold move from a man who says he is determined to lick the frail economy into shape.With caveats aimed squarely at reassuring the cosseted farming industry, Shinzo Abe said Japan could not afford to miss negotiations on thrashing out the Trans Pacific Partnership (TPP).The announcement came just hours after his pick for central bank chief was approved by parliament, boosting the likelihood of more of the aggressive monetary easing he has been calling for to counter chronic deflation."A huge economic bloc that would account for roughly a third of the world economy is about to begin," Abe told a news conference."What the TPP is aiming to achieve is to make the Pacific Ocean a sea where goods, services and investment are freely exchanged."Supporters of the TPP say participation would give Japan's flagging economy a boost the government estimates by as much as $33bn over a decade and increase consumer choice.They say opening up Japan's cosseted markets is vital if its stumbling economy is going to pick up speed, a key campaign promise from Abe.But opponents claim it could be a body blow to the country's ageing farmers, removing the sky-high tariffs that have sheltered them and sending many to the wall, changing the face of the countryside in the process.Japan's rural heartland is a crucial source of support for Abe's brand of conservative nationalism and any suggestion that farmers will lose their unparalleled protection could be politically costly for him.But, said the premier, the agricultural sector could not stand still. He said it was already facing challenges and participation in the TPP presented an opportunity."I am sure that Japan's delicious and safe farm products will become popular all over the world," he said."The TPP is not a crisis but, rather, a huge chance. I have heard many who worry that Japan's agriculture would be devastated if we join."I promise that I will protect Japan's farm industry and Japan's food industry by any means."The TPP forms a vital plank in US President Barack Obama's vaunted "pivot" to Asia, and is seen by some as part of a US bid to contain China's rising economic might.Washington has been keen to get Japan on board because of the economic heft its participation lends to the project and Acting US Trade Representative Demetrios Marantis said the US welcomed Abe's "important announcement".But the US Alliance for American Manufacturing, which is backed by the US auto industry and is nervous of allowing Japanese rivals unfettered access to the huge auto market, was critical of the idea of Japan joining the talks."Japan's closed market, currency manipulation, and many other concerns stand in the way. It's not worth sacrificing American jobs and American manufacturing to secure a TPP agreement at any cost," said AAM president Scott Paul.The TPP has been on the global agenda for years, but a succession of politically weak leaders have been unable to commit Japan to involvement.The fact that Abe appears ready to take the plunge is a sign, say observers, of the momentum he has gathered in the less than three months since he came to power in landslide elections.He hit the ground running on taking office on December 26 and his calls for more monetary easing, coupled with threats to change the law governing the independence of the Bank of Japan, succeeded in driving down the painfully strong yen.Helped by the slide in the currency, which helps the country's many exporters, the stock market is at more than four-year highsFriday's upper house approval for Abe's slate of central bank chiefs Haruhiko Kuroda was confirmed as governor, while Kikuo Iwata and Hiroshi Nakaso got the nod as his deputies - boosts his efforts to pull Japan out of more than a decade of deflation.The BoJ's new management team, which was approved by the lower house on Thursday, is set to take up their positions next week with the focus now squarely on their first policy meeting next month."High hopes are resting on the ability of the Bank of Japan's new leadership to revitalise the economy," London-based Capital Economics said in a note.Kuroda, 68, is thought likely to back the premier's prescription of big spending and aggressive monetary easing, vowing during confirmation hearings to do "everything possible" to reverse years of falling prices.

IMF urges EU to clean up banks

The International Monetary Fund said on Friday that the European economy and financial system remained weak and urged the region to quickly clean up its banks in order to advance toward a banking union.In a first-ever assessment of the stability of the European Union financial system, the IMF said banks in the region were still weak and needed more capital strengthening."Much has been achieved to address the recent financial crisis in Europe, but vulnerabilities remain, and intensified efforts are needed across a wide front," the IMF report said."Financial stability has not been assured," it said, pointing to continued falls in asset prices, distrust of sovereign debt and the overall weak economy, which remains in recession.The first priority, the IMF said, is to shore up banks by cleaning up their balance sheets, weighed down by large but still-unclear levels of bad assets, and put them through more stress tests.Secondly, the EU must complete the establishment of a region-wide financial oversight mechanism, necessary to strengthen the eurozone currency union and the single market for banking, and then a regional resolution mechanism for winding up failed financial institutions.All that needs to be done this year, the IMF emphasized, stressing that market and economic threats continued to hang over the European economy.With those jobs tackled, it said, the region can move toward a banking union with, ideally, a road map laid down by the middle of this year."The crisis has shown that national decisions, even well-intended ones, have union-wide repercussions on financial stability, and that there is a need for single frameworks for crisis management, deposit insurance, supervision and resolution, with a common backstop for the banking system."The IMF acknowledged some significant progress toward a single supervisory mechanism and a banking union.However, it said, as long as EU members failed to unite on an EU-wide approach to financial stability, the system remains "vulnerable to shocks, and generates incentives for national ring-fencing and fragmentation."

IMF calls for Palestine breather

The International Monetary Fund (IMF) on Thursday called for "urgent action" to help revive the Palestinian economy, saying it had been choked by Israeli restrictions and political uncertainty."Urgent actions are needed by the Palestinian Authority (PA), by the government of Israel, and by donors to stabilsze the fiscal position and rekindle economic growth over time," the IMF said in a statement.The fund said the situation in the West Bank and the Gaza Strip had deteriorated in recent months, pointing to rising unemployment which had claimed nearly a quarter of the labour market in late 2012."Israeli restrictions on movement and access are virtually unchanged and continue to hamper growth prospects," the IMF said, noting that gross domestic product had risen by only 6% last year compared to an average of around 11% in 2010 and 2011.Further slippage in GDP to around 5% was possible this year, the IMF said, citing "increasing political uncertainty" in the region."The military confrontation between Hamas and Israel last November, continued settlement expansion, and recent outbreaks of unrest in the West Bank underline the common view that prospects for peace remain dim," the IMF said.The fund's analysis also said the Palestinian Authority faced a "liquidity crisis" with public spending on an "unsustainable" trajectory."If left unchecked, these trends will ultimately lead some to question the legitimacy of the PA and undermine its ability to govern effectively," the IMF remarked.The fund called on the international community to increase financial support to the Palestinian Authority while urging "enhanced economic cooperation with Israel".The IMF analysis echoed a report by the World Bank on Tuesday ahead of a meeting of international donors on March 19, which warned of "lasting damage" to the Palestinian Authority's economy wreaked by Israeli restrictions and the worsening fiscal situation.

US slaps sanctions on covert Iran oil net

The United States on Thursday slapped financial sanctions on a Greek businessman for secretly operating a shipping network on behalf of the Iranian government to get around international sanctions on the country's sale of oil."Today, we are lifting the veil on an intricate Iranian scheme that was designed to evade international oil sanctions," US Treasury undersecretary for terrorism and financial intelligence David Cohen said in a statement. The move named Dimitris Cambis and a number of front companies for buying tankers on behalf of the National Iranian Tanker Company, barring US citizens from doing business with them and freezing any of their assets under US jurisdiction.Cambis was identified in Reuters report last month that said Iran was using old tankers to ship oil to China. He denied that he had been involved.But a senior US administration official dismissed Cambis' denial in a telephone conference call with reporters on Thursday, and said the clandestine operation had been deliberately structured to conceal Iranian involvement.As the sanctions have had increasing impact, so have the efforts to evade them, the official said.Sanctions were introduced last year by the West to choke Tehran's funding of its nuclear program by targeting the country's oil exports.The West believes Iran is developing weapons, a charge Tehran denies.Sanctions halved Iran's oil exports in 2012 by more than 1 million barrels per day, about the amount that oil production grew in the United States during that time, and Washington has been at pains to keep up the pressure."We will continue to expose deceptive Iranian practices, and to sanction those individuals and entities who participate in these schemes," Cohen said.The targeted network bought and operated eight tankers, each able to carry roughly $200m of oil per shipment."These operations are conducted through a series of ship-to-ship transfers in an attempt to mask the fact that the true origin of the oil is from Iran and to introduce it into the global market as if it were non-Iranian oil," Treasury said.US officials stressed that the sanctions were not aimed in any way at the Greek government, other Greek shippers, or the Greek shipping industry in general.

Still hope for fiscal deal: top official

Senior congressional Republicans said on Sunday they see a chance for a broad deal with President Barack Obama on deficit reduction and reining in spending on vast government programs like Medicare and one senator signaled potential flexibility on taxes.Obama, who met with lawmakers of both parties last week, has been calling for more tax increases on the wealthiest taxpayers, coupled with new spending cuts, to help curb budget deficits that have exceeded $1 trillion in each of the past four years.House of Representatives Speaker John Boehner, the top Republican in Congress, and Obama failed to come to terms at the end of last year on an agreement to get America's fiscal house in order.Such a deal could include spending cuts, tax reform and curbing spending on costly entitlement programs like the Social Security retirement program and the Medicare health insurance program for the elderly and disabled.Speaking on the "Fox News Sunday" program, Senator Bob Corker, a Tennessee Republican, said: "There, by the way, is a chance on a deal. I know the president is saying the right things. And we have an opportunity over the next four to five months."Asked on the ABC programme "This Week" if prospects for a "grand bargain" were dead, Boehner said, "I don't know whether we can come to a big agreement. If we do, it'll be between the two parties on Capitol Hill. Hopefully, we can go to conference on these budgets and hope springs eternal in my mind."Boehner said that while the United States does not have "an immediate debt crisis" one is looming because entitlement programs are not sustainable in their current form. "They're going to go bankrupt," he said.Asked how long the country had to solve these problems, Boehner said, "Nobody knows where this is. It could be a year or two years, three years, four years."Obama has engaged in a couple of weeks of outreach to lawmakers - some have called it a "charm offensive" but the prospects of a large deficit reduction deal by midyear remained unclear. Corker underscored the importance of reform in the huge entitlement programs like Medicare."I think Republicans, if they saw true entitlement reform, would be glad to look at tax reform that generates additional revenue. And that doesn't mean increasing rates. That means closing loopholes. It also means arranging our tax system so that we have economic growth."Boehner said he has "a very good relationship" with Obama, they are "trying to bridge some big differences" and that he "absolutely" trusts the president.But Boehner said that if Obama "believes that we have to have more taxes from the American people, we're not going to get very far.""If the president doesn't believe that the goal ought to be to balance the budget over the next 10 years ... (I'm) not sure we're going to get very far," he said. Obama met last Wednesday with House Republicans and made little headway in persuading them to accept his demand for tax hikes as part of any deficit-reduction deal. Republicans and Democrats in Congress last Tuesday offered up vastly different plans to slash long-term deficits. On Thursday, a Senate bill to avert a federal government shutdown stalled under the weight of more than 100 proposed amendments as senators sought to attach pet provisions. Senate Democratic leaders postponed further votes on the government spending legislation until Monday and said they would work over the weekend to try to whittle down the number of amendments. They had hoped to pass the measure on Thursday.Democrat Dick Durbin of Illinois, the No. 2 Senate Democrat, said senators must pass the budget resolution "and then we're going to move to the next stage and that is the grand bargain stage. That's what the president has tried to set up."The added provisions in the Senate budget measure threatened to make the bill unacceptable to the Republican-controlled House, which last week passed a much less complicated version of the extension to government funding through September 30. Government agencies and programs face a broad shutdown if Congress fails to pass an extension by March 27.

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. 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.

US averts fiscal cliff

A weary Congress sent President Barack Obama legislation to avoid the economy-threatening fiscal cliff of middle class tax increases and across-the-board spending cuts late on Tuesday night, hours before financial markets reopen after the New Year's holiday.The bill's passage on a 257-167 vote in the House of Representatives sealed a hard-won political triumph for the president less than two months after he secured re-election while calling for higher taxes on the wealthy.The economic as well as political stakes were considerable. Economists have warned that without action by Congress, the tax increases and spending cuts that technically took effect with the turn of the new year at midnight could cause unemployment to spike and send the economy into recession.The extraordinary late-night House vote took place less than 24 hours after the Senate passed the measure in the pre-dawn hours on New Year's Day. The legislation cleared the Senate hours after Vice-President Joe Biden and Senate Republican Leader Mitch McConnell, veteran negotiators, sealed a deal.In addition to neutralising middle class tax increases and spending cuts that technically took effect on Monday at midnight, the legislation raises tax rates on incomes over $400 000 for individuals and $450 000 for couples. Remarkably, in a party that swore off tax increases two decades ago, dozens of Republicans supported the bill in both houses of Congress.Supporters of the bill in both parties expressed regret that the bill was narrowly drawn, and fell far short of a sweeping plan that combined tax changes and spending cuts to reduce federal deficits. That proved to be a step too far in the two months since Obama called congressional leaders to the White House for a post-election stab at compromise.Majority Republicans did their best to minimise the bill's tax increases, just as they abandoned their demand from earlier in the day to add spending cuts to the package "By making Republican tax cuts permanent, we are one step closer to comprehensive tax reform that will help strengthen our economy and create more and higher pay cheques for American workers," said Rep Dave Camp of Michigan, chairperson of the tax-writing House Ways and Means Committee.He urged a vote for passage to "get us one step closer to tax reform in 2013" as well as attempts to control spending.House Democratic leader Nancy Pelosi also said the legislation included "permanent tax relief for the middle class", and she summoned lawmakers to provide bipartisan support as the Senate did.The bill would prevent an expiration of extended unemployment benefits for an estimated two million jobless, renew tax breaks for businesses and renewable energy purposes, block a 27% cut in fees for doctors who treat elderly Medicare patients, stop a $900 pay increase for lawmakers from taking effect in March and head off a threatened spike in milk prices.The bill would also raise the top tax rate on large estates to 40% from 35%, and taxes on capital gains and dividends over $400 000 for individuals and $450 000 for couples would be taxed at 20%, up from 15%.It would stop $24bn in spending cuts set to take effect over the next two months, although only about half of that total would be offset with spending reductions elsewhere in the budget.Even with enactment of the legislation, taxes are on the rise for millions.A 2 percentage point temporary cut in the Social Security payroll tax, originally enacted two years ago to stimulate the economy, expired with the end of 2012. Neither Obama nor Republicans made a significant effort to extend it.The fiscal cliff measure had cleared the Senate on a lopsided pre-dawn New Year's vote of 89-8, and House Republicans spent much of the day struggling to escape a political corner they found themselves in."I personally hate it," Rep John Campbell of California said of the measure, giving voice to the concern of many Republicans that it did little or nothing to cut spending.Majority Leader Eric Cantor, the No 2 House Republican, told reporters at one point: "I do not support the bill. We are looking, though, for the best path forward."Within hours, Republicans abandoned demands to add spending cuts to the bill and agreed to a simple yes-or-no vote on the Senate-passed bill.They feared that otherwise the Senate would refuse to consider any alterations, sending the bill into limbo and saddling Republicans with the blame for a whopping middle class tax increase. One Senate Democratic leadership aide said majority leader Harry Reid would "absolutely not take up the bill" if the House changed it. The aide spoke on condition of anonymity, citing a requirement to keep internal deliberations private.If the House failed to pass the Senate bill it would mean that any fiscal deal would have to start all over when a new Congress, with dozens of new members, is seated Thursday. And any change in the legislation would require the Senate to re-pass the measure before it could go to Obama for his signature.Despite Cantor's remarks, Speaker John Boehner took no public position on the bill as he sought to negotiate a conclusion to the final crisis of a two-year term full of them.House Democrats met privately with Biden for their review of the measure and the party's leader, Pelosi, said afterward that Boehner should permit a vote.The non-partisan Congressional Budget Office said the measure would add nearly $4 trillion over a decade to federal deficits, a calculation that assumed taxes would otherwise have risen on taxpayers at all income levels. There was little or no evident concern among Republicans on that point, presumably because of their belief that tax cuts pay for themselves by expanding economic growth and do not cause deficits to rise.The relative paucity of spending cuts was a sticking point with many House Republicans. Among other items, the extension of unemployment benefits costs $30bn, and is not offset by savings elsewhere.For all the struggle involved in the legislation, even its passage would merely clear the way for another round of controversy almost as soon as the new Congress convenes.With the Treasury expected to need an expansion in borrowing authority by early spring, and funding authority for most government programs set to expire in late March, Republicans have made it clear they intend to use those events as leverage with the administration to win savings from the Medicare health care programme for the elderly and other government benefit programmes.McConnell said as much moments before the 02:00 Tuesday vote in the Senate - two hours after the advertised "cliff" deadline."We've taken care of the revenue side of this debate. Now it's time to get serious about reducing Washington's out-of-control spending," he said. "That's a debate the American people want. It's the debate we'll have next. And it's a debate Republicans are ready for."Obama, who had campaigned for re-election on the promise of protecting households making under $250 000 a year from a tax increase, praised the agreement after the Senate's vote. Some liberal Democrats were disappointed that the White House did not stick to a harder line in negotiations, considering that Obama nlonger faces re-election."While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country and the House should pass it without delay," Obama said in a statement. "This agreement will also grow the economy and shrink our deficits in a balanced way - by investing in our middle class, and by asking the wealthy to pay a little more."The fiscal cliff came about because tax rate cuts enacted in 2001 and 2003 during president George W Bush's administration were set to expire at the end of the year.The threatened across-the-board reductions in government spending, which would slice money out of everything from social programmes to the military, were put in place last year as an incentive to both parties to find ways to cut spending. That solution grew out of the two parties' inability in 2011 to agree to a grand bargain that would have taken a big bite out of the deficit which has averaged about $1 trillion a year.If Obama and Congress failed to act, about $536bn in tax increases touching nearly all American workers and about $110bn in spending cuts, about 8% of the annual budgets for most federal departments, were scheduled to start going into effect beginning in January. 

Digital sales break £1bn barrier

Greek manufacturing activity shrank for the 40th month running in December, hurt by weak domestic demand and slumping export orders, leading firms to shed yet more jobs, a survey showed on Wednesday.Markit's purchasing managers' index (PMI) for Greek manufacturing, which accounts for roughly 15% of the economy, fell to 41.4 points in December from 41.8 in November. The index has now held below the 50 mark dividing growth from contraction ever since September 2009, just before the country's massive debt problems came to light, triggering the crisis that has plagued Greece.December's decline in manufacturing output was the steepest in four months, bringing the average for the fourth quarter to 41.4, down from an average reading of 42.0 in the third quarter.In November, Greece adopted a new round of austerity measures to qualify for its next batch of EU/IMF bailout payments, expected to keep its economy in recession for the sixth straight year in 2013.The government expects gross domestic product (GDP) to contract by 4.5% next year from 6.5% in 2012."December data showed no sign of the downturn in Greece's manufacturing sector easing," said Markit senior economist Phil Smith."Of particular concern was a faster contraction in new export orders, a trend which has deteriorated considerably since the start of the year," he said.Greek manufacturers saw a near-record drop in new orders from abroad in December, exceeded only by heavier falls in November 2008 and January 2009.Weak sales led manufacturers to shed staff again in December, weighing on the country's record-high unemployment rate of 26%. Almost 24% of surveyed firms reported a reduction in payroll numbers since November. Despite falling demand, input price inflation continued to rise in December on the back of higher raw material prices. Competitive pressures led firms to cut output prices to secure new business.

Singapore growth quells recession fears

Singapore's economy grew in the fourth quarter, avoiding a technical recession despite disappointing growth figures for 2012, government data showed on Wednesday. Gross domestic product (GDP) rose 1.1% year-on-year in the three months to December from zero growth in the previous quarter, the Ministry of Trade and Industry said .On a quarter-on-quarter basis, the trade-dependent economy expanded by a seasonally adjusted annualised 1.8%, reversing a revised 6.3% contraction in the third quarter. The figures are based on estimates. Analysts feared the economy had likely slipped into a technical recession after two successive quarters of contraction. Prime Minister Lee Hsien Loong said in a speech on 1 January 2013 that GDP rose 1.2% for the full year. This was below the government's target for the economy to expand 1.5-2.5%"Overall growth of just over 1.0% is low by historical standards but it's still growth," said CIMB Research economist Song Seng Wun.The manufacturing sector shrank by an annualised 10.8% quarter-on-quarter as the European debt crisis and the sluggish US economy weakened global demand. Manufacturing contracted by 0.2% in 2012.Construction also contracted 8.9% quarter-on-quarter but grew 8.8% on year. The services sector expanded 1.2% overall in 2012.Premier Lee said GDP was expected to grow 1.0-3.0% in 2013 due to expected continued weakness in global demand.

India aims to stop welfare fraud

India will pay billions of dollars in social welfare money directly to its poor, under a new program that aims to cut out the middlemen blamed for the massive fraud that plagues the system.Previously officials only handed out cash to the poor after taking a cut - if they didn't keep all of it for themselves and were known to enrol fake recipients or register unqualified people. The program inaugurated on Tuesday would see welfare money directly deposited into recipients' bank accounts and require them to prove their identity with biometric data, such as fingerprints or retina scans.Finance Minister P. Chidambaram has described the venture as "nothing less than magical," but critics accuse the government of hastily pushing through a complex program in a country where millions don't have access to electricity or paved roads, let alone neighbourhood banks.The program is loosely based on Brazil's widely praised Bolsa Familia program, which has helped lift more than 19m people out of poverty since 2003. It will begin in 20 of the country's 640 districts on Tuesday, affecting more than 200 000 recipients, and will be progressively rolled out in other areas in the coming months, Chidambaram said Monday. The country has 440m people living below the poverty line.  "In a huge new experiment like this you should expect some glitches. There may be a problem here and there, but these will be overcome by our people," Chidambaram said.He appealed for patience with the program, which he called "a game changer for governance."The opposition Bharatiya Janata Party has accused the ruling Congress party of using the program to gain political mileage ahead of elections expected in 2014.As a first step, the government has said it plans to begin directly transferring money it would spend on programs such as scholarships and pensions.Eventually the transfers are expected to help fix much of the rest of India's welfare spending, though Chidambaram said the government's massive food, kerosene and fertilizer distribution networks - which are blamed for much of the corruption and lost money would be exempt.The program will eliminate middlemen and transfer cash directly into bank accounts using data from Aadhar, a government project working to give every Indian identification numbers linked to fingerprints and retina scans. Currently hundreds of millions of Indians have no identity documents.On Monday, 208 activists and scholars published an open letter expressing concern that the government was forcing the poor to enroll in Aadhar to get welfare benefits without putting safeguards in place to protect their privacy. They also expressed fears that the government planned to eventually replace the food distribution system for the poor, the largest program of its kind in the world."Essential services are not a suitable field of experimentation for a highly centralized and uncertain technology," they wrote. Others said the government was trying to do too much too soon."A very important concern is if we are ready for this sort of thing. The banking infrastructure is very poor, people are far from these banks, when they exist they are overcrowded. Sometimes people have to walk for a day to get to the bank," says Reetika Khera, a development economist with the New Delhi-based Institute for Economic Growth.Mihir Shah, a member of India's Planning Commission accepts that the government's timeline is "unrealistic," but said many critics had confused the lack of readiness with flaws in the plan itself."My question to them is, is it better than what is there today? That is the only way we can judge policy. I don't think there's a perfect solution to any of mankind's problems," he said.Shah said a lot more work needed to be done before cash transfers could become a reality across the country. The identification drive needed to reach the vast majority of India's poor, and villages needed banking infrastructure and Internet connectivity.

Merkel challenger remarks spark outrage

Chancellor candidate Peer Steinbrueck was widely criticised on Sunday, even by his own centre-left Social Democrats (SPD), for saying German leaders were underpaid. Steinbrueck has struggled to gain ground against Chancellor Angela Merkel ahead of next September's election, in part due to lingering criticism over him earning €1.25m as an after-dinner speaker in the past three years.The remarks from the former finance minister about what he called the inadequate compensation for the chancellor drew speedy rebukes across the country's political spectrum, including from the last SPD chancellor Gerhard Schroeder."A German chancellor does not earn enough based on the performance that is required of her or him compared with the jobs of others who have far less responsibility and far more pay," Steinbrueck, 65, was quoted on Sunday by the Frankfurter Allgemeine Sonntagszeitung newspaper saying."Nearly every savings bank director in North Rhine-Westphalia earns more than the chancellor does," Steinbrueck said of his home state.Merkel's pay is set to rise by €930 per month to €17 106 in 2013 along with pay rises for her ministers and members of parliament, increases that have been criticised by some for sending the wrong signal in an era of austerity."Some of the debates kicked up by the 'guardians of public virtue' are grotesque and are harmful for anyone considering getting involved in politics," Steinbrueck said.The SPD trails Merkel's conservatives by 10 points in opinion polls, but, with its Greens allies, it does have a chance of winning power in September because of the prolonged weakness of Merkel's Free Democrat (FDP) coalition partners. Steinbrueck, whose blunt talk makes him popular among some voters despite him never winning a major election and him being defeated as state premier in North Rhine-Westphalia in 2005, said there were times in his career when he was not as well off and admitted he was now a "wealthy Social Democrat". Schroeder, chancellor from 1998 to 2005, has endorsed Steinbrueck to lead his party against Merkel but distanced himself from Steinbrueck's views on pay."In my view politicians in Germany are adequately compensated," Schroeder told Bild am Sonntag newspaper. "I was certainly always able to live off the pay. And anyone who doesn't feel it's enough pay can always look for another job."Other SPD leaders indirectly criticised Steinbrueck. Dieter Wiefelspuetz, a top SPD member of parliament, said politicians were misguided if they compared their wages to private industry."To serve as chancellor is a fascinating job and the pay is definitely not shabby," he said.Steinbrueck was once seen as the centre left's best hope of winning back the chancellorship. He was popular as the no-nonsense finance minister and the SPD hoped he would siphon centrist voters away from the conservatives.But the controversy over his earning €1.25m for 89 speeches will not go away and his campaign has been marred by setbacks and awkward comments.Analysts say he is also struggling to win over female voters, many of whom are put off by his combative style. "Merkel is popular due to a 'woman's bonus' that she gets," Steinbrueck told the paper.

Italy upbeat at end of 2012

Italy is ending 2012 on an upbeat note, with renewed financial market confidence and optimism among analysts that the worst of the financial crisis is over, despite expectations of political uncertainty in the run-up to a general election in February.The Treasury's borrowing rates were slightly higher at short, medium and long-term debt auctions last week, but were well below levels seen at the end of 2011, when Prime Minister Mario Monti took over from Silvio Berlusconi as Italy teetered on the brink amid the eurozone debt crisis.In late November 2011, the country was paying a 7.56% rate for its benchmark ten-year bonds, sparking widespread concerns it might have to ask for a bailout.On Friday, that rate stood at 4.48%.As 2012 draws to a close, "even if public debt has breached the two trillion euros mark, Italy's ability to finance itself is no longer in doubt," said Enrico Marro in Italy's Il Sole 24 Ore financial daily."For 2013, optimism reigns," he concluded.The turnaround is principally the result of two factors: the European Central Bank's promise to buy sovereign debt issued by eurozone member states without limit if necessary if they meet certain strict conditions, and Monti's decisive reforms which have restored Italy's credibility internationally. Experts have forecast a couple of months of volatility on the markets in the lead up to the February 24 and 25 elections, but the worst appears to be over. Italian bank Intesa Sanpaolo said "the fever should drop off in 2013 compared with 2012."The bond spread a key measure of the difference between Italian and German 10-year bond yields has also dropped sharply over the year, dipping below 300 basis points in early December from double that figure at its peak. While European leaders congratulated Monti on restoring calm to the markets, Berlusconi's announcement at the start of December that he is running again for prime minister sparked panic and the spread began to inch up again.The media magnate has dismissed the spread measure as "a trick and an invention" used to bring down his government. Investors will be watching closely in the coming weeks to see if Berlusconi's large-scale media campaign for re-election wins him potential votes from Italians tired of Monti's austerity packages and record unemployment levels.Renewed confidence in financial markets contrasts sharply with official forecasts for economic growth over the coming year, as Italy struggles to pull itself out of a recession.Despite Monti's "Grow Italy" plan, the economy is not expected to return to growth before the end of 2012 or the beginning of 2014."Business and household sentiment does not appear to have benefited from the easing market tension," Intensa Sanpaolo said.The government has forecast a 0.2% contraction of the country's gross domestic product in 2013 an outlook considered overly optimistic by Italy's business association Confindustria, which expects GDP to shrink by 1.1% next year.One figure is on the rise however: the number of people on Twitter following Monti, who is drumming up support for a reform-led electoral campaign. Monti, who resigned last week after Berlusconi's People of Freedom party pulled support from the government, has said he is keen to lead the country again after the elections a message welcomed by the markets, European leaders and Italy's Catholic Church alike.

 

IMF, EU push for softer deficit cuts

The International Monetary Fund and European Commission officials have encouraged France and its eurozone partners not to fixate on deficit reduction targets if it would exacerbate the bloc's debt crisis.The head of an IMF mission in France, Edward Gardner, urged officials in Paris last week to consider their 2013 budget targets "in a broader European context."The IMF and the EU Commission expect the French public deficit to amount to 3.5% of gross domestic product (GDP) next year.They do not believe France can reach its 3.0% goal, the eurozone limit, without additional measures that could aggravate an already tenuous economic situation."The credibility of the medium term orientation policy" was more important than a specific deficit target, Gardner told reporters.Loosening the criteria would "be more effective, more credible in a coordinated fashion" across the 17-nation eurozone, he suggested.In Portugal the public deficit fell at the end of the third quarter to 5.6% of GDP from 6.7% at the same point a year earlier, while neighbouring Spain has promised to slash its deficit to 3.0% by 2014 from a blowout shortfall equal to 9.4% of output last year. Germany expects its budget to be in balance this year, two years ahead of schedule, but IMF head Christine Lagarde has suggested that Berlin ease up a bit in its drive for healthy finances. "Germany ... and others ... can allow themselves to go a little more slowly than others in the push to straighten out their public finances," Lagarde told the German weekly Die Zeit in comments published last week.Her call echoed other European voices that are now arguing for greater emphasis on growth rather than austerity measures."The IMF is beginning to understand that the French situation has become dangerous," economist Marc Touati at the ACDefi consulting group said. Unemployment is climbing and the economy is still struggling, he pointed out.The IMF was "trying to prepare public opinion" for missed government targets, Touati suggested."This is not really a new position," Frederique Cerisier at the French bank BNP Paribas said of Lagarde's recent remarks. She acknowledged however that some international institutions were "placing added emphasis" on the need to cut deficits more gradually.On Tuesday, the EU's 'fiscal compact,' a hard-won step towards tighter economic coordination agreed as part of efforts to tame the debilitating debt crisis, takes effect.Finalised in March, 25 of the 27 EU member states accepted a 'balanced budget rule' in the compact to ensure that governments would no longer run the massive budget deficits which drove the debt crisis and nearly sank the euro.But as the European debt crisis drags on and economies flounder, the idea of allowing governments more time to straighten out their finances has gained ground.European Economic Affairs Commissioner Ollie Rehn said last week that France needed more reforms rather than more austerity."Once you have a credible medium-term budget strategy, backed up by reforms, you can have a slower adjustment," he told French daily Le Monde.If a 3.0% French deficit remains a valid reference, "what needs to be taken into account above all is the structural budget adjustment effort which France is making with remarkable intensity," the EU official said.French officials nevertheless seem determined to stick by their targets. They insist that the public deficit will be brought down to 3.0% of GDP next year from 4.5% in 2012, based on a 2013 growth estimate of 0.8% that economists consider overly optimistic.Friday's third-quarter growth figures gave them little comfort: official statistics revised growth over that period down from 0.2% to 0.1%.French Finance Minister Pierre Moscovici wrote in the German business daily Handelsblatt that France had a duty to reverse years of budget deficits."In the past 30 years, France has not been able to pass a balanced budget. State debt rose to an unacceptable €1.7 trillion in 2011. It is our duty to reverse this," Moscovici said. On Friday he reaffirmed the goverment's 2013 growth target.Cerisier at BNP Paribas warned that France, which is nowbenefitting from exceptionally low borrowing rates, must be careful how it communicates to markets, if it wants to maintain its credibility.But, she added: "The fact that we can begin to discuss all that is proof that countries have become more credible with respect to their economic targets."

 

France's 75% tax on rich struck down

France's top constitutional body on Saturday struck down a 75% upper income tax rate, dealing a major blow to Socialist President Francois Hollande, who had made it his centrepiece tax measure.The government vowed to push ahead with the tax rate, which would apply to incomes over a million euros a year, and propose a new measure that would conform with the constitution.The tax rate had angered business leaders and prompted some wealthy French citizens to seek tax exile abroad, including actor Gerard Depardieu who recently took up residency in Belgium. The Constitutional Council said in its ruling that the temporary two-year tax rate, due to take effect next year, was unconstitutional because unlike other forms of income tax it applied to individuals instead of whole households. As a result, the council said, the tax rate "failed to recognise equality before public burdens".Though largely symbolic it would have applied to only about 1 500 individuals the Socialists said the tax rate was aimed at making the ultra-rich contribute more to tackling France's budget deficit.The move was welcomed by the French Football League (LFP) which had expressed concern at the impact on top footballers such as Paris Saint Germain's Swedish star striker Zlatan Ibrahomovic. LFP chairperson Frederic Thiriez said if the measure had reached the statute book there could have been an "exodus of the best players" in the French league.The 75% tax rate was a flagship promise of the election campaign that saw Hollande defeat right-winger Nicolas Sarkozy in May. Prime Minister Jean-Marc Ayrault said the ruling was a "symbolic but not severe censure" and pledged to ensure the measure was adopted." The government will propose a new system that conforms with the principles laid down by the decision of the Constitutional Council. It will be presented in the framework of the next Finance Act," he said in a statement. "We want to maintain" the measure "because it symbolises the need for the effort to be more fairly shared," he added.The Constitutional Council also rejected new methods for calculating a separate wealth tax, striking down a provision that would have increased the amount of taxable revenues and capital gains. Other new measures in the budget were approved, however, including an increase in some upper tax rates to 45% and the addition of capital gains to taxable income. Finance Minister Pierre Moscovici said the ruling "does not compromise" budget efforts and said the council had approved "the essential" of the government's economic policies.But government critics hailed the ruling as proof the Socialists are pursuing unfair tax policies. "While the whole world watched us in dismay, Francois Hollande deceived the French into believing that 'taxing the rich' would be enough to solve our country's problems," said the head of the right-wing opposition UMP, Jean-Francois Cope."In reality, discouraging entrepreneurs and punishing the most wealthy until they leave our country inevitably puts the tax burden on the middle class. This moral error was sanctioned today. "France is struggling to plug a €37bn hole in its public finances to meet its target of reducing the budget deficit to the EU ceiling of 3% in 2013.The 2013 budget included €12.5bn in spending cuts and €20bn in new taxes on individuals and businesses. Critics have said the new tax measures will stifle economic growth, with the French economy already expected to contract by 0.2% in the final quarter of this year. The 2013 budget is based on a government forecast of 0.8% economic growth next year a figure many economists consider too optimistic. Hollande has seen his popularity plummet in recent months as the economy stagnates and unemployment mounts.

US lawmakers seek last-gasp fiscal deal

After weeks of failed haggling, the fiscal cliffhanger is at hand as US lawmakers convene Sunday in a bid to strike a year-end deal that avoids huge tax hikes and possibly spending cuts set to kick in January 1.With the clock ticking ever closer to the New Year's time bomb, the suddenly alarmed Senate and House were holding special sessions 36 hours before the year-end deadline for a plan that would keep America from tumbling off the so-called fiscal cliff. The stakes in the game of holiday-interrupting brinkmanship are enormous. Economists agree the $500bn in fiscal pain due to hit when the new year starts would stifle the US economic recovery and send the country back into recession, spelling bad news for the global economy as well. Aides to both sides' leaders in the Democrat-controlled Senate worked feverishly behind closed doors Saturday to fashion a deal palatable to Democrats as well as to Republicans, who control the House of Representatives. The Senate convenes Sunday at 1:00 pm (18:00 GMT) while the House goes into session an hour later, with no votes expected before 23:30 GMT. Both chambers would have little time to debate and then pass a deal that has eluded the White House and Congress for weeks. President Barack Obama, who called congressional leaders to the White House on Friday, will address the crisis once more when he gives an interview on NBC's Sunday morning talk show "Meet the Press. "Amid the tense negotiations, Obama pressed lawmakers to clinch a deal, even if they must reach a compromise that lacks the significant deficit-reduction measures both sides had sought. If lawmakers fail, "every American's paycheck will get a lot smaller," the president warned. "Congress can prevent it from happening, if they act now. "Obama, sensing a mandate from his re-election last month, wants to raise taxes on the rich. Republicans want only to close tax loopholes to raise revenue and demand significant spending cuts in return, notably to federal benefit programs like Social Security. But if nothing is done by the deadline, all taxpayers will see an increase. Following the White House talks, the Senate Majority Leader Harry Reid and Republican Minority Leader Mitch McConnell are heading efforts to craft a deal. But any agreement would also have to pass the House, where there is doubt that an Obama-backed deal would win favor with restive conservatives in the Republican caucus. While each side must for the sake of appearances be seen to be seeking a deal, one way out is to go over the cliff, then fix the problem in the first days of next year. Under that scenario, Republicans who are philosophically opposed to raising taxes could vote to lower the newly raised rates on almost all Americans without formally hiking taxes. Lawmakers, while ruing the inability to work out a multi-trillion-dollar grand bargain in time, have said a pared down version dealing mainly with taxes was within reach. Citing unnamed people briefed on the talks, The Washington Post said one version under consideration would protect nearly 30 million taxpayers from paying the higher, alternative minimum tax rate for the first time and maintain unemployment benefits for two million people.The plan also would halt a steep cut in Medicare reimbursements for doctors and preserve popular tax breaks for both businesses and individuals, such as those for research and college tuition, the report said.But the two sides were still at odds over where to set the limits of wealthy - at $250 000 or $400 000 of annual income and over taxes on inherited estates. Nor has there been agreement on spending cuts so sought after by Republicans, who say excessive government spending is the main driver of US debt. Obama warned that if an agreement was not reached in time, he would ask the Senate to hold an up-or-down vote on a basic package that protects the middle class from a tax hike, extends unemployment insurance, and "lays the groundwork for future... deficit reduction. "In a weekly Republican address, Senator Roy Blunt expressed some optimism, saying that "going over the fiscal cliff is avoidable. "But he criticised Democrats for focusing mainly on taxes while setting aside government spending, arguing that such inaction "shouldn't be an option."