NEWS,04.12.2012

Steel reprieve comes at price for Hollande

Francois Hollande's bid to rescue steel furnaces in France's historic industrial heartland was to be the mark of a president on the side of the workers and a state with the courage to bring a multinational to heel.But the two-month stand-off over steel giant ArcelorMittal's  Florange plant in Lorraine has unnerved investors in the eurozone's second largest economy, confused France's unions and exposed his six-month-old government to international ridicule.The dispute began in September with reports that ArcelorMittal would shut the idled furnaces at the plant, the last survivor in the once bustling northeastern steel region. The government immediately ordered the company to restart the furnaces or put them up for sale. Hollande's Socialist allies have hailed as a victory a late-Friday compromise under which ArcelorMittal agreed to invest €180m to expand the site near the German border over five years and hold off making forced redundancies. But as the European steel sector struggles to cope with over-capacity, the furnaces themselves will remain shuttered for now, and questions remain over the exact fate of the some 630 workers employed there and further funding needed for expansion.With unemployment at 14-year highs of 10% and his popularity ratings at record lows for a president only half a year into his mandate, there was clear political advantage for Hollande to lock horns with Indian steel magnate Lakshmi Mittal.But the result is at best a no-score-draw, and the tactics used - anti-business rhetoric and the threat of nationalisation could damage his wider reform effort.While his pugnacious, micro-managing predecessor Nicolas Sarkozy led from the front, Hollande let his ministers lead the fight, creating confusion over who runs industrial policy.Arnaud Montebourg, the firebrand leftist industry minister who pushed the nationalisation option hardest, declared Mittal a persona non grata in France and revealed he had found an anonymous potential buyer ready to invest in the plant.That was lapped up by international critics including London mayor Boris Johnson, who told executives in New Delhi that the "sans culottes" revolutionaries had taken control in Paris and advised them to bring their investment rupees to Britain.Montebourg later retracted his personal attack on Mittal but then had to watch as aides of Prime Minister Jean-Marc Ayrault, who announced the final accord, briefed media that his putative investor was neither "credible or solid".Facing opposition calls to resign, Montebourg went on local television on Saturday to announce he had Hollande's support and insist he felt "not betrayed, merely let down" by the outcome.But worse than the damage done to the credibility of one of Hollande's most high-profile ministers, many fear the cacophony further shakes France's image as a place to do business just when it needs all the help it can get to avert recession. "It has been a disaster," a senior French banker said last week as the episode unfolded."Even for sophisticated investors who understand that in France there is a difference between the rhetoric and the reality, this is hugely unnerving."Elie Cohen, economist at the CNRS public research institute, told the commercial i Tele television network that by raising the option of nationalisation, Montebourg risked encouraging copy-cat demands by workers at other struggling sites.It is still too early to say whether the Florange wrangling will hurt foreign investment in France, which Bank of France data show has grown modestly since the 2008/2009 global turndown to hit €30bn or 1.5% of output last year.Barely noticed last week, US online giant Amazon  said it was opening a new distribution centre in northern France that will create up to 2 500 jobs - four times the number at the Florange furnaces and a reminder that 80% of France's economy is now in the services sector.Vital to France's long-term prospects is whether Hollande obtains in coming weeks the overhaul of the country's unwieldy and expensive labour regulations which he has tasked employers and unions to achieve in negotiations by year-end.For that, France's trade unions must make unprecedented concessions to allow business more flexibility in hiring and firing. But the government handling of the Florange tussle has left many labour leaders feeling betrayed."Until the last minute, basically, we were made to believe that temporary nationalisation was essentially a given," Edouard Martin, head of the Florange chapter of France's large CFDT union, told RTL radio. "We did not understand this last-minute fix-up in which Jean-Marc Ayrault unveils an option never before discussed ... We get the feeling he was lying to us all along."A big test now will be whether unions have been riled so much that they stonewall in the labour reform talks. It could also make some more prone to protest if the government makes the extra public spending cuts that analysts say could be needed next year to ensure France hits its deficit-cutting target.For now, both sides hope the battle of Florange is over. ArcelorMittal has welcomed a deal that includes commitments on voluntary redundancies and re-deployment of furnace workers elsewhere in its French activities that go little beyond what it would likely have offered without government intervention.Hollande's office concedes he did not manage to get the furnaces re-opened as he promised during his election campaign,  but argue the deal to expand activity in the current poor economic climate is a victory of sorts.Whether the accord goes ahead in its entirety partly depends on variables outside the two parties' control, including €400m worth of European Commission funding.It may not be quite the end of the story.Referring to the nationalisation threat, one Hollande aide noted: "We are still keeping that revolver on the table."

S Korea, US to 'maximise' bid to stop North

South Korea and the United States will "maximise" diplomatic efforts to stop North Korea's planned rocket launch, Seoul's top nuclear envoy said on Tuesday as he left for talks in Washington. Lim Sung-Nam's US trip will be dominated by Pyongyang's announcement on Saturday that it intends to launch a long-range rocket between 10 and 22 December. The United States and its key Asian allies South Korea and Japan have condemned the move as a disguised ballistic missile test that violates UN resolutions triggered by Pyongyang's two nuclear tests in 2006 and 2009.Lim told Yonhap news agency that his talks with US officials would seek to "maximise diplomatic efforts and the co-ordination between South Korea and the US to block North Korea's launch". Lim met in Seoul on Monday with ambassadors from China, Russia and Japan other members of the six-party talks on North Korea to discuss a common response. Pyongyang insists the launch is a "peaceful" and purely scientific mission aimed at placing a satellite in orbit. A previous attempt in April failed when the carrier exploded shortly after take-off. During his three-day visit to Washington, Lim will hold talks with his US counterpart, Glyn Davies, and other senior officials. China, the North's closest ally, has expressed "concern" at the launch plan, with the foreign ministry urging "relevant parties to act in a way that is more conducive to the stability of the Korean peninsula". Russia on Monday added its "regret" at Pyongyang's announcement and noted that North Korea was obliged to abide by UN resolutions. Analysts say the international community is running out of options for pressuring the impoverished but nuclear-armed North, which is already under layers of sanctions. The six-party, aid-for-denuclearisation talks have been at a standstill since Pyongyang walked of the forum in April 2009. It staged its second nuclear test a month later.

China's Xi vows to rule by law

China's newly appointed leader Xi Jinping pledged on Tuesday to implement rule of law, in comments that appeared aimed at rising social discontent over government corruption and police brutality.In a speech at the Great Hall of the People that marked the 30th anniversary of China's 1982 constitution, Xi spoke of curbing the near-dictatorial powers of the ruling party.His comments appeared to be the strongest yet by a Chinese leader on the need for legal restraints on the party and come amid a series of graft scandals and reports of the unbridled wealth of China's top communist families."We must firmly establish throughout society the authority of the constitution and the law and allow the overwhelming masses to fully believe in the law," Xi said in comments carried by China Central Television. "To fully implement the constitution needs to be the sole task and the basic work in building a socialist nation ruled by law."Xi was last month named as the head of the ruling Communist Party and is slated to take over the state presidency from current President Hu Jintao in March as part of China's once-a-decade leadership transition.This year's transition was badly rocked by the case of disgraced politician Bo Xilai, whose wife was convicted in August of murdering a British businessman, in a scandal that has revealed rampant graft and lawlessness at the pinnacle of political power.Bo is awaiting trial for corruption and abuse of power after allegedly using police in Chongqing city where he ruled to remove political opponents and dissidents, practices that are routine in China.Since becoming party head, Xi has repeatedly pledged to fight graft and on Tuesday he further vowed to rein in China's top leaders. "We must establish mechanisms to restrain and supervise power, power must be made responsible, power must be supervised, violations of law must be investigated," he said."We must ensure that the power bestowed by the people is constantly used for the interest of the people.""No organisation or individual has the special rights to overstep the constitution and law, any violation of the constitution and the law must be investigated."China's current constitution has enshrined the basic freedoms of speech, press, religious belief and association, but such rights are routinely sanctioned and violated, rights groups say.Xi also appeared to address such alleged rights violations."To ensure the implementation of the constitution, is to ensure the realisation of the basic rights of the people," he said."By defending the dignity for the law, we are defending the will of the party and the people for dignity."

NEWS,05.11.2012

'King-maker' Ohio final stop before poll

President Barack Obama and Mitt Romney stormed into the final day of campaigning before Election Day, on 6 November, once again visiting the toughest battleground state of all - Ohio. The industrial Midwestern state has picked the winner of the last 12 electionNationwide polls show the two locked in one of the closest, and most expensive, presidential races in recent US history.But a majority of polls in the battleground states especially in Ohio and other Midwestern states of Iowa and Wisconsin show Obama with a slight advantage. That gives him an easier path to the 270 electoral votes needed for victory. No Republican has won the White House without carrying Ohio, and it was possible that Romney would make a last-minute visit to the state on Election Day.Under the US system, the winner is not determined by the nationwide popular vote but in state-by-state contests, making nine "battleground" states that don't consistently vote Republican nor Democratic extremely important in such a tight race. Winning a state gives Romney or Obama that state's electoral votes, which are apportioned to states based on a mix of population and representation in Congress.This year's tight race raises the possibility of a replay of the chaotic 2000 election, when Republican George W Bush won the presidency with an electoral vote majority while Democrat Al Gore had a narrow lead in the nationwide popular vote.Both Obama and Romney say this year's winner will be determined by which of their campaigns can get the most supporters to the polls. "This is going to be a turnout election," the president declared in an interview airing on Monday. Obama needs the support of blacks and Hispanics to counter Romney's support among while men, but his campaign knows that the feeling of making history by electing America's first black president that fired up the 2008 campaign, has cooled.Rock legend Bruce Springsteen and rapper Jay-Z were joining Obama for Ohio events on Monday."We have one job left," and that's getting people out to vote, Romney told a Florida crowd on Monday morning. The crowd chanted, "One more day!"The cost of the presidential campaign has surged past $2bn.Romney, who described himself as "severely conservative" during the Republican primary campaign, has shifted sharply in recent weeks to appeal to the political centre and highlights what he says was his bipartisan record as governor of Democratic leaning Massachusetts. He continues to insist that his experience as a businessman would help fix the still-weak US economy a top issue with voters.Obama has come back from a weak performance in his first of three debates with Romney last month and hammered at Romney's shifting positions.The final national Wall Street Journal Poll, released on Sunday, showed Obama with the support of 48% of likely voters, with Romney receiving 47%. The poll had a margin of error of 2.55 percentage points.The final national poll from the Pew Research Centre found Obama with a three-point edge over Romney, 48% to 45% among likely voters, an improved showing that indicates the president may have benefited from his handling of the response to last week's Superstorm Sandy. Obama suspended three full days of campaigning to deal with the East Coast disaster. The Pew poll had a margin of error of 2.2 percentage points.If the election were held now, an Associated Press analysis found that Obama would be all but assured of 249 electoral votes by carrying 20 states that are solidly Democratic or leaning his way and the District of Columbia. Romney would lay claim to 206, from probable victories in 24 states that are strong Republican ground or tilt toward the Republicans.Up for grabs are 83 electoral votes spread across Colorado, Florida, Ohio, New Hampshire, Virginia and Wisconsin. Of those, Republicans and Democrats alike say Obama seems in slightly better shape than Romney in Ohio and Wisconsin, while Romney appears to be performing slightly better than Obama or has pulled even in Virginia and Florida.With Obama sustaining his lead in Ohio, Romney has made a surprise, last-minute move in neighbouring Pennsylvania. The state has voted Democratic in the last five presidential elections and has long been counted in the Obama column. Romney made his first visit of the fall campaign on Sunday.The theme from the movie Rocky blared from the loudspeakers as he stepped to the podium in a Philadelphia suburb. "The people of America understand we're taking back the White House because we're going to win Pennsylvania," Romney told a large crowd on a cold night.Obama's campaign said Romney's move in Pennsylvania showed the Republican's desperation over his diminished chances in Ohio. And the Obama campaign announced that former president Bill Clinton Obama's most powerful surrogate would make four campaign stops in Pennsylvania on Monday.About 30 million people have already cast ballots in 34 states and the District of Columbia, although none will be counted until Election Day on Tuesday.Storm-hit New York and New Jersey hurried to make voting accessible in a region where more than 1 million remain without power. The states, however, are considered by both campaigns to be heavily for Obama.

 

Obama and Romney in final voter appeals

The Democratic incumbent, appearing in Madison, Wisconsin, drew a large crowd that was warmed up by Bruce Springsteen."Wisconsin, tomorrow you have a choice to make," he said. "It is a choice between two different visions for America."On the defensive throughout the year for presiding over persistently high unemployment, Obama said the choice was between the Republicans' "top-down policies that crashed our economy" and his own approach to moving the country forward.Romney was in Lynchburg, Virginia, telling voters: "One final push is going to get us there."We're only one day away from a fresh start, one day away from the start of a new beginning," he said.Obama was making stops in three swing states and Romney was hitting four.Their goal was to piece together the 270 Electoral College votes needed for victory in the state-by-state battle for the presidency.All eyes were on the Midwestern state of Ohio, whose 18 electoral votes could be decisive.After voting early in his home state of Massachusetts, Romney was considering a last-second visit to Ohio on election day to try to drive turnout, aides said.The election's outcome will impact a variety of domestic and foreign policy issues, from the looming "fiscal cliff" of spending cuts and tax increases that could kick in at the end of the year to questions about how to handle illegal immigration or Iran's nuclear ambitions.The balance of power in Congress also will be at stake, with Obama's Democrats now expected to narrowly hold their Senate majority and Romney's Republicans favoured to retain control of the House of Representatives.In a race where the two candidates and their party allies raised a combined $US2 billion , the most in US history, both sides have pounded the heavily contested battleground states with an unprecedented barrage of ads.The close margins in state and national polls suggested the possibility of a cliffhanger that could be decided by which side has the best turnout operation and gets its voters to the polls.In the final days, both Obama and Romney focused on firing up core supporters and wooing the last few undecided voters in battleground states.Romney reached out to dissatisfied Obama supporters from 2008, calling himself the candidate of change and ridiculing Obama's failure to live up to his campaign promises."He promised to do so very much but frankly he fell so very short," Romney said at a rally in Cleveland on Sunday.Obama, citing improving economic reports on the pace of hiring, argued in the final stretch that he has made progress in turning around the economy but needed a second White House term to finish the job."This is a choice between two different versions of America," Obama said in Cincinnati.Obama will close his campaign with a final blitz across Wisconsin, Ohio and Iowa - three Midwestern states that, barring surprises elsewhere, would be enough to get him more than the 270 electoral votes needed for victory.Polls show Obama has slim advantages in all three. His final stop on Monday night will be in Iowa, the state that propelled him to the White House in 2008 with a victory in its first-in-the nation caucus.Romney will visit his must-win states of Florida and Virginia where polls show he is slightly ahead or tied along with Ohio before concluding in New Hampshire, where he officially started his presidential run last year.The only state scheduled to get a visit on Monday US time from both candidates is Ohio, the most critical of the remaining battlegrounds - particularly for Romney. He has few paths to victory if he cannot win in Ohio, where Obama has kept a small but steady lead in polls for months.One in every eight jobs in Ohio is tied to car manufacturing and Obama has been buoyed in the state by his support for a federal bailout of the auto industry.Ohio also has a strong state economy with an unemployment rate lower than the 7.9% national rate.That has undercut Romney's frequent criticism of Obama's economic leadership, which has focused on the persistently high jobless rate and what Romney calls Obama's big-spending efforts to expand government power.Romney, who would be the first Mormon president, has centered his campaign pitch on his own experience as a business leader at a private equity fund and said it made him uniquely suited to create jobs.Obama's campaign fired back with ads criticising Romney's experience and portraying the multimillionaire as out of touch with everyday Americans.Obama and allies said Romney's firm, Bain Capital, plundered companies and eliminated jobs to maximize profits. They also made an issue of Romney's refusal to release more than two years of personal tax returns.

States that will decide White House race

The White House race has narrowed to a fight over less than 10 states ahead of Tuesday's tight election between President Barack Obama and Mitt Romney.Obama's strategy, with a final day of campaigning to go, is to solidify his last line of defence in the industrial Midwest, and to try to pluck away several insurance states from Romney's target list elsewhere.The Republican challenger trails the president in polls in many of the battleground states but retains a narrow and plausible path to the 270 electoral votes needed to win the presidency.Romney's camp also argues that the challenger may not even be behind, claiming that state polls are based on unrealistic assumptions of the size of the Democratic slice of the electorate and underplay Republican enthusiasm.Here is the state of play in swing states that will decide whether Obama wins a second term, or Romney recaptures the White House for Republicans.

The number of electoral votes each state has is in brackets.

Obama's last line of defence

If Obama wins Ohio, Wisconsin and Iowa, and avoids any upsets on his turf, he is all but certain to become only the second Democrat to win two White House terms since World War II.

Romney spent months trying to tear the president's Midwestern "firewall" but was hampered by an Obama advertising blitz hammering him as a wealthy plutocrat who disdains the middle class.

-    Ohio (18)

In most recent polls, Obama led Ohio between two and five points, an ominous sign for Romney, as no Republican since the Civil War has lost the state and gone on to win the White House.

Obama touts his bailout of the indebted auto industry in 2009 and Romney's opposition to it, as one-in-eight jobs in the state are linked to the sector.

His team believes that Romney has undermined his hopes in Ohio by running an ad warning that Chrysler will outsource production of its Jeep vehicles to China, a charge the company's CEO has said is false.

Obama leads an average of polls in Ohio by the  website by 2.8%.

-    Wisconsin (10)

Wisconsin has been solid Democratic territory for years: the last time a Republican won the state was Ronald Reagan in 1984.

But Republicans, who managed to repel an attempt by Democrats to oust Governor Scott Walker in a recall election this year, have a solid ground game in the state, and Romney's running mate Paul Ryan is a local boy.

The president leads average by 4.2%.

-    Iowa (6)

Where it all started for Obama. The president built his grass roots operation in the agricultural heartland state and believes that after carving out an advantage in early voting, he has the edge on Romney.

Obama leads average in Iowa by 2.5%.

Up for grabs

-    Florida (29)

The Sunshine State, the largest electoral battleground, is often decisive in presidential elections, but may not be the kingmaker this time. But Obama is competing fiercely there because if he wins, it is all but impossible for Romney to take the White House.
A punishing foreclosure crisis and an unemployment rate higher than the national average have many analysts expecting Florida to swing to Romney.

Obama has led several recent polls however, and if he can get a bumper turnout in Democratic strongholds in the southern part of the state, he could pull off a surprise.

Romney leads average by 1.4%.

-    Virginia (13)

Neither side seem to know whether the state will revert to Republicans after Obama became the first Democrat to win there since 1964. Obama needs to maximize turnout among students, and African American voters around the cities of Richmond and Norfolk.

Romney will count on old school conservatives in rural areas of the state and look to cut down on Obama's margins with educated middle class voters in the Washington DC suburbs.

Currently, Romney leads average by 0.3%.

-    North Carolina (15)

The most likely state to move from Democratic to Republican because Obama won it by only 14 000 votes in 2008. Romney aides are certain their man will win, but the Obama camp has mobilised a massive early voting effort, which it says will keep the president competitive into election day.

Romney is up 3.8% in scoreboard.

-    Colorado (9)

Romney's best chance to grab a western swing state. Obama is relying on women and Hispanic voters to keep him in the game here and currently heads the RCP average by 0.6%.

-    New Hampshire (4)

The flinty northeastern state with an independent streak knows Romney well after he served as governor of neighbouring Massachusetts.

Obama won this state, in 2008 and leads average this year by 1.5%.

May be over

-    Nevada (6)

The Obama campaign says it has a substantial lead after early voting which means Romney needs to win big in election day voting.
Obama has a powerbase among Hispanic voters, and his trip to the bowels of a vast Las Vegas casino hotel to greet culinary workers a few weeks ago looks to have paid off.

Obama leads Nevada by 2.8% in average.

Romney's last stand

-    Pennsylvania (20), Michigan (16), Minnesota (10)

Romney will make a late swoop into Pennsylvania on Sunday after ignoring the Keystone State for much of the campaign. Democrats say his move shows desperation and recognition that he cannot get to 270 electoral votes elsewhere. Obama leads the RCP average by 3.9%.

Republicans have also made big advertising buys in Democratic states Minnesota, where Obama is up by 5.8 five points, according to RCP and in Michigan where Obama leads by 3.8% in the averages.

Obama aide David Axelrod is so confident that he has offered to shave his trademark moustache if Romney wins any of the trio.

NEWS,04.11.2012

Obama and Romney sprint to unpredictable finish

President Barack Obama and Republican challenger Mitt Romney are sprinting to an unpredictable finish in the last 48 hours of a very close race for the White House.The two candidates have been trying to turn out supporters and woo undecided voters in a handful of toss-up states.Obama and Romney began cross-country trips on the next-to-last day of a race that polls show is deadlocked nationally, although the president appeared to have a slight edge in the swing states that will decide who captures the 270 electoral votes needed to win on Tuesday .US correspondent told Breakfast the race was "insanely tight", with polls showing the two candidates within a margin of error of each other."Both candidates are trying to win over any last-minute voters that they can especially in the swing states that will likely win this election," he said."Perhaps the state of most importance of crucial importance to both campaigns - is Ohio. Barack Obama is campaigning there every day at the moment," he said.Political Editor Corin Dann told the programme that support in Obama's hometown was muted and there was some disappointment after his first term.He said Chicago was "very much a Democrat town" but that Romney supporters were also visible.Obama himself did not have any events scheduled in Chicago over the next couple of days, Dann said. "All the effort and energy is spread out into those states which will decide this election."But our correspondent said that despite the popular vote being close, he believed Obama had "a pretty clear lead when it comes down to the Electoral College vote", which will actually decide the election.After months of sometimes bitter attacks and saturation advertising in pivotal states, Obama and Romney pressed their arguments that they offer the best solution to weak economic growth and partisan gridlock in Washington.The two also made direct appeals for votes in a race that may come down to which side does the best job of getting its supporters to the polls."It's up to you. You have the power," Obama told a crowd of more than 14,000 people who filled the downtown streets of Concord, New Hampshire."You will be shaping the decisions for this country for decades to come, right now, in the next two days."In Iowa, Romney urged more than 4,000 people in a Des Moines hall to get out and vote and convince a few undecided or former Obama supporters to back him while they are at it.Romney, the former governor of Massachusetts, renewed his argument that he is the candidatewho offers real change and can reach out to Democrats to craft bipartisan agreements."Accomplishing real change is not just something that I talk about. It's something that I've done," Romney told supporters in Des Moines."And it's something I'm going to do when I am president of the United States."Advisers for Obama and Romney blanketed the Sunday morning news shows to predict victory in a race focused on eight or nine battleground states that will provide the margin of victory in what national polls show is likely to be a very tight race.A daily online tracking poll on Sunday showed Obama with a national lead over Romney of 48% to 47% - essentially a dead heat.The result fell within the survey's credibility interval, a tool used to account for statistical variation in Internet-based polls.Many polls show Obama with a slight but persistent lead in Ohio, Wisconsin, Iowa and Nevada states that would give him more than the 270 electoral votes he needs, barring any surprises elsewhere.Republicans said they see a different story in early voting in key states, which mostly shows Democrats casting more early ballots but not at the pace that Obama set in his victory in 2008 over Republican John McCain by 7 percentage points.Obama and Romney planned stops on Sunday in Ohio, perhaps the most critical of the swing states and particularly vital for Romney. If he loses Ohio, Romney would need a breakthrough in another state where polls currently show him trailing.Both candidates were getting plenty of help in the late stages from their running mates, Vice President Joe Biden and Wisconsin congressman Paul Ryan.Obama also got help at his New Hampshire rally from popular former President Bill Clinton.Ryan joined fans holding tailgate parties outside a Green Bay Packers football game in Wisconsin.Campaigning in Ohio, Biden joked that the end of Daylight Savings Time in the United States on Sunday was Romney's favorite day because he could officially turn back the clock.

World week ahead: All eyes on US election

All eyes are on the US presidential elections this week and investors may prove hesitant to make fresh bets until the results are in.One of the latest polls showed that President Barack Obama is slightly ahead of Mitt Romney in Ohio and Florida, viewed by many strategists as the two most important swing states. The Wall Street Journal/Marist College survey of likely voters put Obama ahead of Romney in Ohio, 51% to 45%, and in Florida, 49% to 47%, according to Bloomberg News. Obama appears to be receiving a lift from his managing of the crisis in the wake of Hurricane Sandy as well as encouraging economic signs."The market might like the fact of an Obama win since it would mean less uncertainty," Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, in Cincinnati, told Reuters.Trading on Wall Street was limited to three days last week-stock markets were closed on Monday and Tuesday-as Hurricane Sandy caused an estimated US$50 billion of damage to the East Coast of the US.New York City in particular was hit hard with transportation and the power grid suffering significant damage. In addition, almost half of the people killed as a result of the superstorm died in the New York City area.Amid low volume and a focus on the storm, markets were mostly muted the final three days of last week: the Standard & Poor's 500 Index gained 0.2%; the Dow Jones Industrial Average fell 0.1%; and the Nasdaq Composite Index shed 0.2%.There were notable and individual exceptions among companies including Starbucks which lifted its profit forecast for the fiscal year and whose shares surged 9% on Friday.The latest clues on the state of the world's largest economy will come in the form of the ISM Non-Manufacturing Index and reports on international trade and weekly jobless claims in the days ahead.Last week, data provided much-needed relief with better-than-expected numbers on consumer confidence and manufacturing. Most importantly October's jobs report-released on Friday-was stronger than anticipated and bolstered hope that progress is being made after all in the struggling labour market. US employers added 171,000 jobs in October and more people resumed looking for work, which pushed the jobless rate slightly higher to 7.9%.The US Treasury is scheduled to sell US$72 billion in notes and bonds this week, according to Bloomberg. The appetite for US government debt remains strong as the economic impact of Sandy raised fresh concerns about the recovery. A Reuters poll of economists predicted that Sandy will knock 0.2 percentage points off of fourth-quarter gross domestic product. US bonds also are being lifted by the lingering EU crisis. Europe's feeble finances may take five years or more to resolve, German Chancellor Angela Merkel told some of her own party officials on Saturday.Looking beyond the elections, the outlook for US corporate earnings continues to weigh on Wall Street. Of the 378 companies in the S&P 500 that have reported earnings so far, 61.9% have exceeded forecasts, in line with the 62% quarterly average since 1994, according to Thomson Reuters data through Friday.However, just 38.2% of companies having reported better-than-expected revenue, compared with the 62% quarterly average since 2002 and the 55% average over the past four quarters.Companies set to report this week include Groupon, Time Warner Cable and News Corp.In Europe, the Stoxx 600 Index increased 1.6% last week lifted by some strong results from a range of companies including Deutsche Bank as well as a plan by UBS to slash 10,000 jobs as it refocuses its business.Not to be forgotten, policy makers at the European Central Bank and the Bank of England meet later this week. BOE officials will decide whether to extend the bank's asset-purchase program after the UK economy grew in the third quarter. The nine-member Monetary Policy Committee will probably leave the target for asset purchases at 375 billion pounds (nz$728 billion), according to 35 of 45 economists in a Bloomberg News survey. Seven forecast a 50 billion-pound increase in quantitative easing, and three expect a 25 billion-pound expansion.The latest data on China-with reports on retail sales, industrial production, and the consumer price index due this week-will also be closely watched for further clues that the slowdown in the pace of expansion of the world's second-largest economy is less than initially feared. A report on the weekend showed that China's non-manufacturing sector rebounded in October. The timing is good as it comes days ahead of the once-in-a-decade leadership change at the top of the Communist Party set for November 8.

Greek PM warns of euro exit

Greek Prime Minister Antonis Samaras warned again on Sunday that the debt-crippled country could be forced out of the euro if parliament fails to approve a new round of austerity measures needed for a lifeline from creditors."We must save the country from catastrophe... if we fail to stay in the euro nothing will make sense," he told lawmakers from his conservative party.Parliament is due to vote Wednesday on a bill outlining €18bn of cuts and other reforms, followed by a vote on Sunday on the 2013 budget as Greece battles to secure a new tranche of aid from its troika of international creditors.Samaras said the votes were vital to "put an end once and for all" to the risk that Greece, faced with a crushing debt mountain, could return to the drachma.He called on coalition partners, the socialist Pasok and the moderate left-wing Dimar (Democratic Left) parties, which have raised concerns about the scope of the measures, to act in the "supreme interests of the nation".Greek unions however are planning a two-day strike from Tuesday to coincide with the austerity vote amid seething public anger over further painful cuts in a country that is heading for its sixth year of recession.Greece has been negotiating with the European Union, International Monetary Fund and the European Central Bank to unlock a €31.5bn tranche of a bailout package or risk bankruptcy in mid-November.But the IMF said last week that the talks were stalled over the conditions for financing Greece, which has been seeking a two-year extension to meet its fiscal goals, sending stocks crashing.The Dimar party, which has 16 deputies, has suggested it would vote against the bill Wednesday because of its objections to labour market deregulation proposals, while up to five socialist lawmakers could also defy Samaras.The dissenters would leave the government with a narrow majority, with just 154-159 seats in the 300-member assembly, the Greek press said on Sunday, while predicting the measures would nevertheless go through.

 

G20 flags US fiscal cliff

Finance chiefs of the world's 20 leading economies are ringing alarm bells over the US fiscal cliff and Europe's debt woes at a meeting in Mexico this weekend as they look to push back deficit reduction targets to help boost growth.Unless a fractious US Congress can reach a deal, about $600bn in government spending cuts and higher taxes are set to kick in on January 1, threatening to push the American economy back into recession and hit world growth.But with the US presidential election looming on Tuesday, dealing with the fiscal cliff has been delayed. "The Americans themselves acknowledge that this is a problem," a G20 official said on condition of anonymity. "The US administration says it doesn't want to fall off the fiscal cliff, but right now it can't tell us how exactly it will address it because that issue is on ice ahead of the election."Tax cuts enacted under President George W. Bush are set to expire in January, when automatic spending cuts designed to put pressure on lawmakers to strike a long-term budget deal are also set to kick in."What remains a sort of key aspect is that the United States is not respecting the current commitments (to reduce its deficits) and does not have a credible fiscal consolidation plan," one European official said. The US Congress will also soon have to raise the nation's debt limit to avoid a default. An initial consensus around the need for urgent action to prevent a new depression has given way to deep differences over issues such as spending to boost growth and the right pace of belt-tightening to tackle high debt levels. Jose Angel Gurria, head of the Organisation for Economic Co-operation and Development, said on Saturday the G20 should appeal to the United States to avoid the fiscal cliff, but added he was optimistic that Congress would strike a deal."I still believe it is not going to be applied," Gurria said in an interview before the meeting of G20 finance chiefs, which formally starts on Sunday. Officials are also concerned about Japan's own fiscal cliff, and recognise that previous commitments made by developed countries to cut their budget deficits in half by 2013 and to stabilise their debt load by 2015 look unfeasible.US and European officials are also likely to come under pressure from G20 peers for dragging their feet on implementing the so-called Basel III accords on financial regulations, the world's response to the 2007-09 financial crisis. Despite the issue's prominence, a G20 source said Russia wants to keep financial regulation discussions at a more technical level when it takes over the presidency of the group from Mexico after this meeting, which ends on Monday. Spain's reluctance to seek financial aid is stoking worries that Europe's debt crisis could further hurt world growth. The government is under pressure to seek a bailout as it struggles to cope with high public debt and the cost of recapitalising its banks. Eurozone sources say they expect Spain to seek financial aid from the eurozone in November. A government source told Reuters on Wednesday that Prime Minister Mariano Rajoy had not ruled out applying for a rescue, but Rajoy has signaled he will not rush unless market conditions deteriorate significantly.

G20 finance chiefs to tackle euro crisis

G20 finance chiefs begin Sunday two days of talks aimed at quelling fears of a global economic downturn amid a persistent eurozone debt crisis and a looming fiscal crunch in the United States.Finance ministers and central bank governors from the Group of 20 top economies will gather in Mexico City as debt-riddled Greece continues to trouble Europe while Spain fights off pressure to seek a bailout.While Madrid avoids the bailout route, the problems in Greece are still haunting Europe's single currency, more than two years after Athens received its first multi-billion-euro rescue.Greek officials are locked in tough negotiations with European Union and IMF auditors over austerity measures Greece must take in return for a bailout payment it needs to avoid defaulting on its debt.While the fiscal situation in the United States is also a major concern, officials do not expect any movement on that front until after Tuesday's US presidential election.The White House and Congress need to find a compromise by the end of the year to avoid a "fiscal cliff" of automatic spending cuts and tax hikes, which experts say could hurt the US economy and curb global growth.The meeting is a follow-up to a June summit, when G20 leaders vowed to coordinate "fiscal actions" to boost domestic demand if economic conditions deteriorated.Since then, the IMF slashed its 2012 global growth forecast to 3.3%, eurozone unemployment rose to a record 11.6% in September and growth decelerated in emerging nations.

NEWS,09.08.2012

China's inflation slows to 1.8% low

Chinese inflation hit a two-and-a-half-year low in July, official data showed on Thursday, giving the government further policy leeway to boost weakening growth. The country's consumer price index (CPI) rose 1.8% year-on-year (y/y) last month, the National Bureau of Statistics said, the fourth straight month of y/y easing and the lowest level since January 2010.The slowdown potentially gives authorities more ammunition to light a fire under the world's second-largest economy, which grew 7.6% in the second quarter for its worst performance since the height of the global economic crisis in 2008-2009.Authorities this year have taken measures including the rare step of slashing interest rates twice in quick succession while also lowering requirements for how much money banks must keep in reserve.Chinese leaders, including Premier Wen Jiabao, have expressed concern over the weakness in the economy and have hinted that the government may need to take further action to bolster growth.Sun Junwei, China economist at HSBC in Beijing, said the figure was in line with expectations and confirmed that inflation overall is trending downward."In general, China's inflation will likely be moderate and controllable in the future, which offers room for China to further loosen its (monetary) policy," she said.Sun added that if other economic data due out later on Thursday comes in worse than expected there could be a further cut in interest rates or bank reserve requirement ratios in August.China is scheduled to announce July figures in industrial production, fixed asset investment and retail sales later Thursday.Helping suppress the overall consumer price index was a decline of 0.9% in prices for transportation and telecommunications, according to the data.Inflation for the first seven months of 2012, meanwhile, was 3.1%, the bureau said."Inflation continues to peel off rapidly, highlighting an output gap that the government is trying to plug with rising state investment," economists at IHS Global Insight said in a report after the release of the July data.Producer price inflation (PPI), a leading indicator, declined 2.9% in July from the same month last year for the fifth straight month of contraction.Producer prices "continue to highlight the severe deflationary pressure rippling across the country", IHS Global Insight said, noting that "deflation, not inflation, is the greatest short-term threat to the Chinese economy".

Eurozone GDP to fall by 0.3% this year

The eurozone economy will contract by 0.3% in 2012 before recovering more slowly than expected next year to expand by 0.6%, a poll conducted by the European Central Bank (ECB) revealed on Thursday. The data came from the Survey of Professional Forecasters which the ECB carries out on a quarterly basis. It was published in the Frankfurt-based bank's monthly bulletin.The previous SPF survey predicted a 0.2% contraction for eurozone gross domestic product (GDP) this year and a 1% expansion in 2013.Recession-inducing austerity measures in some euro countries and "higher uncertainty" over the resolution of the single currency's debt crisis were "the main factors behind the downward revisions," the ECB said.Forecasters also said that eurozone unemployment would stay at its current high of 11.2% throughout 2012 and increase to 11.4% in 2013. Inflation was projected to fall from 2.3% to 1.7% over the same period.The ECB said it expected "weak" economic activity both in the second and third quarter of 2012 and only a "very" gradual recovery afterwards. "Risks surrounding the economic outlook for the euro area continue to be on the downside," it noted.The European Union statistical office, Eurostat, is to publish GDP figures for the second quarter of the year on Tuesday.

India's shock fall in industrial output

India's industrial production contracted by a shock 1.8% from a year earlier in June, as manufacturing output shrank in Asia's third-largest economy, official figures showed on Thursday, The data underscored the massive job ahead for India's new pro-market finance minister, P. Chidamabaram, who pledged this week to "restart the growth engine" of India's sharply slowing economy.Manufacturing output, which accounts for three-quarters of the index of industrial production, fell 3.2% from a year earlier in June, according to the government data.Manufacturing has been undermined by high interest rates to combat stubbornly high inflation, falling business confidence and Europe's debt crisis which has hit exports.The 1.8% shrinkage in output by factories, mines and utilities in June was the third contraction in four months and followed a revised 2.5% production rise in May.The industrial output reading was far below analysts' expectations, which were for an increase of 0.80%, according to a Dow Jones Newswires poll.The weak performance is likely to pile pressure on the central bank to ease interest rates to spur growth.The bank has said it wants inflation to come down before cutting borrowing costs, but Chidambaram has already indicated he wants lower rates, saying "sometimes it is necessary to take carefully calibrated risks".The weak numbers come as the left-leaning Congress-led government is under pressure over a string of graft scandals and its attempts to liberalise the still inward-looking economy to spur growth have led to gridlock in parliament.India's once-booming economy grew just 5.3% between January and March, its slowest annual quarterly expansion in nine years.Capital goods output, an important investment indicator, slid 27.9% in June from a year earlier.Goldman Sachs economist Tushar Poddar, who recently pared his full fiscal year growth forecast to 5.7% in contrast to the central bank's expectation of 6.5% expansion, saw more tough times ahead."Weak monsoons are also likely to impact rural consumption demand and exacerbate weakness in investment demand," Poddar said ahead of the data.Citibank has said if a nationwide drought is declared, which would be the country's third in a decade, growth could be as low as 4.9% as hundreds of millions of farmers depend on the annual rains for their income.