NEWS,12.03.2013

British manufacturing output slumps

Britain's manufacturing output slumped by 1.5% in January compared with December, official data showed on Tuesday, dealing a fresh blow to the country's hopes of avoiding a fresh recession.The wider measure of industrial production - which includes mining and quarrying, electricity, gas and water supply dropped by 1.2% in January from December, the Office for National Statistics added in a statement.Analysts' consensus forecast had been for manufacturing and industrial output to have each grown by 0.1% in January month-on-month, according to a survey by Dow Jones Newswires.Industrial output fell as suspended production at the Schiehallion oil platform in the North Sea hit oil and gas extraction."January’s figures do little to ease fears that GDP may still be contracting and that the economy could therefore be in a triple-dip recession," said Capital Economics analyst Samuel Tombs.Recent official data showed that British gross domestic product (GDP) shrank by 0.3% in the final quarter of 2012, compared with the previous three months.Another contraction in the current first quarter of 2013 would place the British economy in its third technical recession since the 2008 global financial crisis."Industrial production measure fell 1.2% month-on-month in January, a far worse outturn than expected," said Royal Bank of Scotland economist Ross Walker."The slump in January leaves a decline in first-quarter GDP looking more likely than not."In a separate data release on Tuesday, the ONS also revealed that Britain's trade-in-goods deficit narrowed at the start of the year.The deficit shrank to £8.2bn in January from £8.7bn in December.That beat analysts' forecasts for a January deficit of £8.9bn.However, IHS Global Insight economist Howard Archer argued that the improvement masked a worrying trend."On the face of it, the sharply reduced trade deficit in January is better news for hopes that the economy can grow in the first quarter," Archer said."But even here the headline figure masks some worrying trends as the reduced deficit occurred because UK imports fell more than exports. This indicates that UK exporters are currently still finding life very tough while domestic demand is weak."

Eurozone crisis not over - ECB's Weidmann

The euro zone crisis is not over and governments must tackle the roots of their troubles with reforms, Bundesbank chief Jens Weidmann said on Tuesday, adding that France's reform drive seems to have gone off track."The crisis is not over despite the recent calm on financial markets," Weidmann, a member of the European Central Bank's policymaking governing council, told a news conference to present the Bundesbank's 2012 results.There was uncertainty about the reform course in Italy and Cyprus, he said, adding: "The reform course in France seems to have floundered".

Judge blocks NY ban on giant fizzy drinks

New York judge blocked mayor Michael Bloomberg's planned ban on giant sodas Monday, dealing a setback to his public health agenda just hours before curbs on selling such drinks were due to begin.Judge Milton Tingling ruled that measures to restrict soda servings to a maximum of 16 ounces (470 milliliters) in restaurants and other venues, were "arbitrary and capricious," and he was barring the plan "permanently."Bloomberg has made health issues a key plank of his administration, banning smoking in restaurants, bars and other public places. He quickly denounced the judge's decision on sodas as "clearly wrong," and said the city would appeal."I am trying to do what is right to save lives. Obesity kills," a visibly angry Bloomberg told reporters, noting that 5 000 New Yorkers and 70 000 US citizens would fall victim to the disease this year."Sugary drinks are a leading cause of obesity. We have a responsibility as human beings to do something, to save each other," he added.But Bloomberg's super-sized soda ban, which would have been a first for a US city, sparked frenzied debate, with petitions and media campaigns from both sides.Some supported Bloomberg's arguments, emphasizing that 30 years ago the average soda serving was just six ounces, but that these days, it's not rare to see young Americans with giant fizzy drinks of more than a litre (33 ounces).Opinion polls over the summer indicated that a majority of New Yorkers opposed the limited ban, with some suggesting the mayor was impinging on civil liberties and others arguing the rules would not be effective.Industry lobby groups led by the American Beverage Association (ABA) and the National Restaurant Association took the court action that led to Monday's judgment, and they praised the decision."The court ruling provides a sigh of relief to New Yorkers and thousands of small businesses in New York City that would have been harmed by this arbitrary and unpopular ban," the ABA said in a statement.As well as the thousands who die each year from obesity-linked problems, one in eight adult New Yorkers has diabetes, which can be aggravated by sugar consumption, and studies have shown that sodas, which often cost less than bottled water, are a contributing factor."Remember, for many years, the standard soda size was six ounces - not 16, it was six, then it was 12 ounces and people thought that was huge. Then it became 16, then 20 ounces," Bloomberg said."We believe it's reasonable to draw a line and it's responsible to draw a line right now," he added.The New York Board of Health approved the measures last September and they were due to come into force on Tuesday in restaurants and places of public entertainment, such as stadiums.In a boost for the soda limits, the newly-built basketball stadium for the Brooklyn Nets had said it would immediately adopt the rules.But under the measures put forward by the city there was nothing to stop people from buying as much soda as they like by refilling smaller containers.Also, the ban did not extend to drinks sold in supermarkets or any dairy or fruit drinks, many of which also contain huge quantities of sugar.Diet and alcoholic drinks were also exempted under the city's plan."The exclusion of all alcoholic beverages from the ban is completely irrational. Beer and soda have nearly the same calories per ounce," the legal complaint said.And "the application of the ban to some business establishments but not others is arbitrary and capricious," it argued.Bloomberg previously acknowledged that the plan would fall short of ending over-consumption of sugary drinks, but he said the disappearance of mega-sized cups would at least make people more aware of what they were consuming.

Australia unveils media shake-up

Australia's centre-left Labour government unveiled a shake-up of media laws on Tuesday, introducing a public interest test for mergers but stopping short of press regulation asfeared by the industry.Communications Minister Stephen Conroy said the reforms, drafted after an inquiry into Australia's media following the phone-hacking scandal in Britain, were aimed at modernising the industry and guarding fairness and diversity.If passed into law, the changes would bring a public interest test to "nationally significant" mergers and acquisitions, which Conroy said was not the same as the "fit and proper person" test seen in Britain.It would be monitored by a new statutory authority called the Public Interest Media Advocate, which would oversee a robust self-regulation model, the minister said, stressing that the government would have no role."The government will not fund or oversee press standards bodies, they will be run, funded and operated by the print media themselves," he said.Proprietors, most vocally Rupert Murdoch's dominant local arm News Limited, had feared official regulation of the press, but Conroy said the present model of self-regulation would continue, although it would be tightened.Conroy added that the government would be seeking a "more transparent and open process" on appointments to regulatory bodies such as the current Press Council and better enforcement of existing press standards.The Press Council could apply to be authorised under the new framework, but Conroy said it would be  expected to be "transparent, open and independent" of proprietors, not just the government, to address community concerns."In Australia there is a real risk that over time there will be fewer and fewer organisations owning and controlling sources of news and commentary," Conroy told reporters."There are two existing mechanisms that address this risk: competition law and foreign ownership restrictions. But these alone do not reflect the full question of public interest in media diversity."Conroy said the government would not barter on the legislation, which he believed had enough backing in parliament."If these reforms do not garner sufficient support to pass the parliament by the end of next week then the government will not proceed with the bills containing them," he said.

NEWS,25.02.2013

Obama: Time to start governing

US President Barack Obama warned warring politicians on Monday it was time to start governing as Washington headed into another manufactured crisis threatening the fragile economy. Obama told an annual meeting of state governors at the White House that huge budget cuts due to hit on 1 March would "slow our economy, eliminate good jobs" and leave Americans with "thinly stretched" budgets wondering what to do.The president is demanding that congressional Republicans stave off a set of arbitrary, automatic spending cuts known as the sequester by closing tax loopholes that benefit the rich and corporations."We can't just cut our way to prosperity. Cutting alone is not an economic policy," Obama told Democratic and Republican governors in the State Dining Room of the White House.Many Republicans agree that the sequester, which imposes across the board cuts of $85bn this year from government programme, is a bad way to cut spending and reduce the deficit.But they argue that Obama is not serious about reining in spending and warn the president that his success in getting higher income tax rates on the rich late last year is the last time they will permit him to raise more revenue.Obama, who no longer has to worry about answering to voters, warned Washington had to "get past its obsession with focusing on the next election instead of the next generation”."All of us are concerned about our politics, both in our own party as well as the other party. But at some point we've got to do some governing."What we can't do is keep careening from manufactured crisis to manufactured crisis. "The American people have worked hard and long to dig themselves out of one crisis. They don't need us creating another one."

World powers have 'good offer' for Iran

World powers will present Iran with an updated and "good" offer at talks this week on its nuclear programme, an EU official said on Monday, although hopes for a breakthrough were slim. Talks aimed at curbing Tehran’s nuclear drive start in Kazakhstan on Tuesday, with the so-called 5+1 world powers represented by the EU sitting down with an Iranian team led by its top nuclear negotiator Saeed Jalili."We have prepared a good and updated offer for the talks, which we believe is balanced and a fair basis for constructive talks," said the spokesperson for EU foreign policy chief Catherine Ashton."The offer addresses international concerns... on the nature of the Iranian nuclear programme, but is also responsive to Iranian ideas," said the spokesperson, Michael Mann."We hope that Iran will seize this opportunity and come to the talks with flexibility and commitment to make concrete progress towards a confidence-building step."A source close to the negotiations said the offer would still insist that Iran halts enriching uranium to 20%, shuts down its controversial Fordo uranium enrichment plant and sends abroad all uranium already enriched to 20%."This still forms the basis of the demands of the 5+1 group," said the source who asked not to be identified.Reports have said that Iran could in return be offered a softening of sanctions imposed against it, possibly starting with a lifting of measures against its gold industry.However, Jalili said at the weekend that Tehran would not go beyond its obligations or accept anything outside its rights under the non-proliferation treaty (NPT)."We don't expect any breakthrough. The Iranians have made different declarations in the last days. It depends if you take the positive or the negative ones," said one Western official who asked not to be identified.The 5+1 world powers are Britain, China, France, Germany, Russia and the US.

China manufacturing growth falls

China's manufacturing growth hit a four-month low in February but remained positive, British banking giant HSBC said Monday, noting that the world's second-biggest economy was still recovering slowly.The bank's seasonally adjusted preliminary purchasing managers' index (PMI) stood at 50.4 for the month, down from a final 52.3 in January, it said in a statement.A reading above 50 indicates expansion and it was the fourth consecutive month of growth, after 12 months of contraction."The Chinese economy is still on track for a gradual recovery," Qu Hongbin, a Hong Kong-based economist with HSBC, said in the statement, downplaying the fall in PMI."The underlying strength of Chinese growth recovery remains intact, as indicated by the still expanding employment and the recent pick-up of credit growth," he added.Chinese banks more than doubled their lending in January from December, granting 1.07 trillion yuan ($171.7bn) worth of new loans, official data showed earlier this month, as Beijing seeks to boost economic growth.The domestic economy expanded at 7.8% last year, its slowest pace in 13 years, in the face of weakness at home and in key overseas markets.Policymakers cut interest rates twice in 2012 and have trimmed the amount of cash banks must place in reserve three times since December 2011 to encourage lending and pump up growth.The PMI figure, compiled by information services provider Markit and released by HSBC, tracks manufacturing activity and is a closely watched barometer of the health of China's economy.Liao Qun, a Hong Kong-based economist with Citic Bank International, said weaker manufacturing activity in February may have suggested the domestic rebound was unstable, but the overall recovery trend remained intact."The figure, after being seasonally adjusted, might indicate a weaker economic rebound in February due to the uncertainty in overseas economies and a lack of clarity in China's fiscal and monetary policies ahead of the two sessions," Liao said.The "two sessions" is a Chinese reference to the annual meetings of the country's top legislative and political advisory bodies in March, which will set the tone for the country's economic policies."Given the HSBC PMI index is just preliminary, we'll have to wait for the official PMI to gauge the momentum of China's growth recovery," Liao added. The official PMI, released by the China Federation of Logistics and Purchasing and the National Bureau of Statistics on a monthly basis, focuses more on large and medium companies, while the HSBC PMI covers mostly small firms.

China communists lament spoiled generation

The mouthpiece of China's ruling Communist Party on Monday lamented a generation who had never tasted "hard work" after the son of a general was detained on suspicion of involvement in a gang rape.Li Guanfeng, the teenage son of general Li Shuangjiang - a popular military singer and household name in the country - was held last Thursday in the latest allegation against privileged children of officials to spark public outrage.The news has dominated internet message boards, online news portals and state-run newspapers in China, where crimes by the offspring of the country's elite cause particular anger among ordinary people."Family education" among successful, well-known figures in China needs to be "cautious", said the People's Daily, the ruling party's official organ, in an editorial on the case."Many of these children have not experienced the hard work needed in the struggle to achieve success, but are shown the results of this success."Used to getting everything they want and having all their problems handled, they will use their father's name as an excuse, take flaunting wealth for granted and regard defying the law as brave behaviour."AssaultLi is among five suspects detained over allegations of a sexual assault on 17 February, the state-run China Daily said.The newspaper quoted an unnamed Beijing police source saying the group were accused of gang-raping a woman in a hotel room after a night of drinking.It is not the first time the 17-year-old has come to public attention.He was sent to a government correctional facility for one year in 2011 for beating a couple while their young child looked on. Domestic media reports said his parents changed his name from Li Tianyi to Li Guanfeng on his release.Hundreds of thousands of people went online to express their outrage at the time, and the general apologised for his son's actions.

Horsemeat found in Swedish meatballs

Czech authorities said on Monday they have detected horsemeat in meatballs labelled as beef and pork for Swedish furniture retailer giant Ikea, while EU officials met to discuss tougher food labelling rules to counter the developing scandal.The horsemeat was found in 1kg packs of frozen meatballs made in Sweden and shipped to the Czech Republic for sale in Ikea stores there, the State Veterinary Administration said. A total of 760kg of the meatballs were stopped from reaching the shelves.Ikea's furniture stores feature restaurants and also sell typical Swedish food, including the so-called Kottbullar meatballs.It was not immediately clear whether Ikea exported the same product to other countries. Calls seeking comment from Ikea in Sweden were not immediately returned on Monday.The Czech authority also found horsemeat in beef burgers imported from Poland during random tests of food products.Authorities across Europe have started doing random DNA checks after traces of horsemeat turned up in frozen supermarket meals such as burgers and lasagne beginning last month.The EU's agriculture ministers gathered in Brussels on Monday to discuss the widening scandal's fallout, with some member states pressing for tougher rules to regain consumer confidence.The 27-nation bloc must agree on binding origin disclosures for food product ingredients, starting with a better labelling of meat products, German Agriculture Minister Ilse Aigner said."Consumers have every right to the greatest-possible transparency," she insisted.Austria backs the German initiative; but others like Ireland say existing rules are sufficient although Europe-wide controls must be strengthened to address the problem of fraudulent labelling.The scandal has created a split between nations like Britain who see further rules as a protectionist hindrance of free trade under the bloc's single market, and those calling for tougher regulation.Processed food products - a business segment with traditionally low margins that often leads producers to hunt for the cheapest suppliers - often contain ingredients from multiple suppliers in different countries, who themselves at time subcontract production to others, making it hard to monitor every link in the production chain.Standardised DNA checks with meat suppliers and more stringent labelling rules will add costs that producers will most likely hand down to consumers, making food more expensive.The startThe scandal began in Ireland in mid-January when the country's announced the results of its first-ever DNA tests on beef products. It tested frozen beef burgers taken from store shelves and found that more than a third of brands at five supermarkets contained at least a trace of horse. The sample of one brand sold by British supermarket kingpin Tesco was more than a quarter horse.Such discoveries have spread like wildfire across Europe as governments, supermarkets, meat traders and processors began their own DNA testing of products labelled beef and have been forced to withdraw tens of millions of products from store shelves.More than a dozen nations have detected horse flesh in processed products such as factory-made burger patties, lasagnes, meat pies and meat-filled pastas. The investigations have been complicated by elaborate supply chains involving multiple cross-border middlemen.

Ikea pulls meatballs from 14 countries

Swedish furniture giant Ikea has withdrawn some of its company-branded meatballs in 14 European countries after horsemeat was found in the product by Czech authorities, the company said on Monday."We take this very seriously and have withdrawn one-kilo bags of frozen meatballs from Slovakia, the Czech Republic, Hungary, France, Britain, Portugal, Italy, the Netherlands, Belgium, Spain, Cyprus, Greece and Ireland," in addition to Sweden, said company spokesperson Ylva Magnusson.

NEWS,11.01.2013

British manufacturing output slumps

British manufacturing output fell in November and industrial production was weaker than expected, official data showed on Friday, sparking renewed speculation that the economy shrank at the end of 2012.Manufacturing output contracted by 0.3% in November from activity in October and dived by 2.1% on a 12-month comparison, the Office for National Statistics (ONS) said in a statement. That was worse than market expectations for a monthly increase of 0.5% and an annual drop of 2.1%, according to analysts polled by Dow Jones Newswires. Manufacturing suffered a sharp downturn as construction industry output fell by 3.4% in November from activity in October - which was the biggest monthly decline for seven months - and tumbled 9.8% on an annual basis. "November's disappointing UK industrial production and construction figures provided yet more evidence that the economy probably contracted in the fourth quarter of last year," said Vicky Redwood, chief UK economist at British research group Capital Economics. The wider measure of industrial production - which includes also mining and quarrying, electricity, gas and water supply - rose by 0.3% in November from October, but fell 2.4% on an annual basis. The ONS said that the modest increase in industrial output was caused by the return to production of the North Sea's Buzzard Oil field, which was closed throughout September and October for maintenance. As a result, oil and gas extraction soared 11.3% in November compared with October. That was the biggest monthly gain since January 1968."Although overall production posted a 0.3% monthly rise, this just reflected a bounce-back in the energy sector," added Redwood. The ONS will publish its initial estimate for British gross domestic product (GDP) in the fourth quarter, or October-December period, on January 25.Britain, which has suffered two recessions since the 2008 financial crisis, will suffer a triple-dip recession should GDP contract in both the fourth quarter of last year and first quarter of 2013.

Japan unveils $226bn stimulus package

Japan's new government unveiled a massive $226.5bn stimulus plan on Friday in the latest bid to boost the world's number three economy, with plans to rebuild disaster-hit areas and beef up the military. Japanese investors welcomed the news, with the Nikkei index surging to a 22-month high and the yen tumbling, but analysts questioned its long-term effect and warned it could lead to more misery further down the line. Prime Minister Shinzo Abe, who came to power in a landslide election victory last month, followed through with one of his key pledges by outlining details of a big-spending plan designed create jobs and end deflation. "With the measures, we will achieve real GDP growth of two percent and 600 000 jobs will be created," he told a briefing. Japan's economy shrank by 0.6% in 2011, while last year's gross domestic product figures are yet to be released. "It is crucially important to break out of prolonged deflation and the high yen," he added. A hawkish Abe also repeated his call for Tokyo and the Bank of Japan to "join hands" on driving growth, comments that have stoked tension between the him and BoJ chief Masaaki Shirakawa over perceived threats to its independence and policy decisions. The new premier had pledged before the election that he would press the BoJ to carry out more aggressive monetary easing and warned that if it did not agree to a two percent inflation target he would change the law regarding its remit. While the total size of Friday's package came in at ¥20.2 trillion, Tokyo's direct spending on economic stimulus and pension financing amounts to about ¥13 trillion, with local governments and the private sector kicking in the rest, Abe said. Rebuilding disaster-struck areas, making more schools and hospitals earthquake resistant, and upgrading ageing infrastructure were among the planned measures. It will also see ¥180.5bn spent on missiles, fighter jets and helicopters to beef up the military as Tokyo is embroiled in an increasingly bitter territorial row with China over a group of uninhabited islands in the East China Sea.Friday's stimulus is the latest unveiled by successive governments who have tried to lift the economy from years of anaemic growth. Investors gave a big thumbs up, with the Nikkei surging 1.5% in the afternoon to levels not seen since before the March 2011 quake tsunami. The yen also tumbled to ¥89.35 against the dollar, its lowest since June 2010 and a far cry from the record high 75 it hit in late 2011, which hammered exporters. But the big spending plans have stoked fears over Japan's already tattered fiscal health, the worst among industrial countries with public debt standing at more than twice the size of the economy. "Huge spending of this size will, of course, have a one-time effect on boosting the economy. But if it fails to ignite a sustained recovery, Japan could fall into a vicious cycle of needing more stimulus spending," said Taro Saito, senior economist at NLI Research Institute. Saito also raised fears that some of the money would fall into a black hole of "wasteful spending". "If that is the case, it would only have a negative impact on Japan's fiscal health and a limited effect on boosting the economy," he said. Abe, however, insisted the package was not just a return to form for his Liberal Democratic Party (LDP), which has a history during its decades-long domination of what critics say is pork-barrelling, especially in the vote-rich countryside. "There is a suspicion that it is a kind of wasteful spending on white elephant projects that the LDP did in the past. That's wrong," Abe said on Friday. "Fiscal discipline is quite important. However, without a strong economy... we cannot improve our fiscal health."

Banks Officially No More Than Giant Babies: Seven And A Half Things To Know

Thing One: Are You Comfortable, Banks? Can We Get You Anything? When it comes to big banks, we're like overly doting parents: Four years after the financial crisis, we just can't stop babying them.Apparently, despite the personal guarantee of Warren Buffett that the banks are okey-dokey, they still need our assistance. Their profit margins are getting squeezed in several ways, writes Robin Sidel in the Wall Street Journal (as we'll observe when they report fourth-quarter earnings, starting with Wells Fargo today). For one thing, they have way too many deposits, on which they must pay interest. For another, they're having a hard time finding anybody they want to loan money, so they're not getting as much interest back. As a result, their net interest margins are too thin. Meanwhile, they also just can't seem to stop getting into trouble and paying hefty fines all of the time, which is also not great for business. Big lenders will take hits totaling about $20 billion in fines this quarter from their various settlements with the government, Sidel notes settlements that weren't too awfully onerous and that almost never involved any criminal charges being filed, mind you. Even as we speak, they're getting into more trouble: A couple of top UBS executives testifying before a UK parliamentary commission yesterday expressed shock and ignorance about rampant Libor fraud at their bank, for which it has paid $1.5 billion in fines. And Reuters reports that JPMorgan Chase will soon get a strongly worded letter from the U.S. government that it needs to do a better job of keeping an eye on the money going through its coffers, lest it run afoul of money-laundering laws, as HSBC, Standard Chartered and many other banks have before.Meanwhile, banks complained so much about the fragile state of housing that they won some key concessions in the new mortgage-lending rules announced yesterday by the Consumer Financial Protection Bureau, notes Peter Eavis in the New York Times. The rules may prevent some of the pre-crisis abuses in mortgage lending that helped lead to the housing collapse, but they will take effect over many years, and the CFPB offered possibly unnecessary protections to the banks against being sued by homeowners. In another sop to the banks, the recent government settlement with mortgage lenders over their shoddy foreclosure practices was based on a belief that actually reviewing cases of foreclosure abuse was just way too hard, and that it's better for everybody (except homeowners) just to let lenders handle things as they see fit, as Jessica Silver-Greenberg in the NYT reminds us (and EleazarDavid Melendez and Ben Hallman wrote earlier this week).All of this follows the most profound bank concession of all: the retreat earlier this week on tougher bank capital and liquidity standards by the Basel III regulators. Some commentators suggested this surrender was a good thing, otherwise these tender banks would be so fragile as to not be able to lend money any more. That's just completely wrong. The banks already aren't lending money, as Sidel's WSJ story today points out, either because they're being too finicky or because the economy is weak or because there's just not that much demand for loans, or all of the above. Distant-future capital and liquidity standards are not really a big part of the equation. Sure, business is bad, and we help industries when business is bad. But we shouldn't sacrifice the future safety of the financial system in the process. It's time to stop spoiling these banks.

Thing Two: More Stimulus For Japan: The government of new Japanese Prime Minister Shinzo Abe approved a $116 billion stimulus plan for that country this morning, the latest in a long series of measures aiming to jolt that moribund economy back to life. The move puts pressure on Japan's central bank to pitch in with its own monetary stimulus measures later this month, writes Reuters.

Thing Three: Dreamliner Nightmare Won't End: Another day, another set of mishaps on Boeing 787 Dreamliner airplanes. This time both incidents happened in Japan, one involving a fuel leak and another involving a cracked windshield. Both planes were operated by All Nippon Airways. Earlier this week, two separate Japan Airlines flights had trouble at Boston's Logan International Airport. The FAA is launching an investigation with a press conference in Washington later today.

Thing Four: Google's European Vexation: U.S. antitrust regulators may have given Google a pass, but European regulators aren't going to be such pushovers. The European Union's competition chief told the Financial Times that the search giant will have to "change the way it presents search results in Europe or face antitrust charges."

Thing Five: Fed To America: You're Welcome: Well, this should help with the deficit, a little: The Federal Reserve turned a record profit of $88.9 billion last year, the WSJ writes. That will go straight to the Treasury Department. Funny thing is, that profit came from the Treasury Department, in the form of interest payments on the mountain of Treasury bonds the Fed holds as a result of its stimulus programs.

Thing Six: Shell Game: A Shell oil rig that ran aground off the coast of Alaska last week might have been in motion only because Shell was trying to avoid paying taxes, according to a letter from Rep. Edward Markey (D-Mass.) to Shell's CEO. Shell denies the claim and says the rig was being moved for safety reasons. But a Shell spokesman last month told a local paper the timing of the rig's move was influenced by tax considerations, Reuters writes.

Thing Seven: Not-So-OK Computer: Some years back the RAND Corporation touted far and wide the benefits of switching health records from paper to electronic systems as a way of improving health-care efficiency and cutting costs, and the government spent tons of money to help speed up the process. Now, after a new study, RAND admits that it can see little benefit from the switchover, the New York Times writes. Awesome show, RAND. Great job!

Thing Seven And One Half: A Day In The Life: As a public service, to provide you a yardstick against which to measure your own life, Uproxx has unearthed an old AP story with a chronological list of all of the things Hunter S. Thompson ingested in a typical day. (Hint: Cocaine is well-represented.) It's a miracle he survived to that afternoon, much less the age of 67.

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Shell Kulluk Rig May Have Been Moved To Avoid Paying Millions Of Dollars In Taxes: Lawmaker

Shell may have moved an oil rig that ran aground off Alaska last week partly to avoid millions of dollars in taxes, U.S. Rep. Ed Markey said, raising even more questions about the oil company's decision on the timing of the move. The letter from the top Democrat on the House of Representatives Natural Resources Committee adds to the already-intense political scrutiny of Royal Dutch Shell's ambitious and troubled Arctic drilling foray last year. Shell's 30-year-old Kulluk drillship ran aground on New Year's Eve in what were described as "near hurricane" conditions while it was being towed south for the winter. In a letter to Shell's top U.S. executive, Marvin Odum, Markey said the decision to move the rig "may have been driven, in part, by a desire to avoid...tax liability on the rig. "In late December, a Shell spokesman told a local newspaper, the Dutch Harbor Fisherman, that it was "fair to say the current tax structure related to vessels of this type influenced the timing of our departure." But Shell said in response to Markey on Thursday that its decision was guided by safety, not taxes. Markey, an outspoken critic of the oil and gas industry, said his office received information about Shell and taxes from Alaska's revenue department. Shell could have been exposed to a state tax if the rig had remained in the state until January 1, as Alaska law says an annual tax of 2 percent can be assessed on drilling equipment on that date, Markey said in the letter sent on Wednesday.The company spent $292 million on upgrades on the rig since purchasing it in 2005, so the liability could have been about $6 million, he wrote. In total, Shell has spent $4.5 billion since 2005 to develop the Arctic's vast oil reserves. Jim Greeley, Anchorage-based petroleum property assessor for the Alaska Department of Revenue, explained that the tax applies to property used for exploration, production or transportation of oil or natural gas. He could not say whether the Kulluk would have been taxed or whether Shell's actions avoided a tax. The issue was complicated by the fact that Shell's drilling was in federal waters. "There's no tax precedent for that," at least in recent times, Greeley said, adding that department officials were researching the tax practices from two decades ago when there was a flurry of drilling offshore Alaska.The decision would have to be made by the time the state publishes its tax rolls on March 1.Shell's Arctic work has been closely watched by many in the industry and especially by ConocoPhillips ahead of its planned Alaska offshore drilling program slated for 2014.According to the U.S. government, the Beaufort and Chukchi seas hold an estimated 23 billion barrels of recoverable oil  equivalent to a tenth of Saudi Arabia's reserves. A Shell spokeswoman said the plan for the Kulluk this winter was always to move it in December. "While we are aware of the tax environment wherever we operate, the driver for operational decisions is governed by safety." She said an approved tow plan for the rig included weather considerations. Winter transit in northern waters is not unusual for rigs. Just this month, a rig owned by contractor Seadrill was due to arrive in Norway to start work for Statoil, while another was headed to Canada for Exxon Mobil Corp. The Kulluk accident is only Shell's latest problem in Alaska. Its 2012 Arctic drilling season was plagued by delays due to lingering ice and problems getting a mandatory oil spill containment vessel certified by the Coast Guard. Also, the U.S. Environmental Protection Agency said late on Thursday it issued notices of violation for air pollution in 2012 for the Noble Corp-owned Discoverer, Shell's other Arctic rig, and for the Kulluk. The EPA also terminated a temporary, more lenient permit granted to Shell in September for the Discoverer and said Shell's application for a less strict air permit was still under review. The U.S. Department of the Interior said this week it would review Shell's Arctic oil drilling program to assess the challenges it faced and to guide future Arctic permitting. Markey's committee does not have the power to stop drilling. His investigation would focus on why the rig was being towed along the coast down to Washington state in such severe weather and on Shell's safety policies, an aide to Markey said. Any permitting changes or delays resulting from the Interior Department review could threaten Shell's 2013 drilling plans, as the company has a limited drilling window during the summer. The Kulluk, before heading south, had previously been at a private facility in Unalaska/Dutch Harbor operated by Kirkland, Washington-based Offshore Systems Inc, which serves fishing and other vessels in Alaska. Harbormaster Jim Days said it was there for at least a month after completing its Beaufort Sea drilling. The environmental impact of the Kulluk accident is so far limited. The incident response team has located all four survival ships and one rescue ship that were dislodged from the drillship when it ran aground. The survival ships all had 68-gallon-capacity fuel tanks and two had been breached. None of the 155,000 gallons of fuel and other oil products aboard the Kulluk itself had leaked.

NEWS,25.10.2012

Eurozone business slump accelerates

Eurozone private sector business activity slumped deeper into the mire in October, falling at its fastest rate since June 2009 to 40-month lows, a closely watched survey showed on Wednesday.The Composite Purchasing Managers Index (PMI), a survey of 5 000 eurozone businesses compiled by the Markit research firm, fell to 45.8 points in October from 46.1 in September.The index is a leading indicator and any reading below 50 indicates a contraction in activity, with the eurozone getting off to a bad start for the fourth quarter as the debt crisis continues to undermine growth and jobs.The preliminary data showed the Services sector PMI at 46.2 points in October, edging up from 46.1 in September while the Manufacturing sector fell very sharply to 45.3 from 46.1.Markit said eurozone firms "continued to cut employment, adjusting capacity down in response to lower levels of demand for goods and services."Further declines in activity over the coming year were signalled by another deterioration in business optimism in the service sector, which also suggests that employment looks likely to be cut again," it added. Markit chief economist Chris Williamson said the data suggested the eurozone economy was shrinking at a rate of 0.5% on a quarterly basis, more than enough to count the eurozone as deep in recession."While gross domestic product may decline only modestly in the third quarter, a steeper fall looks to be on the cards for the fourth quarter," Williamson said."The financial markets may have cheered the positive developments from policymakers in seeking to resolve the region’s debt crisis ... but business appears to have been less impressed."Sentiment about prospects for the year ahead are now the gloomiest since early-2009, when the post-Lehman Brothers crisis was in full swing," he said.Analysts said the survey findings were cause for concern, with the eurozone falling deeper into recession.The figures "worryingly indicate that the eurozone downturn is, if anything, deepening rather than easing. Consequently, it already looks highly likely that the eurozone is headed for further economic contraction in the fourth quarter," said Howard Archer of IHS Global insight.Archer noted how austerity policies implemented to combat the debt crisis were hitting domestic demand while muted global growth undercut exports.The European Central Bank was now likely to cut its benchmark interest rate to 0.50% from 0.75% in December in an effort to boost growth, he said, although it could be delayed until early 2013.

EU, IMF insist no Greek creditor deal yet

 

Greece's finance minister announced he had agreed a new austerity deal with international creditors, but the EU and IMF insisted that while there had been progress, no deal had yet been thrashed out.Yannis Stournaras told parliament Wednesday the so-called troika had granted a long-sought extension in return for a €13.5bn austerity package needed to unlock funds vital to keep the country afloat.But officials at both the European Union and the International Monetary Fund were quick to make it clear that the troika had not yet reached any agreement with Athens."Substantial progress has been made in talks with Greece but a few outstanding issues remain before a staff-level agreement can be reached," a spokesperson for European economic affairs commissioner Olli Rehn said in a tweet.The International Monetary Fund issued a similar message soon after."There has been progress in recent days, but some outstanding issues remain to be agreed upon to reach full staff-level agreement," a spokesperson said."Furthermore, financing issues will be discussed between the official lenders and Greece."European Central Bank chief Mario Draghi also said that while there had been progress "the review is not finished yet".The EU has been negotiating alongside the ECB and the IMF on a new round of spending cuts and reforms by Greece to unlock a €31.2bn installment from its rescue loans.A finance ministry source had said earlier that the government hoped to present the deal to a Eurogroup meeting on Thursday, ending talks that have dragged on since July.But Finance Minister Wolfgang Schaeuble of key paymaster Germany said: "As far as the German government knows there are no new findings."When the proposals (from the troika) are on the table, the Eurogroup will look at them. There is nothing more to add."Earlier Stournaras had said that he had finalised the agreement on cutbacks in talks with the troika's auditors."We have obtained the extension," he told parliament, announcing that two draft laws related to the package would be presented to parliament next week.The new measures, to be voted on by November 12, still have to be approved by Greece's three-party coalition government, with key allies remaining split over the painful reforms.According to the draft budget, Greece plans to cut the public deficit to 6.6 percent of output this year - still over twice the EU limit.'Greece will be saved by those who dare'European leaders have long maintained that extra time for Greece means more money from eurozone taxpayers.But Stournaras said: "Greece aims to cut its debt through lower interest rates and an extension in the repayment of loans it has received from the EU and the IMF."German daily Sueddeutsche Zeitung and Greek media had reported that Athens would be given two more years to slash its public debt mountain and implement key labour reforms and privatisations.Greece, heading for a sixth straight year of recession, is desperately trying to unlock the new installment of loans from the troika.In exchange, Athens has to agree to tough economic reforms, but the measures are deeply unpopular among ordinary Greeks who have taken to the streets in sometimes violent protests.With unemployment topping 25%, the government has been pleading for more time to implement the austerity measures.Media reports had said Athens would be given to 2016 to cut its deficit to the EU limit of 3% of gross domestic product rather than the previous deadline of 2014. Its total debt stood at a whopping 150% of GDP at the end of the second quarter, according to Eurostat.The reported agreement also scaled back targeted privatisation revenue to €10bn by 2016 - effectively nine billion less over an extra year - while calling for a two-year rise in the statutory retirement age and fresh cuts to state salaries and pensions.Earlier Wednesday, ECB executive board member Joerg Asmussen said that if Athens did get another two years to implement its reforms, other members of the 17-nation eurozone would have to lend it more money to bridge the deficit shortfall.Athens recently pledged €7.8bn in cuts next year, only to be told by the troika that an effort of €9.2bn was required to counterbalance the effects of the recession.Prime Minister Antonis Samaras's political allies, the socialist and moderate leftist parties, have baulked at calls to lower severance pay and facilitate layoffs while the country faces record unemployment."Greece will be saved by those who dare," Samaras said on Tuesday after a meeting of coalition leaders. "We have already modified many of the troika's original proposals - on labour issues and others - and the negotiation continues."

Olympics lift Britain out of recession

Britain stormed out of its longest double-dip recession since the 1950s after its economy returned to growth in the third quarter with a robust gain of 1%, official data showed on Thursday.British gross domestic product, or combined value of produced goods and services, grew at the strongest rate for five years during the July-September period after contracting in the previous three quarters.Market expectations had been for the economy of Britain, which is not part of the eurozone, to have expanded by 0.6% in the third quarter compared with the second after falling into a double-dip recession in late 2011.British Prime Minister David Cameron welcomed the data but warned against complacency amid global economic headwinds."There is still much to do, but these GDP figures show we are on the right track, and our economy is healing," Cameron said in a statement.Finance minister George Osborne echoed the cautious sentiment, saying that "yesterday's weak data from the eurozone were a reminder that we still face many economic challenges at home and abroad."Britain escaped from a deep downturn in late 2009 but fell back into recession at the end of 2011.The economy contracted by 0.4% in the second quarter of this year after shrinking by 0.3% in the first - and by 0.4% in the final quarter of 2011."GDP was estimated to have increased by 1% in Q3 2012 compared with Q2 2012," the Office for National Statistics said in a statement."The largest contribution to the increase came from the services sector. There was also an increase in activity in the production sector. Activity in the construction sector fell."Growth was also affected by one-off factors, including the London 2012 Olympic Games and rebounding activity after an extra public holiday for Queen Elizabeth II's Diamond Jubilee, the ONS said."Not only did the UK pull out of its double-dip in Q3, but the one percent quarterly rise in GDP was a fair bit better than expected," said Vicky Redwood, senior economist at the Capital Economics research group." Admittedly, much of this reflected temporary factors. We think that the reversal of the Jubilee effect probably added about 0.5 percent, the Olympic ticket sales added 0.2% and there may have been a wider Olympic boost."But even accounting for this suggests that underlying output managed to rise by a small amount - an improvement on recent quarters. It won't be plain sailing from now on, though. There are still a number of constraints on the recovery."Output was meanwhile flat in the third quarter compared with the equivalent period in 2011, the ONS added.Despite emerging from recession, Britain was facing considerable difficulties, not least from tight credit conditions and worries about the impact of the debt crisis in the eurozone, a key trading partner.Other major headwinds include rising inflation on higher energy and food prices, an uncertain jobs market and ongoing austerity measures from Britain's coalition government.

China to open energy to private investors

China will seek to encourage more private investment in its state-dominated energy sector, according to a new industry white paper published by official news agency Xinhua on Wednesday.China is preparing for a once-in-a-decade leadership transition in November, and its new leaders are widely expected to push for the sort of market-oriented reforms that will break up monopolies in sectors such as energy. The new policy document said China planned to “give full play to the fundamental role of the market in allocating resources” and would draw up new regulations designed to reform the energy sector.  Included in the list of possible private investment targets were the exploration and development of energy resources, coal processing, oil refining, renewables, the construction of oil and natural gas pipelines and the electricity sector.“All projects listed in the national energy program, except those forbidden by laws or regulations, are open to private capital,” the document said.Policy makers have struggled to bring market forces to bear on the energy industry, with dominant state-owned enterprises like the State Grid Corp. proving resistant to change. The white paper said China would also seek to improve legislation on, and regulation of, the industry, with plans to adopt a comprehensive new energy law and new provisions dealing with oil reserves, natural gas and nuclear reactor management. While China is committed to raising the share of renewables in its overall energy mix to 15% by 2020, it said it would also promote the clean development of fossil fuels and improve power generation efficiency.      

China slams money-making off religion

China's religious affairs ministry has lashed out at the rampant commercialisation of sacred places and temples in the country, including the practice of employing "fake monks" and fortune-tellers. In a statement posted online, the State Administration for Religious Affairs, which oversees the country's religious organisations, also criticised plans by some Buddhist and Taoist temples to raise funds by listing on the stock market." Temples shall not in any way engage in 'stock' or 'joint venture' activities," the administration said in the statement dated October 22.Policies by the Communist Party suppressing religion have been relaxed since the 1970s, leading to a rapid increase in pilgrimages and visits to temples. Religious organisationsare still required to register with the government. The State Administration for Religious Affairs picked out for particular criticism those "using the excuse of promoting traditional culture" to profit from devotees." There have been reports of non-religious sites employing fake monks... illegally setting up donation boxes to take religious donations, even threatening religious believers and tourists to cheat them out of money," the statement said."These phenomena seriously violate the party's policies towards religion, and national laws," it added, listing other abuses including pressuring tourists to buy expensive incense and illegal fortune-telling. The Famen temple in northwest China is set to list on Hong Kong's stock exchange next year, according to the Global Times daily, while Mount Putuo, a sacred Buddhist mountain, has announced plans to go public within three years.Two fake monks wearing orange Buddhist robes were detained in Beijing in April after they were caught drinking alcohol on the city's subway and checked into a luxury hotel with two women, local reports said at the time.

NEWS,08.08.2012

Will Manufacturing Make China a Democracy?

 

The other day, I had lunch with an economist I respect and admire. I asked him, what would it take for China to become a modern democracy and build a strong middle class? OK. I didn't ask him that. I told him that China would need strong institutions of civil society, and a deeper sense of Social Contract to become a stable modern democracy with a dynamic middle class.In America's early history, we had strong institutions of civil society, such as free press, good education, and strong national identity. We wrote individual freedoms into our Constitution. We had respect for the rule of law, not much bribery, respect for science, and technical progress. We had social and economic mobility, opportunity and fairness. Well, at least for white males who owned property. But you see where I'm going with this. A robust civil society gives voice to workers, families and communities. It serves as a counter-balance to wealthy and powerful economic interests.China has a rich culture and strong national identity, but income inequality is growing in China, no free press, no unions, no environmental groups, and no real political system to make tough tradeoffs between wealthy powerful economic interests and the public good. Workers have no economic bargaining power. China's leaders have limited respect for the rule of law, and little willingness to enforce rule of law. China has done an exceptional job of acquiring the means of production. Not so much for human rights, labor rights, public health, or environmental protections. My economist friend told me, "No! Not buying it." China will modernize simply through economic transformation. I'm not sure what he meant, exactly. Maybe he meant that industrialization and democracy were the same thing, more or less. You get one with the other. My point was that you don't get one with the other. You might get a banana republic. You might get Egypt or something like Egypt, or Victorian England without a history of individual freedoms. Russians got plutocracy, corruption, murdered journalists, and a political system with zero credibility. You might get a lot of things, depending on what kind of civil society you have. National politics is really a contest between short-term investor interests and long-term public interests. Investors will act in their short-term interest. Public good often works in the long term. Market forces will not protect public good. For that, you need an effective political system. Colombia is a poster child for dysfunctional political and economic systems. Their culture and national identity are proud enough, but working Colombians are kidnapped, intimidated and killed routinely, as punishment for political involvement. Prosecutors, judges and justice ministers live in the shadow of violence. The last thing Colombia needed was a so-called Free Trade Agreement, which increases rights and powers for global businesses and weakens rights and powers for civil society. Now, Colombia faces worsening inequality and more social disruption. Japan, Germany, Korea, Singapore, Taiwan, and other modern democracies have strong social cohesion, strong institutions of civil society and strong middle classes. These outcomes are not accidental. They are the result of deliberate political choices these countries made. I asked my friend about China becoming a modern democracy. My real question wasn't about China, or Colombia, for that matter. I was really asking about America. What happens to our prosperity, our middle class, and our institutions of civil society? In the last 30 years, our civil society has weakened. Political and economic power are concentrating in the hands of the top 1%. Our respect for science has been replaced with ideology and denial. We disparage public education, and public employees. Our social cohesion is so weak that we envy our neighbors who still have pensions. Rule of law is becoming situational - it doesn'treally apply to big banks or foreclosure robo-signers. Political campaigns are so expensive that elected officials literally cannot afford to govern for the public good. They can only govern for the wealthy and powerful. Within this 30-year decline for civil society, our so-called free trade policy steadily lowers the bar for democratic political process, substituting global business interests for public interest.In his new book, Nobel laureate economist, Joseph Stiglitz, calls globalization, as we've managed it, "global governance without global government." In Western democracies, we solve tough social and political problems through a political process. However, in so-called free trade agreements, global businesses write the rules, then we send disputes to anonymous tribunals. Democratic problem-solving does not happen in the trade agreements. It won't happen in Colombia. I don't see how it will happen in China. It's becoming more difficult in America. This is really about political and economic power. In the conclusion to his book, Stiglitz offers two possibilities. One is that we in the 99%, can recognize our predicament and reclaim our political birthright. Alternatively, the 1% can recognize their "self-interest, properly understood," and lead the way back to a sustainable democracy. Stiglitz traces this back to Alexis de Tocqueville in 1835. Americans understood a basic fact: looking out for the other guy isn't just good for the soul - it's good for business. The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn't seem to have bought: an understanding that their fate is bound up with how the other 99 percent live. Throughout history, this is something that the top 1 percent eventually do learn.Yeah. That would be good.

 

Blair concerned about UK exit from the EU

Former British Prime Minister Tony Blair told a German newspaper he was "deeply worried" Britain might opt to leave the European Union in a referendum, particularly if too many powers were transferred to Brussels without democratic legitimacy.Talk of Britain leaving the EU was once far fetched, but the euro zone debt crisis and the prospect of the currency bloc forging a closer political union have convinced some senior UK politicians it is time to demand a new relationship with Brussels.Current Prime Minister David Cameron said last month it was a "perfectly honourable position" to call for an immediate referendum on Britain's EU membership - something polls show a majority of British people would vote to reject - but that he would never campaign for an "out" vote because leaving the EU would not serve British interests.Blair told Die Zeit it was clear that the euro zone crisis would lead to a "powerful political change of the EU", adding: "And on this point, I am deeply worried that Britain could decide by referendum to leave the whole process.""If more competences are transferred to the EU, then its democratic legitimacy must be built up too," he said, according to a German transcript of the interview which is due to be published on Thursday. "Britain must play a strong role in this. Because we need a balance between European institutions and the nation states.""If this is done wrongly, we could create a political crisis that could become just as a big as the euro crisis. People will not go along with the abolishment of the nation state."Cameron has tried to stave off demands for an immediate vote on Britain's EU membership by holding out the prospect of a referendum some time in the future and by promising a new relationship with the EU.He vetoed a new EU fiscal treaty in December, forcing euro zone states to set their new rules outside the formal EU structure, while using its institutions.Sceptics say EU regulations shackle Britain's $2.5 trillion economy and that leaving the 27-nation bloc would allow London to restore its sovereignty while saving billions of dollars in membership dues.However, supporters of membership argue Britain would lose influence if it left the EU, its biggest trading partner, and that its economy would still be influenced by rules made in Brussels anyway.

HK Airlines to quit London service

 

Hong Kong Airlines will end its service between Hong Kong and London due to poor demand, reports said on Wednesday, another blow to the carrier after authorities banned its expansion. "The last flight from London to Hong Kong will be on September 10," Hong Kong Airlines General Manager Albert Chan told Dow Jones Newswires, meaning the service will have run for just seven months. The airline uses three Airbus 330-200 planes for the flights which are fitted exclusively with business-class seats. The service costs around HK$10m ($1.3m) a month to run, the South China Morning Post newspaper reported. The airline did not immediately respond to requests for comment.The move followed an unprecedented aviation authority ban last month on the airline's expansion, limiting the types of aircraft the company can operate until the airline meets all safety requirements for operating a larger fleet.The airline said it supported the conditions, adding they were sensible for a company at their stage of growth."Given the profitability of our regional routes, we believe that we now have the optimal fleet to continue to build a business... focused on Asia Pacific," an HKA spokesperson told AFP on Monday.Hong Kong Airlines was established in 2006 and operates 21 aircraft flying to locations in mainland China and international destinations ranging from Tokyo to Bangkok.HKA flights were severely delayed and cancelled when a typhoon lashed Hong Kong last month, leaving hundreds of passengers stranded.