NEWS,12.06.2013

Swiss upper chamber approves US tax deal

The Swiss upper house of parliament backed on Wednesday a bill that would let Swiss banks hand over information to the US authorities to help settle a dispute on tax evasion.
After US action over tax evasion led to the closure of the country's oldest private bank earlier this year, and with formal investigations under way into some of its biggest institutions, the Swiss government urgently wants a compromise to end threats of criminal charges that have hurt a vital national industry.
The bill, which is set to go to the lower chamber next week, would allow banks to sidestep secrecy laws to strike settlements with US prosecutors, expected to include heavy fines which might amount to $10bn for the whole industry.
Though opposition to the draft law has been vocal from left to right as lawmakers chafe at what some call US blackmail, 24 lawmakers voted in favour of the bill and only 15 opposed. The draft law is likely to face tougher debate in the lower house.
The country's biggest bank UBS was forced in 2009 to pay a fine of $780m and deliver the names of more than 4 000 clients to avoid indictment, giving the US authorities information that allowed them to then pursue other Swiss banks.

Iraq to get $6trn from new energy plan

Iraq on Wednesday unveiled an ambitious energy strategy that aims to see it raise $6 trillion from oil and gas sales by 2030 and massively increase local power generation, a major domestic complaint.
The plan, dubbed the Integrated National Energy Strategy, would see Iraq invest some $620bn in the sector over nearly two decades, in a bid to substantially increase living standards and employment levels in a country badly hit by decades of conflict and sanctions.
"The strategic goals of the plan are to meet local energy needs, maximise government revenues, encourage economic diversification and improve the standard of living and create jobs," said Thamir Ghadhban, a former oil minister and the head of Prime Minister Nuri al-Maliki's advisory committee.
In all, Iraq aims to increase oil production to 4.5 million barrels per day by 2014, and about double that by 2020 in its "medium" scenario, with all domestic energy requirements met by 2022.
The country projects it will raise about $6trn in revenues by 2030, about 85% of which will come from oil exports.
It also aims to diversify its oil-dependent economy and add 10 million new jobs, with planners arguing that by 2020, non-energy sectors of the economy will grow faster than oil and gas.
Iraq has sought in recent years to dramatically increase its oil production in order to fund reconstruction of its battered economy and dilapidated infrastructure.
But while output has increased, unemployment remains high and Iraqis frequently complain about a lack of improvement in daily living standards.
Tempers run particularly high during the country's boiling summer, when most residents receive only a few hours of government-supplied power per day.

Electricity market shake-up looms in UK

Britain's energy watchdog on Wednesday proposed changes to prise open the grip of big suppliers on the wholesale electricity market and increase choice for consumers.
The objective was to create "a more level playing field", over concerns about the pricing power of eight companies.
The driving idea behind the change is to increase competition and improve opportunities for small suppliers.
Ofgem said that under its proposals the big six suppliers British Gas Centrica, EDF Energy, EON, RWE Npower, Scottish Power and SSE will have to post the prices at which they buy and sell wholesale electricity on power trading platforms up to two years in advance.
The changes were aimed also at putting pressure on Britain's two biggest independent power generators Drax Power and GDF Suez Energy UK while the eight indentified companies must together trade fairly with small suppliers or face financial penalties.
"Ofgem's proposals would mean that the big six and the two largest independent power generators cannot refuse any reasonable requests by small suppliers to buy electricity," the regulator said in a statement.
"They must also ensure that they sell power to small suppliers at a fair price and negotiate fairly with them at all times."
Andrew Wright, senior partner for markets at Ofgem, said the regulator wanted also "to improve consumer confidence and choice by putting strong pressure on prices through increased competition in the energy market.
"Ofgem's proposals will break the stranglehold of the big six in the retail market and create a more level playing field for independent suppliers, who will get a fair deal when they want to buy and sell power up to two years ahead," he added in the statement.
Wright said greater price transparency would also assist investors seeking to build new generation plants and help secure supplies for consumers, "who are also set to benefit from a simpler, clearer and fairer energy market".
Edward Davey, Secretary of State for Energy and Climate Change called on companies "to work with Ofgem to implement these proposals as swiftly as possible", adding that the government stood ready "to take necessary measures to improve energy market liquidity should Ofgem's proposals be delayed or frustrated".

Broader bank data swap in tax dodge fight

The European Commission proposed to expand the kind of customer information that banks must surrender to authorities around the European Union, as political momentum grows to clamp down on tax dodging.
Algirdas Semeta, the EU official in charge of tax policy, outlined proposals on Wednesday for banks to disclose account balances, dividends and capital gains, to catch sophisticated schemes not covered by the simpler EU rules now in place.
But the Commission's suggestion will likely face opposition from Luxembourg, which does not want to be forced to lift its veil of banking secrecy higher than that of neighbouring Switzerland, its chief rival as a financial centre.
"Member states will be better equipped to assess and collect the taxes they are due," Semeta said. "It will be another powerful weapon in our arsenal to lead a strong attack against tax evasion."
Banking secrecy is high on the political agenda ahead of German elections later this year and following the resignation of a French budget minister over a secret Swiss account.
Luxembourg has signed up to exchanging information about the bank accounts of EU citizens from 2015, but its officials have been rowing back in private on the type of data they are willing to hand over.
Luxembourg does not want to agree to a revised version of the EU savings tax regime that would extend beyond simple interest payments on saving accounts, which are little used to hide income, to include foundations and trusts.
The tiny but wealthy state has an important banking sector and a lot to lose, particularly if customers were lured away by a Swiss financial sector subject to laxer rules.
Switzerland is the world's biggest home for offshore assets, totalling $2 trillion and four times the size of those held in Luxembourg.
Luxembourg is awaiting the outcome of talks between Brussels and Switzerland on a similar agreement to swap information. Semeta will kick-start those talks next week on a trip to meet Swiss Finance Minister Eveline Widmer-Schlumpf.

NEWS,18.02.2013

JFK jacket sold for over $600

A leather bomber jacket that belonged to slain US president John F. Kennedy has been sold at auction for $665 500, far exceeding the initial estimate, a Massachusetts auction house said on Monday.The brown Air Force One jacket was one of 700 pieces put on the auction block on Sunday after the family of David Powers, a special assistant to Kennedy, discovered a treasure trove of JFK memorabilia in the Powers family home.The jacket was initially estimated at $20 000 to $40 000.Among the other JFK items up for sale, nearly 50 years after his assassination, were photographs, campaign posters, letters and books belonging to the president. The sale lasted more than six hours, the house said.

 

Horsemeat scare hits UK consumers hard

The discovery of horsemeat in products sold as beef has shocked many British consumers into buying less meat, a survey showed on Monday.The furore, which erupted in Ireland last month and then spread quickly across Europe, has led to ready meals being pulled from supermarket shelves and damaged people's confidence in the food on their plate.It raised concerns over food labelling and the complex supply chain across the European Union, putting pressure on governments to explain lapses in quality control.A fifth of adults said they had started buying less meat after traces of horse DNA were found in some products, according to the poll conducted by Consumer Intelligence research company."Our findings show that this scandal has really hit consumers hard, be it through having to change their shopping habits or altering the fundamentals of their diet," David Black, a spokeperson for Consumer Intelligence said.The online poll, conducted on February 14-15, questioned more than 2 200 adults on their spending habits following the horsemeat scandal. It gave no specific figures on how much meat people were buying, focusing only on broader trends.More than 65% of respondents said they trusted food labels less as a result."(Brands) will have to put in place really stringent ways of checking that what's being delivered and what's on the label is indeed what's in there," Black said. In the month since horsemeat was first identified in Irish beefburgers, no one is yet reported to have fallen ill from eating horse but many supermarkets and fast food chains are already struggling to save their reputations. Governments across Europe have stressed that horsemeat poses little or no health risk, although some carcasses have been found tainted with a painkiller given to racehorses but banned for human consumption. More than 60% of adults surveyed said they would now buy meat from their local butchers, the poll said, while a quarter of adults said they would now buy more joints, chops or steaks instead of processed meat. Michael Suleyman, who owns a family-run butchers shop in Brixton, London, said more customers appeared concerned although for now there had not been any difference in sales figures."We have seen people panicking and asking us lots of questions like 'where do you get your meat from?'," Suleyman, 51, told Reuters. "We assure our customers by showing them the meat and mincing it for them in front of their eyes. "But with inflation running above central bank targets and an uncertain job market, the spending power of British consumers has been eroded in recent years and, for some, buying more expensive meat is not an option. Nearly a fifth of respondents said they wanted buy less processed meat such as ready-meals, but could not afford to. At a London branch of Britain's biggest retailer, Tesco, which found horse DNA in some of its own-brand frozen spaghetti bolognese meals last week, consumers were still buying meat products. "I've got nothing against horse meat," said Sean Cosgrove, 39, a local government employee. "I think you're being ambitious if you expect top quality meat in those products anyway."

ECB warns of low interest rates

The head of the European Central Bank on Monday outlined the risks of keeping interest rates low for a long period, suggesting the ECB is unlikely to slash rates further from already record lows.Speaking to members of the European Parliament in Brussels, Mario Draghi also reiterated the bank's view on the level of the euro on the foreign exchange markets, saying talk of a currency war was "really excessive". "Naturally, the ECB is aware of the challenges arising from a protracted period of low policy rates," Draghi said, a week after the bank decided to keep its main interest rate on hold at a record low 0.75%.He said that low interest rates for a long time could harm the returns for savers and investors as well as possibly fuelling bubbles in house prices. In a low interest rate environment, banks might also have less incentive to monitor credit risk properly "and may provide too many loans to non-profitable business," Draghi said.Draghi said current interest rates were "accommodative", which analysts often take to mean that the bank is unlikely to cut them further.Turning to the exchange rate, Draghi said: "I find really excessive any language referring to currency wars" amid concerns that the euro is too strong on the foreign exchange markets and worries over the weak Japanese yen.He referred to the statement made by the Group of 20 countries in Moscow over the weekend, where leading powers vowed they would not target specific forex rates or devalue currencies to make them more competitive."I urge all parties to exercise very, very strong verbal discipline. I think the less we talk about this the better," said Draghi.Some eurozone countries, notably France, have expressed concern that the level of the euro, which has risen recently on the foreign exchange markets, could hurt exports and dampen any nascent recovery in the eurozone.Paris wants the eurozone to arm itself with an exchange rate policy. The external value of the euro should not be left to market forces, French President Francois Hollande has argued.But Draghi hit back saying: "The exchange rate is not a policy target, but it is important for growth and price stability."He also denied that the euro was too strong, saying it was "around its long term average."On the economy, the ECB chief said: "We enter 2013 in a more stable financial environment than in recent years" and predicted "a very gradual recovery" later in the year as the 17-nation eurozone battles with recession.

 

Qatar spends over $15bn on new airport

Energy-rich Qatar will open on April 1 a new airport with a capacity to handle 30 million passengers, as the Gulf state vies to increase its share of transit air travel, an official said Monday."The annual capacity of Hamad International Airport will be 30 million passengers when it opens on April 1," the head of Qatar's Civil Aviation Authority Abdul Aziz al-Nuaimi told AFP.He said the cost of building the new hub over nearly eight years has "exceeded $15bn." Eleven foreign budget carriers will be the first airlines to use the new facility, while the emirate's flag carrier Qatar Airways, will be joining in the second quarter of 2013, he said.The new airport spreads over 29 square kilometres (11.2 square miles), and features two runways stretching 4.85 kilometres (three miles) and 4.25 kilometres (2.64 miles) respectively.The terminal has a total surface of 60 hectares.The new airport, which replaces the old Doha International, is expected to raise its capacity to 50 million passengers per year by 2020.Qatar Airway is one of the fast growing carriers which like neighbouring Gulf carriers, Dubai's Emirates and Abu Dhabi's Etihad, vies to increase its share of transit travel between Europe, Asia and Australia.He acknowledged that austerity in many countries was strangling economic growth but insisted it was "unavoidable" for nations, especially those labouring under high debt, to reduce their public deficits.He called for "properly designed fiscal consolidation as based more on expenditure cuts rather than on tax rises", noting that taxes in the eurozone were "indeed very high already."

Crisis-hit arms market shrinks

For the first time since the mid-1990s, sales of the 100 biggest arms dealers excluding China declined in 2011 as the economic crisis prompted budget cuts, a Stockholm-based think tank said on Monday. The 100 companies' total sales declined, including inflation, by five percent from the previous year, the first time a drop has been registered since 1994, the Stockholm International Peace Research Institute (SIPRI) said.Even excluding inflation, the total fell, to €307bn from €412bn in 2010."Austerity policies and proposed and actual decreases in military expenditure as well as postponements in weapons programme procurement affected overall arms sales in North America and Western Europe," SIPRI said in a statement.Troop drawdowns in Iraq and Afghanistan and sanctions on arms transfers to Libya also played a role in the decline, it added.Proposed austerity measures "have led some companies to pursue military specialisation, while others have downsized or diversified into adjacent markets" such as security and in particular cyber security, the think tank said.The SIPRI figures do not include China due to a lack of reliable data. Chinese companies supply a military that enjoys the world's second-biggest budget.The list of top 100 arms-producing companies is dominated by American and European companies, which respectively hold 60% and 29% of the global market and together hold the top 17 spots on the list.US group Lockheed Martin is number one, with sales of $36.3bn in 2011, ahead of another US group, Boeing, and BAE Systems of Britain in third place.The think tank, which is specialised in research on conflicts, weapons, arms control and disarmament, was created in 1966 and is 50% financed by the Swedish state. It defines arms sales as "sales of military goods and services to military customers, including both sales for domestic procurement and sales for export."

 

Thai economy soars in fourth-quarter

Thailand's economy enjoyed record growth in the fourth quarter of 2012 as industry recovered from the impact of the kingdom's worst floods in decades, official data showed Monday.Gross domestic product (GDP) soared 18.9% in the three months through December from the year-earlier period according to the government's National Economic and Social Development Board (NESDB).GDP rose 3.6% compared with the previous quarter.Strong domestic and international demand helped to drive the strong performance, said NESDB secretary general Arkhom Termpittayapaisith. "There has been a full recovery after the severe floods," he told a press conference. The Thai economy suffered a double-digit contraction in the wake of the months-long floods, which deluged vast swathes of the country in 2011, killing hundreds of people and causing widespread damage to factories. At their height the floodwaters affected 65 of the country's 77 provinces, swamping hundreds of thousands of homes and disrupting global supply chains.The NESDB forecasts economic growth of 4.5%-5.0% for 2013, after an expansion of 6.4% in 2012."An economic recovery in the United States, China and Europe will be good for Thai exports," Arkhom said, adding that an increase in the kingdom's minimum wage would also boost domestic demand.Rising car sales and production helped to lift GDP in the fourth quarter due to a government scheme to encourage new vehicle purchases.Thailand's central bank last month held its key interest rate steady at 2.75% citing a better-than-expected performance in the economy.

NEWS,01.02.2013

Daimler boosts stake in China

German automaker Daimler unveiled plans Friday to boost its position in the fast-growing Chinese market by acquiring a 12% stake in the country's fifth-biggest car group.Daimler, which at the end of last year created a new position on its management board dedicated especially to China, said in a statement it had decided to deepen its existing partnership with Beijing Automotive Group (BAIC) by buying a stake in its passenger car unit BAIC Motor.BAIC is planning to float the subsidiary on the stock exchange and when it does so, Daimler would buy a stake of 12%, the German group said.As part of the agreement, Daimler would receive two seats on the BAIC Motor's board of directors.At the same time, the two sides would increase their stakes in existing joint ventures, they said.BAIC's holding in the production joint venture Beijing Benz Automotive Company (BBAC) would rise to 51 percent from 50 percent, while Daimler's stake in the integrated sales joint venture Beijing Mercedes-Benz Sales Service would be increased to 51 percent.Financial details were not disclosed. But Daimler and BAIC expect the deal  which still has to be approved by the relevant authorities -- would be closed "by the end of this year or early next year.""Following our technical cooperation with BAIC Motor and the setup of our integrated sales company, we are now taking the next step in deepening our relationship even further," said Daimler chief executive Dieter Zetsche."Our investment is a strong sign of the increased level of trust and cooperation between our two companies and clearly emphasises the long-term commitment to a joint successful future of our two companies," he said.BAIC chairman Xu Heyi said the partnership "has entered into its best phase ever, with further deepened cooperation in accordance with the mutual interests and development plans between both companies."Daimler's acquisition of a 12% stake "will go a long way in accelerating the development of BAIC's self-owned brand in terms of capital, technology, management, and brand. At the same time, this will help Mercedes-Benz to boost its business performance in China," Xu said.NordLB analyst Frank Schwope put the estimated price tag of the deal at €640m.He said Daimler has long been trailing rivals BMW and Audi, a unit of Volkswagen, in China, which is the world's most important market in terms of growth outlook.In 2012, Daimler, which employs more than 2 000 people in China, sold around 210 000 of its Mercedes-Benz cars there. It aims to lift sales to 300 000 by 2015 with two thirds of those manufactured locally.China is currently Daimler's third-biggest market after Germany and the United States, but is expected to become the German group's number one market by 2020.According to the China Association of Automobile Manufacturers or CAAM, BAIC is China's fifth-biggest maker with sales of 1.69 million vehicles last year.Investors nevertheless appeared somewhat sceptical about the deal and Daimler shares were underperforming the overall market on the Frankfurt stock exchange, edging up only 0.08 percent while the blue-chip DAX 30 index rose by 0.26 percent.

Eurozone inflation nears ECB goal

Eurozone inflation fell more than expected in January in a sign that companies were cutting prices to entice consumers at a time when joblessness remained at a record level at the end of 2012.The rate of consumer price inflation in the 17 countries using the euro fell to 2% in January compared to a year ago, the EU's statistics office Eurostat said on Friday.The reading, Eurostat's first estimate, was lower than the 2.2% level forecast by economists polled by Reuters, which was also December's level.Unemployment remained at a euro-era high of 11.7% in December, Eurostat also said, slightly lower than the 11.9% level expected by economists, but still higher than the European Commission's year-end 11.3% prediction.Inflation is now near the European Central Bank's target of close to, but below 2%, and along with record unemployment, gives the ECB room to cut interest rates again to stimulate the economy.But an improvement in eurozone business morale for the third straight month in January and better factory output suggest the bloc has passed the worst of its recession, meaning further ECB stimulus in the form of lower borrowing costs may not be necessary. "Inflation is non-existent," said Thomas Costerg, an economist at Standard Chartered in London. "Now with German inflation decelerating, that will fuel debate about how to do ECB's easing," he said, forecasting a cut in the ECB's main refinancing rate in the second quarter.The ECB's Governing Council kept rates on hold at its January meeting and will discuss rate policy again on February 7. The decision to keep policy on hold was unanimous last month, but economists are still divided over the ECB's next move. 38 out of 73 analysts polled by Reuters in January, said that the ECB will remain on hold in the first quarter. The ECB's task is also complicated by a divide between wealthier, northern countries which are showing signs of emerging from the eurozone's three-year debt crisis and countries such as Spain and Italy, that are in deep recessions."The story in the eurozone remains one of national divergence between the peripheries and the core," said Evelyn Herrmann, an economist at BNP Paribas in London, also pointing to a growing gap between the German and French economies.

 

Taiwan premier resigns over economy

Taiwanese Premier Sean Chen said Friday he has stepped down for health reasons, after the cabinet he heads came under fire for its poor handling of the economy."I have some health problems ... and I need to completely change my life and work style to reverse the situation," the 63-year-old finance expert told a press conference to announce his resignation."I believe that the economy will improve in the coming year. We have worked very hard on the planning for long-term issues and I hope everybody will continue to support the new team."Deputy premier Jiang Yi-huah, 53, a scholar-turned-politician and a former interior minister, will take over his job, Chen said.Chen's departure came as Taiwan's economy grew 1.25% in 2012 from a year ago at the slowest pace in three years due to shrinking exports. Chen, who previously headed the Financial Supervisory Commission, the main industry regulator, had a tense term since taking office as premier in early 2012.His cabinet frequently came under attacks over the sluggish economy and other controversial policies, with the opposition repeatedly demanding his resignation.Last year, Chen survived a parliamentary no-confidence vote - only the second in Taiwan history - over what opposition lawmakers deemed as his cabinet's failure to curb rising unemployment and inflation.Under Taiwan's political system the premier heads the cabinet and is appointed by the president.

'Rockstar' Clinton leaves lasting legacy

Hillary Clinton is stepping down as the top US diplomat firm in the belief she has restored America's global standing during her tenure that may also have traced a path to the White House in 2016.But as she sweeps out of the imposing buildings of the State Department for the last time on Friday, how will history judge her as secretary of state?How she stacks up against giants of American diplomacy like Henry Kissinger and James Baker and how she'll fill in the blank pages as she opens a new chapter in her life remain open questions.Clinton says she never once gave a thought to her legacy in the past four years. Instead, she just got up every day determined to work as hard as she could to promote America's interests.She now leaves office with the highest popularity rating of any of President Barack Obama's cabinet members, imbued with the title of "rock star diplomat" and with many saying she'll be the Democratic Party's strongest hope in the next elections, despite her constant denials that she is planning to run."Her contribution I think was fighting for resources for her own department, America's credibility in the world through her relentless travel, finding a 21st century agenda, I call it planetary humanism," said Wilson Centre vice president Aaron David Miller."These are important issues. They don't get you into the secretary of state hall of fame," Miller, a distinguished scholar who has served under six secretaries of state, said.Critics say Clinton cannot point to a signature issue achieved under her stewardship. The major challenges of the day - Syria, the new world order emerging from the Arab Spring, Iran's nuclear ambitions and the search for peace in the Middle East - she bequeaths to her successor John Kerry.Yet the Obama administration seized the opportunity to help prise open Myanmar, she showed effective diplomacy in negotiating the freedom of Chinese dissident Chen Guangcheng, helped the United States pivot its focus toward Asia and built a solid alliance in support of biting sanctions against Iran.And Clinton brought to Obama's administration her charisma, celebrity status and a willingness to travel, believing that even in this interconnected world, face-to-face meetings remain one of diplomacy's most important tools."Secretary Clinton, because of her celebrity and popularity, has been a great secretary of state from that respect. People are thrilled to meet with her. She's probably second best to meeting with Obama," said Isobel Coleman, senior fellow at the Council on Foreign Relations.Even hardened politicians found it hard to resist her charms, British Foreign Secretary William Hague revealed during a dinner in her honour."There is a wonderful stillness that descends on large halls full of diplomats and ministers the moment Hillary enters the room," he said.Hague praised Clinton's "infectious spirit of optimism, opportunity and hope" as well as her faith "in the power of friendship and persuasion".In pursuit of diplomacy, Clinton has travelled exactly 1 539 712.5km, visiting about 112 countries. She was the first US secretary of state ever to visit Togo, and the first in over half a century to fly into Laos."Remember what we faced in January 2009: Two wars. An economy in freefall. Traditional alliances fraying. Our diplomatic standing damaged," she told the Council on Foreign Relations on Thursday."And around the world, people questioning America's commitment to core values and our ability to maintain our global leadership."That was my inbox on day one as secretary of state."Four years on, while the world "remains a dangerous and complicated place", much has changed, Clinton argued, saying "we've revitalised American diplomacy and strengthened our alliances".Those dangers were highlighted by the September attack on the US mission in Benghazi, Libya, in which the ambassador Chris Stevens and three other Americans were killed.Whether the attack, and the scathing criticism of security failures by the State Department, will taint her career in the long-term is too soon to tell.Many argue that Clinton's emphasis on what she calls "soft power" - her unrelenting focus on women's rights, development issues, economic statecraft and lesbian and gay rights - may well be what she's remembered for."As a long-term enduring legacy, I think I'd feel prouder about that than having invaded another Middle Eastern country," Coleman said.Observers also point to Europe's renewed faith in America, after Clinton made 42 trips to the continent during her time in office."In 2009, everything needed to be rebuilt... she has succeeded in restoring America's image in the world. She has marked the return of multilateralism," a western diplomat said in an interview.Tyson Barker, director of transatlantic relations at the Bertelsmann Foundation North America, agreed that "Europe loves Hillary Clinton, and she's spent a lot of time here investing in that relationship."She has really carried the torch for reconciliation and European integration."

Japan PM vows new statement on WWII

Japan's hawkish Prime Minister Shinzo Abe told lawmakers on Friday he intends to release a new statement on World War II, a move that could cause friction with neighbouring nations including China."I would like to announce a future-orientated statement that will suit the 21st century," Abe said. "On the timing and the content I'd like to think thoroughly hereafter."The nationalist premier said he wanted to update a landmark statement issued in 1995 by then-prime minister Tomiichi Murayama, seen as a key step in what many Asian nations say was Japan coming to terms with its brutal history.The statement said Japan "through its colonial rule and aggression, caused tremendous damage and suffering to the people of many countries, particularly to those of Asian nations", adding the premier feels "deep remorse" and offers a "heartfelt apology".Abe said on Friday he was in agreement with previous sentiments, adding: "Japan in the past caused great damage and suffering to many countries, particularly in Asia. The Abe cabinet shares that recognition with past cabinets."In a possible hint the statement may come in 2015, he said: "The so-called Murayama statement was issued to commemorate 50 years after the war, and 60 years after the war the [Junichiro] Koizumi administration issued a statement."Neighbouring countries that came under the yoke of Japan's military tyranny in the first half of the 20th Century, notably China and South Korea, chafe at the idea of Japan reneging on its apology, which both insist was insufficient anyway.

NEWS,03.01.2013

Obama signs fiscal cliff legislation

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

 

US CEOs pan fiscal cliff deal

 

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

Bigger fights loom after fiscal deal

 

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

Weak productivity hammers UK economy

 

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

Tough times for world's top brokers

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

US jobless claims rise

 

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

Job market grows despite fiscal crisis

 

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

Vatican suspends bank card payments

 

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

Worldwide IT spend to rise in 2013

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