NEWS,07.11.2012

How Obama won

US President Barack Obama confounded political logic by triumphing over a sluggish economy to win a second term in office.A gruelling and often unpleasant campaign yielded, in the end, a decisive victory, built on the strong foundations laid down months ago by his crack campaign team.Here are some of the keys to Obama's win over Republican Mitt Romney.The economy, despite tepid growth rates and high unemployment, was not bad enough to doom Obama, and he appears to have finally received belated credit for halting the slide into a second Great Depression.When he took office in January 2009, the economy was losing 700 000 jobs a month, and while Americans are still dissatisfied with the economy, exit polls suggest they still blame ex-president George W Bush as much as Obama.Obama endured months of grisly monthly unemployment numbers, which told a tale of an economy struggling to gain steam.He got a break over the last few months, as the unemployment rate dipped below the psychological barrier of eight percent.Consumer confidence and optimism began to rise along with the stock market, and Americans began to feel a bit more optimistic as house prices finally began a slow rise, despite a lingering foreclosure crisis.Often criticised as aloof and professorial, Obama, in the final days of his campaign, his voice hoarse, finally seemed to strike a chord with blue collar workers who enrich the Democratic coalition in the rustbelt.In a twist of political history, Obama was helped by the embrace of his former Democratic antagonist, ex-president Bill Clinton, who buried the hatchet after Obama's defeat of his wife Hillary in the 2008 Democratic primary.Clinton, remembered for leading an era of economic prosperity, often made the case for Obama better than the president himself.The two Democratic giants will now stand together in history as the only two Democrats to win a second term since World War II.The Obama campaign made a gamble soon after Romney captured the Republican primary to go negative.Searing Obama ads and rhetoric branded the former investment manager a corporate vulture, who bought and sold firms for his own profit and heartlessly put good Americans out of work or shipped their jobs overseas.The plan was to define Romney in a harsh light before he had the chance to introduce himself to Americans with a multi-million dollar blitz of television advertising in the swing states, like Ohio, which would decide the election.Romney's limp defence of his record as head of Bain Capital, and his missteps - including a refusal to divulge his complicated offshore tax arrangements and a video in which he was seen decrying 47% of Americans as freeloaders who paid no income taxes played into the stereotype.By the time of Romney's stellar performance in the first presidential debate in October, the damage had been done.The killing of al-Qaeda chief Osama bin Laden in a daring Navy SEAL raid in 2011 did not win Obama re-election.But it bolstered the image of the president as a steely commander-in-chief who kept Americans safe and defused the classic Republican attack that Democrats are weak and cannot be trusted on national security.Kudos Obama won with the Bin Laden raid, not to mention a ruthless drone war against terror suspects abroad, may have also insulated the president against a late-election furore over the killing of the US ambassador to Libya in Benghazi.For the second election running, Obama's campaign team has reinvented the way presidential elections are won.In 2008, Obama's political brain trust, led by the intense David Plouffe, outwitted the political machine of Bill and Hillary Clinton with a delegate collection strategy that redefined the way primary campaigns are won.This time around, they defied the strong headwinds of a slowly growing economy and re-elected their president in the face of ferocious Republican opposition.The path to victory lay in the most sophisticated voter targeting and turnout machine in history, which reached all the way down to neighbourhoods and was constructed over several years.Way back in October 2011, Obama's political high command insisted to sceptical journalists that the president, smarting from a drubbing in mid-term congressional elections, could and would win re-election.The strategy: position Obama as a populist warrior for the middle class, and brand his opponent as a rich plutocrat oblivious to the suffering of regular Americans.Obama's team insisted all along that his coalition of young voters, Hispanics and African Americans, as well as the educated white middle class, would show up for him in 2012, just as they did in 2008.Republicans scoffed, but they were proven wrong.According to exit polls, 93% of African Americans backed Obama, along with 69% of Latinos and 70% of Jewish voters, and he was able to limit his losses among white voters.Obama also won an important victory among unmarried women voters, 68% of whom backed him.

 

Obama has little time to savour election triumph

Fresh from a decisive re-election win, President Barack Obama returns from the campaign trail today with little time to savour victory, facing urgent economic challenges, a looming fiscal showdown and a still-divided Congress able to block his every move.Obama defeated Republican challenger Mitt Romney last night in a gruelling presidential race and used his acceptance speech in front of a huge cheering crowd in Chicago to strike a conciliatory note toward his political opponents.But in the cold light of the 2012 election's morning-after, it was clear that even though voters have endorsed a second Obama term, the president will have a hard time translating that into a mandate to push forward with his agenda.Obama need to get back to work straight away "because he's got major problems with the economy".The "fiscal cliff" a combination of expiring tax cuts and automatic across-the-board reductions in federal spending due to come in at the end of the year could take out over half a trillion dollars from the US economy.The fact that Obama won the popular vote as well as getting more than 300 Electoral College votes meant "he's got that mandate I guess that power a little bit behind him - where he can push on."However, Americans chose to preserve the status quo of divided government in Washington.Obama's fellow Democrats retained control of the Senate and Republicans kept their majority in the House of Representatives, giving them power to curb the president's legislative ambitions on everything from taxes to immigration reform.This is the political reality that Obama - who won a far narrower victory over Romney than his historic election as the country's first black president in 2008 - faces when he returns to Washington later on Wednesday.But that did not stop him from basking in the glow of re-election together with thousands of elated supporters in his hometown of Chicago early yesterday."You voted for action, not politics as usual," Obama said, calling for compromise and pledging to work with leaders of both parties to reduce the deficit, to reform the tax code and immigration laws, and to cut dependence on foreign oil.Obama told the crowd he hoped to sit down with Romney in the coming weeks and examine ways to meet the challenges ahead though the president may be more in need of mending fences with Republican congressional leaders who wield clout in Washington.The problems that dogged Obama in his first term, which cast a long shadow over his 2008 campaign message of hope and change, still confront him. He must tackle the $US1 trillion annual deficits, rein in the $US16 trillion national debt, overhaul expensive social programs and deal with the split Congress.The immediate focus for Obama and US lawmakers will be to deal with the "fiscal cliff," a mix of tax increases and spending cuts due to extract some $US600 billion from the economy at the end of the year barring a deal with Congress. Economists warn it could push the United States back into recession.House Majority Leader John Boehner moved swiftly on the fiscal cliff issue, saying he would issue a statement on it today citing "the need for both parties to find common ground and take steps together to help our economy grow and create jobs, which is critical to solving our debt."Concern about US fiscal problems after Obama's re-election contributed to a decline in global financial markets.World shares turned lower and Wall Street stocks, which had been expected to rise on relief over the clear election outcome, opened lower partly due to fears over economic weakness in Europe.Obama also faces international challenges like the West's nuclear standoff with Iran, the civil war in Syria, the winding down of the war in Afghanistan and dealing with an increasingly assertive China.Romney, a multimillionaire former private equity executive, came back from a series of campaign stumbles to fight a close battle after besting Obama in the first of three presidential debates.But the former Massachusetts governor failed to convince voters of his argument that his business experience made him the best candidate to repair a weak US economy.The nationwide popular vote remained extremely close with Obama taking about 50% to 49% for Romney after a campaign in which the candidates and their party allies spent a combined $US2 billion. But in the state-by-state system of electoral votes that decides the White House, Obama notched up a comfortable victory.Yesterday, Obama had 303 electoral votes, well over the 270 needed to win, to Romney's 206. Florida's close race was not yet declared, leaving its 29 electoral votes still to be claimed.Romney, 65, conceded in a speech delivered to disappointed supporters at the Boston convention centre. "This is a time of great challenge for our nation," he told the crowd. "I pray that the president will be successful in guiding our nation."He warned against partisan bickering and urged politicians on both sides to "put the people before the politics."In Boston there would be "plenty of soul-searching for the Republicans over the next few weeks to find out exactly what when wrong".The party is expected to look particularly closely at how it has alienated Hispanic voters, an important constituency in Obama's victory."The fact is Republicans are going to have to do a lot of rethinking at the presidential level," Newt Gingrich, a former House speaker who lost the Republican nominating race to Romney. In the election aftermath, there were indications that partisan gridlock would persist in Washington.Senate Republican leader Mitch McConnell gave no sign that he was willing to concede his conservative principles, signalling potential confrontations ahead."The voters have not endorsed the failures or excesses of the president's first term, they have simply given him more time to finish the job they asked him to do together with a Congress that restored balance to Washington after two years of one-party control," McConnell said.Obama's win puts to rest the prospect of wholesale repeal of his 2010 healthcare reform law, which aims to widen the availability of health insurance coverage to Americans, but it still leaves questions about how much of his signature domestic policy achievement will be implemented.Obama, who took office in 2009 as the ravages of the financial crisis were hitting the US economy, must continue his efforts to ignite strong growth and recover from the worst downturn since the Great Depression of the 1930s. An uneven recovery has been showing some signs of strength but the country's jobless rate, currently at 7.9%, remains stubbornly high.Obama's re-election puts him in the company of three of his past four predecessors whom voters granted a second term. He now faces the need to reshuffle his cabinet, Treasury Secretary Timothy Geithner and Secretary of State Hillary Clinton planning to step down soon.In keeping control of the 100-member Senate, Democrats seized Republican-held seats in Massachusetts and Indiana while retaining most of those they already had, including in Virginia and Missouri.The Republican majority in the 435-member House means that Congress still faces a deep partisan divide as it turns to the fiscal cliff and other issues."That means the same dynamic. That means the same people who couldn't figure out how to cut deals for the past three years," said Ethan Siegel, an analyst who tracks Washington politics for institutional investors.British Prime Minister David Cameron also said Britain and the United States should make finding a way to solve the Syrian crisis a priority following Obama's re-election.

What to expect in Obama's second term

US President Barack Obama is expected to pursue an active trade agenda during his second term, centred on tough final negotiations of a new free trade pact in the Asia-Pacific region and continued challenges posed by China.

Here is a glimpse of what's ahead:

Trans-Pacific partnership agreement

Talks on the proposed Trans-Pacific Partnership pact date back to the administration of Republican George W. Bush, but the Obama administration relaunched negotiations in March 2010 and has overseen their expansion to 11 countries: the United States, Australia, New Zealand, Vietnam, Malaysia, Singapore, Chile, Peru, Brunei, Canada and Mexico.A final deal could come in 2013, with negotiators just now beginning to grapple with the most politically sensitive issues. For the United States, the pact could require opening up protected sectors like dairy, sugar and textiles in exchange for new US export opportunities.Other countries such as Japan and South Korea could join the talks.

US-EU trade agreement

The United States and the 27-nation European Union are expected to announce a decision by the end of this year to negotiate a comprehensive trade agreement.US Trade Representative Ron Kirk, who is a member of the president's Cabinet, and EU Trade Commissioner Karel De Gucht have led an effort over the past year to explore how to expand the already huge US-EU bilateral trade and investment relationship to create new jobs and economic growth.They are expected to release recommendations in December. Negotiations on the landmark agreement would likely start in early 2013 and take one to two years to complete.

China

Trade with China is expected to remain contentious during Obama's second term, with US manufacturers irritating Beijing by filing additional petitions for anti-dumping and countervailing duties on Chinese products.The Obama administration is likely to file more cases against China at the World Trade Organization, and will likely face continued pressure from US companies to confront growing competition from China's state-owned and state-supported enterprises.Early this year, Obama created a trade enforcement unit to bring together resources from across the executive branch to make sure China and other countries follow the rules.The Obama administration has filed eight WTO cases against China since January 2009, compared with seven by Bush in the previous five years.Obama is likely to continue to put pressure on China to allow its currency to rise more rapidly in value, but stop short of taking any provocative move like declaring China a currency manipulator or authorizing the use of countervailing duties against undervalued currencies.

Trade promotion authority

Trade Promotion Authority, also known as "fast-track" trade legislation, allows the White House to negotiate trade agreements it can submit to Congress for straight up-or-down votes within 90 days and with no amendments.The Bush administration used fast-track authority to negotiate trade deals with 16 countries in Latin America, the Middle East and the Asia-Pacific region before it expired in June 2007.Obama has not sought to renew the legislation, which is generally considered essential to encouraging other countries to make their best offers in trade talks with the United States.For four years, administration officials have said they would seek the authority "at the appropriate time." While the business community would like Obama to make an early push to renew the legislation, union groups oppose it and the White House has yet to signal when it might move forward.

Obama’s plans to fix US economy

President Barack Obama, who has convinced Americans to give him another four years in office, now faces the tough task of getting the US economy to grow more quickly.Gross domestic product has struggled to expand by more than 2% a year since the 2007-09 recession and unemployment remains high at 7.9%. About 23 million Americans are either unemployed, working part-time because they can’t find full-time work, or want a job but havegiven up the search.Here are Obama’s key plans for the economy:Obama has said his jobs plan would strengthen manufacturing, help small businesses, improve the quality of education and make the country less dependent on foreign oil.He envisions 1 million new manufacturing jobs by 2016 and more than 600 000 jobs in the natural gas sector, as well as the recruitment of 100 000 math and science teachers.Repairing and replacing old roads, bridges, airport runways and schools are part of his plan to put Americans back to work. Half of the money saved from ending the wars in Iraq and Afghanistan would be used to fund infrastructure projects.Unlike at the start of his first term, when a Democrat-run Congress approved Obama’s $840bn in stimulus, the president will struggle to get any new major spending plans approved by the House, which remains under Republican control.Obama has proposed cutting the government budget deficit by more than $4 trillion over the next decade by allowing tax cuts for upper-income Americans enacted during the George W Bush administration to expire, and by eliminating loopholes. The goal is to balance the budget down the road.Obama backs cutting the top corporate income tax rate to 28% from 35%. He has offered a long list of corporate tax breaks to end, ranging from inventory accounting to interest on overseas profits and tax provisions benefiting oil and gas companies. He wants to eliminate tax breaks for companies that send jobs and profits overseas.Half of the money saved from ending the wars in Iraq and Afghanistan would be used to reduce the deficit.Obama may want to offer Ben Bernanke a third term in charge of the central bank but Fed watchers say the former Princeton professor has probably had enough after eight grueling years in the job. Bernanke’s term as chairperson expires on January 31, 2014.Fed vice-chairperson Janet Yellen is viewed as a leading candidate to succeed Bernanke and would be at least as ready to keep monetary policy ultra-stimulative until the labour market has improved substantially. Obama is likely to stick to the path he laid out in his first term, which included a broad reform of Wall Street in response to the financial crisis that blew up in 2008. Regulators are due to put in place the small print of the so-called Dodd-Frank financial reform law. Obama has promoted efforts to help troubled borrowers refinance their mortgages and benefit from record low interest rates but far fewer American homeowners have been helped than originally planned.Obama has locked horns with the regulator of government-controlled Fannie Mae and Freddie Mac, Edward DeMarco, failing to convince him to allow the mortgage finance firms to reduce principal for borrowers who owe more than their homes are worth. Resolution of the standoff is unlikely any time soon.Democrats and Republicans agree that the government’s outsized presence in the US mortgage market through Fannie Mae and Freddie Mac needs to be curtailed. Fannie and Freddie account for about 60% of the mortgage market.

 

Re-elected Obama faces fiscal cliff

 

Barack Obama won re-election on Tuesday night, but the US president faces a fresh challenge confronting the "fiscal cliff," a mix of tax increases and spending cuts due to extract some $600bn from the economy barring a deal with Congress. At stake are two separate issues  individual tax cuts due to expire at year's end and tens of billions of dollars in across-the board federal spending cuts due to kick in the day after New Year's Day. Failure to prevent a dive off the cliff could rattle US markets, and push the US economy into a recession, which could have global implications. How Obama fares with a familiar set of challenges most notably a Republican-controlled House of Representatives could colour his second term.Obama, who defeated Republican challenger Mitt Romney based on television projections, will want to strike a deal with Washington lawmakers before December 31 or risk a recession in the first half of 2013, budget experts and Democratic aides say.His backers say his win gives him a mandate for an elusive "grand bargain" he sought in his first four-year term. Such a pact would raise new revenue, make changes to popular programs like the Medicare health program for the elderly and pare the federal deficit. "They have signalled that they want a big deal and I think Obama will be aggressive about getting it," said Steve Elmendorf, a former House Democratic senior adviser and now a lobbyist.Obama and most Democrats are at odds with Republicans in Congress over the stickiest issue  whether to let low tax rates for the wealthiest Americans expire on December 31.The president and most Democrats want to raise taxes on income earned above $250 000; Republicans want to extend the current low rates for all income levels. Financial markets and the business community crave long-term certainty and that is what a major deal envisioned by Obama is intended to tackle.A big X-factor is how congressional Republicans will respond to an Obama win. The hard line against raising revenue taken by many Republicans in the House may not abate after the election.House Speaker John Boehner said this week that his Republicans would stand firm on their position opposing any tax increases, even for millionaires, though he was speaking before the election results.Republicans kept control of the House, as expected, and Democrats were projected to maintain control of the Senate.An Obama victory "takes a lot of air out of the room for Republicans", Jim Walsh, a former Republican representative, who retired in 2009, predicted before the election. The odds of a grander deal with increased revenue though not in the form of higher tax rates goes up with an Obama victory, he said.Former Democratic representative Bart Gordon was unsure whether more conservative elements of the party, associated with the Tea Party movement, would go along so easily. "Those folks don't need much of a reason to fight," Gordon said.

Violence erupts in Athens over austerity measures

Greek police fired teargas and water cannons to disperse thousands of protesters who flooded into the main square before parliament today in a massive show of anger against lawmakers due to narrowly pass an austerity package.The violence erupted as a handful of protesters tried to break through a barricade to enter parliament, where Prime Minister Antonis Samaras is expected to barely eke out a win for the belt-tightening law despite opposition from a coalition partner.But the parliamentary session was briefly interrupted when parliament workers went on strike and opposition lawmakers walked out of the chamber in protest. Outside parliament, loud booms rang out as protesters hurled petrol bombs and police responded with teargas and stun grenades. Smoke and small fires could be seen on a street next to parliament.That came after a sea of Greeks braved a steady downpour holding flags and banners saying "It's them or us!" and "End this disaster!" stood before riot police guarding parliament.In all, nearly 100,000 protesters - some chanting "Fight! They're drinking our blood" - packed the square and side streets in one of the largest rallies seen in months, police said.Protesters held aloft Italian, Portuguese and Spanish flags in solidarity with other southern European nations enduring austerity."These measures are killing us little by little and lawmakers in there don't give a damn," said Maria Aliferopoulou, a 52-year-old mother of two living on 1000 euros a month."They are rich, they have everything and we have nothing and are fighting for crumbs, for survival."Public transport was halted, schools, banks and government offices were shut and garbage was piling up on streets on the second day of a two-day nationwide strike, called to protest against the vote.Backed by the leftist opposition, unions say the measures will hit the poor and spare the wealthy, while deepening a five-year recession that has wiped out a fifth of the country's output and driven unemployment to a record 25%.

NEWS,15.10.2012

Softening stance on Greece, Merkel rules out default

Chancellor Angela Merkel has ruled out letting Greece default on its debt, in the latest sign Berlin is softening its stance towards Athens ahead of an eagerly awaited report on its reform progress from the "troika" of international lenders.The German leader signalled that she would be taking a more conciliatory approach towards Greece by visiting the country last week for the first time since the euro zone crisis erupted there three years ago.And over the weekend, comments by several conservative allies of the chancellor provided further evidence that the government has embarked on a delicate policy pirouette.Finance Minister Wolfgang Schaeuble, one of Greece's harshest critics, told a meeting of business leaders in Singapore on Sunday that the country would not go bankrupt - an acknowledgement that Athens will get the 31.5 billion euro aid tranche it needs next month to avert a default.Merkel told a news conference with Panama's president on Monday that she was in total agreement with Schaeuble, and explicitly ruled out any steps  including a Greek insolvency or euro zone exit that might unleash "uncontrollable developments" in the single currency bloc.The change in tone, which helped push down Greek bond yields to their lowest levels in over a year, reflects a reassessment by Merkel of the costs and benefits of her tough public stance towards the euro zone's most vulnerable member.The hard line served two main purposes: it ensured that reform pressure on Greek Prime Minister Antonis Samaras remained high, and it convinced sceptical conservative allies of Merkel in parliament to support her.Now the calculation has changed. With a US election less than a month away and a German vote due one year from now, reducing the risk of turmoil has become the top priority, even if it complicates Merkel's domestic dance.She now looks set to grant Samaras the two extra years he is seeking to hit deficit reduction targets. This will be a tough sell at home, in part because it would tear a new hole in Greece's funding plan.But it is seen as workable as long as Merkel can avoid going to parliament to seek approval for additional loans, on top of those set out in the country's second bailout package."There is a recognition, not just in Germany, that we need to avoid going back to national parliaments for Greece," a senior German official told Reuters, requesting anonymity.Bundling aid an "illusion" Ideas under consideration range from front-loading the loans in the second bailout, to using left-over EU budget funds to plug a Greek hole that sources say could total as much as 30 billion euros.Governments and the European Central Bank have ruled out accepting losses on their existing loans to Greece a solution favoured by the International Monetary Fund (IMF) to fill the Greek gap.Merkel also seems to have cooled on the idea, floated by some German officials, of bundling aid for Greece, Spain and Cyprus together in one final package towards the end of this year."It's an illusion to think we can align these three countries in one package," a second senior German official said. "Things just don't work that way in Europe."Working in Merkel's favour is the support of the main opposition party, the Social Democrats (SPD), for a softer stance on Greece.Her SPD challenger in the 2013 election, Peer Steinbrueck, has come out in favour of giving Greece more time to make savings, reducing the domestic risks for Merkel of that course.There are also signs that doubters in her own coalition are prepared to go along if a divisive debate in the Bundestag can be avoided. Rainer Bruederle, leader of the Free Democrats (FDP) in parliament, said on Monday that there was a readiness within the government to give Greece another chance.Until he struck a softer tone in Singapore, Schaeuble was seen by many outside of Berlin as the biggest obstacle to agreement on a range of euro zone issues - from aid for Greece and Spain, to European banking supervision and direct recapitalisation of banks via the ESM rescue fund."There have been several instances when he was clearly speaking for himself and not for the German government," one senior EU official said. "He seems to be trying to limit Merkel's room for manoeuvre."Two senior German officials agreed with that assessment, saying Schaeuble was worried about Merkel making too many compromises, and therefore felt the need to come out strongly in public to defend what he saw as German interests."If Merkel wants to give Greece additional money without new steps in return, then she will have to give Schaeuble a clear order to do it," one official close to the minister told Reuters earlier this month.Whether that order has indeed come down is unclear, but Schaeuble now seems to have got the message.

Brics 'need political reform for growth'

The world's five emerging economic powerhouses will experience significantly slower growth if they delay in implementing key political reforms, according to a report released on Monday by Germany's Bertelsmann foundation. The report said the five Brics countries Brazil, Russia, India, China and South Africa must focus on creating competent and stable political institutions and improving their education, health and judicial systems in order to achieve sustainable growth. Brazil, which the report says has halved incidences of extreme poverty and moved 20 million people into the middle class in the last decade, was called "the most promising of the Brics states" because of its institutional reforms and infrastructure improvements. The "worst-performing" country in the comparative study was Russia, which suffers from "a unilateral economic strategy, patronage and the lack of involvement of civil society." It said Russia must diversify its economy by overcoming its reliance on natural resources. The Bertelsmann report, titled "Sustainable Governance in the Brics," said the results for China were "ambivalent" as the country grapples with problems related to demography, social inequality and pollution. India too is plagued by "enormous regional and social imbalances," as well as infrastructure shortfalls and widespread corruption, which hinder growth. The report lauded South Africa for its economic stability, reduction of state debt and strengthening of social welfare policies, but said it held a "middling" position within the Brics, due in large part the poor performance of its education system and labour market. It has the highest level of social inequality in the grouping. The five countries are home to 42% of the world population and make up some 18% of global gross domestic product (GDP). Goldman Sachs, the investment group that coined the Brics acronym in 2001, forecasts the countries to account for some 40% of global GDP by 2050

World's best paying jobs

What jobs offer the highest pay? Investment banking is up there. So is specialist surgery. But consider this. Slightly over twenty years ago, Johnathan Roberts started work on an oil rig at $5 an hour. Today, the newly appointed operations manager of Norway's Standard Drilling makes about half a million dollars a year.Even accounting for inflation, it's a huge jump for the 45-year-old American. Salaries on oil rigs have soared because of a global boom in offshore drilling.Managers and workers are scarce in this specialised industry, where the work is intense and the job involves living on a platform in remote seas for weeks. For new players in Asia, where the energy demands of booming economies are driving a foray into offshore drilling, the costs and availability of skilled workers will be a big restraining factor."The amount of money they are making an hour is just mind-boggling now, just five years ago they were making just half that," said Roberts, who moved to Singapore this year from Texas. He said his pay more than doubled in 1999 when the industry faced a labour shortage like the one that appears to be emerging.The increasing demand for oil and gas is pushing energy companies to explore frontier areas like the Arctic and new offshore zones given that output from accessible fields is declining. Global oil demand has risen 14% in total to 88 million barrels per day (bpd) in 2011 from 2001, according to the BP annual statistical review. Rapidly growing economies have accounted for much of the increase - consumption in China doubled in the same period to 9.76 million bpd. Energy and mining offer good salaries, said Wyn James, a Singapore-based Briton who left a career in banking this year to open Zhen Global, a firm that recruits and places workers in mining and oil extraction."What we are seeing now is an acute shortage of people actually with applied skills, from engineering or chemical backgrounds," James said. "Even if the skills do exist globally, they don't necessarily exist in the place that is needed. So what we are doing is we are picking up people from all corners of the world and we are sticking them into projects, whether it's short-term or medium-term, but where they can earn reasonable money, live in a different country, live offshore, whatever that may be."Global trendDeepwater drilling, one of the most difficult but most lucrative parts of the extraction business, has mainly been centred in the Gulf of Mexico. But in the past decade, Brazil has become a key player, exploring untapped reserves in the Santos basin as far away as 300 km southeast of Sao Paulo, and at depths of over 1,500 metres. That drive is sucking in hundreds of rig operators, drillers, engineers and other technicians.On the other side of the world, China National Offshore Oil Corp (CNOOC) aims to build capacity to produce one million barrels per day of oil equivalent in deep waters offshore China by 2020.India, Asia's third-biggest oil consumer, is also expanding into the deep waters of the Bay of Bengal. There were 540 offshore oil rigs in the world last year and, by the end of 2012, the number should rise by 51 to 591, says Faststream Recruitment, a UK-based firm that specializes in hiring for the shipping, oil and gas industry.It is the biggest jump for any year in the past decade, said Mark Robertshaw, managing director of Faststream. In 2013, the number will grow by 28 to 619.The increase would mean more than 11 000 new jobs over the next 12 to 18 months from a total of 117 000, based on an average need of about 184 jobs on one rig, he said."If you consider that over the past 10 years, the annual number of rigs under contract has grown to average 539 during 2011, it becomes apparent that offshore employment for workers actually housed on floaters and jackups will spike significantly," Robertshaw said.Roustabouts and roughnecksThe labour crunch has already seen pay for a roustabout, the least skilled worker on a rig, nearly double in the past five years to $18-$20 an hour. A roughneck, a rank higher, earns about $27-$28, said Roberts, the US rig manager. "When the rousta gets a raise it doesn't just stop there," he said. "It goes all the way to the top."A rig operates on 12-hour shifts and typically workers do 14 days and then rotate out for a break for another 14 days.The schedule puts off many and with salaries in IT and other industries growing, an engineering graduate or technician has other options."Skilled labour is becoming difficult to find," said Scott Kerr, chief executive of Norwegian deepwater drilling company Sevan Drilling.The salary increases show up on balance sheets. For Keppel Corp., the world's largest rig builder, wages and salaries surged 27% to $1.43bn by 2011 from 2007, while the number of employees increased 5.7% over the same period, according to its annual reports. Nearly 90 percent of staff work in the oil rig division. Besides pay, companies try to attract talent with career opportunities."An engineer does not need to stay an engineer all his life. I was trained as a naval architect and I practised for a few years, but beyond that I was in management," said Choo Chiau Beng, chief executive of Keppel Corp."In some respects, being a highly paid CEO has attracted people to Keppel, because it shows you don't need to be a lawyer to be highly paid, you can be an engineer and be highly paid."For rig men like Roberts, the money is not to be sneezed at."After clearing taxes, my first check after one week was $167," he said. "My first apartment was very small, it was a little bitty one bedroom studio."Today, Roberts owns a home in a community in Texas that has manicured lawns, landscaped gardens and four golf courses. He is saving to buy a $2m ranch."I didn't come up with a silver spoon in my mouth, I came up working through the ranks," he said.

NEWS,20.08.2012

ECB: Greek exit viable but undesirable

A Greek exit from the eurozone would be manageable, European Central Bank (ECB) policymaker Joerg Asmussen was quoted on Monday as saying, although he would prefer it if the crisis-stricken country remained within the single currency bloc. He also said that the Bundesbank, whose chief ECB President Mario Draghi singled out earlier this month for expressing reservations over the bank's new bond-buying plans, was not isolated in Europe.The comments on Greece from the ECB executive board member, Germany's deputy finance minister until he took the post at the end of last year, sum up a growing debate in Berlin on the possibility of cutting Greece free. Most would prefer not to, but an increasing number of MPs and influential figures have come out of the woodwork saying the eurozone is strong enough to deal with the fallout. "Firstly, my clear preference is that Greece should remain in the currency union," Asmussen was quoted as saying in an advance copy of an interview due to appear in Germany's Frankfurter Rundschau on Monday. "Secondly, it is in Greece's hands to ensure that. Thirdly, a Greek exit would be manageable."But Asmussen also warned that a so-called Grexit would not be as orderly as some imagined: "It would be associated with a loss of growth and higher unemployment and it would be very expensive - in Greece, Europe as a whole and even in Germany."He also said it would be good if the eurozone's permanent bailout mechanism, the European Stability Mechanism (ESM), successor to the European Financial Stability Facility (EFSF), were up and running as soon as possible."The ESM is a better instrument for dealing with the crisis than the EFSF," he was quoted as saying.Germany's Constitutional Court has said it will deliver its ruling on whether the ESM and the fiscal pact are compatible with the German constitution on September 12. Germany cannot legally ratify the two treaties without the go-ahead from the court and the ESM cannot come into effect without German backing.On eurozone bonds, Asmussen said such common debt was only logical in a full fiscal union and added that they were not crisis management tools.Draghi indicated earlier this month that the euro zone's central bank may again start buying government bonds to reduce crippling Spanish and Italian borrowing costs but not before September and only if governments activated the euro zone's bailout funds to join the ECB in buying bonds.Whether the plan goes ahead at all, however, remains largely a question of whether leaders in Germany, whose own central bank opposes bond-buying, agrees over the course of a series of key meetings next month.Whereas Draghi said that Bundesbank chief Jens Weidmann had been the only ECB policymaker to register reservations against the bond-buying proposals at this month's meeting, Asmussen hinted that the division may not be as clear cut."No-one should try to give the impression that the Bundesbank or its president is isolated," said Asmussen, adding that he and Weidmann worked closely together and trusted each other.Noting that Draghi had not said the new bond-buying programme would be limited in terms of time and volume, the paper asked Asmussen if this meant it could be successful as it would be unlimited."You heard him correctly. But wait and see. We are working on further details of the new programme and we will discuss this at our next meeting," Asmussen replied.

The Unrepentant and Unreformed Bankers

These days, the business sections of newspapers read like rap sheets. GE Capital, JPMorgan Chase, UBS, Wells Fargo and Bank of America tied to a bid-rigging scheme to bilk cities and towns out of interest earnings. ING Direct, HSBC and Standard Chartered Bank facing charges of money laundering. Barclays caught manipulating a key interest rate, costing savers and investors dearly, with a raft of other big banks also under investigation. Not to speak of the unprecedented wrongdoing that precipitated the financial crisis of 2008.Evidence gathered by the Financial Crisis Inquiry Commission clearly demonstrated that the financial crisis was avoidable and due, in no small part, to recklessness and ethical breaches on Wall Street. Yet, it's clear that the unrepentant and the unreformed are still all too present within our banking system.A June survey of 500 senior financial services executives in the United States and Britain turned up stunning results. Some 24 percent said that they believed that financial services professionals may need to engage in illegal or unethical conduct to succeed, 26 percent said that they had observed or had firsthand knowledge of wrongdoing in the workplace, and 16 percent said they would engage in insider trading if they could get away with it.That too much of Wall Street remains unchanged is not surprising. Simply stated, the banks and their leaders have paid no real economic, legal or political price for their wrongdoing and thus have not felt compelled to change.On the economic front, the financial sector has rebounded nicely from its brush with death, thanks to an enormous taxpayer bailout. By 2010, compensation at publicly traded Wall Street firms had hit a record $135 billion.Last year, the profits of the nation's five biggest banks exceeded $51 billion, with their chief executives all enjoying pay increases. By 2011, the 10 biggest U.S. banks held 77 percent of the nation's banking assets.On the legal front, enforcement has been woefully inadequate. Federal criminal financial fraud prosecutions have fallen to a two-decade low. Violations are settled for pennies on the dollar  the mere cost of doing business, with no admission of wrongdoing and with the bill invariably picked up by insurers or shareholders. (When it's shareholders, that's not someone else far away, that's your 401(k), pension fund or mutual fund.) When Goldman Sachs was charged with failing to set policies to prevent insider trading, it was fined $22 million, an amount the bank collects in about seven hours of trading. Goldman's record $550 million penalty for securities fraud in 2010 amounted to less than 2 percent of that year's revenue.On the political front, after a brief stint in the penalty box, the big banks have resumed the political muscling that got them two decades of deregulation.To block reform, the financial industry has spent more than $317 million on lobbying in Washington over the past two years and more than $230 million in federal political contributions in the 2010 and 2012 election cycles.It's been to good effect. Two-thirds of the regulations called for in the financial reform law passed two years ago are still not in place. And the House Republicans, the banks' sturdiest allies, have slashed at the budgets of the Securities and Exchange Commission and the Commodities Futures Trading Commission to impede their ability to investigate wrongdoing.Clearly, the present order is unsustainable. We need to demand fundamental changes now, breaking up the big banks to snap their stranglehold on our markets and our democracy, ensuring that the newly minted financial reform laws are implemented, and wringing out rampant speculation.But true reform can only occur if we root out the corruption that has distorted our banking system and undermined the productive work of the many good people in the financial sector.The system of financial law enforcement is clearly broken. Think of it this way: If someone robbed a 7-Eleven of $1,000 but could settle a few days later for $25 and no admission of guilt, would they do it again?Only enforcement with real consequences will work. That means vigorous pursuit of criminal cases against individuals involved in wrongdoing, the surest method to deter malfeasance.It means enforcement agencies eschewing weak settlements in civil cases and seeking remedies with teeth such as civil penalties, restitution and executives forfeiting their jobs. And, it means tougher financial fraud laws. In that regard, the bipartisan proposal by Sens. Jack Reed, D-R.I., and Charles Grassley, R-Iowa, to increase fines for securities fraud is a place to start.To make any of this a reality, the U.S. Department of Justice and the federal regulators must have the will and the resources to do the job. President Obama has asked for additional funds for the Department of Justice, the SEC and the Commodities Futures Trading Commission. Giving these agencies the tools to detect and prosecute wrongdoing will more than pay for itself  the Commodities Futures Trading Commission's fine against Barclays for interest rate manipulation alone will pay for almost an entire year of that agency's budget.None of these changes will come easily, but this much is clear: We cannot allow Wall Street to continually flout our sense of right and wrong, to erode faith in our legal and political systems, and to put our financial system and economy in jeopardy.

NEWS,17.08.2012

What U.S. and Iranian Leaders Can Do to Avert War

 

It is clear that if U.S. and Iranian political leaders continue down the present course they will almost certainly lead us into another bloody war. Out of empathy for those who will do the fighting and dying, here are a few things they can do to avert conflict:

• U.S Political Leaders: Have the courage to stand up publicly to AIPAC lobbyists and their supporters who would pressure you to send our troops into another preventive war. While it remains unclear whether the Ayatollah Khamenei is sincere or engaging in strategic deception when he says that nuclear weapons are forbidden to Iran, he is almost certainly more likely to pursue them if he feels that his government is being backed into a corner with no way out.

• Iranian Political Leaders: Disavow statements made by President Ahmadinejad that have been interpreted as genocidal toward Israel. Your president's threatening statements in the context of your nation's nuclear pursuits -- whether peaceful or not -- have arguably done more harm to your cause than almost any other statement you've made or action you've taken. Israel not only appears to be poised to attack you unilaterally but will probably draw the U.S. in as well if it does. Your president's inflammatory and threatening rhetoric may result in a conflict that will likely cause great suffering to you and your people. On the other hand, the international community would undoubtedly be more open to your pursuit of nuclear energy if you distanced yourself from such irresponsible and seemingly irrational statements.

• U.S. Political Leaders: Stand up for American principles by imposing real political and economic costs on Israel for its settlement expansions and denial of Palestinian rights. Continued economic aid should no longer be a given but, rather, should be contingent upon the Israeli government's demonstrated progress in this area. American policymakers' selective application of human rights standards on this issue is an affront to the Muslim world as well as to American values and can only exacerbate the U.S.-Iran diplomatic situation.

• Iranian Political Leaders: Fully comply with IAEA inspections to allay the international community's concerns over alleged clandestine nuclear weapons sites. Time is needed to build trust. Set aside your pride and compromise on higher levels of uranium enrichment in order to avoid provoking U.S. and Israeli alarm. Viewing the unfolding of events from the U.S., it appears that American policymakers are poised to make the same foolish mistake they made with Saddam Hussein: that the absence of proof that your government is not engaged in nefarious activities means that you must be. Don't play into the hands of U.S. and Israeli hawks by playing Saddam's guessing game.

• U.S. Political Leaders: Acknowledge the courage behind such concessions if Iranian leaders commit to them and offer them more in return: not only alleviation of sanctions but positive economic and political incentives as well.

While there is no guarantee that these steps will lead to a peaceful outcome, continuing down the current road will only lead to greater economic deprivation and bloodshed. Though the current diplomatic impasse may appear insurmountable, commit to a renewed effort while there is still time. You owe it to the men and women you will be sending into battle if you fail.

Is Italy in Denial of Its Public Debt?

 

This week, the amount of government debt of Italy at the end of June was published: 1,972 billion euros. By this time it must have exceeded 2,000 billion euros ($2.4 trillion).Mario Monti, the Prime Minister cum Minister of Finance, toured the capitals of Europe to obtain support for Italy, indicating that Italian sentiment would turn anti-Euro without such help. He chose Berlin to accuse Germany of profiting from the European sovereign crisis. Needless to say, it immediately backfired. It was, to put it bluntly, particularly stupid. In an interview with the Wall Street Journal he stated: What we ask is that European authorities certify Italy's good conduct by translating that into interventions to keep spreads within reasonable limits. I have often told Merkel that, if this isn't done, she risks finding herself before an Italian parliament that repudiates Europe, monetary stability and the euro and is not friendly toward Germany.What is worse, however, is that he sent completely contradictory messages: he said that the European crisis was reaching the end of the tunnel.The reality is much scarier: Italy is facing 500 billion euros of refinancing and deficit financing between now and the end of 2013. The measures taken by the Italian Government did not translate into an interest rate decrease, let alone a debt decrease.When he states that Italy does not need a bail out he is right: not that Italy is not in need, but that there is no way the current resources, even if they were entirely allocated to Italy, would be sufficient to bail the country out.What is currently missing, however, is a serious crisis debt management. It would be perfectly possible to launch a consolidation bond issue, open to holders of 2012 and 2013 debt. With a maturity of 5 years and an interest rate of 5 percent it would not require any haircut from the banks and it would help the country bridge the reimbursement gap of the next two years.But Italy is scared to propose what would be a voluntary transaction. Should there be an increase in its refinancing rates, it would be a disaster.This lack of debt management might create the perfect conditions for a European tornado that would affect global markets everywhere. France would definitely be next. The main source of discontent for the investors is not only those facts. It is the benevolent way with which the Italian Treasury is handling the problem, shortening the maturities of its bonds,and not increasing its refinancing risk.We are talking about actions, not words. E la nave va...

World execs have confidence in Obama

Twice as many business executives around the world say the global economy will prosper better if incumbent US president Barack Obama wins the next election than if his Republican challenger Mitt Romney does, a poll showed on Friday. Democrat Obama was chosen by 42.7% in the 1 700 respondent poll, compared with 20.5%for Romney. The rest said "neither". The result was different among respondents in the United States, where a slim majority thought Romney would be better for their businesses than Obama.Obama maintains a seven-point lead over Romney among registered voters in the race for the November 6 presidential election, despite the fact Americans are increasingly pessimistic about the future, according to a Reuters/Ipsos poll conducted last week. The FT poll was conducted before Romney picked Wisconsin Congressman Paul Ryan as his vice presidential running mate at the weekend, a move that could dramatically shift the election debate between two sharply contrasting views of government spending and debt. Romney's choice for running mate gave him no immediate boost to his White House prospects.

NEWS,28.6.2012

Europe's greatest threat

Financial markets slide towards disaster, scarcely pausing to celebrate the "success" of the Greek election or the deal to recapitalise Spanish banks, the euro project is finally revealing its fatal flaw. One country poses an existential threat to Europe – and it is not Greece, Italy or Spain. Every serious proposal to resolve the euro crisis since 2009 – haircuts for bank bondholders, more realistic fiscal consolidation targets, jointly guaranteed eurobonds, a pan-European bailout fund, quantitative easing by the European Central Bank (ECB) – has been vetoed by Germany, and this pattern looks likely to be repeated next week. Nobody should be surprised that Germany has become the greatest threat to Europe. After all, this has happened twice before since 1914. To state this unmentionable fact is not to impugn Germans with original sin, but merely to note Germany's unusual geopolitical situation. Germany is too big and powerful to coexist comfortably with its European neighbours in any political structure ruled purely by national interests. Yet it isn't big and powerful enough to dominate its neighbours decisively, as the US dominates North America or China will dominate the Far East. Wise German politicians recognised this inherent instability after 1945 and abandoned the realpolitik of national interest in favour of the idealism of European unification. Instead of trying to create a "German Europe" the new national goal was to build a "European Germany". Unfortunately, this lesson seems to have been forgotten by Angela Merkel. Whatever the intellectual arguments for or against German-imposed austerity or the German-designed fiscal compact, there can be no dispute about their political import. Merkel's stated goal is now to create a "German Europe", with every nation living, working and running its government according to German rules. Merkel doubtless believes that she is helping Europe when she maternally instructs the Greeks, Italians and Spaniards to "do their homework" and so become good little Germans. But like its less benign predecessors, this effort to impose German hegemony is guaranteed to fail. Europe's leaders must therefore sart considering a previously unmentionable question, perhaps as soon as the current summit, if the euro crisis intensifies. This question is not whether Europe will agree to live under German leadership, but whether Germany will agree to live under EU leadership – or whether the other nations must form a united front against Germany to prevent the destruction of Europe, as they have repeatedly in the past. To be specific, the euro's only chance of survival now depends on a decisive move towards political and fiscal union. Angela Merkel plays lip service to such political union, even claiming that democratic accountability is her main condition for financial rescues; but what she means is accountability to German voters, German newspapers and German constitutional judges. She promises to "do whatever it takes to save the euro" but vetoes anything that might actually work, claiming deference to German public opinion or national interests. Europe must now call this bluff. At the summit, France, Italy and Spain can turn the tables on Merkel by presenting her with an ultimatum. Led by President Hollande, who has abandoned president Sarkozy's Gaullist pretensions of parity with Germany, the big three Mediterranean countries could agree on a programme that really might save the euro: a banking union, followed by jointly issued eurobonds and backed by ECB quantitative easing. If Merkel tried to block these policies, the others could politely invite her to leave the euro, since Germany's political pressures evidently made membership impossible on terms its partners could accept – essentially the proposition Merkel put last month to Greece. Without Germany, the eurozone would have much smaller internal imbalances and much more political coherence, with a much weaker currency and higher inflation, both of which would make debts easier to resolve. Merkel would probably insist on Germany's legal right to remain within the euro, ironically echoing the Greek position. At this point the other nations could play their trump card: to reduce interest rates and make their economies more competitive by weakening the euro, the debtor nations could vote for unlimited bond purchases by the ECB. The Germans on the ECB council would doubtless oppose this, but even with support from Finland, Slovakia, and perhaps Austria and Holland, Germany could command no more than seven votes out of 23. Germany would then face the very same existential choice about its relations with Europe that Merkel has inflicted on Greece and other debtor nations. Germans will almost certainly support the political concessions that might give the euro a chance of survival, including fiscal transfers and some mutualisation of debts, once they realise that their only alternative is isolation from the rest of Europe. But before they agree to a European Germany, voters may need to be reminded that trying to create a German Europe always leads to disaster. 

NEWS, 14.06.2012.

Greeks pull cash from banks before election

 

Greeks pulled their cash out of the banks and stocked up with food ahead of a cliffhanger election on Monday (NZ time) that many citizens fear will result in the country being forced out of the euro.Bankers said up to 800 million euros ($US1 billion) were leaving major banks daily and retailers said some of the money was being used to buy pasta and canned goods in case of shortages, as fears of returning to the drachma were fanned by rumours that a radical leftist leader may win the election.The last published opinion polls showed the conservative New Democracy party, which backs the 130-billion-euro ($US160 billion) bailout that is keeping Greece afloat, running neck-and-neck with the leftist SYRIZA party, which wants to cancel the rescue deal.As the election approaches, publishing polls is now legally banned and in the ensuing information vacuum, party officials have been leaking contradictory "secret polls".Yesterday, one rumour making the rounds was that SYRIZA was leading by a wide margin."This is nonsense," one reputable Greek pollster said, on condition of anonymity. "Our polls show the picture has not changed much since the last polls were published. Parties may be leaking these numbers on purpose to boost their standing."The pollster said there was some consolidation, with voters turning to New Democracy and SYRIZA from smaller parties but the pool of undecided voters remained unusually large so close to the election and the result was impossible to predict.Both parties say they want Greece to remain in the single currency but SYRIZA has pledged to scrap the bailout agreement signed in March which has imposed some of the toughest austerity measures seen in Europe in decades.The European Union and International Monetary Fund have warned that Greece, which has only enough cash to last for a few weeks, must stick to the conditions of the bailout deal or risk seeing funds cut off.Euro or drachma dilemma New Democracy has been telling voters they must choose between the euro or the drachma, while SYRIZA promises to end the austerity measures imposed by Greece's international lenders, such as salary and pension cuts, that have driven many Greeks into poverty.Fears that Greece will collapse financially and leave the euro have slowly drained Greek banks over the last two years. Central bank figures show that deposits shrank by about 17%, or 35.4 billion euros ($US44.4 billion) in 2011 and stood at 165.9 billion euros ($US208.1 billion) at end-April.Bankers said the pace was picking up ahead of the vote, with combined daily deposit outflows from the major banks at 500-800 million euros ($US625 million to $US1 billion) over the past few days, and 10-30 million euros ($US12-36 million) at smaller banks."This includes cash withdrawals, wire transfers and investments into money market funds, German Bunds, US Treasuries and EIB bonds," said one banker, who spoke on condition of anonymity.Retailers said consumers were stocking up on non-perishable food while almost all other goods were seeing a huge drop in sales as cash-strapped Greeks have no money to spare in the country's fifth year of recession."People are terrified by the prospect of returning to the drachma and some believe it's good to fill their cupboard with food products," said Vassilis Korkidis, head of the ESEE retail federation."It's over the top, we must not panic. Filling the cupboard with food doesn't mean we will escape the crisis," he said.Supermarkets said they did not see a rise in profits as people spend less money. But sales of staples like pasta have gone up.A generation that suffered the deprivations of the Nazi occupation of Greece has traditionally raided supermarkets ahead of any impeding crisis, for fear people will go hungry. Their children have picked up the habit and are stocking up on basics."It's fear that is motivating people," said Anastassia Tzorbatzidou, mother of three, who says she has her shelves full. "When you have kids, it's better to have something."

Italy, France find common ground on crisis

 

The Italian and French leaders on Thursday found common ground on how to confront Europe's worsening debt crisis, emphasizing that budget discipline should not come at the expense of economic growth and calling for a region-wide move to boost market confidence.The leaders held their first bilateral meeting since President Francois Hollande took office last month as Italy's borrowing costs skyrocketed on concerns the country may be the next, after Spain, to need financial aid.The positions outlined by Italian Premier Mario Monti and Hollande, however, were at odds with those espoused by Chancellor Angela Merkel.Europe's crisis response `'has not been enough to protect the euro from market turbulence," Monti said. "We need to reinforce the weak points of the system" in both the real economy and finance. The two leaders agreed that focusing on growth does not mean abandoning budgetary discipline.`'But public account discipline is not enough to have growth, foster development and create jobs," Monti said.The two men also discussed launching eurobonds, jointly issued bonds that would spread debt risk that both support. Germany opposes the bonds out of concern they will lead to fiscal laxity.Monti pointedly noted that Italy and France have together contributed 40 percent of the eurozone's bailout funds to date, staking a claim for the legitimacy of their views.The need for action to boost market confidence in the euro was evident in the bond market movements on Thursday.Italy paid 5.3 percent to raise (EURO)3 billion ($3.76 billion) in three-year bonds from financial markets, up from 3.91 percent last month and the highest level since December.The high rate underscores how investors are increasingly worried Italy will be destabilized by market turmoil in Spain and might run into trouble servicing its debt as it wallows in a deep recession. Political wrangling over reforms has also raised questions over the government's ability to overhaul the economy.To boost confidence in the euro, Hollande said a solution must be forged not just between France and Italy, but with other countries ahead of a European summit on June 28."Growth is the first thing, the second is stability ... the third point is deepening euro monetary union," Hollande said.Monti's technocratic government came to power in November with broad, bipartisan support from political parties to reform the economy. However, lawmakers have in recent weeks shown signs of returning to the old Italian ways of political jockeying. Lobbies and some parties have pushed to water down some reforms.The lower house of Parliament passed a package of anti-corruption measures aimed at making Italy a more just society  something that Monti, a former EU competition commissioner, believes will help encourage more risk-taking and enterprise-building. After being bruised on labor reforms, Monti's government attached the package to three votes of confidence on the most contentions passages, all of which easily passed lower house votes. Despite the passage, there were many calls for changes when the Senate takes up the package  an indication of more political gridlock

NEWS,16.05.2012.

Judge to lead Greece in emergency Government

 

 Greece put a senior judge in charge of an emergency Government yesterday to lead it to new elections on June 17.In a sharp blow to confidence, sources at the European Central Bank it had halted liquidity operations with some Greek banks because their capital had been too far depleted.The move would mean those banks are no longer able to park assets at the ECB in return for cash, and would have to seek costlier emergency financing from the Bank of Greece.It was not clear which banks, or how many of them, were affected. One person familiar with the matter said the capital of four Greek banks was so depleted they were operating with negative equity capital.Greeks have been withdrawing hundreds of millions of euros (dollars) from banks in recent days as the prospect of the country being forced out of the European Union's common currency zone seems ever more real - although there has so far been no sign of a run on bank branches in Athens.European leaders who once denied vociferously that they were fretting over Greece leaving their currency union have given up pretence.Asked if he was concerned about a Greek exit, European Central Bank chief Mario Draghi said simply: "No comment".Political leaders failed to form a government following an inconclusive parliamentary election on May 6, leaving the state with its coffers almost empty and no elected cabinet in place to satisfy lenders it deserves the money needed to stay afloat.President Karolos Papoulias, whose powers as head of state are limited, named supreme administrative court head Panagiotis Pikrammenos as caretaker prime minister.He will have no power to take political decisions, only to carry Greece into the vote.The parliament that was elected on May 6 will convene today and be immediately dissolved, a presidency source said.The interim leader is little known. State television said he was born in 1945 and studied law in Athens and Paris. A court source said he would name as few ministers as possible."Thank you for your trust, and I believe that I am worthy of this mission," Pikrammenos said at a meeting with the president. "This is purely a caretaker government. However, it escapes no one that our country is going through difficult times."He repeated a joke he said he had read in the press, that his own name, which translates as "sorrowful" in English, made him suited to be the last prime minister of a political era.Leftists lead A new poll confirmed what other surveys have shown: that radical leftists who reject a bailout agreed with the EU and IMF are poised for victory, and the two establishment parties that agreed the rescue are sinking further after an historic wipeout 10 days ago.The leftists argue they can tear up the bailout and keep the euro, but European leaders say if Greece fails to meet promises to them, lenders will pull the plug on financing, driving Athens to bankruptcy and a swift exit from the EU single currency.On Monday, according to an official account, the president told party chiefs that figures from the central bank headed by George Provopoulos showed savers had withdrawn up to 800 million euros ($1 billion) from banks."Mr. Provopoulos told me there was no panic, but there was great fear that could develop into a panic," the president was quoted as saying in minutes of a meeting that failed to yield agreement on a cabinet."Withdrawals and outflows by 4 pm when I called him exceeded 600 million euros and reached 700 million euros," he said. "He expects total outflows of about 800 million euros, including conversions into German Bunds and other such things."Several banking sources told Reuters similar amounts had also been withdrawn on Tuesday. Nevertheless, there was no sign of panic or queues at bank branches in Athens on Wednesday. Bankers dismissed suggestions that a bank run was looming.A senior executive at a large Greek bank: "There is no bank run, no queues or panic. The situation is better than I expected. The amount of deposit withdrawals the president mentioned referred to three days, not one."Still, some were taking no risks. A 60-year-old textiles store owner who gave his name only as Nasos said he had transferred 10,000 euros over the phone to a bank in fellow eurozone state Cyprus on Tuesday afternoon."Any way you see it, things are difficult. If they call elections on June 17 - then everyone will take their money out on the Friday." That June 17 date was later confirmed.Charles Dallara, chief negotiator for the body representing private sector holders of Greek bonds, said there had been "a pickup in deposit flight from Greece".Dallara, who as head of the International Institute of Finance spent months negotiating the largest ever sovereign debt restructuring, said a Greek exit from the euro zone would be "somewhere between catastrophic and Armageddon" for Europe.

Merkel, Hollande promise joint growth strategy

 

 New French President Francois Hollande and German Chancellor Angela Merkel have acknowledged differences over how to boost growth in recession-plagued Europe, but pledged to forge a joint approach in time for an EU summit next month.The Socialist Hollande jetted to Berlin yesterday only hours after being sworn in to meet Merkel, a conservative, for the first time, arriving over an hour late after his plane was hit by lightning and he was forced to return briefly to Paris.The meeting was being closely watched for signs the leaders of Europe's biggest economies will be able to move beyond a war of words over how to resolve the debt crisis that now threatens to tear apart the 13-year-old currency bloc.Hollande sharply criticised Merkel during his election campaign for insisting on tough austerity to bring down suffocating debt levels across the euro zone. She in turn had backed Hollande's rival, conservative incumbent Nicolas Sarkozy.Supported by others in southern Europe, Hollande has vowed to shift the focus to growth and reopen a tough new set of budget rules that Merkel and other EU leaders agreed to adopt earlier this year - a step considered taboo in Berlin."I said it during my election campaign and I say it again now as president that I want to renegotiate what has been agreed to include a growth dimension," Hollande told a joint news conference with Merkel at the Chancellery in the German capital.Merkel's five-year double act with Sarkozy earned the duo the moniker "Merkozy" for their close cooperation during Europe's debt crisis. The new Franco-German couple - referred to by some as "Merkollande" - took care to play down their differences on Tuesday, hoping to send a signal of unity at a time when speculation is growing that Greece may have to exit the euro zone and return to the drachma."Growth has to feed through to the people. And that's why I'm happy that we'll discuss different ideas on how to achieve growth," Merkel said.They said the goal was to present joint proposals at a European Union summit in late June.Growth pact Instead of reopening Merkel's "fiscal compact", they are expected to complement it with a new "growth pact".Berlin has already signalled it is open to several ideas favoured by Hollande, including more flexible use of EU structural aid, a bigger role for the European Investment Bank and the introduction of "project bonds" to foster investments in infrastructure like transportation and energy networks.But most economists agree that these steps will make little difference to countries like Greece, which is in its fifth year of recession and has seen unemployment surge to 22 percent.That means Germany is likely to come under pressure to take additional steps, like giving struggling euro countries more time to reduce their deficits, a step it has so far resisted for fear of spooking jittery financial markets.Although the reserved Merkel learned over time to work with the impulsive Sarkozy, her advisers often complained about his erratic behaviour and some believe she will ultimately form a closer bond with the more outwardly cautious Hollande.The two were born less than a month apart, grew up in religious households and both scorn the flashy styles of their more charismatic predecessors, Sarkozy and Gerhard Schroeder.Hollande noted that French and German leaders of different political stripes had a long history of working well together to promote the common European project, referring to Schroeder and Jacques Chirac, as well as to Helmut Kohl and Francois Mitterrand, and Helmut Schmidt and Valery Giscard d'Estaing.After the news conference, the two leaders dined on lamb schnitzel and asparagus on the eighth floor of the Chancellery, overlooking the Tiergarten park and the Reichstag parliament building. Aides said they had a broad conversation on topics ranging from economic and foreign policy to bilateral issues.Hollande later flew back to Paris. He is due in Washington later in the week to meet US President Barack Obama ahead of G8 and NATO summits at Camp David and Chicago.Hollande finds himself in the hot seat from day one. Earlier on Tuesday, Greece abandoned a nine-day hunt for a government and called a new election that could hand victory next month to leftists opposed to the terms of the country's EU/IMF bailout.A growing number of policymakers in Europe have warned over the past week that if Greece does not stick to the budget cuts and structural reforms agreed with its international lenders, it may have no future in the currency bloc.Both Merkel and Hollande said they wanted Athens to remain a part of the euro project and stood ready to explore ways to support the Greek economy so it could return to growth: "Like Mrs. Merkel, I want Greece to remain in the euro zone," Hollande said.