NEWS,22.02.2013

Ultra-cheap eurozone loans hit a snag

 

Eurozone banks do not seem ready to repay as much as expected of the ultra-cheap three-year loans made available to them by the European Central Bank last year, official data showed on Friday.The ECB announced that 356 eurozone banks have signalled their intention to repay early €61.1bn ($80.5bn) of a second batch of special long-term refinancing operations or LTROs, launched last year to avert a looming credit crunch in the single currency area.That is much lower than the €130bn some analysts had been expecting.The LTROs are injections of liquidity into the banking system with ultra-long maturities of three years.They were launched in two batches - €468.19bn in December 2011 and €529.5bn in February 2012.At the time, they were widely credited with pulling Europe back from the brink of a dangerous credit crunch.Both rounds of LTRO included provisions to allow early repayment after one year, if banks so chose.The first repayment window opened on January 30, when 278 banks repaid €137bn.And the second window opens on February 27.After that, repayments can continue on a weekly basis, depending on demand.Total repayments so far amount to €212.3bn or 21% of the combined total of €1.02 trillion in LTROs.ECB chief Mario Draghi has argued that the fact that eurozone banks are ready to repay early such a large chunk of their emergency loans "reflects the improvement in financial market confidence."But analysts suggested the lower-than-expected repayments for the second batch is a signal that banks are still not ready to rely solely on the normal funding markets, especially with the Italian elections looming this weekend."The uncertainty ahead of the general political elections in Italy could have led some banks that had decided to exit to postpone their repayment," said Giuseppe Maraffino and Laurent Fransolet of Barclays Research."Should this have been the case, the repayment in the following weeks could be higher than at the previous three paybacks in the weeks following the January 30 payback, which averaged €4.1bn," the analysts said.The ECB did not provide a national breakdown of banks that are repaying and few banks have made public their repayment plans.

Spain approves urgent job refoRms

The Spanish government has approved a package of urgent reforms it hopes will create jobs for young people and help slash the country's 26% unemployment rate. The measures approved on Friday include scrapping company social security payments for a year for young people as long as the company takes on long-term unemployed people aged over 45.Other measures include limiting monthly social security payments to €50 for six months for under 30s setting up their own businesses and the possibility of allowing people to use lump sum unemployment payments to start a company.Some 6 million people have lost their job since the economy went into freefall with the collapse of the real estate sector in 2008. The unemployment rate for people under 25 is a staggering 55%.

US youth now more credit savvy – study

The recession had a strong impact on young Americans who saw the credit crisis up close: they are taking on less credit card debt, delaying plans to buy homes and owning fewer cars, according to a study released on Thursday.From 2007 to 2010, the median debt of US households headed by people aged 35 and younger fell by 29% - from $21 912 to $15 473 - while debt of older Americans fell by just 8%, to $30 070, according to a Pew Research Center study titled "Young Adults After the Recession."Residential property accounts for at least three-quarters of average American debt, so much of the drop may be connected to a decrease in home ownership. The number of Americans under 35 who own their primary residence dropped to 34% in 2011 from 40% in 2007, Pew said.Meanwhile, the percentage of homeowners over age 35 fell by 2 percentage points to 72%."As younger people invest in education and wait longer to enter the workforce or start families, that may mean they will wait longer to buy homes," said Richard Fry, a senior economist at Washington-based Pew and the author of the study.Young adults are cutting back on credit card usage as well. Young households with credit card debt fell by 10 percentage points to 39% between 2007 and 2010.Car ownership is an area in which younger Americans also cut back. The number of households led by adults under 35 with auto debt fell by 12% between 2007 and 2010. The typical outstanding car loan fell to $10 000 from $13 000.As unemployment drove many young people to return to school, student debt increased during the recession. By 2010, 40% of households headed by young adults had student debt, up from 34% in 2007 and 26% in 2001.Squeezed by increasing student debt, younger Americans are cutting debt in other areas. Their median level of debt fell to $15 473 in 2010 from $17 938 in 2010, according to the study.

Iran 'installing new nuclear equipment'

World powers condemned Iran just days before talks on its controversial nuclear programme, after an International Atomic Energy Agency (IAEA) report said it had begun installing advanced equipment at one of its main nuclear plants."On 6 February 2013, the Agency observed that Iran had started the installation of IR-2m centrifuges" at the Natanz plant, the IAEA report said."This is the first time that centrifuges more advanced than the IR-1 have been installed" at the plant in central Iran, the UN atomic watchdog added.One official said Iran intended to install around 3 000 of the new centrifuges at Natanz enabling it to speed up the enrichment of uranium.This process is at the heart of the international community's concerns about Iran's nuclear programme, since highly enriched uranium can be used in a nuclear weapon.The US State Department denounced the development as "yet another provocative step" by Iran and White House spokesperson Jay Carney warned Tehran it had a choice. "If it fails to address the concerns of the international community, it will face more pressure and become increasingly isolated," he said on Thursday."The burden of sanctions could be eased, but the onus is on Iran to turn its stated readiness to negotiate, into tangible action."Britain expressed "serious concern".Israel, the Middle East's sole if undeclared nuclear-armed state, warned that Tehran was "closer than ever" to achieving the amount of enriched uranium to make a nuclear bomb.The report was "severe" and "proves Iran is continuing to rapidly advance to the red line" that Prime Minister Benjamin Netanyahu has said the international community must draw to prevent Iran obtaining an atomic weapon, Netanyahu's office said.Israel has refused to rule out bombing Iran's nuclear facilities. Despite the developments at Natanz, the IAEA's quarterly report seen by AFP also noted that Iran had not started operating any new equipment at its Fordo plant.Fordo is of more concern to the international community, since it is used to enrich uranium to fissile purities of 20%: At Natanz it is mostly to 5%.The ability to enrich to 20% is technically speaking considerably closer to 90%, the level needed for a nuclear weapon.Iran has so far produced 280kg of 20% uranium, of which around 110kg have been diverted to fuel production, the new report said.Experts say that around 250kg are needed for one bomb, although creating a weapon requires several other steps and if Iran were to start further enriching to weapons-grade this would be detected by the IAEA.Iran denies seeking atomic weapons but many in the international community suspect otherwise, The UN Security Council has passed several resolutions calling on Iran to suspend all uranium enrichment.The IAEA report came ahead of a new meeting between Iran and six world powers - the US, China, Russia, Britain, France and Germany - in Kazakhstan on 26 February.These will be the first talks between the parties since three rounds of meetings ended in stalemate in Moscow last June.The so-called P5+1 called on Iran to suspend all 20% enrichment, shut down Fordo and export its 20% stockpile.But they stopped short of offering Tehran substantial relief from UN Security Council and unilateral Western sanctions that last year began to cause major economic problems for the Gulf country.A Western diplomat said Wednesday that the P5+1 would come to Almaty with an offer containing "significant new elements".Reports have said that the powers could ease sanctions on Iran's trade in gold and other precious metals.On Thursday, US State Department spokesperson Victoria Nuland urged Iran to consider "another path" than the nuclear bomb."They have an opportunity to come to those talks ready to be serious, ready to allay the international community's concerns, and we hope they take that opportunity," she said.Parallel efforts by the IAEA dating back more than a year to press Iran to grant it access to sites, documents and scientists involved in what the agency suspects were past efforts to develop nuclear weapons remain stalled.The new report said that although the IAEA board had adopted two resolutions on the urgent need to resolve these issues with Iran, they had not been able to reach agreement with Tehran on the way forward.It added however that the Vienna-based IAEA's "commitment to continued dialogue is unwavering".

Mexico vigilantes challenge government

Fed up with the police's failure to curb crime, armed vigilante groups have spread to at least four Mexican states, manning checkpoints, patrolling streets and in one case killing a "suspect" in a shootout.The proliferation of self-policing poses a challenge to the government of President Enrique Pena Nieto, who inherited a drug war that had killed about 70 000 people in six years when he took office in December.Raul Plascencia Villanueva, head of the National Human Rights Commission, said the vigilante trend must be rejected, warning that there is "a very fine line between self-defence organisations and paramilitary groups".Although self-defence groups have long existed in Mexico, they began to expand last month, when hundreds of men donned masks and took up machetes and hunting rifles in the rural mountains of the southwestern Guerrero state.In recent weeks, more groups have emerged in the neighbouring state of Michoacan, the southern state of Oaxaca and the central state of Mexico, which surrounds Mexico City.In Guerrero, the civilians decided to police their own streets after a community leader was kidnapped in early January.The vigilantes say the local police are too corrupt, unwilling or unable to stop drug gangs - a charge often levelled against police in Mexico.The vigilantes detained 53 people, accusing them of a slew of crimes from murder to kidnapping and extortion, and held them in makeshift jails in remote villages.They handed the last of their detainees to authorities this week after long negotiations, but the self-policing took a deadly turn on Wednesday. Crisoforo Garcia, a leader of the vigilante movement, said a squad was on a "routine patrol" in the mountain village of El Refugio when it was attacked by a group of armed men, one of whom was killed in the resulting gunfight.Interior Minister Miguel Angel Osorio Chong met with leaders of the Guerrero vigilante movement, agreeing to find a way to make the community police forces legal in return for the handover of 31 suspects Gerardo Rodriguez, a security expert and director of the Mexico Seguridad consultancy, said it was a "dangerous" deal, because giving legitimacy to these groups "shows the Mexican state's inability at the federal and local level to bring security and justice to these towns""It is a new flashpoint of insecurity for the Mexican state that can escalate," Rodriguez said. Community police forces that are tolerated by the authorities have existed in Guerrero since 1995, allowing indigenous groups to mete out justice according to their own traditions. But the vigilantes who have taken up arms in recent weeks were outside this local system, in which prisoners face public justice and sentences that include years of hard labour in various towns.The growth of vigilante squads has sparked a debate among politicians, with some pointing fingers at state governors and other saying federal policymakers should do more to help."It is a governability crisis, because it demonstrates the total absence of the police," said Senator Ernesto Cordero, a leading member of the opposition National Action Party.Manlio Fabio Beltrones, the leader of the ruling Institutional Revolutionary Party (PRI) in the lower house of Congress, said governors should "reconsider the way their governments work" if they "are not capable enough to offer protection, safety and justice" to their populations.Guerrero's leftist Governor Angel Aguirre said federal lawmakers should provide more resources to state governments to improve security. Fausto Vallejo, the PRI governor of Michoacan, suggested that the community police forces should be legalised and given training and equipment.Pena Nieto has vowed to shift the focus of the drug war towards reducing the daily violence plaguing much of the country. He wants to form a paramilitary "gendarmerie" to replace the thousands of troops deployed by his predecessor since 2006.But the government has said soldiers will remain deployed until the level of violence falls.

NEWS,09.11.2012

obama 'open to compromise' to avoid cuts

Newly re-elected President Barack Obama has offered to deal with Republicans to avert a looming US fiscal calamity but insisted a tax increase for the very rich must be part of the bargain.Obama reminded Republicans that his approach to avoiding steep tax hikes and spending cuts due in January, which could trigger another recession, had just won the backing of Americans at the polls.He spoke just hours after John Boehner, the Republican Speaker of the House of Representatives, had repeated his party's commitment not to raise anyone's tax rates as part of a deal to address the fiscal crisis.In his first event at the White House since beating Republican Mitt Romney in Tuesday's election, Obama called on Congress to work with him to produce a plan and invited congressional leaders to meet with him next week."I'm not wedded to every detail of my plan. I'm open to compromise. I'm open to new ideas," he said.The "fiscal cliff" of steep government spending cuts and tax increases due to be implemented under existing law in early 2013 is Obama's most pressing challenge after winning a second term.Aimed at cutting the federal budget deficit, the planned measures could take an estimated $600 billion out of the economy and severely hinder economic growth.While striking a conciliatory tone toward the Republican House majority, Obama said voters supported his ideas, including raising taxes on the wealthiest Americans."I just want to point out, this was a central question during the election. It was debated over and over again. And on Tuesday night we found out that the majority of Americans agree with my approach," he said.Earlier, Boehner called on Obama to play a more active role in addressing the issue and urged the president to take the lead in negotiations."This is an opportunity for the president to lead. This is his moment to engage the Congress and work towards a solution that can pass both chambers," Boehner told a news conference.While disagreeing on immediate measures to avert the looming crisis, Obama and Republicans may find common ground in calls for enactment over the next six months of a larger package of deficit reduction measures, including a rewrite of US tax laws.The non-partisan Congressional Budget Office reiterated on Thursday that if left unaddressed, the abrupt fiscal tightening would knock the economy back into recession, with unemployment rates soaring back to about 9%. The rate is now 7.9%.But it also warned of a crisis ahead if the United States does not stem the growth of its exploding deficit.Partisan squabbling over the budget crisis will also harm the US economy, according to a strong majority of economists polled by Reuters after Tuesday's presidential election.

Argentines flood streets in anti-government protest

Hundreds of thousands of Argentines flooded the streets of the country's biggest cities on Thursday in a broad protest against President Cristina Fernandez's interventionist policies and combative style.The center-left leader won easy re-election a year ago but her approval ratings have slid since. Her government has virtually banned dollar purchases and it limited imports this year, worsening a steep economic slowdown.High crime, inflation of roughly 25% a year, and a possible bid by government allies to reform the constitution to allow Fernandez to run for a third term are also stoking unrest, particularly among middle-class Argentines."We've taken to the streets because we're sick of crime and having our pockets picked. Inflation is killing us, our pensions can't keep up," said Daniel Gonzalez, 70, a retired teacher.Thursday's pot-banging protests conjured memories of the demonstrations staged by angry savers, housewives and students during Argentina's 2001-02 economic and political crisis.Protesters in neighborhoods throughout Buenos Aires waved signs demanding freedom, transparency and an end to crime and corruption. A spokesman for the city's Justice and Security Ministry estimated 700,000 people were rallying in the capital.A similar, smaller protest was staged just two months ago.Local television showed rallies in other cities, including Rosario, Cordoba and Salta. The demonstrations were organised through social media and not by any one political party.Some Argentines even took to the streets abroad with hundreds of demonstrators gathering outside the country's consulates in Italy, Spain and the United States."We're protesting against Cristina's government so she listens to us. She's not infallible like she wants to seem. With this arrogance we won't get anywhere, we're already quite isolated (in the world) because of her policies," said Pedro Dominguez, a 56-year-old doctor protesting in Buenos Aires.Fernandez's government has angered trading partners with import curbs and it riled Madrid when it seized control of energy company YPF from Spain's Repsol earlier this year. The country still has outstanding debts dating back to a financial meltdown a decade ago.Critics say a government drive to break up the media empire run by Grupo Clarin is an assault on free speech. But supporters of the anti-monopoly law that is being enforced say officials are democratising the airwaves.Fernandez won 54% of votes in October 2011, largely due to an economic boom, job growth and expanded social programmes. Her government spends heavily to stoke high economic growth and backs big wage hikes that tend to mirror inflation.Several government officials have been dismissive of the protests and accused organisers of being on the far right.Fernandez told supporters on Wednesday that Argentines enjoyed more freedom of speech than ever before."If there's a sector that is demanding certain things, they have to stand up and say this clearly. Now, please, don't anyone think that I'll start contradicting my own policies," she said.The president's approval rating edged up to 31.6% in October, up 1 percentage point from a month earlier, while her rejection rating dipped slightly to 59.3%, according to a recent poll.Other polls have given her higher approval ratings but they also show a decline of 10 to 15 percentage points this year."The government and Cristina will emerge even weaker than they were (after the protests) but the opposition will show its impotence and its inability to channel these demands," said Sergio Berensztein, director of the Poliarquia political consulting firm.Under the constitution, Fernandez cannot run for a third consecutive term in 2015. Local media report her congressional allies may try to reform the country's charter to change this, but the government has not confirmed any such plan.For now, no opposition leader poses a real challenge to her and the ruling Peronist party still has strong support in the heavily populated working-class outskirts of Buenos Aires."Cristina won with 54% of votes and if there were an election today, she would win again because there are no opposition candidates," said Cesar Pacheco, a 62-year-old shipbuilder protesting outside the presidential palace.

Iranian jets fired on US drone in Gulf

The Pentagon revealed on Thursday that two Iranian fighter jets fired on an unarmed US Predator drone in the Gulf last week but the aircraft was not hit, in an incident that underscored tensions in the region.The incident occurred on 1 November - less than a week before America's presidential election - but the Pentagon kept it quiet until reports of the confrontation leaked out."They intercepted the aircraft and fired multiple rounds," spokesperson George Little told a news conference.The Su-25 Frogfoot fighters, much faster than the slow-moving turboprop drone, fired at least twice and made two passes, he saidIt was unclear whether the Iranians intended to warn off the unmanned drone but Little said: "Our working assumption is that they fired to take it down."The confrontation threatened to derail diplomatic efforts to defuse a mounting crisis over Tehran's nuclear programme, amid a shadow war of cyber attacks, bombings and assassinations.Tough new sanctions led by Washington are squeezing Iran's economy, while the United States and Israel are accused of staging cyber sabotage on Tehran's uranium enrichment plants.The US military drone was "never in Iranian air space" and came under fire from the fighter jets off the Iranian coast over international waters, Little said.The robotic Predator aircraft was conducting "routine surveillance" and the United States has told Iran it has no plans to suspend the flights, he said."The United States has communicated to the Iranians that we will continue to conduct surveillance flights over international waters over the Arabian Gulf consistent with longstanding practice and our commitment to the security of the region," he said.In a warning to Tehran, the Pentagon spokesperson said the United States was prepared to safeguard its forces."We have a wide range of options, from diplomatic to military, to protect our military assets and our forces in the region and will do so when necessary," Little said.The MQ-1 drone was pursued further by the Iranian warplanes but was not fired on again, he said.The Predator later returned safely to an unspecified military base in the region following the incident.The Predator known as the weapon of choice in America's bombing campaign against al-Qaeda in Pakistan was intercepted about 16 nautical miles off the Iranian coast, beyond the Islamic Republic's territorial waters that extend 12 nautical miles off the country's shore.Iranian military speedboats have sometimes swarmed US warships in the Gulf and the strategic Strait of Hormuz, a vital waterway for the world's oil, but the incident last week was the first involving an American drone in a confrontation with Iranian aircraft, officials said.Tensions over Iran's nuclear ambitions prompted the United States to bolster its military presence around the Gulf over the past year, deploying two aircraft carrier battle groups in the area at all times, a squadron of stealthy F-22 fighters to the United Arab Emirates and more minesweeper ships.With America's drawn out election campaign finally over, analysts had predicted President Barack Obama might have more leeway to pursue diplomacy with Iran. But the encounter with the Iranian fighter jets served as a reminder that a single incident or misunderstanding could trigger conflict.A new round of talks between Iran and six world powers, the first since June, is expected by the end of the year or in early 2013.Iran insists its nuclear programme is peaceful and has made clear any deal with the major powers has to offer relief from crippling sanctions.Israel meanwhile maintains time is running out as Iran expands its uranium enrichment work, with Prime Minister Benjamin Netanyahu suggesting his country may stage a unilateral strike next year if Tehran continues on its present course.At the State Department, officials unveiled yet more sanctions on Iran, targeting the communications minister and the culture ministry among others for censoring the media and the internet.