NEWS,12.05.2013

G7 to press on with bank reforms

Group of Seven finance officials agreed on Saturday to redouble efforts to deal with failing banks and gave a green light to Japan's drive to galvanise its economy.
British finance minister George Osborne said the finance ministers and central bankers meeting 40 miles outside London focused on unfinished bank reforms, with signs that plans for a eurozone banking union are fraying.
"It is important to complete swiftly our work to ensure that no banks are too big to fail," Osborne told reporters after hosting a two-day meeting in a stately home set in rolling countryside.
"We must put regimes in place ... to deal with failing banks and to protect taxpayers and to do so in a globally consistent manner," he said.
The emergency rescue of Cyprus after a near meltdown in March served as a reminder of the need to finish an overhaul of the banking sector, five years after the world financial crisis began.
Germany has come under pressure to give more support to a banking union in the euro zone. The plan could help strengthen the single currency area, but Berlin worries it may pay too much for future bank bailouts if it signs up to a scheme to wind up stricken lenders.
While the first step to create a single bank supervisor under the European Central Bank - looks set to be in place by mid-2014, a second pillar, a 'resolution' fund to close failed banks, is in doubt. And there is little prospect that a single deposit guarantee scheme will ever see the light of day.
A senior US Treasury official said the talks at the 17th-century Hartwell House zeroed in on the need not just for better bank supervision but also to clean up balance sheets so lending can pick up.
"There was a sense of urgency among the euro area participants," the official said.
German Finance Minister Wolfgang Schaeuble countered that the eurozone was no longer the main risk to the world economy.
As at previous international meetings, Japan escaped any censure for printing money on a scale that has pushed the yen sharply lower.
Osborne said the G7 - the United States, Germany, Japan, Britain, Italy, France and Canada - reaffirmed that fiscal and monetary policy should be aimed at domestic concerns, not currency manipulation.
"We will not target exchange rates," Osborne said. "I would say that the statement by the G7 of earlier this year was a successful statement and one that has been held to."
The yen hit a four-year low against the dollar on Friday , driven in part by Japanese investors shifting into foreign bonds, a move that had been expected since the Bank of Japan unveiled a massive stimulus plan.
But having urged Tokyo for years to do something to revive its economy, other world powers are not in a strong position to complain now that it is doing so. Then there is the fact that central banks such as the Federal Reserve and Bank of England have printed money in the way the Bank of Japan is.
Japanese Finance Minister Taro Aso said the G7 had levelled no criticism at Japan's monetary policy but Schaeuble said there had been "intense discussions" and that the situation would be monitored carefully.
Growth debate
Debate has also heated up about the need for governments to ease up on austerity, something Germany, Britain and Canada view with caution but Washington, Paris and Rome favour.
Osborne said there was less disagreement about whether governments should focus on debt-cutting or growth-boosting measures than is commonly assumed.
"Everyone is clear that there needs to be credible medium-term fiscal consolidation ... We also agreed that there needs to be flexibility," he said. "Growth prospects remain uneven and we can't take the global recovery for granted."
But his suggestion before the meeting that it should consider what more monetary policy could do to support economic recovery appeared to fall on deaf ears.
"There wasn't any call to do more," European Central Bank chief Mario Draghi told reporters after the meeting.
"It is quite clear that all central banks have done a lot, each one within its own mandate. So (the meeting) was just taking note of this ... All of us have really been active."
Several officials from visiting delegations questioned why Britain had called the gathering just three weeks after they and others met at International Monetary Fund meetings in Washington, but Bank of England Governor Mervyn King said the informal nature of the discussions had paid dividends.
"Freed from burden to agree a communique, the principals engaged more with each than I can recall before and as a result genuinely made real progress in taking forward some of the questions and issues that are facing the G7," he said.

Experts cautious over equities rally

Optimism is blowing through stock markets around the world, lifting many of them to record high levels but this contrasts with widespread economic gloom and leads some analysts to wonder if some of it is just hot air.
Records have been created with increasing speed since the beginning of May.
The main DAX index in Frankfurt has reached a new record high level, and the markets in London and Tokyo have returned to the levels reached in October 2007 just before the financial crisis began.
Wall Street in New York is leading the way and sets a fresh record almost every day.
But the stock market in Paris lags behind. The main CAC 40 index has just risen to the level last reached in the middle of 2011 and is far below the record high level of almost 7,000 points set in October 2000, and still trails the 4,332 points registered just before the collapse of Lehman Brothers bank in the United States in September 2008.
Analysts at Swiss Life private investment managers commented recently that the markets "are swimming in the midst of paradox", questioning the strong rises at a time when the global economic situation is a long way from being stabilised and is even deepening in some places, including in Europe.
In financial circles, experts give various explanations for the rise of stock markets in mature economies.
Some hold that it is an artificial bull market driven by huge amounts of money pushed into economies by central banks. Others say that the rises are justified because investors are anticipating a recovery of the world economy and a recovery of those stocks which have fallen heavily.
"The dichotomy between the real economy and the financial sphere is widening and this is worrying," commented Guillaume Garabedian, a portfolio manager at French brokers Meeschaert Gestion Privee.
He held that that stock markets were rising mainly because central banks had been applying highly accommodating monetary policies, reducing their key interest rates, and pushing huge amounts of liquidity into the financial sector.
All classes of assets have been boosted by this, even the riskiest assets such as debt bonds issued by crisis-hit countries in southern Europe which are able to place their bonds despite still being in difficulty.
The rise of asset prices could even lead to a new financial bubble, some analysts are beginning to warn.
At Capital Spreads, Jonathan Sudeira said that "despite the efforts of the central banks, the volume of trading is falling and the high levels reached by some shares is beginning to look unjustified for traders who are being asked at the same time not to take account of the economic situation."
The "bulls", meaning those who think that share prices will continue to rise on a healthy and justified basis, also have their arguments. At the moment, they seem to have the upper hand.
"Extremely favourable" context
Portfolio managers in dealing rooms say that investors are encouraged by signs that the US economy is recovering, by underlying strength of activity in Germany, encouraging statements by the leaders of big companies about the outlook for the end of the year, and by the removal of the risk that the eurozone might collapse.
At French Natixis bank, economist Philippe Waechter said that apart from the policies of the central banks, the situation in the United States, still the guiding light for stock markets around the world, was satisfactory and explained why optimism had lifted the indices.
"There is growth, certainly it is moderate, but it is there and so there is positive anticipation," he said.
He noted that portfolio managers were looking for good rates of return from the shares they hold and consequently were inclined to go for riskier shares which offered higher returns.
In addition, companies which were cautious about trying to expand their businesses, were buying their own shares which pushed up the value of those stocks.
"Overall, we are in a context which is extremely favourable for stock markets," he said.
Garabedian said that the question boiled down to analysing the fundamental causes of the rise.
"Because if the markets are rising for reasons which are not sufficiently viable, the correction will be severe," he warned.

Clinton did not make Benghazi call

A seasoned diplomat who penned a highly critical report on security at the US consulate in Libya that was attacked last year defended his scathing assessment on Sunday but absolved then-Secretary of State Hillary Clinton.

Thomas Pickering, whose career spans four decades, stood by his conclusion in the report that decisions about the consulate were made well below the secretary's level.
His comments during several television show appearances were unlikely to quiet renewed Republican demands for accountability for the attacks in Benghazi that left four Americans dead, including US Ambassador Chris Stevens. Democrats say Republicans are trying to exploit the Benghazi deaths to undercut Clinton, an early favourite for the Democratic presidential nomination in 2016.
"We knew where the responsibility rested," said Pickering, who headed the Accountability and Review Board that investigated the attack, along with retired Admiral Mike Mullen, the former chair of the Joint Chiefs of Staff.
"They've tried to point a finger at people more senior than where we found the decisions were made," Pickering said of Clinton's critics.
Pickering and Mullen's report released in December found that "systematic failures and leadership and management deficiencies at senior levels" of the State Department meant that security was "inadequate for Benghazi and grossly inadequate to deal with the attack that took place."
The Obama administration has tried to move past the controversy, but a steady drip of new information is fuelling Republican claims that the government initially misled the public about the nature of the assault.
The House Oversight and Government Reform Committee last week heard a riveting minute-by-minute account from a former top diplomat in Libya about the two night time attacks on 11 September, 2012. Gregory Hicks, a former deputy chief of mission to Libya, detailed his phone conversations from Tripoli with Stevens.
Hicks and two other State Department witnesses criticized the Pickering and Mullen's review. Their complaints centred on a report they consider incomplete, with individuals who weren't interviewed and a focus on the assistant secretary level and lower.
Cover-up
The hearing produced no major revelation but renewed interest in the attacks that happened during the lead-up to the November 2012 presidential election.
The top Republican on the oversight committee, Republican Darrell Issa, said he wants sworn depositions with Pickering and Mullen. Issa said his panel has not been provided sufficient details on the State Department review, such as a list of everyone the investigators interviewed or a full transcript of those conversations.
"We want the facts. We're entitled to the facts. The American people were effectively lied to for a period of about a month," Issa said.
Republicans are insisting on exploring what happened at the consulate, what might be done to prevent future such attacks and what political calculations went into rewriting talking points the US Ambassador to the United Nations, Susan Rice, used on news shows the Sunday after the attack.
A series of e-mails that circulated between the State Department and the CIA led to weakened - and, in some cases, wrong - language that Rice used to describe the assault during a series of five television interviews the Sunday after the attacks.
"I'd call it a cover-up," said Senator John McCain, a Republican. "I would call it a cover-up in the extent that there was wilful removal of information, which was obvious."
2016 campaign
"I was surprised today that they did not probe Secretary Clinton in detail," Senator Kelly Ayotte said, of the review board.
One Republican eyeing a White House run, Senator Rand Paul, said at a public appearance that he thinks the Benghazi attack "precludes Hillary Clinton from ever holding office".
Clinton's allies said Republicans were looking to weaken her ahead of a potential 2016 campaign.
"This has been caught up in the 2016 presidential campaign, this effort to go after Hillary Clinton," said Senator Dick Durbin, a Democrat. "They want to bring her in because they think it's a good political show and I think that's unfortunate."

NEWS,30.10.2012

Dozens dead as US reels from devastating superstorm

Millions of people have awoken to scenes of destruction wrought by monster storm Sandy after it smashed into the eastern United States, killing an estimated 35 people in seven states, cutting power to swathes of the nation's most densely populated region, swamping New York's subway system and submerging streets in Manhattan's financial districtSandy, one of the biggest storms to ever hit the country, dropped just below hurricane status before making landfall on Monday night in New Jersey.The storm interrupted the presidential campaign a week before Election Day posing both risks and opportunities for President Barack Obama as he seeks a second term in a tight race - and closed US financial markets for a second day.As a weakened but still massive storm system continued its trek inland, more than 1 million people in a dozen states were under orders to evacuate. Sandy left behind a trail of damage homes underwater, trees toppled and power lines downed - caused by epic flooding and fierce winds all along the Atlantic coast.The storm is expected to bring snow to eight US states, and Canada is bracing itself for the onslaught, even as its eastern areas have already experienced the storm's force.More than 100,000 Canadians were still without power on Tuesday after the huge storm Sandy toppled trees and power lines in Canada's most populous provinces, killed one person, and halted units at an Ontario refinery.In the storm's wake, Obama issued federal emergency decrees for New York and New Jersey, declaring that "major disasters" existed in both states. One disaster-forecasting company predicted economic losses could ultimately reach $20 billion, only half insured."It's total devastation down there, there are boats in the street five blocks from the ocean," said evacuee Peter Sandomeno, one of the owners of the Broadway Court Motel in Point Pleasant Beach, New Jersey. "That's the worst storm I've ever seen, and I've been there for 11 years.Sandy, which was especially imposing because of its wide-ranging winds, brought a record storm surge of almost 14 feet (4.2 metres) to downtown Manhattan, well above the previous record of 3 metres during Hurricane Donna in 1960, the National Weather Service said.Two people in New York City reportedly died in the storm - a man in a house hit by a tree and a woman who stepped into an electrified puddle of water. Two other people were killed in suburban Westchester County, north of New York City, and two others were reported killed on suburban Long Island.A motor vehicle death in Massachusetts was blamed in part on the bad weather. Two other people were killed in Maryland in storm-related incidents, state authorities said, and deaths also were reported in Connecticut, New Jersey, Pennsylvania and West Virginia, CNN said.Toronto police also recorded one death a woman hit by flying debris.Sandy killed 66 people in the Caribbean last week before pounding US coastal areas.The unprecedented flooding hampered efforts to fight a massive fire that destroyed more than 50 homes in Breezy Point, a private beach community on the Rockaway barrier island in the New York City borough of Queens.New York University hospital was forced to evacuate more than 200 patients, among them babies on respirators in the neonatal intensive care unit, when the backup generator failed. Four of the newborns had to be carried down nine flights of stairs while nurses manually squeezed bags to deliver air to each of the baby's lungs, CNN reported.More than 8.1 million people in several US states were without electricity due to the storm, which crashed ashore late on Monday near the gambling resort of Atlantic City, New Jersey.Obama, who has made every effort to show himself staying on top of the storm situation, faces political danger if the federal government fails to respond well in the storm's aftermath, as was the case with predecessor George W Bush's botched handling of Hurricane Katrina in 2005.With Obama and Republican presidential rival Mitt Romney keeping campaigning on hold for a second day instead of launching their final push for votes ahead of the November 6 election, the storm's onslaught added a new level of uncertainty to an already tense, tight race for the White House.In an address on Tuesday local time, Obama said the federal government would do all it could to help local authorities cope with damage caused by the massive storm Sandy.The president, speaking at the national headquarters of the American Red Cross, said the storm, which slammed into some of the most densely populated areas of the eastern United States on Monday, was "not yet over" and that there were still risks."It is still moving north," he said. "There are still communities that could be affected. So I want to emphasise there are still risks of flooding, there are still risks of downed power lines, risks of high winds.""I want everyone leaning forward on this," an aide quoted Obama as telling his disaster-response team in the White House Situation Room. "I don't want to hear that we didn't do something because bureaucracy got in the way."Obama will travel to New Jersey to survey the damage and meet those affected on Wednesday local time.With politics cast aside for the moment, New Jersey Governor Chris Christie, a Republican, heaped praise on the Democratic incumbent for the government's initial storm response."The federal government response has been great," Christie, a staunch Romney supporter, told NBC's Today show. "I was on the phone at midnight again last night with the president personally ... and the president has been outstanding in this."Federal government offices in Washington, which was spared the full force of the storm, were closed for a second day on Tuesday, and schools were shut up and down the East Coast.The storm was plowing westward over south-central Pennsylvania, still packing near hurricane-force winds as strong as 105 km/h, the National Weather Service said.Wind gusts, rain and flooding were likely to extend well into Tuesday, but without the storm's earlier devastating power, said AccuWeather meteorologist Jim Dickey."Overall, the worst has past," Dickey said.The storm's wind field stretched from North Carolina north to the Canadian border and from West Virginia to a point in the Atlantic Ocean halfway to Bermuda, easily one of the largest ever seen, the National Hurricane Center said.Heavy snow fell in higher elevations of the Appalachian Mountains inland.Water poured into the subway system and tunnels that course under the city, raising concerns that the world's financial capital could be hobbled for days."Hitting at high tide, the strongest surge and the strongest winds all hit at the worst possible time," said Jeffrey Tongue, a meteorologist for the weather service in Brookhaven, New York.Hurricane-force winds as high as 90 miles per hour (145 km per hour) were recorded, he said. "Hopefully it's a once-in-a-lifetime storm," Tongue said.As residents and business owners began the daunting clean-up effort, large sections of New York City remained without power, and transportation in the metropolitan area was at a standstill.It was the worst disaster to strike the storied New York subway system in its 108-year history, and the Metropolitan Transportation Authority said it could take up to four days to get the water out of the flooded train tunnels.New York City's subway is likely to be out of service for another four to five days after monster storm Sandy, Mayor Bloomberg said on Tuesday.The mayor said at a press conference that the city was hoping to resume limited bus service on Tuesday and full bus service on Wednesday.New York Governor Andrew Cuomo said at a separate press conference that all bus fares would be suspended on Tuesday.New York City experienced 23 fires during the storm, with a severe one in Breezy Point, Queens, that burned more than 80 houses.Throughout New York state, 15 people died in connection with the storm, which touched down in New Jersey late on Monday, Cuomo said.Three towns in New Jersey, just west of New York City, were inundated with up to 5 feet (1.5 metres) of water after a levee on the nearby Hackensack River was overtopped or breached, officials said. Rescuers were using boats to aid the marooned residents of Moonachie, Little Ferry and Carlstadt.In New York, a crane partially collapsed and dangled precariously from a 90-story luxury apartment building under construction in Midtown Manhattan.Much of the city was deserted, as its subways, buses, commuter trains, bridges and airports were closed. Power outages darkened most of downtown Manhattan as well as Westchester County, affecting more than 650,000 customers, power company Consolidated Edison said.Neighborhoods along the East and Hudson rivers in Manhattan were underwater, as were low-lying streets in Battery Park near Ground Zero, where the World Trade Center once stood.US stock markets were set to be closed on Tuesday. They closed on Monday for the first time since the attacks of September 11, 2001.Most areas in downtown Manhattan were without power on Monday morning. As the sun rose, most of the water in Manhattan's low-lying Battery Park City appeared to have receded.A security guard at 7 World Trade Center, Gregory Baldwin, was catching some rest in his car after laboring overnight against floodwaters that engulfed a nearby office building."The water went inside up to here," he said, pointing to his chest. "The water came shooting down from Battery Park with the gusting wind."In Lower Manhattan, firefighters used inflatable orange boats to rescue utility workers stranded for three hours by rising floodwaters inside a power substation.One of the Con Ed workers pulled from the floodwater, Angelo Amato, said he was part of a crew who had offered to work through the storm."This is what happens when you volunteer," he said.

New York City floods as Sandy slams into eastern US

Millions of people in the eastern United States awoke this morning to flooded homes, fallen trees and widespread power outages caused by the giant storm Sandy, which swamped New York City's subway system and submerged streets in Manhattan's financial district.At least 15 people were reported killed in the United States by Sandy, one of the biggest storms to ever hit the country, which dropped just below hurricane status before making landfall yesterday night in New Jersey.More than 1 million people in a dozen states were under orders to evacuate as the massive system plowed westward.One disaster forecasting company predicted economic losses could ultimately reach $20 billion, only half insured.The storm interrupted the presidential campaign a week before Election Day and closed U.S. financial markets for two days.Sandy, which was especially imposing because of its wide-ranging winds, brought a record storm surge of almost 4.2 meters to downtown Manhattan, well above the previous record of 3 meters during Hurricane Donna in 1960, the National Weather Service said.Water poured into the subway system and tunnels that course under the city, raising concerns that the world's financial capital could be hobbled for days."Hitting at high tide, the strongest surge and the strongest winds all hit at the worst possible time," said Jeffrey Tongue, a meteorologist for the weather service in Brookhaven, New York.Hurricane-force winds as high as 145 kph were recorded, he said."Hopefully it's a once-in-a-lifetime storm," Tongue said.Large sections of New York City were without power, and transportation in the metropolitan area was at a standstill."In 108 years our employees have never faced a challenge like the one that confronts us now," Metropolitan Transportation Authority Chairman Joseph Lhota said in a statement.It could take anywhere from 14 hours to four days to get the water out of the flooded subway tunnels, the MTA said."The damage has been geographically very widespread" throughout the subway, bus and commuter train system, MTA spokesman Aaron Donovan said.The unprecedented flooding hampered efforts to fight a massive fire that destroyed more than 50 homes in Breezy Point, a private beach community on the Rockaway barrier island in the New York City borough of Queens, the Fire Department of New York said.Two people in New York City reportedly died in the storm a man in a house hit by a tree and a woman who stepped into an electrified puddle of water. Two other people were killed in suburban Westchester County, north of New York City, and two others were reported killed on suburban Long Island.A motor vehicle death in Massachusetts was blamed in part on the bad weather. Two other people were killed in Maryland in storm-related incidents, state authorities said, and deaths also were reported in Connecticut, New Jersey, Pennsylvania and West Virginia, CNN said.Toronto police also recorded one death a woman hit by flying debris.More than 7 million people in several states were without electricity due to the storm, which crashed ashore late on Monday near the gambling resort of Atlantic City, New Jersey.The storm was plowing westward over south-central Pennsylvania, still packing near hurricane-force winds as strong as 105 km per hour, the National Weather Service said.Wind gusts, rain and flooding were likely to extend well into Tuesday, but without the storm's earlier devastating power, said AccuWeather meteorologist Jim Dickey."Overall, the worst has past," Dickey said.The storm's wind field stretched from South Carolina north to the Canadian border and from West Virginia to a point in the Atlantic Ocean halfway to Bermuda, easily one of the largest ever seen, the National Hurricane Center said.Heavy snow fell in higher elevations of the Appalachian Mountains inland.Three towns in New Jersey, just west of New York, were inundated with up to 1.5 metres of water after a levee on the nearby Hackensack River was overtopped or breached, officials said. Rescuers were using boats to aid the marooned residents of Moonachie, Little Ferry and Carlstadt.In New York, a crane partially collapsed and dangled precariously from a 90-story luxury apartment building under construction in Midtown Manhattan.Much of the city was deserted, as its subways, buses, commuter trains, bridges and airports were closed. Power outages darkened most of downtown Manhattan as well as Westchester County, affecting more than 650,000 customers, power company Consolidated Edison said."This is the largest storm-related outage in our history," said John Miksad, Con Ed's senior vice president for electric operations. The previous record was the more than 200,000 customers hit with outages last year during Hurricane Irene, the utility said.Neighborhoods along the East and Hudson rivers in Manhattan were underwater, as were low-lying streets in Battery Park near Ground Zero, where the World Trade Center once stood.A security guard at 7 World Trade Center, Gregory Baldwin, was catching some rest in his car after laboring overnight against floodwaters that engulfed a nearby office building."The water went inside up to here," he said, pointing to his chest. "The water came shooting down from Battery Park with the gusting wind."Power and back-up generators failed at New York University Hospital, forcing patients to be moved elsewhere for care.In Lower Manhattan, firefighters used inflatable orange boats to rescue utility workers stranded for three hours by rising floodwaters inside a power substation.One of the Con Ed workers pulled from the floodwater, Angelo Amato, said he was part of a crew who had offered to work through the storm."This is what happens when you volunteer," he said.With a week to go before the election, President Barack Obama and Republican challenger Mitt Romney canceled scheduled campaign events. Obama left the campaign trail to return to Washington to monitor the storm and Romney curtailed political events to show respect for the storm's victims.U.S. stock markets were set to be closed today. They closed yesterday for the first time since the attacks of Sept. 11, 2001.The federal government in Washington was closed for a second day today, and schools were shut up and down the East Coast. Sandy killed 66 people in the Caribbean last week before pounding U.S. coastal areas.