NEWS,15.07.2012

Hollande says Peugeot must renegotiate layoff plan

French President Francois Hollande says that Peugeot must renegotiate a plan to lay off 8000 workers to lessen its social impact and accused the carmaker of lying over its intentions and making serious strategic errors.In a television interview yesterday, Hollande said a government rescue plan for the ailing car sector due to be announced on July 25 would include public incentives to encourage consumers to purchase French-made, environmentally friendly cars.He ruled out, however, a return to the scrappage subsidies introduced in the 2009 financial crisis by former conservative President Nicolas Sarkozy, which he said had cost the taxpayer dearly and had often been spent on foreign-made vehicles.However, he admitted he could not halt Peugeot's plant to stop production at the Aulnay assembly plant near Paris in 2014.Hollande, who won power in May with a promise to tackle high unemployment and halt France's steady industrial decline, acknowledged Peugeot had economic reasons for making the cuts.The company said last week its manufacturing arm is losing 200 million euros a month."However, the plan in its current condition is not acceptable. It must be renegotiated," Hollande said, adding he wanted to make sure voluntary redundancy packages or new jobs were found for all workers. "We want to open discussions so that there are no straight firings at Peugeot."Peugeot has so far said it will find jobs within the group for 1500 of the workers concerned, with a further 3600 workers offered voluntary redundancy until 2013.The Peugeot announcement came as Hollande faces scrutiny over billions of euros in tax rises to hit a deficit target this year - with the prospect of worse to come in 2013 - and struggles to fulfil a campaign pledge to bring down France's highest unemployment rate in 12 years.The shock announcement from Europe's second-largest carmaker last week revived memories of former Socialist Prime Minister Lionel Jospin's failure to halt Renault's closure of its Vilvoorde plant in Belgium after winning power in 1997.Jospin's admission "the state cannot do everything" is credited with helping to sink his 2002 presidential bid."The state will not stand idly by," Hollande said, asked if his government would follow Jospin's route.Hollande said the government had means of "exerting pressure" and could provide credit to ensure Peugeot stuck to its commitment to see Aulnay remains an industrial site.He dismissed a call from Peugeot Chief Executive Philippe Varin for the state to cut the heavy social charges weighing on labour costs, which the executive said made manufacturing uncompetitive."It's too easy to blame labour costs. There were bad strategic choices," Hollande said."There were delays in taking difficult decisions and shareholders who were too hungry for dividends when investment should have been the priority."Hollande's government has said it will consider steps such as lowering social charges on labour as part of a competitiveness review headed by former EADS Chief Executive Louis Gallois due to be completed in October.That will come too late, however, to defuse the current crisis in the car sector.The president accused Peugeot of misleading public opinion by concealing its plans until after presidential and legislative elections in May and June. A company spokesman declined comment."There was both a lie - this plan was not announced although it was already on the agenda - and a deliberate delay until after the elections," Hollande said.Prime Minister Jean-Marc Ayrault will announce incentives on July 25 for buying French vehicles as part of a package to support the sector, Hollande said."In France, we have an industry which has taken the lead in making clean vehicles and hybrid vehicles. We should make sure these type of vehicles have the advantage," he said.State and regional governments would buy these vehicles to give them a boost, Hollande said, while credit would be made available for research to boost industrial innovation."We will create a plan which costs as little as possible to the taxpayer and is as effective as possible," said Hollande.

 

France's Hollande vows to fight job cuts

President Francois Hollande marked Bastille day celebrations with a pledge to fight industrial layoffs and clean up French politics, after watching troops parade down the Champs Elysees as jets streamed the national colours overhead.The Socialist leader's first National Day since winning office in May was overshadowed by outcry at mass job cuts announced by carmaker Peugeot and a scandal over his private life threatening to undermine his image as "Mr Normal".Reviving the tradition of a July 14 television interview, scrapped by his predecessor Nicolas Sarkozy, Hollande said France had to make an "effort" to restore its public finances but ruled out the kind of painful austerity causing protests in Spain and Italy."My mission is to help France recover and give it a future. Jobs are my priority," Hollande said in the interview at navy headquarters overlooking the historic Place de la Concorde, where thousands went to the guillotine during the Revolution.Hollande, who pledged during his campaign to curb the highest unemployment level in 12 years, faces a major challenge after Peugeot said on Thursday it would axe 8000 jobs in France.Accusing the company's management of strategic errors and misleading the public over its intentions, Hollande said he could not accept the restructuring plan as it stood and promised public incentives to help French-made cars.During the interview he also said he had told his partner, journalist Valerie Trierweiler, and the wife of his four children, Segolene Royal, to end a public spat.The parade - which ended with parachutists landing before the presidential tribune - came as Paris struggles to pare back one of the highest levels of public spending in Western Europe to meet an EU deficit target of 3% of GDP next year.The government announced 7.2 billion euros in new taxes last week to plug a budget shortfall for this year and needs to find 33 billion euros in 2013 to meet its European deficit targets or risk unnerving financial markets."I knew the state of France before I inherited it. I am not going to pretend that I just discovered it," Hollande said.He said the government was looking at a raft of measures to fill the shortfall, including an increase in the CSG social welfare charge recommended by the state auditor this month, which would hit all households."I'm not going to announce today an extra tax for the majority of the French... A rise in the CSG is one of the things under study, among other measures," he said.With his popularity already hit by voters' fears over austerity, Hollande has also had to deal with simmering tensions between his partner, his four children and their mother, Socialist politician Royal.The affair flared this week when Thomas Hollande, his eldest son, told Le Point magazine he and his siblings wanted no contact with Trierweiler after she backed Royal's rival in a legislative election in the western city of La Rochelle in June.Royal said a tweet from Trierweiler in support of her opponent was partly to blame for her losing the seat, fuelling media reports of bitterness between the two women."Private matters should be handled privately and I told those close to me that they should scrupulously respect this principle," Hollande said in Saturday's interview, promising there would be no repeat of the incident, dubbed "tweetgate".Trierweiler sat in a separate tribune from Hollande to watch Saturday's two-hour parade under cloudy Parisian skies in the Place de la Concorde. Thousands of onlookers packed the tree-lined avenue, decked out in France's Tricolour flag, as troops, cavalry and tanks streamed past from the Arc de Triomphe.

 

European Union Working On $120 Billion Spanish Bailout

 

The European Union's bailout fund is working on a (EURO)100 billion ($120 billion) package to prop up Spanish banks, according to a report Saturday by German news weekly Der Spiegel.A confidential draft plan by senior officials at the European Financial Stability Facility proposes an initial (EURO)30 billion payment to Spain at the end of July, the magazine said.Of that, some (EURO)20 billion would go toward shoring up Spanish banks' short-term finances while another (EURO)10 billion would be reserved as a longer-term emergency buffer.Three further payments totaling (EURO)45 billion would be made in November and December of this year, and in June 2013, Der Spiegel said. A Spanish Economy Ministry spokeswoman declined to comment on the report.According to the report, up to (EURO)25 billion would also be made available to create a "bad bank" to buy up hard-to-sell debt.This would be in line with a draft memorandum of understanding agreed by finance ministers from the 17 eurozone countries, which suggests that part of Spain's bank bailout should involve the segregation of billions in problematic assets to an "external asset management agency" to clean up Spanish banks' balance sheets.Investors are becoming increasingly wary of placing money in Spanish banks, which are having to turn to the European Central Bank for financing. In June, Spanish bank borrowing from the ECB rose 17 percent from May. The accrued total as of the end of that month was (EURO)337 billion, 77 percent of all the money owed to the ECB and seven times the figure from June 2011.The government on Friday approved its latest package of measures aimed at cutting (EURO)65 billion ($79 billion) off the budget deficit through 2015, the biggest deficit-reduction plan in recent Spanish history. The sweeping austerity measures include wage cuts and tax increases for a country struggling under a recession and an unemployment rate of near 25 percent.

 

Chavez re-election team reaches out via Twitter

 

Venezuela's verbose Hugo Chavez is offering to send supporters his tweets to their mobile phones as the socialist president fights a vigorous opposition campaign across the Twitter-mad country ahead of an October 7 election.Chavez has had three cancer operations in the last year and his delicate health means he has not been able to travel anywhere near as much as his younger rival, Henrique Capriles.Instead, he has had to focus on making regular state TV appearances - usually for several hours at a time, almost every day of late - and pontificating via his @chavezcandanga Twitter account, which has nearly 3.2 million followers.The president's online persona is an important part of his team's strategy in an election battle that is shaping into the toughest fight of his political life.Spurred by an explosion in Twitter's popularity in Venezuela and annoyed at what he said was the opposition's domination of local electronic media, Chavez began tweeting in early 2010.His account quickly overtook one belonging to Globovision, the main opposition TV station, and he soon said he had needed to hire 200 people to help him read and respond to what he called an "avalanche" of messages from supporters, requests for help, and complaints about faulty services and corruption.Delighted with his cyber success, he even urged Cuba's Fidel Castro and Bolivia's Evo Morales to start tweeting too.The three men are arguably Latin America's most vocal left-wing critics of what they denounce as the US "empire."While the 57-year-old Chavez says he is completely cured of cancer, his recuperation means he has had to watch while Capriles, a 40-year-old former state governor, spent months crisscrossing the OPEC nation on a "house by house" tour.Most opinion polls still give Chavez a double-digit lead, and on Friday he launched a series of campaign events describing his recovery as "a miracle" and seeking to capitalize on the deep emotional ties that even his fiercest critics concede he shares with Venezuela's poor majority.The SMS service was unveiled late on Friday and is aimed at the many Venezuelans who have no easy access to the Web and would like to receive tweets by "el comandante" via SMS message."The initiative will (also) let people without Twitter accounts receive the messages," said state-run news agency AVN.Supporters who register at this Chavez's website can choose to receive his tweets in real time, or avoid being woken up by choosing just those he posts between 7 am and 10 pm. Chavez's number of followers - many of whom must have signed up at least partly out of curiosity about how the former soldier famed for his hours-long speeches works with a 140-character limit - currently puts him at 179th in the world, just behind Jamaican-American hip hop star Sean Kingston.By comparison, the top spot is held by singer Lady Gaga with more than 27 million followers. Capriles, on the other hand, has 1 million - about a third as many as Venezuela's president."Good morning, Patriotic World!" Chavez said in one fairly typical tweet on Saturday, adding that he was on his way to lead what would be another lengthy televised ceremony at a military base in Caracas. "Long live our Soldiers!"

NEWS,15.06.2012.

Euro zone won't let Greece go easily - economist

 

If Greece leaves the euro zone it could send a signal to other struggling European economies they are better off leaving too economists says. As Greece heads to the polls this weekend, the world waits to see which way the population votes on austerity measures.But University economist Professor Christoph Schumacher says Greece is too big to fail.He that on top of the 1 trillion euros it will cost the region in the event of a Greek exit, it will send the wrong message to other struggling euro zone economies."Imagine Greece doing well leaving the euro zone - that would send the message to countries like Portugal, Spain, Italy that if we devalue our currency and boost our economy, I believe Greece might send the signal of the end of the euro," he said.Schumacher said he does not think the euro zone will allow Greece to leave easily.He said the people of Europe want to be united and will not let someone go just because they are struggling."But the solution with the austerity measures at the moment may not be the right way to go because it will not give Greece the chance to recover," Schumacher said.He has said so far austerity has not helped the Greek economy.According to Schumacher, in the past two years Greece's GDP has fallen by 20%, its unemployment has risen to 24%, and for people under 25 years old the unemployment rate is over 50%.And if it does leave, "the whole world will feel it", according to the economist."They already see the effects right The Official Cash Rate, said it is "monitoring Europe closely" and if things seriously deteriorated, would re-introduce liquidity facilities it made available during the global financial crisis.Schumacher said even if the socialist party wins the election, austerity measures will be challenged but they may not necessarily leave the euro zone.The mood in Greece Greeks are "pretty amped" about the election this weekend. The leaders of the pro and anti-austerity parties are holding rally."I guess it's really the last hurrah to fire up the base and get people to turn out,the event is a "bit of a black box" because no polling has been allowed days out from the election.

UK to flood banking system with 100b pounds

 

The UK government and central bank will flood Britain's banking system with more than 100 billion pounds ($155.43 billion), seeking to pump credit through an economy struggling to escape recession under the "black cloud" of the euro zone crisis.In his annual Mansion House policy speech to London financiers on Thursday, Bank of England Governor Mervyn King said Britain would launch a scheme to provide cheap long-term funding to banks to encourage them to lend to businesses and consumers.He also said the bank would activate an emergency liquidity tool.Treasury officials said the government plan could support an estimated 80 billion pounds in new loans, while the central bank's separate scheme will provide monthly 5 billion pound tranches of six-month liquidity to banks.King said the case for pumping more money into the economy via further purchases of government bonds had increased as the outlook for the economy had worsened, although he again rejected calls for the central bank to buy private assets.King said the euro zone's woes were leading to a crisis of confidence in Britain which was leading to a self-reinforcing weaker picture of growth."The black cloud has dampened animal spirits so that businesses and households are battening down the hatches to prepare for the storms ahead," he said.Britain's action comes just before cliffhanger Greek elections this weekend that could determine the fate of the euro zone, as well as a meeting of the leaders of the world's major economies next week to find ways to tackle the currency bloc's crisis and spur the global economy.British finance minister George Osborne warned of the huge dangers from a collapse of the euro area. He again urged euro zone leaders to fix the crisis and said Britain was taking action to protect its own economy."We are not powerless in the face of the euro zone debt storm," Osborne said in his speech at Mansion House. "Together we can deploy new firepower to defend our economy from the crisis on our doorstep."Britain is still reeling from the 2007-2009 financial crisis that has left many Britons poorer and forced the country to bail out big banks with tens of billions of pounds of taxpayers' money.The government on Thursday announced a sweeping reform of bank regulations aimed at making financial institutions safer, and avoiding a re-run of the crisis which has pushed Britain into recession twice in the last four years.Cash boost Britain slid back into recession around the turn of this year, piling pressure on Osborne's embattled Conservative-led coalition government to come up with new ways to boost growth.The government has pinned its fortunes on a tough austerity plan of tax hikes and spending cuts to erase a budget deficit which still comes in at around 8% of GDP.Osborne defended his debt-cutting measures, arguing that they gave the Bank of England the leeway to keep monetary policy loose, and said there was still more the central bank could do.BoE Governor Mervyn King said the central bank would complement its quantitative easing asset purchase scheme with new steps to encourage bank lending and reduce their funding costs, which have rocketed as a result of the euro zone crisis.The BoE and finance ministry have designed a new scheme, to be launched in a few weeks, that would offer banks loans with a maturity of possibly 3-4 years at below current market rates.The loans would be made available on condition that banks increase their lending to businesses and households.In addition, the central bank will activate its Extended Collateral Term Repo facility, created in December, to provide six-month liquidity to banks against a wide range of collateral.King said now was the right time to activate the scheme, which is aimed at helping banks through phases of exceptional stress.King hinted that the central bank may also restart its QE programme, which it halted in May having bought 325 billion pounds of British government bonds, and countered accusations that the scheme had lost its effectiveness."With signs of a deterioration in the outlook, especially in world markets, the case for a further monetary easing is growing," King said.