NEWS,11.08.2013

Iran beefs up oil tanker fleet

Iran has beefed up its oil tanker fleet with vessels from China and is selling more crude to Beijing as Tehran struggles under international sanctions, the IEA said in a report Friday.
Iran's once lucrative oil sector has been crippled by sanctions imposed by the United States and the European Union over Tehran's controversial nuclear drive. Despite Iranian denials, the West is convinced Tehran is pursuing a nuclear bomb.
In its monthly oil market report, the International Energy Agency said Iranian crude oil production in July fell back to 2.6m barrels per day (mbd)  50 000m barrels less per day from June.
In contrast, however, the IEA said that preliminary data show that Iranian crude oil exports climbed to 1.16 mbd from just 960 000 barrels per day in June, mainly owing to a rebound in Chinese imports which last month rose to 660 000 barrels of oil per day from 385 000 the month before.
"Just five countries reported importing crude from Iran in July China, Japan, South Korea, Turkey and the United Arab Emirates," the IEA said, noting the number of countries totalled as many as 16 in January 2012.
Despite this, the IEA said "Iran continues to expand its shipping fleet in a bid to sustain crude sales in the wake of increasingly stringent international sanctions".
Since May, it has added four more supertankers, known as VLCCs, to its fleet, which now totals 37 VLCCs and 14 smaller crude tankers.
Most of the additions come from China as part of a 2009 deal to buy 12 VLCCs for $1.2bn.
"The expanding shipping fleet should provide the state oil company more flexibility in marketing its crude and for use in floating storage," the IEA said.
In his first news conference since taking office, Iran's new President Hassan Rowhani earlier this month said he is determined to find a solution to the nuclear programme issue. The IEA said that although analysts are still sceptical, "markets warmed to the tone".

New permit proposals could slow shale drilling

Britain's Environment Agency (EA) proposed new guidance on Friday that could further delay the already lengthy application process for launching shale and other unconventional oil and gas exploration.
Beset by protests that have made the question of whether to allow shale drilling a national issue, shale firms complain that the UK's complex application process takes months longer than in the United States, discouraging investment.
In a technical guidance document on its website, the EA proposed taking longer than normal to decide whether to give an environmental permit for onshore oil and gas exploration if a site is of "high public interest".
If approved, the agency said that the new guidance could increase the time scale for granting environmental permits from the current 13 weeks to six months or more to give it time to consult properly with local communities.
That would be just the latest blow to an industry that the government, keen on the jobs and revenue that Britain's theoretically substantial shale gas reserves could generate, has said it is keen to support.
"This has the potential to delay the exploration of shale gas resources in the UK," said Simon Colvin, an expert on energy and environmental regulations at law firm Pinsent Masons.
"The high public interest status could mean an extremely lengthy process, taking into account a number of rounds of community consultation."
The proposal is part of a consultation document which people can comment on until October 23. The agency will then consider the responses before publishing a final version of the guidance later this year.
"Given the current level of public interest in unconventional gas and oil exploration, it's likely that we will treat such sites as being of high public interest," the agency said in the document on its website.
Fracking
It has been estimated that Britain might have major shale reserves but the amount which could be developed commercially is still uncertain.
The government is looking to shale gas to reduce its reliance on natural gas imports and unveiled tax breaks last month for shale gas developers, which analysts said could attract more companies.
British exploration firms IGas and Cuadrilla are at the exploration stage in shale gas, while other firms are watching developments with interest. But they continue to face significant barriers.
Fracking, which retrieves gas and oil trapped in tight layered rock formations by injecting high-pressure water, sand and chemicals, has already been banned for a year in 2011 after triggering small earthquakes. Protestors successfully blocked access to a Cuadrilla site in southern England last month.
Developers already need to make nine separate applications to the EA for a single exploratory well. They also have to get planning permission from the Department of Energy and Climate Change and the Health and Safety Executive.
"Delaying the process further is simply another layer of red tape at the early stages of exploration," said Colvin.

The cost of complexity

Simple: conquering the crisis of complexity by Alan Siegel and Irene Etzkorn

THE subtitle of this book is conquering the crisis of complexity, and a crisis it is.

Are you paying for things you did not order because the account is too complex to understand? Americans are paying $2bn each year for services they did not request or use on their phone accounts, because the format is confusing.

Research into insurance policy holders indicates that a third to a half of them misunderstood what they have bought.

Most medicine warning labels and inserts are insufficient warning to all but the medically trained.

The solution to these problems is to reduce or eliminate complexity. Simplification is not degeneration into the simplistic. The distinction lies in understanding what is essential and meaningful as opposed to what is not, and then ruthlessly eliminating what is not essential and meaningful.

Why has everything we encounter become so complex? The authors cite many factors, one of which is that simplicity is hard to achieve, which is why Leonardo da Vinci is referred to as “the ultimate sophistication”.

We also need to accept that it is deliberately used as a money-making tactic by those who wish to extract what we would not hand over, if we only knew. On the other hand, many think that more information equals greater clarity, which it definitely does not.

Simplification involves removing complications, unnecessary layers, or distractions while focusing on the essence of  what people want and need in that situation.

Are some industries and offerings too complicated to be simplified? Consider air travel with the various forms of reservation, seating, meals, check-in, landing rights, disembarking and embarking, plane maintenance, fuel volatility, and more. Add to this the overcrowding in the industry.

Southwest Airlines have made their mark through simplifying everything from booking to the maintenance of their planes, from meals to their baggage policy. The result is that they are one of the world’s few consistently profitable airlines.

There are probably very few things that cannot be further simplified. What simplification requires is a thorough and persuasive commitment by an organisation to “empathize, distil, and clarify”.

Consider the following situation. You are asleep on the 20th floor of a hotel in a foreign city. At 03:30 you are awoken by a fire alarm. You can smell smoke. You recall seeing the evacuation instructions on the door.

You try desperately and unsuccessfully to decipher what map is describing, as the alarm is blaring in your ears and the smell of smoke is becoming more intense.

The map was designed by a safety agency in a well-lit office, by a relaxed and cheerful safety officer. When he was done, he was sure he had a good piece of work. It was clear and accurate. So, what went wrong?

He had not considered how one feels on the 20th floor of a hotel in a foreign city at 03:30, when you are woken up by a fire alarm and can smell smoke. Your emotional state was not considered; the safety officer had not empathised with the condition of the reader of the map under duress.

Empathising with the clients, whether it is the intake at a hospital or your monthly bank or cellphone statement, requires an understanding of how the recipient will experience what you are communicating.

The second factor in simplification is to distil the information or procedure down to its essentials. These essentials are defined by the user’s requirements, not those of the company.

In the Siegel+Gate 2011 Global Brand Simplicity Index, one brand stood out above the rest: Google. Using Google is a simple and a rewarding experience. Visit their landing page and then the landing page of other search engines. Google’s is uncluttered and simple.

To keep it this way, any new features staff wish to add to the landing page must go through an “audition”. The goal is for the home page to have the fewest number of points, because more points mean less simplicity.

This is not only an aesthetic consideration - rather, it has been proven to be an economic one. Studies in the USA have shown that consumers are willing to spend about 20 minutes trying to work out how to operate a new toy. After that, they give up and return the toy to the store.

The cost of returned products in the USA is $100bn a year, excluding the reputational damage.

Flip, a video camera, has only one button. Press it and you start videoing and press it again to stop. That is it. A primary school child and an adult can use it, but it is not a cheap, crude toy.

Rather, it is a highly sophisticated camera with proprietary, built-in exposure control algorithms to make sure the picture maintains a smooth look over a range of lighting conditions. You do not see all the complexity, all you see is the elegant simplicity, the distillation of the user’s needs into a convenient video camera.

Two million units were sold in the first six months it was on the market, and it held an impressive 37% of the camcorder market in 2011. 

The third part of the simplification process is the clarification aspect. According to health research organisation NEIH, people’s inability to follow prescription drug instructions cost $290bn in medical expenses each year. The instructions are obviously not clear enough for the users.

The problem is compounded when you have multiple drugs in your medicine cupboard, all in very similar-looking vials.

A pioneer in this field was alerted to the problem when her grandmother took ill from mistakenly using her grandfather’s similar-looking medication. The medicine labelling, she discovered, was practically unreadable even for her, a young woman.

She devised a very simple format that would occupy most of the size of the label and contain only three pieces of information. What is the name of the person for whom then medicine is intended? What is the name of the medicine and the dosage prescribed? How should it be taken?

Any business or service can increase its appeal to customers merely by simplifying the engagement with them. The number of touch-points where improvement can be made inexpensively and quickly is substantial.

The range includes product instructions, invoicing, correspondence, and even finding your contact details. The simplicity of getting information on how you can serve potential customers is widely indicated.

There is gold in this book. Read it. 

New trade route to Europe

A 19 000-ton cargo vessel is making the first journey by a Chinese merchant ship to Europe via the Northeast Passage, a shortened route that could revolutionise trade, state media reported Saturday.
The Arctic route has become navigable due to global warming melting sea ice and promises to slash journey times by around 12 to 15 days, saving shipping companies and Chinese exporters millions in lower fuel bills and reduced operating costs.
A freighter belonging to Chinese shipping firm Cosco left the northeastern port of Dalian on Thursday and was expected to take 33 days to reach Europe via the Bering Strait and Russia's northern coastline, the official China Daily reported.
The SinoShipNews website said the vessel was headed for Rotterdam and was due to arrive on September 11.
The new route, which is now navigable for around four months of the year from the end of July, avoids the politically unstable pinch point of the Suez canal, and trims around 7 000 kilometres off the journey, according to the China Daily.
Around 90% of China's foreign trade is carried by sea and Beijing is also hoping the new shipping route can help develop the northeast.
In 2012, 46 ships used the Northeast Passage, compared with four in 2010, according to Rosatomflot, a Russian operator of icebreakers.
But the traffic is still negligible compared with traditional commercial shipping routes, such as the Suez Canal, which has 19 000 ships pass through it a year.
Previous estimates have suggested up to 15% of Chinese foreign trade could use the Arctic route by 2020.
Europe is one of China's largest trading partners, with two-way trade last year worth nearly $550bn.

NEWS,27.06.2013

EU deals on banks and budget lift mood

European officials struck two significant deals on banking resolution and their long-term budget in last-ditch negotiations early on Thursday, giving EU leaders a much needed lift at the start of a summit on youth unemployment and growth.
After late-night talks in Luxembourg that followed 18 hours of unsuccessful bargaining last week, European Union finance ministers finally agreed how to share the costs of future bank failures among investors and wealthy savers.
Separately, negotiators for the European Parliament, the European Commission and EU member governments clinched agreement on a €960bn ($1.25 trillion) seven-year budget for the bloc for the period 2014-20, ending months of squabbling.
That cleared the way for a drama-free summit, at which EU Council President Herman Van Rompuy said the 27 leaders, joined by industry and trade union represenatives, aimed to achieve results for young job seekers and small businesses.
They would adopt concrete measures to tackle "the credit crunch that is holding back the very companies that should be driving the recovery", Van Rompuy told the opening session.
Designed to shield European taxpayers from having to foot the bill for rescuing troubled banks, the banking resolution deal will be implemented on a national basis from 2018.
It also lays the ground for a single system to resolve failed banks in the euro zone and the 27-nation EU, the second stage of what policymakers call a European banking union, meant to strengthen supervision and stability of the financial sector.
The European Commission, the EU's executive, will put forward proposals for a single resolution mechanism next week, but any deal on it is a long way off because EU paymaster Germany opposes taking any liability for other countries' banks.
German Chancellor Angela Merkel welcomed the breakthrough on the EU budget, saying it would allow new spending on everything from agriculture to research, roads, bridges and development aid to move ahead.
"This is about improving our competitiveness with an eye to global competition and not mainly about creating ever new pots of resources," she said on arrival at the summit.
The European Parliament, which has gained greater power in recent years, had held up approval to demand more flexibility in how the money is spent and the right to redirect unspent funds instead of returning surpluses to member states.
In the end, a compromise was struck to the relief of EU officials, not least because the plan includes 6 billion euros EU leaders want to bring forward to launch programmes to fight youth unemployment the focus of the summit.
Low growth, no job
With two major obstacles out of the way, EU leaders faced a far less awkward agenda during the two-day summit focused on unemployment, the most devastating legacy of the crisis that has bedevilled the EU since 2010.
The last summit before Germany's September general election a key date in Europe's political calendar - may prove to be one of the least contentious of the past three years.
It is a far cry from the peak of the debt and economic turmoil of late 2011 and early-to-mid 2012, when there was a real threat of the euro zone collapsing.
Since then, thanks largely to a promise by the European Central Bank last July to do whatever it takes to defend the single currency, pressure from financial markets has eased and EU leaders have made some progress in reforming their economies.
As well as strict new rules on budget deficits and tighter oversight of budget spending plans by the European Commission, steps have been taken to improve banking supervision and weaken the link between indebted countries and problem banks.
British Prime Minister David Cameron, under pressure from eurosceptics in his own country, said the budget compromise must not affect Britain's annual rebate from EU coffers.
EU officials said a change in way rural development is funded in eastern Europe could potentially reduce London's entitlement to repayments by up to €350m a year, but they said a technical solution could be found.
From late next year, the European Central Bank will become the single supervisor for virtually all the euro zone's 6,000 banks the first stage of banking union.
The next step, the creation of a single resolution mechanism, is likely to prove a deeply divisive and drawn out process, with sharp differences between the views of the EU institutions, Germany, France and other member states.
Further-reaching plans for a single bank deposit guarantee across the euro zone look unlikely to gain traction due to German and north European opposition, although officially the idea remains on the table.
Most of Europe has been either in recession or on the brink of it for the past three years, while unemployment has steadily risen. EU unemployment now stands at 11%, the highest since records began, with youth unemployment a particular problem, especially in Spain, Greece, Italy, Portugal and Cyprus.
EU leaders have agreed to invest €6bn in a "youth employment initiative" that would offer people under 25 a promise of a job, training or apprenticeship within four months of leaving education or being unemployed.
It's a bold promise, and one that will be targeted at regions of the EU where youth unemployment exceeds 25%, including much of Greece and Spain.
Politicians and sociologists are worried that extended unemployment for young Europeans will lead to a "lost generation" that never gets fully incorporated into economic life, with deep psychological and financial implications.
That will even further undermine Europe's ability to boost growth and compete with the rest of the world, especially China and a United States that is shifting its focus to Asia.

Syria doubles diesel prices

Syria has nearly doubled the price for diesel fuel to cut back on the cost of maintaining generous subsidies to the population after two years of war that crippled its economy.
The new official price of £60 (33 US cents) for a litre of diesel from state petrol stations is still a fraction of the commercial price for the fuel on the black market, the only way it is available in many parts of Syria.
Even in government-held areas, petrol stations that sell subsidised fuel at the official price often run out or experience long queues.
Syria's government boasts that it has managed to maintain subsidies on food, fuel and energy that give it some of the lowest official prices in the region, despite a war that has killed 93 000 people and displaced millions.
However, it is not clear how much of the subsidised goods actually reaches the population. The United Nations says many Syrians have little access to subsidised bread and have to pay commercial prices many times higher.
Businessmen and trade officials said this week's diesel price increases, which were not publicised widely, reflect growing official concern about the hard currency cost of imports needed to maintain the subsidies.
The price of a litre of diesel, used for transport, as heating oil and to power army tanks military vehicles, was raised to £60 from £35, the biggest hike since the war's start. The price of gasoline, now £85 a litre, has not yet gone up but is also expected to be raised soon.
Before the war diesel was sold for £20 a litre under a subsidy programme that then cost $8bn a year.
The pound has lost about 75% of its value against the dollar during the conflict. Economists warn that Syria could be heading for hyperinflation with inflation running at around 60% since the start of the year.
Western sanctions do not bar companies from selling diesel to Syria, but restrictions on some financial transactions have raised the cost of imports and cut the exports that Syria uses to raise hard currency.
"With the increase in the value of the dollar, import costs have doubled. Our ability to export has dropped and on the other hand imports have increased in value and quantities," Economy Minister Mohammad Zafir Muhabik said in an interview with state television.
A source close to a government procurement agency, who requested anonymity, said the price hike was given impetus by the increasing need to route imports over land through Lebanon rather than through Syria's own Mediterranean ports. The source said imports through Lebanon in the first four months of this year were already equal to all of 2012.
Imports via Lebanese ports incur lower insurance costs than through Syria's Mediterranean ports and provide better security of supply to Damascus. Syria's own ports are far from the capital over routes through areas that have seen fighting.
Smaller shipments from Iran have also arrived by sea to Syria's Latakia and Tartous ports in recent months. Syria sends surplus gasoline to Iran in return for Iranian diesel.
Rebels control most of Syria's main eastern oil producing areas that produced around 380 000 barrels of crude oil daily, starving the government of a major hard currency earner.
Syrians have been grappling with fuel supply shortages for months, with areas under rebel control worst hit. That has helped reduce the cost of the subsidies for the government, since so many Syrians have no access to subsidised goods.
"We are facing worse shortages in our besieged areas, where people are relying on the black market instead of risking going through road blocks to petrol stations in regime-held areas," said Rami al-Sayyed, a resident of the southern, rebel-held Damascus neighbourhood of Hajar al-Asswad.
The price hike follows a debate within the Syrian cabinet and government whether to reduce subsidies, which use up two thirds of the budget. The government has also argued that raising prices will reduce smuggling of oil products out of Syria to neighbouring countries such as Lebanon and Turkey.
"A lot of our petroleum products are being smuggled to neighbouring countries as a result of its low prices,' said Muhabik.
The price increases in petroleum products have neutralised the impact of public sector salary increases on Saturday of between 20 to 40% that were announced to ease the social impact of the plunge in the local currency.
Already, public transport costs have shot up by an a average 20% this week alone, residents contacted by phone said. Many bakeries rely on subsidised diesel to run their ovens.

French consumer morale hits record low

French consumer confidence has hit an all-time low, the latest survey showed on Thursday, just as the state auditor warned that a likely economic contraction would knock the government off course on this year's deficit reduction target.
The June consumer confidence index fell to the lowest level since records began in 1972 and households are more pessimistic than ever about their future living standards, data from the national INSEE statistics institute showed.
The trend suggests that Europe's second-biggest economy, hit by lagging trade competitiveness and caught in a shallow recession, will not be able to count on its traditional driver of consumer spending to rebound.
The Cour des Comptes, a quasi-judicial body that oversees state accounts, warned in an annual review that with the public spending deficit heading for near 4% of economic output this year, missing a 3.7% official target, structural reforms must be implemented immediately to cut spending.
"Large doubts weigh on the flow of corporate and sales tax revenues," the auditor said in its 250-page review.
The body's president, Didier Migaud, told lawmakers as he presented the document that "reforms enabling a reduction in the weight of public spending seem more necessary than ever."
French GDP shrank 0.2% quarter-on-quarter in the first three months of the year, INSEE data confirmed this week. The government sees full-year growth at 0.1%, but INSEE and the European Commission both forecast a 0.1% drop.
The June consumer confidence index came in at 78, three points below analyst expectations of 81 and far below a long-term average of 100, data from statistics office INSEE showed.
The view by French households on how their living standards would evolve also came in at the lowest in over four decades, while more people said they felt now was the right time to save and fewer planned important purchases.
The gloom is being driven by record-high jobless claims and growing doubts that President Francois Hollande can make good on his promise to reverse the unemployment trend by the end of the year.
Adding to the gloom, weeks of cold and rainy weather have left retailers with huge stocks of unsold summer clothes, forcing them to offer huge discounts of up to 80% as sales kicked off this week, although even rock-bottom prices had yet to make an impact, store owners complained.
"It's really terrible. Sales are really low, we've never seen such a drop," said Celeste Touboul, who manages two clothes shops in central Paris with her husband.
For the first day of sales on Wednesday, they met the very low target they had set themselves, she said, with turnover 50 percent down on more normal years.
"Don't even talk to me about the weather, it killed us even more, the season is ruined," Touboul said in her shop of colourful dresses, tops, and bags amid big "Sales" signs.
INSEE said last week that with subdued consumer demand weighing, growth would be too weak this year for the economy to start creating new jobs. It also forecast that the unemployment rate would rise to 11.1% by year-end, up from 10.8% today and just shy of a 1997 record of 11.2%.
The statistics office will publish May consumer spending data on Friday. French consumer spending fell last year for the first time in 19 years.

Eurozone's jobless sit tight

The car plant where 46-year-old Agathe Martin works is shutting down, but when PSA Peugeot offered her a job in another factory elsewhere in the Paris region she said "Non".
After 17 years working in the same plant, taking the job would have meant either a much longer commute or losing her cheap social housing and uprooting her two daughters in a move.
The single mother prefers to stay put and look for another job even if that will be hard amid soaring unemployment and with only factory work and small jobs on her CV. If all else fails, she will still have more than €60 000 in severance pay.
"I am lucky enough to have a small house with a rather modest rent and I would not find that elsewhere," Martin said, huddled in a bicycle shed to escape the rain with colleagues who had just cashed in their severance cheques.
More than 2 000km away on the sunny Italian island of Sicily, 47-year-old Calogero Cassia struggles with the same problems.
After losing his job nearly two years ago when the Fiat plant near Palermo where he had worked for 25 years shut down, the father of three would be happy to take any kind of job in the area, where he has strong family ties.
But he worries that he does not have the skills to transfer to other sectors.
"If you look around it is just desperation, you find nothing, we can't manage," he said. The Termini Imerese plant, the main local employer, shut because of its remote location on an island south of mainland Italy, with 2 200 workers affected.
In both countries, hit by industrial decline and factory shut-downs, the lack of mobility fuels raging unemployment, adding to recession and lagging competitiveness.
Too many workers are unwilling or unable to move from one sector to another or one region to another, due to a debilitating mix of factors from high real estate prices to deficient training and family dependency.
The immobility in wealthier "old Europe" is a contrast to the hundreds of thousands of workers from poorer central and eastern Europe who took advantage of the EU's free movement of labour to flock westwards in the mid-2000s in search of jobs.
About 19.2 million people are now out of work in the 17-nation eurozone, a top priority for EU leaders who meet on Thursday and Friday in Brussels, but with little concrete relief to offer.
Housing costs
The number of jobless is at a record high in Italy, where it reached 12% in April, and in France, where anlysts polled by Reuters see it at 11.5% in the last quarter of 2013. Among young people, the unemployment rate is more than double.
So greater movement across jobs and regions is an imperative at a time when whole sectors are struggling and factories closing, says Herve Boulhol, the lead economist for France at the OECD think-tank.
"When a sector is in decline, restructuring and reallocation of jobs takes too much time in France. Some of the labour rules, including on collective redundancies, need to be trimmed, while training and assistance to find jobs must be improved," he said.
People move eight times less among the EU's 27 member states than between the 50 US states, according to OECD 2010 data.
This is partly due to language barriers. But even between regions of a same EU country, mobility is still nearly two-and-a-half-times lower than among US. states, data on the EU's 15 oldest states shows.
More people from crisis-hit southern EU now want to move to the wealthier north, but mobility within countries is still low, the European Commission said in a report on Tuesday.
A key obstacle in France is the jump in real estate prices in the past decade, with 40% of French businesses blaming housing problems for difficulties in recruiting staff or transferring them to another location.
People who have rented the same home for years will lose out if they move, especially if they have to give up subsidised social housing.
For Peugeot worker Martin, this was the main reason not to accept the job offer in Poissy, west of Paris, when her plant in Aulnay-sous-Bois in the northern suburbs shuts down next year as the loss-making French group tackles production over-capacity by cutting 8 000 jobs nationwide.
She pays just €320 per month for a modest house with a garden south of Paris, thanks to a deal struck between Peugeot and the local authority landlord. That is affordable on her monthly salary of €1 200 and a bargain in a region with the highest real estate prices in the country.
For those who own their home, high transaction costs, from notary and registration fees to taxes, are a major obstacle to moving, which the government plans to tackle with tax breaks.
France has the second-highest housing transaction costs among 33 OECD countries in a study the think-tank based on 2009 data nearly three times higher than in the United States.
Skills mismatch
Italy is a nation of home owners and many young Italians live with their parents.
While younger people with fewer ties are more likely to move abroad or to the wealthier north, they can be put off by the types of work contract they are offered, said Raffaele Fabozzi, professor of labour law at LUISS University of Rome.
"A young person who has to move to another region has to pay for their rent ... so if they don't have a stable contract they don't have any reason to leave their family home," he said.
Italy, like France, has a two-tier labour market that gives protection and benefits to salaried workers and hardly any rights to hundreds of thousands of mostly young people on temporary contracts. In the current recession, employers have become even more reluctant to hand out long-term contracts.
Unemployed people also face difficulties moving to new sectors due to limited retraining and qualification services.
Welfare spending in Italy has traditionally focused on pensions, while spending for labour policies has been more limited, said Luca Paolazzi, head of the research unit at employers' lobby Confindustria.
"We have few active policies to boost work. We have few training, education and requalification capacities and ability to move workers from one sector to another," he said.
In France, government officials acknowledge privately that too much is spent on generous unemployment benefits and not enough on training. But reforming the unemployment benefit fund, is a matter for negotiation between labour unions and employers, due to begin this autumn.
Rudy Tichy, who heads a public employment agency in Altkirch in the eastern French region of Alsace, said the closure of big plants in former industrial regions such as his triggered a skills mismatch which requires people to either move or retrain.
"Half of the people registered here have industry sector profiles but the jobs on offer are in the services sector, personal assistance to people, trade," he said.
Family ties
Beyond that experience mismatch and the practical difficulties of moving a family and making sure both spouses have a job, "French tradition means people simply don't have geographic mobility in mind," said Tichy.
While France has an extensive network of childcare services and subsidies, in Italy, many families rely on grandparents to help look after children, which also makes it harder to move.
In Lazio, south of Rome, 57-year-old Guerino Ventre is struggling to make ends meet with the roughly €1 000 a month he earns for working about 10 days a month since Fiat's Cassino plant in Lazio started running at reduced hours.
But the father of three grown children, who has been working in the plant for 34 years, said he doesn't want to leave the region, where most of his relatives live.
"I have my family here now, my things. And then there is the question, where to and to do what? All plants are experiencing the same situation, so moving does not make a difference."

US consumer spending rebounds

US consumer spending rebounded in May and new applications for unemployment benefits fell last week, suggesting the economy remained on a moderate growth path.
Other data on Thursday showed contracts to buy previously owned homes surged to their highest level in more than six years in May, keeping the recovery anchored in the face of tighter fiscal policy.
"Economic growth is not over the top, that's for sure," said Chris Rupkey chief financial economist at the Bank of Tokyo-Mitsubishi UFJ in New York. "We expect, however, economic growth will be strong enough to bring unemployment down at an acceptable pace."
The Commerce Department said consumer spending increased 0.3% last month, reversing April's 0.3% drop. The increase was in line with expectations.
When adjusted for inflation, consumer spending rose 0.2% last month. However, the so-called real consumer spending for April was revised to show the first contraction in six months.
This suggests second-quarter consumer spending growth could slow a little bit more than economists had previously anticipated and hold back overall economic growth.
Consumer spending grew at a 2.6% annual pace in the first quarter.
Some economists pared their second-quarter gross domestic product estimates. Barclays cut its GDP forecast by 0.4 percentage point to a 1.4% annual pace, while Morgan Stanley trimmed its estimate to 1.5% from 1.6%.
The economy expanded at a 1.8% rate in the first three months of the year.
In a separate report, the Labor Department said initial claims for unemployment benefits fell 9 000 to a seasonally adjusted 346 000. The four-week moving average for new claims, which irons out week-to-week volatility, fell 2 750 to 345 750.
The claims report signaled little change in the pace of job growth. Employment growth has averaged 189 000 jobs per month so far this year.
"It appears that the underlying pace of layoffs remained stable during June. The other half of the employment equation, hiring, also likely held steady," said Guy Berger, an economist at RBS in Stamford, Connecticut.
Data tone improving
Recent data, including housing, regional factory activity, business spending plans and consumer confidence, have pointed to an economy that is regaining its footing after stumbling early in the second quarter.
That is broadly supportive of the view the Federal Reserve expressed last week that the downside risks to the economy's outlook have waned. Fed chairperson Ben Bernanke said the US central bank could start scaling back on the pace of its monthly bond purchases this year.
US stock were trading higher in morning trade. The dollar touched a session high against the yen, while prices for US Treasury debt pushed higher.
The economy's stabilizing tone was underscored by a report from the National Association of Realtors showing signed contracts in May to buy previously owned homes surged to their highest level since December 2006.
While part of the jump in pending home sales reflected a rush by buyers to lock in deals before mortgage rates climbed higher, it was also a sign of underlying strength in the housing market.
The NAR's Pending Home Sales Index, based on contracts signed last month, increased 6.7% to 112.3.
The improving growth theme held as other details of the Commerce Department report showed income grew 0.5% last month, the largest gain since February, after nudging up 0.1% in April. That reflects a steady pace of job gains.
Households also saved a bit more last month, lifting the saving rate to a five-month high of 3.2%.
There was also a bit of inflation in the economy last month, pointing to some pick-up in demand.
A price index for consumer spending inched up 0.1% in May after declining two straight months. A core reading that strips out food and energy costs also rose 0.1% after being flat in April.
Over the past 12 months, inflation increased 1%, well below the Fed's 2% target but up from a 0.7% reading in the period through April.
Core prices were up 1.1% from a year ago, the same as in April. While that suggested some stabilization after a long period of disinflation, it matched a record low reached only a few times since the series started in 1960.
Falling healthcare costs have pulled core inflation lower, but Bernanke said last week that those prices should turn higher as he made the case for a likely reduction in the Fed's bond-buying stimulus later this year.
One Fed official, St. Louis Federal Reserve Bank President James Bullard, has said Bernanke should have waited for clearer signs inflation was turning higher before laying out the case for less Fed stimulus.

Deal struck on EU budget

Top European Union officials reached a deal Thursday on the bloc's 2014-20 budget, paving the way for measures to tackle youth unemployment and stimulate growth following months of wrangling between the bloc's parliament and member states.
"This is a good deal for Europe, this is a good deal for Europe's citizens, this is a good deal for the European economy," Barroso said of the agreement reached with European Parliament President Martin Schulz and Irish Prime Minister Enda Kenny, who represented member states.
Without the 960-billion-euro (1.25-trillion-dollar) budget, several of the measures being discussed Thursday at an EU summit to overcome the bloc's lingering economic crisis could not come into effect.
EU President Herman Van Rompuy welcomed the compromise, stressing that the seven-year budget was "an indispensable tool to help more young people to secure jobs."
"It must be effective as of 1 January 2014," he added, urging all parties to formally approve it without delay.
But many have argued that the funding plan, which represents the first real-term cut to a multi-year budget, does not go far enough to address the EU's economic woes.
Schulz said he would have to "fight in parliament for a majority" to approve the compromise, after lawmakers had rejected a previous deal, arguing that it did not fully take into account their demands aimed at maximizing resources.
"This is not what I thought would be the best solution, but it is the maximum I could, and we could, negotiate here," Schulz said. He said he would try to have the budget vote scheduled for next week's plenary session.
But initial reactions from parliament were mostly positive.
The European People's Party, the largest group in parliament, said the budget deal demonstrated responsibility "in times of economic difficulties," but avoided sentencing the EU to "seven years of rigour," in the words of chairman Joseph Daul.
Hannes Swoboda, the leader of the second-largest party, the Socialists and Democrats, said the deal was a "decisive improvement," and welcomed increased funding for youth employment schemes, as well as support for research and small and medium-sized enterprises.
But British lawmaker Martin Callanan, of the far smaller European Conservatives and Reformists group, complained that "too much EU money will still be spent on French cows and not enough on research and economic growth."
Irish Prime Minister Enda Kenny said he was "confident" that all EU member states would support the deal. Ireland holds the bloc's rotating presidency until the end of the month.
Under the compromise, the budget will be reviewed in a few years' time -a key demand of the parliament - but spending increases will be limited to a maximum of 7 billion euros for 2018, 9 billion euros for 2019, and 10 billion euros for 2020.
These ceilings are in response to member states' fears that budgetary demands could balloon in the course of such a review, once the worst of the economic crisis is over.
The deal also takes into account lawmakers' calls for flexibility, by agreeing to place unspent funding during the first few years of the financial framework into a pot, to be redistributed across the latter half of the budget period.
Kenny also pledged that member states would agree by July 9 to a second top-up for the 2013 budget, which is short of 11.2 billion euros according to the commission - thus meeting another condition of the parliament.
This is the first time the parliament has the power to sign off on the EU's expenditures.

Inflow of money in rich economies plummets

Developing countries have attracted more foreign direct investment than developed ones for the first time last year, the UN Conference on Trade and Development (UNCTAD) said on Wednesday.
The reversal came as the inflow of money in rich economies plummeted by nearly a third to $561bn in 2012.
On a global scale, direct foreign investments fell 18% to $1.35trn, with developing countries attracting just over half of the world's investment flows.
"The road to foreign direct investment recovery is bumpy," and increases would be only moderate in the next two years, Unctad said in its report, citing the fragile state of the global economy.
The United States remained the world's largest recipient of foreign investment, followed by China, Hong Kong, Brazil and the British Virgin Islands.
Britain, Australia, Singapore, Russia and Canada completed the top-10 list.
Investments in the Middle East fell for the fourth year in a row as foreign investors remained wary of political uncertainties, Unctad said.
At the same time, foreign interest in natural resources pushed up inflows to Africa and South America.
In Asia, foreign money shifted to Cambodia, Myanmar and Vietnam along with labour-intensive manufacturing.

NEWS,25. AND 26.05.2013

China, EU to discuss trade disputes

China said it would hold talks with the European Commission on Monday to discuss a trade row over solar panels and wireless equipment, laying the ground for formal negotiations amid concerns of an escalating dispute.
China's Vice Commerce minister Zhong Shan will meet EU Trade Commissioner Karel De Gucht in Brussels to discuss EU investigations into Chinese solar panels and wireless equipment, the Ministry of Commerce said on Sunday.
The EU accuses China of unfairly pricing its solar panels and mobile telecom devices too cheaply and "dumping" them in Europe, and plans to impose duties on Chinese panel makers.
China denies the allegations. China Premier Li Keqiang, who is touring Europe this week, censured the EU's plans for Chinese solar makers late on Friday, saying "they harm others without benefiting oneself".
Trade disputes between China and the EU have risen in recent years as commercial ties between the two deepened. Eighteen of 31 trade investigations conducted by the EU involves China.
The fall-out over solar panels, which climaxed this month after the European Commission agreed to impose import duties averaging 47% on Chinese panel makers, is the largest to date.
It could hurt €21bn ($26.9bn) worth of Chinese solar panels sold in Europe sales that account for 60% of China's total solar panel exports and 7% of the country's total exports to the EU.
Both sides have negotiated in the past but with no success. Beijing on its part has condemned the proposed EU duties and urges dialogue while tacitly threatening retaliation.
This is not the first time Chinese solar panel makers are running afoul of foreign regulations. The United States imposed five-year duties as high as 36% on China solar products in November.
Trade rows over Chinese solar panel prices come as China's manufacturers battle a glut in capacity and falling demand.
China is set to decide in June whether it wishes to levy its own duties on European, US and South Korean imports of solar-grade poly silicon, a raw material used in making solar panels.

Potential Federal Reserve Policy Changes Could Make For Volatile Summer

Have your summer vacation all booked? Hoping to ignore your phone for a while, feeling safe in your investments and secure in the knowledge that the world's financial authorities aren't planning any surprises just yet?

Think again.

U.S. Federal Reserve Chairman Ben Bernanke made it clear in congressional testimony this week that the central bank could very well entertain a change in policy sooner than many had predicted. That would mean providing less stimulus to the economy by cutting back on its bond buying program.

The result was an unsettling bout of volatility, with Treasury yields jumping while stocks slid, as investors feared the Fed's support might start to recede.

And that means this could be a summer when investors may find the waves are not only on the beach.

While Fed-watchers are hard-pressed to see a turning point at the bank's June policy meeting, there are plenty of other spots this summer when the Fed could start to prepare markets for change.

Besides the June meeting, there is a policy meeting in July and the release of minutes from both those meetings that will follow. There are three Fridays where monthly jobs data will be released, and plenty of inflation readings and other, lesser economic datapoints.

And of course, there are other potential flashpoints. Will an heir to Bernanke emerge? Will the annual monetary policy symposium in Jackson Hole, Wyoming, this August matter without Ben Bernanke?

Here's what to watch for this summer on the Fed front.


FED MEETINGS AND MINUTES

Fed policymakers meet twice more before the Sept. 2 Labor Day holiday this year: June 18-19 and July 30-31. In addition, the minutes of those Federal Open Market Committee meetings will be released three weeks later.

The June meeting is likely "as good a target as any" for a signal from the Fed about their future plans, said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, D.C.

The Fed doesn't want to startle investors, because that would be disruptive. Expect plenty of flags, through meeting statements and minutes, before policymakers make any movements.


DATA DELUGE: JOBS VS INFLATION

The Fed's dual mandate means that both jobs and inflation data will be key. Labor data has been more encouraging of late, with the unemployment rate down to 7.5 percent. The Fed has said it wants to see the rate fall to 6.5 percent before it raises interest rates.

The data has been spotty enough that policymakers could want more consistency. Nonfarm payroll growth has averaged about 208,000 monthly over the past six months but has dipped below that level in some months. Chicago Fed President Charles Evans said he would like to see growth of 200,000 each month before cutting back on bond purchases, also referred to as quantitative easing.

Also far from target is inflation. The Personal Consumption Expenditures index, which is the measurement most watched by the Fed, was only at 1 percent in March. The April reading is due on May 31.

"They would be more comfortable with inflation at 2, 2.5 percent," said Wilmer Stith, co-manager of the Wilmington Broad Market Bond Fund in Baltimore.

With inflation hardly threatening, there are few price pressures to argue for ending the flood of easy money, and the data only goes to underscore the relative weakness of the economy, Stith noted.


THE NEXT FED CHAIR?

Bernanke hasn't officially bid adieu to the Fed, but he is clearly eyeballing the door. His second term ends in January, and there has been no official announcement about his future at the Fed.

"I don't think that I'm the only person in the world who can manage the exit (from quantitative easing)," he said earlier this year.


WITH OR WITHOUT BEN: JACKSON HOLE

Bernanke may be opening the way for possible successors by skipping the Jackson Hole gathering later this year due to an unspecified scheduling conflict.

While Fed Vice-Chair Janet Yellen is emerging as the favorite to hold the position next, Bernanke and company have so far been quiet.

The Fed honcho's absence could mean Jackson Hole offers little in the way of news, in which case, head to the beach and read that trashy novel you've been meaning to get through.

But maybe not.

Bernanke's absence on the schedule could open up a spot for an heir-apparent to take the spotlight instead.

If that is Yellen, "perhaps that is going to be the platform for her to gain even more recognition nationally," Stith said.

DEBT CEILING DEBATES - YES, THIS AGAIN

One thing investors and traders may not have to worry about is a debt ceiling crisis in Washington. The government probably won't breach its congressionally authorized borrowing limit until at least Labor Day.

The perfect bookend to summer, in other words.

Schneiderman: More Proof Bank Of America And Wells Fargo Violated Mortgage Settlement

 

New York Attorney General Eric Schneiderman said there is mounting evidence that Bank of America Corp, Wells Fargo and Co and other banks violated the terms of a settlement designed to end mortgage servicing abuses.
Schneiderman - who has said he plans to sue Bank of America and Wells Fargo for failing to live up to their obligations under the deal said other states had found similar problems.
"Several other states have identified similar recurring deficiencies by the participating servicers," Schneiderman said in a letter dated May 23 to the monitor for the settlement, former North Carolina Banking Commissioner Joseph Smith. The letter was obtained by Reuters on Friday.
The $25 billion settlement was brokered last year between five banks and 49 state attorneys general. The other banks are JPMorgan Chase & Co, Citigroup Inc, and Ally Financial Inc. The banks agreed to provide relief to homeowners and comply with a set of servicing standards to atone for foreclosure misconduct.
In his letter, Schneiderman did not identify which other states had provided evidence of banks failing to abide by the settlement. Nor did he identify the banks with recurring deficiencies.
He said receipt of his letter to Smith and a concurrent one to a monitoring committee would start the clock on a waiting period before lawsuits could be filed against the banks. The settlement authorizes the monitor to first work with a mortgage servicer to correct any potential violations and sue if the servicer does not fix the errors.
Schneiderman said on May 6 he planned to sue Bank of America and Wells Fargo after the waiting period was over, although he did not mention the possibility of a lawsuit in Thursday's letter.
At the time, Schneiderman said that, since last October, his office had documented 339 violations of standards - 210 by Wells Fargo and 129 by Bank of America dictating the timeline for banks to process mortgage modification applications.
In Thursday's letter, Schneiderman said the violations reveal the two banks "are engaging in much of the same misconduct that precipitated the National Mortgage Settlement."
Smith said in a statement Friday he would review the violations Schneiderman shared. He also said he will issue a report on the banks' compliance in June. "I intend to use the full breadth of my power under the settlement to hold the banks accountable," he said.
North Carolina Attorney General Roy Cooper, who is on the monitoring committee, said in a conference call on Tuesday that some banks have "fallen short" of complying with servicing standards. He did not name any banks.
In Thursday's letter, Schneiderman said there had been "inordinate delays" in reviewing loan modification applications at Wells Fargo, so applicants had to resubmit documents.
He cited evidence of piecemeal requests for additional documents in one modification application at Bank of America, and said more than three months passed without a request for more information or a decision on another application.
Bank of America has said it did not commit any violations, and that it has provided more relief under the settlement than any other servicer. Wells Fargo has said it was committed to abiding by the settlement.
Citibank said on Friday it remains committed to fulfilling the terms of the settlement. JPMorgan spokesman Tom Kelly declined to comment. Ally said its bankrupt mortgage subsidiary Residential Capital is responsible for the settlement. A spokesperson for ResCap could not immediately be reached for comment.
On Tuesday, Smith reported that the five banks in the settlement had distributed $50 billion in direct relief to over 620,000 homeowners as part of the settlement.