NEWS,04.01.2013

US jobs ease on fiscal cliff angst

The pace of hiring by US employers eased slightly in December, pointing to a lackluster pace of economic growth that was unable to make further inroads in the country's still high unemployment rate.Payrolls outside the farming sector grew 155 000 last month, the labour department said on Friday. That was in line with analysts' expectations and slightly below the level for November.Gains in employment were distributed broadly throughout the economy, from manufacturing and construction to health care.That should reinforce expectations that the economy will grow about 2% this year, unlikely to quickly bring down the unemployment rate or make the US Federal Reserve rethink its easy-money policies, which have been propping up the recovery."It's not a booming economy, but it is growing," Jim O'Sullivan, an economist at High Frequency Economics in Valhalla, New York, said before the data was released.The jobless rate held steady at 7.8% in December, down nearly a percentage point from a year earlier but still well above the average rate over the last 60 years of about 6%. The labour department raised its estimate for the unemployment rate in November by a tenth of a point to 7.8%, citing a slight change in the labour market's seasonal swings.Most economists expect the US economy will be held back by tax hikes this year as well as by weak spending by households and businesses, which are still trying to reduce their debt burdens.Friday's data nonetheless gave signals of growing momentum in the labour market's recovery from the 2007/9 recession. Many economists had expected December's payroll gains to be padded by one-time factors like the recovery from a mammoth storm that hit the East Coast in late October.The government had said last month the storm had no substantial impact on the November data, and many economists expected the government to recant by revising downward in Friday's report its estimate for payroll gains in November. Instead, the government revised its estimate for November payrolls upward by 15 000. "There is some evidence that underlying jobs growth has improved," Paul Dales, an economist at Capital Economics in London, said before the report was released. Austerity's biteDespite the signs of some momentum in hiring, a wave of government spending cuts due to begin around March loom over the economy. Many economic forecasts assume the cuts which would hit the military, education and other areas will ultimately be pushed into next year as part of a deal sought by lawmakers to reduce gradually the government's debt burden.Initially, the cuts were planned to have begun this month as part of a $600bn austerity package that also included tax hikes. Hiring in December may have been slowed by uncertainty over the timing of the austerity, economists say. Congress this week passed legislation to avoid most of the tax hikes and postpone the spending cuts.Even with the last-minute deal to avoid much of the fiscal cliff, most workers will see their take-home pay reduced this month as a two-year cut in payroll taxes expires. That leaves the Fed's efforts to lower borrowing costs as the main program for stimulating the economy.The Fed has kept interest rates near zero since 2008, and in September promised open-ended bond purchases to support lending further. On Thursday, however, minutes from the Fed's December policy review pointed to rising concerns over how the asset purchases will affect financial markets.Analysts ahead of the report expected some of the strength in job creation in December would be due to the Fed's policies."Despite the end-of-year angst over the fiscal cliff, financial conditions remained supportive of job growth in December," economists at Nomura said in a note to clients earlier in the week.

Aid for Sandy victims falls short

US lawmakers finally approved emergency disaster aid for victims of Hurricane Sandy on Friday, but only after a delay that sparked East Coast Republican outrage against their own party leadership Lawmakers voted 354-67 to provide the Federal Emergency Management Agency with $9.7bn to pay the flood insurance claims of thousands of victims of the killer October storm that devastated coastal communities.The bill now goes to the US Senate, where it could pass as early as Friday before the two chambers go into recess, but the sum falls short of what was originally promised and bitter debate is likely top continue.The Senate had approved a comprehensive $60.4bn Sandy aid package last week, but House Speaker John Boehner, stung by fractious negotiations over the deal to avert the fiscal cliff crisis, refused to bring it to the floor."It's been 70 days and many have been living in misery and heartache," Republican congressman Rodney Frelinghuysen of New Jersey told the House, describing the vote as "the first step of what we need to do to rebuild lives."Democrats again attacked the Republican leadership for what congressman Rob Andrews of New Jersey called the "inexcusable and unjust" delay in getting a bill to the House floor.And, while Boehner has pledged to bring the remaining $51bn in aid to a vote on January 15 as a two-part package, Andrews said it would be "meaningless" unless the Senate turned around and quickly approved the aid.Boehner had scrambled to tamp down fury over the delay on aid to victims of the storm, which killed 120 people and destroyed tens of thousands of homes and businesses in New York, New Jersey and neighbouring northeastern states.President Barack Obama, instrumental in cobbling together the $60bn package, joined New Jersey's outspoken Republican Governor Chris Christie in leading the charge against Boehner's delay.Christie offered a blistering critique of his own party's congressional leadership, calling Boehner's delay "absolutely disgraceful."Fuming Republican congressman Peter King of New York also tore into his own leadership, saying the delay was "a knife in the back of New Yorkers and New Jerseyans."The outrage quickly gained the national spotlight, and Boehner wasted little time announcing the two-part vote."This is not a handout, this is not something we're looking for as a favor," King told the House. "What we're asking for is to be treated the same as victims (from) other natural disaster victims have been treated."Some Republicans including Senator Marco Rubio from Florida, a hurricane-prone state which has received billions in federal disaster aid, voted against the Sandy bill in the Senate, claiming it was stuffed with "pork" funding for projects or elements unrelated to Sandy relief.Darrell Issa, the powerful Republican chairman of the House Oversight Committee, continued in that vein Friday, saying "we need to get the pork out" and pointing to funding in the Senate bill that went to programs in Alaska, more than 3 000 miles (4 800 kilometers) from the Sandy disaster zone.He said he was hopeful the re-written legislation due for a vote January 15 would be a "clean bill" focused exclusively on Sandy relief."I believe today we are buying a little bit of time, but for the people on the Eastern Seaboard who are suffering, time is running out," he said.FEMA has announced it will soon run out of flood insurance funding without the $9.7bn increase.

Signs of hope for eurozone

Tentative signs the eurozone may have passed the worst of its downturn emerged in December but business surveys also suggested Britain's economy tipped back into contraction in the final months of 2012.Friday's purchasing managers indexes, which measure the activity of thousands of companies worldwide, brought mixed news from Europe.Activity in Britain's dominant services sector fell for the first time in two years and at a faster pace than predicted by any analyst polled by Reuters, while the speed of decline among French, Italian and Spanish firms slowed.Data from the United States due later on Friday are expected to show continued but modest jobs growth and a steady expansion of its services sector.With Chinese growth showing evidence of revival, that leaves Europe as the world's economic slowcoach going into 2013.In particular, economists were surprised by news the UK services PMI slipped to 48.9 in December from 50.2 last month, sagging below the 50 mark that divides from contraction for the first time in two years."The PMIs point to an economy that is contracting modestly," said Rob Wood, chief UK economist at Berenberg Bank. "The broader picture is that for some time the economy has been bouncing around the bottom ... and I think this is likely to stay with us for the next couple of quarters."Survey compiler Markit said the figures suggest Britain's economy shrank 0.2% in the final quarter of 2012, a slightly bigger drop than most other private-sector forecasts.The eurozone composite PMI hit its highest levels since last March, rising to 47.2 in December from 46.5 in November, although it remained rooted below the 50 mark for an 11th month."I think (the eurozone PMIs) are showing a decisive bottoming-out of activity," said James Nixon, chief European economist at Societe Generale."Now, the actual levels of the surveys are still consistent with GDP declining, but at least things aren't getting worse any faster."  Worst over?The decline eased among the services firms that make up the bulk of the eurozone's economy, ranging from banks to restaurants, but manufacturers endured an awful end to 2012.Survey compiler Markit warned that Friday's figures would probably fail to prevent the eurozone's recession deepening in the fourth quarter of last year, thanks to dismal figures in October and November."The surveys at least bring some substance to the belief that the worst is over and that a return to growth is in sight for the region in 2013," said Chris Williamson, chief economist at Markit.As with last year, the eurozone economy's fate hinges on the resolution of the sovereign debt crisis, which still smoulders despite the creation of financial firewalls by the European Central Bank and European Union.German Finance Minister Wolfgang Schaeuble said last week he thought the worst had passed for the debt crisis, although similar sentiments have been expressed by various European policymakers and politicians since mid-2010.Friday's European data followed news that China's services sector saw its slowest rate of expansion in nearly a year and a half in December, although the HSBC services PMI still pointed to a modest revival in economic growth.And economists expect the US ISM non-manufacturing survey, another PMI, to fall slightly to 54.2 in December from November's 54.7. While showing slowing growth, that would still signal a far brighter economic outlook for the US compared with its European peers.Analysts also predict the US economy added around 150 000 non-farm jobs in December, compared with 146 000 the previous month.

NEWS,03.01.2013

Obama signs fiscal cliff legislation

President Barack Obama has signed into law a contentious compromise bill hammered out in Congress that narrowly averted the US 'fiscal cliff of tax hikes and drastic, immediate cuts in spending, the White House said early on Thursday.  In a statement, the White House said that Obama late on Wednesday signed the "American Taxpayer Relief Act of 2012," raising taxes on households earning above $450 000 and delaying spending decisions for two months.  Officials said the US president, who is on vacation in Hawaii, signed the measure electronically by autopen.  The "fiscal cliff" crisis was finally averted on Tuesday as the House of Representatives, by a vote of 257 to 167, approved a stop-gap agreement passed one day earlier by the US Senate.  The measure dodged across-the-board tax hikes and automatic spending cuts that had threatened to unleash economic turmoil and perhaps drive America back into recession.  The hard-fought agreement, seen as a political victory for Obama, raised taxes on the very rich and delayed the threat of $109bn in automatic spending cuts for two months.  The respite will prove temporary, however: The Democratic administration and the Republican-controlled House of Representatives face several clashes in the coming months on spending cuts and raising the government debt ceiling.  Had the deal fallen apart, all Americans would have been hit by tax increases and spending cuts would have kicked in across government a combined $500bn shock that could have rocked the fragile recovery.  Relief was felt internationally and markets surged, although China's official news agency Xinhua warned: "People, or governments, can overspend for some time, but they simply cannot live on borrowed prosperity forever."

 

US CEOs pan fiscal cliff deal

 

US executives largely panned the congressional deal to steer America away from the "fiscal cliff," saying Washington wasted an opportunity to address the nation's long-term debt, but said they would continue to agitate for a better budget plan.While CEOs expressed relief that $600bn in tax hikes and spending cuts will not kick the fragile economy in the gut, their gratitude was salted with insults."I think this deal's a disaster," said Peter Huntsman, chief executive of chemical producer Huntsman Corp."We're just living in a fantasy land. We're borrowing more and more money. This did absolutely nothing to address the fundamental issue of the debt cliff."Former Wells Fargo CEO Dick Kovacevich said the agreement confirms that Washington and both parties are totally out of control."I think it's a joke," Kovacevich said of the deal. "It's stunning to me that after working on this for months and supposedly really getting to work in the last 30 days that this is what you come up with."Kovacevich and others said business leaders need to consider a different approach, one that either bypasses lawmakers or lays out a much more specific plan for deficit reduction.Corporate America had mounted a media blitz in the last two months, calling on Congress to both avert the potentially devastating fiscal cliff and replace it with a reasonable long-term plan to get the federal deficit under control. Dozens of CEOs joined a loose coalition known as the "Fix the Debt" campaign, travelled to Washington to talk directly with lawmakers, visited the White House, and made regular rounds on TV news programs.The executives scaled back their public posturing during the furious last-minute negotiations, which coincided with their holiday vacations, but some executives kept the phone lines to Washington open. They are not happy with what their efforts bought them.The final deal contained no meaningful spending cuts and adds trillions to the deficit, compared to the budget savings that would have occurred if the extreme measures of the cliff had kicked in.It also set up another cliff of sorts in two months. That's when the nation is expected to hit its borrowing limit, and when the across-the-board spending cuts known as "sequestration" are now scheduled kick in.Despite executives' distaste for the deal, they're not turning their backs on Washington and are holding out hope for a greater deficit reduction plan."We cannot give up now, that's not how a great nation acts," said Honeywell International Inc CEO David Cote, a driving force behind the Fix the Debt group. He said in a statement Wednesday that he's "encouraged" by comments made by both Democrats and Republicans saying that more work needs to be done.RegroupingSome in the business community are calling for a change in strategy due to the meager results of the fiscal cliff deal."It doesn't work talking to the politicians, obviously," former Wells CEO Kovacevich said. "What we've got to do is educate the American public that our country is going to hell."There are questions about how meaningful of a contribution Corporate America can make, especially if they do not deliver a unified voice on hard decisions such as industry-specific tax breaks.Republican Senator Bob Corker from Tennessee said on CNBC on Wednesday morning that the business community could play a great role by pushing for concrete entitlement changes.The business community appears reluctant to provide lawmakers with specific proposals.Jon Romano, a spokesman for the Fix the Debt campaign, said the group has set out principles for a long-term deal, but it doesn't want to prescribe what the policy should look like. "We're really looking to our elected leaders on both sides of Pennsylvania Avenue to come up with that solution to this issue," Romano said. Mark Kennedy, who heads George Washington University's Graduate School of Political Management and served in Congress from 2001 to 2007, said business leaders need to do more.He said executives should identify "sacred cows" that should no longer be protected, be more specific about how big a deficit reduction deal should be, and get specific about what they want included."It's more helpful to get parameters as to what should be done than to just say, do something," Kennedy said.

Bigger fights loom after fiscal deal

 

President Barack Obama and congressional Republicans looked ahead on Wednesday toward the next round of even bigger budget fights after reaching a hard-fought fiscal cliff deal that narrowly averted potentially devastating tax hikes and spending cuts.The agreement, approved late on Tuesday by the Republican-led House of Representatives after a bitter political struggle, was a victory for Obama, who had won re-election on a promise to address budget woes in part by raising taxes on the wealthiest Americans.But it set up political showdowns over the next two months on spending cuts and on raising the nation's limit on borrowing. Republicans, angry the deal did little to curb the federal deficit, promised to use the debt ceiling debate to win deep spending cuts next time."Our opportunity here is on the debt ceiling," Republican Senator Pat Toomey of Pennsylvania said on MSNBC, adding Republicans would have the political leverage against Obama in that debate. "We Republicans need to be willing to tolerate a temporary, partial government shutdown, which is what that could mean."Republicans, who acknowledged they had lost the fiscal cliff fight by agreeing to raise taxes on the wealthy without gaining much in return, vowed the next deal would have to include significant cuts in government benefit programs like Medicare and Medicaid health care for retirees and the poor that were the biggest drivers of federal debt."This is going to be much uglier to me than the tax issue ... this is going to be about entitlement reform," Republican Senator Bob Corker of Tennessee said on CNBC."This is the debate that's going to be far more serious. Hopefully, now that we have this other piece behind us - hopefully - we'll deal in a real way with the kinds of things our nation needs to face," he said.Obama urged "a little less drama" when the Congress and White House next address thorny fiscal issues like the government's rapidly mounting $16 trillion debt load.The fiscal cliff showdown had worried businesses and financial markets, and US stocks soared at the opening after lawmakers agreed to the deal.The Dow Jones industrial average surged 262.45 points, or 2.00%, at 13 366.59. The Standard & Poor's 500 Index was up 29.79 points, or 2.09%, at 1 455.98. The Nasdaq Composite Index was up 77.45 points, or 2.57%, at 3 096.97. The crisis ended when dozens of Republicans in the House of Representatives buckled and backed a bill passed by the Democratic-controlled Senate that hiked taxes on households earning more than $450 000 annually. Spending cuts of $109bn in military and domestic programs were delayed only for two months.Economists had warned the fiscal cliff of across-the-board tax hikes and spending cuts would have punched a $600bn hole in the economy this year and threatened to send the country back into recession.Reluctant republicans House Republicans had mounted a late effort to add hundreds of billions of dollars in spending cuts to the package and spark a confrontation with the Senate, but it failed.In the end, they reluctantly approved the Senate bill by a bipartisan vote of 257 to 167 and sent it on to Obama to sign into law. "We are ensuring that taxes aren't increased on 99% of our fellow Americans," said Republican Representative David Dreier of California.The vote underlined the precarious position of House Speaker John Boehner, who will ask his Republicans to re-elect him as speaker on Thursday when a new Congress is sworn in. Boehner backed the bill but most House Republicans, including his top lieutenants, voted against it. The speaker had sought to negotiate a "grand bargain" with Obama to overhaul the US tax code and rein in health and retirement programs that will balloon in coming decades as the population ages. But Boehner could not unite his members behind an alternative to Obama's tax measures.Income tax rates will now rise on individuals earning more than $400 000 and families earning more than $450 000 per year, and the amount of deductions they can take to lower their tax bill will be limited. Low temporary rates that have been in place for the past decade will be made permanent for less-affluent taxpayers, along with a range of targeted tax breaks put in place to fight the 2009 economic downturn. However, workers will see up to $2 000 more taken out of their paychecks annually with the expiration of a temporary payroll tax cut. The non-partisan Congressional Budget Office said the bill will increase budget deficits by nearly $4 trillion over the coming 10 years, compared to the budget savings that would occur if the extreme measures of the cliff were to kick in. But the measure will actually save $650bn during that time period when measured against the tax and spending policies that were in effect on Monday, according to the Committee for a Responsible Federal Budget, an independent group that has pushed for more aggressive deficit savings.

Weak productivity hammers UK economy

 

Low productivity may have been a bigger factor behind Britain's slow economic recovery than previously thought, with potentially stark implications for monetary policy, Bank of England research suggested on Thursday.Previous research had suggested one-off demand shocks were the main reason for Britain's weak economic recovery from the financial crisis, but the research - co-authored by BoE policymaker Martin Weale - suggested this conclusion was due to flawed statistical techniques.If the findings are right, they may raise the barrier to the BoE restarting bond purchases  which offer a one-off stimulus to demand but do not tackle underlying issues - and put a greater onus on government and BoE policymakers to tackle Britain's poor productivity.Weak productivity is a well-known problem for the British economy, and official data released earlier on Thursday showed that on one measure it fell to its lowest level since 2005.However, existing research referred to in the paper by Weale and two other BoE economists suggested that "temporary demand shocks" - such as headwinds from the euro zone or government austerity - were the main reasons for slow British growth.Britain's economy shrank by around 7% in the 2008/9 recession, and its recovery since then has been amongst the slowest of the six economies looked at in the study, which include the United States, Canada, Germany, France and Italy.Earlier work had failed to properly account for the links between these economies, and doing so correctly led to new conclusions about Britain, the study said."The previous conclusions are now clearly overturned. Both permanent labour productivity and temporary demand shocks now contribute roughly equal amounts to recent (2010 and 2011) weak output growth in the UK," it said."Given this stark difference in results and policy implications, future applied work should therefore not ignore these issues and there might be some merit in a re-examination of past ... research," the study added.Productivity puzzleIf weak productivity, rather than low demand and a lack of confidence, is behind much of sluggish British economic performance, this would help explain why inflation has often been above target and higher than the BoE forecast.An unexpected jump in inflation in October was one reason why the BoE decided in November to halt bond purchases once they had reached the £375bn total agreed in July, and most economists do not expect it to restart this stimulus programme .However, the cause of Britain's weak productivity - and whether it is permanent, or a temporary consequence of the financial crisis - is still largely a mystery.Part of the reason may be the effect of the financial crisis on Britain's once highly profitable financial services sector, as well as a longer-term decline in highly productive North Sea oil and gas extraction.Some BoE officials also blame a lack of bank credit stopping firms from moving into more profitable niches, and this is one reason why the BoE launched its so-called Funding for Lending Scheme in August, which offers banks cheap finance.But other officials, such as former BoE policymaker Adam Posen, have played down the idea that the financial crisis permanently damaged the productive capacity of British workers, and that this would be enough of a reason to hold back stimulus.

Tough times for world's top brokers

The world's top brokers face a fight to hold onto hundreds of millions of dollars of revenue this year when US legislation throws open the vast swaps trading market to stock exchanges.Brokers like ICAP and BGC Partners make around a third of their revenue from the $640 trillion industry for trading swaps - financial instruments used by companies to cover their exposure to changes in interest rates, foreign exchange rates and credit ratings.Exchanges like CME Group, NYSE Euronext and the IntercontinentalExchange, meanwhile, dominate the much smaller market for futures, which give similar protection, but are more standardised and so tend not to offer exact cover.However, new US swap rules enshrined in the Dodd-Frank Act, due to be finalised in the coming weeks and take effect in the middle of this year, could drive business to the exchanges and away from the brokers, and reshape the industry globally due to the size of US markets and the power of their regulators. "It is going to be tough for the brokers. The exchanges are huge with deep pockets and they are not the types of companies you'd want invading your space," said Simmy Grewal, a senior analyst at research house Aite Group.Swaps trading involves brokers matching buyers and sellers in murky over-the-counter (OTC) markets. It has historically been less tightly regulated than futures trading on exchanges.US regulators want to drive swaps trading onto electronic platforms, like those run by exchanges, to make it more transparent and easier to regulate, and to protect the global financial system from problems that arose after the collapse of US bank Lehman Brothers, one of the largest swaps traders.These changes will effectively see brokers and exchanges starting to compete directly for swaps business later in 2013, with exchanges eager to grab a chunk of a huge market. According to the Bank for International Settlements, the swaps industry was worth $639 trillion at the end of June 2012, compared with $25 trillion for futures trading.The world's top five brokers - GFI, Tradition  and Tullett Prebon as well as ICAP and BGC made a combined $2.7bn, or 35%, of their revenues in their last full financial years from interest rate swaps, the most common type. The exchanges have hinted half the swaps market could be up for grabs under Dodd-Frank, which, if true, could see hundreds of millions of dollars in revenues moving to them from brokers.Regulatory swap The US Commodity Futures Trading Commission (CFTC) wants two new categories of regulated markets called Swap Execution Facilities (SEFs) and Designated Contract Markets (DCMs).Brokers are likely to trade swaps through SEFs, while the exchanges are set to offer swap-like futures as DCMs.Analysts are reluctant to estimate the extent of likely broker losses at this stage but early research suggests the reforms will have a significant impact.Three-quarters of respondents to a Berenberg Bank survey in July predicted the reforms would cut OTC trading levels by up to 30% while one in eight saw regulation reducing swaps trading by between 31% and 50%.In a note published in November, Morgan Stanley analysts flagged potential risks to the world's largest swap broker, ICAP, which in its last financial year made £681m ($1.1 bn), or about two fifths of its revenue, from interest rate swaps."The greater certainty in the futures model ... will favour futures over swaps, leading to cannibalisation of the swaps market," they predicted.$8bn question The exchanges received a boost in October when the CFTC said any company trading more than $8bn of swaps in a year must register with it as a "swap dealer", a designation which increases capital and collateral requirements.That could encourage some swaps traders to switch to futures to avoid the hassle of registering with the CFTC. Top banks, which trade billions of dollars of swaps each day, will smash the $8bn limit and some 65 of the top swaps traders, like Goldman Sachs, Morgan Stanley and JP Morgan Chase registered as dealers on Wednesday.However the CME, the world's largest futures exchange, said it saw a definite shift to futures contracts over swaps in the weeks following the CFTC announcement. Exchanges are also doing everything they can to encourage the shift. ICE, the leading energy futures market, in October transformed its energy swaps to futures, allowing clients to continue hedging their energy exposure without adding to their swaps total. Since the CFTC's October announcement, shares in ICAP have fallen 7.5%, while Tullett's have shed 13%.But the brokers are fighting back. ICAP, Tradition and Tullett have all launched swap broking platforms in a bid to retain business. ICAP's i-Swap and Tradition's Trad-X reported strong demand late last year as clients switched to the new regulated swap systems. Analysts say these efforts should help to stem the flow of business to exchanges, though brokers concede they face a fight.

US jobless claims rise

 

The number of Americans filing new claims for unemployment benefits rose last week, but the data continues to be too distorted by the holidays to offer a clear read of labour market conditions.Initial claims for state unemployment benefits increased 10 000 to a seasonally adjusted 372 000, the labour department said on Thursday. The prior week's figure was revised to show 12 000 more applications than previously reported.Claims data reported for the week ended December 22 had been artificially depressed by the holidays, which resulted in data for 19 states being estimated.A labour department official said claims data for nine states, including California and Virginia, had been estimated last week because of the Christmas and New Year holidays. This suggests the numbers are subject to revisions next week.The four-week moving average for new claims, a better measure of labour market trends, rose 250 to 360 000. The claims data has no bearing on December's employment report, scheduled for release on Friday.Employers are expected to have added 150 000 jobs to their payrolls last month, little changed from 146 000 in November, according to a Reuters survey of economists.Job gains in the first 11 months of last year averaged about 151 000 per month, not enough to significantly lower unemployment. Employers' hesitancy to ramp up hiring had been blamed on the so-called fiscal cliff, a combination of sharp government spending cuts and higher taxes.Although Congress this week approved a deal to avoid the fiscal cliff, the budget problems are far from resolved. That could continue to cast a shadow of uncertainty and hurt job growth.The claims report showed the number of people still receiving benefits under regular state programs after an initial week of aid increased 44 000 to 3.25 million in the week ended December 22.

Job market grows despite fiscal crisis

 

Private-sector employers added more new jobs than expected last month even as a possible budget crisis loomed, helping the job market end 2012 on a high note, a report by a payrolls processor showed on Thursday.The ADP National Employment Report showed the private sector added 215 000 jobs last month, comfortably above economists' expectation of a 133 000 gain. The report is jointly developed with Moody's Analytics.The increase came even as companies worried the economy might fall off the fiscal cliff at year end, which would have meant higher taxes and, some predicted, suppressed hiring."All the labour market data has held up very, very well so (there is) no sign of the fiscal cliff impact on the job market," Mark Zandi, chief economist at Moody's Analytics, told CNBC televisionA last-minute deal to avoid going over the fiscal cliff was struck on New Year's day."The underlying economy has momentum and the employment data confirms that," said John Brady, managing director at R.J. O'Brien & Associates in Chicago."The hope and prayer of the market is that our political leaders don't screw it up."A revival in new construction jobs was also a hopeful sign, Zandi said, though the gains were likely boosted by rebuilding efforts after Superstorm Sandy hit the east coast in October.November's private payrolls tally was also revised upward to show a gain of 148 000 from the previously reported 118 000.The Bureau of Labour Statistics' more comprehensive payrolls report due on Friday is expected to show the economy added 150 000 jobs last month after adding 146 000 in November.

Vatican suspends bank card payments

 

The Bank of Italy has suspended all bank card payments in the Vatican including for tickets to its famous museum until further notice because of a failure to fully implement anti money laundering legislation, Italian media reported on Thursday.The payments have been suspended since January 1 after the Bank of Italy ordered Deutsche Bank Italia, which handles bank card payments on Vatican territory, to deactivate its terminals because of a lack of authorisation for the transactions.The Vatican museum, which was visited by five million tourists last year who paid a total of €91.3m ($120m), will now be asking for payments in cash, La Repubblica daily reported.The reports quoted Italian central bank sources saying the Vatican does not respect international anti money laundering norms and an Italian-registered bank such as Deutsche Bank Italia can therefore not operate on its territory.The suspension also includes payments at the Vatican pharmacy, the post office and a few shops that operate in the world's tiniest state.Vatican spokesman Federico Lombardi said contacts were underway with other operators and the suspension of bank card payments should be "short-lived", Corriere della Sera reported.Pope Benedict XVI has vowed greater transparency in Vatican finances and the operations of its bank, the Institute for Works of Religion (IOR), which has been infiltrated by organised crime in the past.Moneyval, a group of experts from the Council of Europe, said last year that the Vatican had made huge strides in adapting its legislation to new rules but that a lot of work remained to be done.

Worldwide IT spend to rise in 2013

Worldwide IT spending was expected to rise 4.2% in 2013 to $3.7 trillion, a pick-up from 1.2% growth forecast for last year as the gloom hanging over businesses and consumers starts to lift, industry research firm Gartner said.Much of the uncertainty surrounding prospects for an upturn in global economic growth is nearing resolution, managing vice president Richard Gordon said. "As it does, we look for accelerated spending growth in 2013 compared to 2012."Spending on devices like PCs, tablets, mobile phones and printers was forecast to reach $666bn, up 6.3%.The rise was below the 7.9% Gartner previously forecast, partly due to increased price competition from android devices in the tablet market.Worldwide enterprise software spending would rise 6.4% to $296bn, Gartner said on Thursday, driven by the security, storage management and customer relationship management sectors.Telecom services, which continue to be the largest IT market, would be flat over the next few years as higher revenue from mobile data services was offset by declines in fixed and mobile voice services markets, Gartner said.

Bigger fights loom after fiscal deal

President Barack Obama and congressional Republicans looked ahead on Wednesday toward the next round of even bigger budget fights after reaching a hard-fought fiscal cliff deal that narrowly averted potentially devastating tax hikes and spending cuts.The agreement, approved late on Tuesday by the Republican-led House of Representatives after a bitter political struggle, was a victory for Obama, who had won re-election on a promise to address budget woes in part by raising taxes on the wealthiest Americans.But it set up political showdowns over the next two months on spending cuts and on raising the nation's limit on borrowing. Republicans, angry the deal did little to curb the federal deficit, promised to use the debt ceiling debate to win deep spending cuts next time."Our opportunity here is on the debt ceiling," Republican Senator Pat Toomey of Pennsylvania said on MSNBC, adding Republicans would have the political leverage against Obama in that debate. "We Republicans need to be willing to tolerate a temporary, partial government shutdown, which is what that could mean."Republicans, who acknowledged they had lost the fiscal cliff fight by agreeing to raise taxes on the wealthy without gaining much in return, vowed the next deal would have to include significant cuts in government benefit programs like Medicare and Medicaid health care for retirees and the poor that were the biggest drivers of federal debt."This is going to be much uglier to me than the tax issue ... this is going to be about entitlement reform," Republican Senator Bob Corker of Tennessee said on CNBC."This is the debate that's going to be far more serious. Hopefully, now that we have this other piece behind us hopefully we'll deal in a real way with the kinds of things our nation needs to face," he said.Obama urged "a little less drama" when the Congress and White House next address thorny fiscal issues like the government's rapidly mounting $16 trillion debt load.The fiscal cliff showdown had worried businesses and financial markets, and US stocks soared at the opening after lawmakers agreed to the deal.The Dow Jones industrial average surged 262.45 points, or 2.00%, at 13 366.59. The Standard & Poor's 500 Index was up 29.79 points, or 2.09%, at 1 455.98. The Nasdaq Composite Index was up 77.45 points, or 2.57%, at 3 096.97. The crisis ended when dozens of Republicans in the House of Representatives buckled and backed a bill passed by the Democratic-controlled Senate that hiked taxes on households earning more than $450 000 annually. Spending cuts of $109bn in military and domestic programs were delayed only for two months.Economists had warned the fiscal cliff of across-the-board tax hikes and spending cuts would have punched a $600bn hole in the economy this year and threatened to send the country back into recession. House Republicans had mounted a late effort to add hundreds of billions of dollars in spending cuts to the package and spark a confrontation with the Senate, but it failed.In the end, they reluctantly approved the Senate bill by a bipartisan vote of 257 to 167 and sent it on to Obama to sign into law. "We are ensuring that taxes aren't increased on 99% of our fellow Americans," said Republican Representative David Dreier of California.The vote underlined the precarious position of House Speaker John Boehner, who will ask his Republicans to re-elect him as speaker on Thursday when a new Congress is sworn in. Boehner backed the bill but most House Republicans, including his top lieutenants, voted against it.The speaker had sought to negotiate a "grand bargain" with Obama to overhaul the US tax code and rein in health and retirement programs that will balloon in coming decades as the population ages. But Boehner could not unite his members behind an alternative to Obama's tax measures.Income tax rates will now rise on individuals earning more than $400 000 and families earning more than $450 000 per year, and the amount of deductions they can take to lower their tax bill will be limited. Low temporary rates that have been in place for the past decade will be made permanent for less-affluent taxpayers, along with a range of targeted tax breaks put in place to fight the 2009 economic downturn. However, workers will see up to $2 000 more taken out of their paychecks annually with the expiration of a temporary payroll tax cut.The non-partisan Congressional Budget Office said the bill will increase budget deficits by nearly $4 trillion over the coming 10 years, compared to the budget savings that would occur if the extreme measures of the cliff were to kick in. But the measure will actually save $650bn during that time period when measured against the tax and spending policies that were in effect on Monday, according to the Committee for a Responsible Federal Budget, an independent group that has pushed for more aggressive deficit savings.

US averts fiscal cliff

A weary Congress sent President Barack Obama legislation to avoid the economy-threatening fiscal cliff of middle class tax increases and across-the-board spending cuts late on Tuesday night, hours before financial markets reopen after the New Year's holiday.The bill's passage on a 257-167 vote in the House of Representatives sealed a hard-won political triumph for the president less than two months after he secured re-election while calling for higher taxes on the wealthy.The economic as well as political stakes were considerable. Economists have warned that without action by Congress, the tax increases and spending cuts that technically took effect with the turn of the new year at midnight could cause unemployment to spike and send the economy into recession.The extraordinary late-night House vote took place less than 24 hours after the Senate passed the measure in the pre-dawn hours on New Year's Day. The legislation cleared the Senate hours after Vice-President Joe Biden and Senate Republican Leader Mitch McConnell, veteran negotiators, sealed a deal.In addition to neutralising middle class tax increases and spending cuts that technically took effect on Monday at midnight, the legislation raises tax rates on incomes over $400 000 for individuals and $450 000 for couples. Remarkably, in a party that swore off tax increases two decades ago, dozens of Republicans supported the bill in both houses of Congress.Supporters of the bill in both parties expressed regret that the bill was narrowly drawn, and fell far short of a sweeping plan that combined tax changes and spending cuts to reduce federal deficits. That proved to be a step too far in the two months since Obama called congressional leaders to the White House for a post-election stab at compromise.Majority Republicans did their best to minimise the bill's tax increases, just as they abandoned their demand from earlier in the day to add spending cuts to the package "By making Republican tax cuts permanent, we are one step closer to comprehensive tax reform that will help strengthen our economy and create more and higher pay cheques for American workers," said Rep Dave Camp of Michigan, chairperson of the tax-writing House Ways and Means Committee.He urged a vote for passage to "get us one step closer to tax reform in 2013" as well as attempts to control spending.House Democratic leader Nancy Pelosi also said the legislation included "permanent tax relief for the middle class", and she summoned lawmakers to provide bipartisan support as the Senate did.The bill would prevent an expiration of extended unemployment benefits for an estimated two million jobless, renew tax breaks for businesses and renewable energy purposes, block a 27% cut in fees for doctors who treat elderly Medicare patients, stop a $900 pay increase for lawmakers from taking effect in March and head off a threatened spike in milk prices.The bill would also raise the top tax rate on large estates to 40% from 35%, and taxes on capital gains and dividends over $400 000 for individuals and $450 000 for couples would be taxed at 20%, up from 15%.It would stop $24bn in spending cuts set to take effect over the next two months, although only about half of that total would be offset with spending reductions elsewhere in the budget.Even with enactment of the legislation, taxes are on the rise for millions.A 2 percentage point temporary cut in the Social Security payroll tax, originally enacted two years ago to stimulate the economy, expired with the end of 2012. Neither Obama nor Republicans made a significant effort to extend it.The fiscal cliff measure had cleared the Senate on a lopsided pre-dawn New Year's vote of 89-8, and House Republicans spent much of the day struggling to escape a political corner they found themselves in."I personally hate it," Rep John Campbell of California said of the measure, giving voice to the concern of many Republicans that it did little or nothing to cut spending.Majority Leader Eric Cantor, the No 2 House Republican, told reporters at one point: "I do not support the bill. We are looking, though, for the best path forward."Within hours, Republicans abandoned demands to add spending cuts to the bill and agreed to a simple yes-or-no vote on the Senate-passed bill.They feared that otherwise the Senate would refuse to consider any alterations, sending the bill into limbo and saddling Republicans with the blame for a whopping middle class tax increase. One Senate Democratic leadership aide said majority leader Harry Reid would "absolutely not take up the bill" if the House changed it. The aide spoke on condition of anonymity, citing a requirement to keep internal deliberations private.If the House failed to pass the Senate bill it would mean that any fiscal deal would have to start all over when a new Congress, with dozens of new members, is seated Thursday. And any change in the legislation would require the Senate to re-pass the measure before it could go to Obama for his signature.Despite Cantor's remarks, Speaker John Boehner took no public position on the bill as he sought to negotiate a conclusion to the final crisis of a two-year term full of them.House Democrats met privately with Biden for their review of the measure and the party's leader, Pelosi, said afterward that Boehner should permit a vote.The non-partisan Congressional Budget Office said the measure would add nearly $4 trillion over a decade to federal deficits, a calculation that assumed taxes would otherwise have risen on taxpayers at all income levels. There was little or no evident concern among Republicans on that point, presumably because of their belief that tax cuts pay for themselves by expanding economic growth and do not cause deficits to rise.The relative paucity of spending cuts was a sticking point with many House Republicans. Among other items, the extension of unemployment benefits costs $30bn, and is not offset by savings elsewhere.For all the struggle involved in the legislation, even its passage would merely clear the way for another round of controversy almost as soon as the new Congress convenes.With the Treasury expected to need an expansion in borrowing authority by early spring, and funding authority for most government programs set to expire in late March, Republicans have made it clear they intend to use those events as leverage with the administration to win savings from the Medicare health care programme for the elderly and other government benefit programmes.McConnell said as much moments before the 02:00 Tuesday vote in the Senate - two hours after the advertised "cliff" deadline."We've taken care of the revenue side of this debate. Now it's time to get serious about reducing Washington's out-of-control spending," he said. "That's a debate the American people want. It's the debate we'll have next. And it's a debate Republicans are ready for."Obama, who had campaigned for re-election on the promise of protecting households making under $250 000 a year from a tax increase, praised the agreement after the Senate's vote. Some liberal Democrats were disappointed that the White House did not stick to a harder line in negotiations, considering that Obama nlonger faces re-election."While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country and the House should pass it without delay," Obama said in a statement. "This agreement will also grow the economy and shrink our deficits in a balanced way - by investing in our middle class, and by asking the wealthy to pay a little more."The fiscal cliff came about because tax rate cuts enacted in 2001 and 2003 during president George W Bush's administration were set to expire at the end of the year.The threatened across-the-board reductions in government spending, which would slice money out of everything from social programmes to the military, were put in place last year as an incentive to both parties to find ways to cut spending. That solution grew out of the two parties' inability in 2011 to agree to a grand bargain that would have taken a big bite out of the deficit which has averaged about $1 trillion a year.If Obama and Congress failed to act, about $536bn in tax increases touching nearly all American workers and about $110bn in spending cuts, about 8% of the annual budgets for most federal departments, were scheduled to start going into effect beginning in January. 

Digital sales break £1bn barrier

Greek manufacturing activity shrank for the 40th month running in December, hurt by weak domestic demand and slumping export orders, leading firms to shed yet more jobs, a survey showed on Wednesday.Markit's purchasing managers' index (PMI) for Greek manufacturing, which accounts for roughly 15% of the economy, fell to 41.4 points in December from 41.8 in November. The index has now held below the 50 mark dividing growth from contraction ever since September 2009, just before the country's massive debt problems came to light, triggering the crisis that has plagued Greece.December's decline in manufacturing output was the steepest in four months, bringing the average for the fourth quarter to 41.4, down from an average reading of 42.0 in the third quarter.In November, Greece adopted a new round of austerity measures to qualify for its next batch of EU/IMF bailout payments, expected to keep its economy in recession for the sixth straight year in 2013.The government expects gross domestic product (GDP) to contract by 4.5% next year from 6.5% in 2012."December data showed no sign of the downturn in Greece's manufacturing sector easing," said Markit senior economist Phil Smith."Of particular concern was a faster contraction in new export orders, a trend which has deteriorated considerably since the start of the year," he said.Greek manufacturers saw a near-record drop in new orders from abroad in December, exceeded only by heavier falls in November 2008 and January 2009.Weak sales led manufacturers to shed staff again in December, weighing on the country's record-high unemployment rate of 26%. Almost 24% of surveyed firms reported a reduction in payroll numbers since November. Despite falling demand, input price inflation continued to rise in December on the back of higher raw material prices. Competitive pressures led firms to cut output prices to secure new business.

Singapore growth quells recession fears

Singapore's economy grew in the fourth quarter, avoiding a technical recession despite disappointing growth figures for 2012, government data showed on Wednesday. Gross domestic product (GDP) rose 1.1% year-on-year in the three months to December from zero growth in the previous quarter, the Ministry of Trade and Industry said .On a quarter-on-quarter basis, the trade-dependent economy expanded by a seasonally adjusted annualised 1.8%, reversing a revised 6.3% contraction in the third quarter. The figures are based on estimates. Analysts feared the economy had likely slipped into a technical recession after two successive quarters of contraction. Prime Minister Lee Hsien Loong said in a speech on 1 January 2013 that GDP rose 1.2% for the full year. This was below the government's target for the economy to expand 1.5-2.5%"Overall growth of just over 1.0% is low by historical standards but it's still growth," said CIMB Research economist Song Seng Wun.The manufacturing sector shrank by an annualised 10.8% quarter-on-quarter as the European debt crisis and the sluggish US economy weakened global demand. Manufacturing contracted by 0.2% in 2012.Construction also contracted 8.9% quarter-on-quarter but grew 8.8% on year. The services sector expanded 1.2% overall in 2012.Premier Lee said GDP was expected to grow 1.0-3.0% in 2013 due to expected continued weakness in global demand.

India aims to stop welfare fraud

India will pay billions of dollars in social welfare money directly to its poor, under a new program that aims to cut out the middlemen blamed for the massive fraud that plagues the system.Previously officials only handed out cash to the poor after taking a cut - if they didn't keep all of it for themselves and were known to enrol fake recipients or register unqualified people. The program inaugurated on Tuesday would see welfare money directly deposited into recipients' bank accounts and require them to prove their identity with biometric data, such as fingerprints or retina scans.Finance Minister P. Chidambaram has described the venture as "nothing less than magical," but critics accuse the government of hastily pushing through a complex program in a country where millions don't have access to electricity or paved roads, let alone neighbourhood banks.The program is loosely based on Brazil's widely praised Bolsa Familia program, which has helped lift more than 19m people out of poverty since 2003. It will begin in 20 of the country's 640 districts on Tuesday, affecting more than 200 000 recipients, and will be progressively rolled out in other areas in the coming months, Chidambaram said Monday. The country has 440m people living below the poverty line.  "In a huge new experiment like this you should expect some glitches. There may be a problem here and there, but these will be overcome by our people," Chidambaram said.He appealed for patience with the program, which he called "a game changer for governance."The opposition Bharatiya Janata Party has accused the ruling Congress party of using the program to gain political mileage ahead of elections expected in 2014.As a first step, the government has said it plans to begin directly transferring money it would spend on programs such as scholarships and pensions.Eventually the transfers are expected to help fix much of the rest of India's welfare spending, though Chidambaram said the government's massive food, kerosene and fertilizer distribution networks - which are blamed for much of the corruption and lost money would be exempt.The program will eliminate middlemen and transfer cash directly into bank accounts using data from Aadhar, a government project working to give every Indian identification numbers linked to fingerprints and retina scans. Currently hundreds of millions of Indians have no identity documents.On Monday, 208 activists and scholars published an open letter expressing concern that the government was forcing the poor to enroll in Aadhar to get welfare benefits without putting safeguards in place to protect their privacy. They also expressed fears that the government planned to eventually replace the food distribution system for the poor, the largest program of its kind in the world."Essential services are not a suitable field of experimentation for a highly centralized and uncertain technology," they wrote. Others said the government was trying to do too much too soon."A very important concern is if we are ready for this sort of thing. The banking infrastructure is very poor, people are far from these banks, when they exist they are overcrowded. Sometimes people have to walk for a day to get to the bank," says Reetika Khera, a development economist with the New Delhi-based Institute for Economic Growth.Mihir Shah, a member of India's Planning Commission accepts that the government's timeline is "unrealistic," but said many critics had confused the lack of readiness with flaws in the plan itself."My question to them is, is it better than what is there today? That is the only way we can judge policy. I don't think there's a perfect solution to any of mankind's problems," he said.Shah said a lot more work needed to be done before cash transfers could become a reality across the country. The identification drive needed to reach the vast majority of India's poor, and villages needed banking infrastructure and Internet connectivity.

NEWS,01.01.2013

'Fiscal cliff' plan goes to Republican House

A legislative fix to patch up America's fiscal crisis will be taken up by lawmakers in the Republican-controlled House of Representatives on Tuesday after passing the Senate overnight.The White House and top Republicans struck a deal after dramatic 11th-hour negotiations to avert huge New Year tax hikes and postpone automatic spending cuts that had threatened to send the US economy back into recession.If the legislation passes the House as expected, it will represent a win for President Barack Obama as it raises taxes on the richest Americans albeit above an income threshold higher than he and other Democrats had wanted.But the victory will be hollow as it fails to tackle the deep spending cuts needed to resolve America's austerity crisis, setting up the prospect of another bitter Washington battle at the start of Obama's second term.After months of agonising over the crisis, weeks of debate about a possible solution, and days of intense, closed-door bartering, the US Senate voted overwhelmingly 89-8 early Tuesday to pass a controversial bill that averts the so-called "fiscal cliff".Hiked tax ratesAlthough the midnight deadline was technically missed, any serious impact on the world's biggest economy will be avoided as long as legislation passes the House of Representatives in the coming days.Obama issued a statement shortly after the 02:00 (07:00 GMT) Senate vote, urging lawmakers in the Republican-controlled House to "pass it without delay." A vote could come as early as Tuesday.If the measure is agreed by both chambers of Congress, tax rates will be hiked on households earning over $450 000 a year but remain where they are for everyone else.While not matching Obama's campaign threshold of $250 000, it would represent a major concession from Republicans who have stuck solidly to a pledge of no higher taxes since then president George HW Bush failed to win re-election in 1992 after breaking a promise not to raise rates"While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country and the House should pass it without delay," Obama said in his statement.he deal puts off $109bn in budget cuts across the government for two months, setting the stage for a new showdown between Obama's Democrats and Republicans in dysfunctional Washington at the end of February, just weeks after the president is sworn in for his second term.Winning over RepublicansHad no deal been struck, experts warned that the fragile US economy could have been sent spinning back into recession due to the $500bn combined whack of spending cuts and tax hikes.It remains for Republican House Speaker John Boehner to rally his restive conservative coalition around the pact, which will likely need some Democratic votes in the House to pass.For two decades, Republicans have fought any attempt to raise taxes. So White House officials will see vindication in a deal that enshrines one of Obama's top pledges in his re-election campaign.In a terse statement, Boehner said his chamber would pick up the legislation if it passed the Senate."Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members and the American people have been able to review the legislation," he said.‘Deal better than the alternative’Democrats suggested that the deal, like many congressional bargains, was not perfect, but that it was preferable to the alternative."It's not that this proposal is regarded as great or is loved in any way. But it's a lot better than going over the cliff," Senator Chuck Schumer told reportersWorld stock markets, expected to be thrown into turmoil by a failure to beat the deadline, are closed New Year's Day, so lawmakers have a few extra hours of breathing room to get the deal concluded.The legislation will also extend tax credits for clean energy firms and unemployment insurance for two million people that had been due to expire.And it includes an end to a temporary two percent cut to payroll taxes for Social Security retirement savings - meaning all Americans will pay a little more - and changes to inheritance and investment taxes.Relief seemed to course through the Senate during and after the vote, but both sides were already gearing up for the next legislative showdown, over the need to lift the government's statutory borrowing limit of $16.4trillion, reached on Monday.The Treasury will take extraordinary measures to keep the government afloat for an undisclosed period of time until the ceiling is raised. Republicans are already demanding spending cuts in return.That fight will now be doubled as it is likely to coincide with the new deadline for the two-month sequester postponement set up by the fiscal cliff agreement.

Activists release anti-North Korea leaflets

South Korean activists launched balloons carrying anti-Pyongyang leaflets across the border on Tuesday as North Korea joined a global party by greeting the New Year with fireworks.About 30 activists released seven balloons carrying 28 000 leaflets in the northern border town of Gwanjeonri in Cheorwon County, shouting "Down with North Korea's dynastic dictatorship!"The launch sparked scuffles with ten local residents who voiced fear of North Korean reprisals, but there were no injuries thanks to quick intervention by police.The launch went ahead despite repeated threats from Pyongyang of military strikes against such exercises.The leaflets launched on Tuesday urged North Koreans to rise up against their new leader Kim Jong-Un and included pictures of overthrown strongmen like Iraq's Saddam Hussein and Libya's Muammar Gaddafi.Kim, in his late 20s, came to power after his father and long-time leader Kim Jong-Il died in December 2011.In Pyongyang, the new leader started the New Year by watching a musical performance and fireworks, according to the official Korean Central News Agency."Fireworks were displayed to beautifully decorate the nocturnal sky above Pyongyang and bells rang on the New Year," it said.

Venezuelans pray as Chavez health worsens

Backers of Venezuelan President Hugo Chavez prayed and called off New Year's Eve festivities on Monday as the cancer-stricken leftist leader took a turn for the worse, fuelling doubts about his political future.Venezuelans prayed in church and a downtown square after the government announced that Chavez suffered "new complications" from a respiratory infection following his fourth cancer-related surgery on 11 December in Cuba.His vice president and political heir, Nicolas Maduro, broke the news from Havana on Sunday night, saying the condition of the 58-year-old leader was delicate and that he faced an uphill battle.Maduro decided to stay in Cuba for "the next few hours" to check on the ubiquitous "Comandante," the face of the Latin American left and fierce critic of the United States who has led the oil-rich nation for 14 years.RumoursJorge Arreaza, Venezuela's science and technology minister as well as the president's son in law, took to Twitter to try to tamp down rampant social media speculation that the end might be near, or had already come."My fellow countrymen: do not believe ill-intentioned rumours. President Chavez has spent the day calmly and stable, with his children at his side," said Arreaza who is in Cuba with other family members.Back in Caracas, crews took down the stage of a downtown concert site while Information Minister Ernesto Villegas invited Venezuelans to gather at Plaza Bolivar to "pray with joy and optimism" for Chavez."I deeply love him and would give my life for him. There should be millions like Chavez," Haydee Dominguez, a 50-year-old secretary, said at the gathering led by Villegas.Others teared up at the San Francisco church while several ministers attended a special mass for Chavez at the Miraflores presidential palace at midday.At a meeting point for Chavez followers in Plaza Bolivar, "Chavistas" choked up as they contemplated the health of their leader."We are all praying for the health of our comandante," said Miriam, one of the people gathered at the square. "There can't be any party here."Election Chavez had declared himself cancer free in July, more than a year after being diagnosed with the disease in the pelvic region. The exact nature of the cancer has never been made public.He was re-elected in October but announced a relapse earlier this month and rushed to Cuba for another operation.On Monday on Twitter, hashtags translating into expressions such as "Chavez will live and conquer" and "I love Chavez" were numerous, while others speculated about his health.One of the people discussing Chavez's health was Jose Rafael Marquina, a Venezuelan doctor who lives in the United States and has claimed in the past to have reliable sources informing him about the president."The respiratory failure continues without any improvement and the kidney function continues to deteriorate," he wrote on Twitter.The government has denied such rumours.OppositionChavez is scheduled to be sworn in on January 10 but the government has indicated that the ceremony could be postponed if the president is not fit by then.Opposition leader Henrique Capriles, who lost to Chavez in the 7 October election, predicted on Monday that there would be "big changes" in 2013.The opposition coalition, Democratic Unity Table, called for dialogue with the government to deal with what it called an "emergency".Veppex, a Miami-based association of 25 000 Venezuelans living outside their country as refugees or political exiles, insisted the constitution must be respected verbatim and new elections held if Chavez is indisposed.Under Venezuela's constitution, a presidential election must be held within 30 days if the head of state is incapacitated or dies before his inauguration or within the first four years of his term.Swearing inThe government is trying to work out how to "resolve that obstacle", said Luis Vicente Leon, head of pollsters Datanalisis, who said it was clear now that Chavez was in a critical condition.As the constitution says he must be sworn in on 10 January, "anything else will be hard to sell without it being construed as an institutional coup", Leon said.But Maduro and parliament speaker Diosdado Cabello have left the door open for Chavez to be sworn in at a later date by the Supreme Court.Cabello has even said that new elections will not be convened on 10 Januar, nor will he himself take over temporarily, as the constitution stipulates, if Chavez is out of the picture.