NEWS,18.08.2012

Barclays 'Deeply Flawed,' Bank of England's Involvement 'Difficult To Justify': Parliamentary Report

 

Company culture at Barclays was "deeply flawed" and the Bank of England's hand in removing its chief executive Bob Diamond was hard to justify, a UK parliamentary report into the "disgraceful" rigging of Libor interest rates said on Saturday.Few emerge unscathed from the Treasury Select Committee's 300-page report and annexes, based on a string of high-profile hearings after Barclays was fined a record $453 million on June 27 for manipulating the London Interbank Offered Rate or Libor."Such behaviour would only be possible if the management of the bank turned a blind eye to the culture of the trading floor," the report said."The standards and culture of Barclays, and banking more widely, are in a poor state," it said, adding it was unlikely the bank acted alone. Barclays is the first of several banks expected to be fined for rigging a rate which forms a reference point for home loans, credit cards and other financial transactions worth over $350 trillion globally.The report slammed the UK's Financial Services Authority (FSA) watchdog for being behind the curve, giving ammunition to London's critics by starting its own formal probe into Libor setting two years after U.S. authorities had kicked off theirs.It said the delay contributed to the perceived weakness of London in regulating financial markets and recommended many reforms, several of which are already being looked at elsewhere, such as criminal penalties and direct oversight.The FSA responded that its managing director Martin Wheatley will consider the report's findings in his government-commissioned review of Libor due to be published in September.The government also welcomed the report and would consider any necessary legislative changes called for by Wheatley.Barclays said it does not expect to agree with all the report but "we recognise that change is required, not least to restore stakeholder trust".The FSA and U.S. authorities are still probing HSBC , Royal Bank of Scotland, Lloyds and several non-UK banks in connection with possible manipulation. Diamond, Barclays' Chairman Marcus Agius and Chief Operating Officer Jerry del Missier all quit in July.Bank of England Governor Mervyn King and FSA Chairman Adair Turner told lawmakers they did not demand that Diamond step down, but the report concluded that their intervention meant it was a "fait accompli".King and Turner stepped in following public outrage over Barclays after the rigging was disclosed in June.” The Governor's involvement is difficult to justify," the report said, dismissing King's defence the Bank would be regulating lenders anyway from 2013 when the FSA is scrapped The central bank must be made accountable to avoid such potential abuses of power, the report said.The Bank of England said in a statement it did not have any regulatory responsibility for Libor at the time and that King's meeting with Agius on the day he resigned was "fully justified"The report criticised Barclays' board for several failings and Diamond himself, saying his testimony to parliament was unforthcoming and selective in parts, and fell well short of the candour and frankness expected.Diamond said in a statement he had responded to questions from lawmakers "truthfully, candidly and based on information available to me. I categorically refute any suggestion to the contrary."A focus of the hearings was a conversation between Diamond and Bank of England Deputy Governor Paul Tucker in Oct. 2008 when markets were in meltdown after the collapse of U.S. bank Lehman Brother the previous month.They agreed that the conversation did not amount to directing Barclays to "low ball" its Libor rate submission in a bid to show it had no problem borrowing from other banks.The heavy public emphasis by Barclays on this conversation may have been a "smokescreen" to distract from more serious failings at the lender and made no fundamental difference to the bank's behaviour, the report said."Barclays did not need a nod, a wink or any signal from the Bank of England to lower artificially their Libor submissions. The bank was already well practised in doing this," it said.Tucker told the lawmakers that possible clues to dishonesty did not ring alarm bells at the time, suggesting "naivety" on the part of the BoE, the report added.Tucker has long been seen as a leading candidate to replace BoE Governor Mervyn King, who stands down next year, and while his grilling in the hearings was seen as setting back his chances, he escapes the trenchant criticism levied at other players.Turner, another candidate for the deputy governorship, also escapes uniformly bad criticism, the report saying the FSA was on the case in questioning Barclays' culture of risk taking.But the FSA's probe left unanswered whether senior figures from Whitehall, a reference to government, instructed Tucker to ask Barclays to low ball its Libor submissions.Evidence received by lawmakers suggested Whitehall simply wanted to know if government efforts to prop up the financial system were working and Barclays was safe, the report said."This was understandable given the fragility of the UK and international financial system in October 2008," it added.Libor is overseen by the British Bankers' Association (BBA), whose review in 2008 appears to have been "an opportunity missed to stop the attempted manipulation that was occurring" and the report questions whether the BBA should keep its role.

Juncker: Greece won't leave eurozone

Greece won't leave the 17-nation eurozone, Luxembourg's prime minister said, arguing in an interview published Saturday that an exit wouldn't be politically feasible and would carry unforeseeable risks.Greece has been kept afloat by international loans, but has fallen behind on implementing reforms and austerity measures demanded in exchange, fueling impatience in Germany and other prosperous nations and speculation about a possible euro exit.But Luxembourg Prime Minister Jean-Claude Juncker, who also chairs eurozone finance ministers' meetings, was quoted as saying in an interview with Austrian newspaper Tiroler Tageszeitung: "It will not happen unless Greece violates all the conditions and keeps to no agreements.""In the case of a total refusal by Greece regarding budget consolidation and structural reforms, one would have to deal with the question," he said, according to the report. "But because I assume that Greece will try to redouble its efforts and achieve the targets that have been set, there is no reason to assume that this exit scenario can become relevant."Juncker said an exit would be "technically," but not "politically" feasible and insisted: "We are not working on it."There's little enthusiasm among creditors such as Germany for granting Greece more time to fulfill the terms of its international aid packages or other concessions. Juncker said it wasn't possible to say whether Athens might be granted more time before a report next month from its debt inspectors, but he doesn't currently consider an extension "absolutely necessary."Germany's vice chancellor, Economy Minister Philipp Roesler, said recently that the idea of Greece leaving the euro has "lost its horror." A regional official with one of the country's governing parties, Bavarian state finance minister Markus Soeder, has called for Greece to leave the currency this year and argued that "an example must be made of Athens."There has been no such talk from Chancellor Angela Merkel or Finance Minister Wolfgang Schaeuble, though they also have shown little appetite for concessions."I have always said that we can help the Greeks, but we cannot responsibly throw money into a bottomless pit," Schaeuble said during an appearance Saturday at his ministry's annual open day.He conceded that "it is immensely difficult for the Greeks," and said that Germans shouldn't speak "disrespectfully" of other nations.

Heineken raises bid for Tiger brewer

Heineken NV has raised its offer of more than $6 billion for Fraser and Neave's (F&N) stake in the maker of Tiger beer as it tries to fend off a Thai rival, a source close to the situation said today.The Dutch brewer's revised offer for Asia Pacific Breweries (APB) of 53 Singapore dollars per share compares to its earlier bid of S$50 and a partial offer by the Thai billionaire's group of S$55 per APB share.Heineken, the world's third biggest brewer, is seeking control of Asia Pacific Breweries to gain a larger slice of one of the last beer markets that is still growing rapidly.But Heineken's efforts have been complicated by Charoen Sirivadhanabhakdi, Thailand's second-richest man, as he tries to expand his Thai Beverage empire in the Southeast Asian market.The source said Heineken had raised its offer for the 58% of APB which it does not already own. That includes the 40% of APB held by its long-time partner Fraser and Neave, a drinks and property conglomerate.But it was not clear the new offer would seal the deal, the source said. Both Heineken and F&N declined to comment.Sources had earlier said a sweetened offer could depend on F&N not accepting the partial Thai bid. It was not clear whether the new offer was conditional.ThaiBev recently became F&N's largest shareholder with 26.4%. Charoen's son-in-law, through his group Kindest Place, separately offered to buy F&N's direct 7.3% stake in APB at S$55 per share."Heineken's resolve to win APB seems to be very strong," said Andrew Chow, head of research at UOB Kay Hian in Singapore."APB has an extensive distribution network and breweries. Its Tiger brand is also strong in Asia."The Thais have said they want to work with Heineken, but sources close to the situation say it would not be keen to cooperate with a competitor.APB has had nearly 20% annual earnings growth over the last decade.The biggest brand APB brews is Heineken itself, accounting for 30 % of its volume, but it also makes Tiger, Bintang and Anchor and runs 30 breweries in countries including Singapore, Malaysia, Indonesia, Vietnam, Thailand and Cambodia."Heineken just can't afford to lose," said one analyst who did not want to be quoted by name, although he said that even a higher offer could bring another bid from its rival - perhaps even as high as S$60."Still, it sounds like we are reaching the end-game," he said.Among Southeast Asian brewers, APB is the sixth-largest in terms of sales across the Asia Pacific region, behind San Miguel Corp of the Philippines in number one spot and ThaiBev in fourth, according to Euromonitor's latest data for 2011.Trading of APB and F&N shares in Singapore was suspended on Friday pending an announcement.Heineken had said its earlier offer of S$50 a share was a 45% premium to the price of APB shares before it made its bid and the F&N board had agreed to recommend the bid to its shareholders."Heineken wants full control of Asia Pacific Breweries, while Charoen wants a piece of that growth and is positioning himself to gain handsomely if Heineken wants to buy him out in the future," said an investment banking source in London.ABP shares have jumped from under S$35 in mid-July before stake building began to S$50.57 at Thursday's close. F&N shares, meanwhile, have risen from S$7.40 since mid-July to end at S$8.40 on Thursday. Both have hit record highs in recent weeks.The Heineken deal could prompt a breakup of F&N with Coca-Cola keeping an eye on its popular soft-drink 100PLUS, fruit juices, mineral water and dairy products unit, which could be hived off from the Singapore group's property assets.Goldman Sachs is advising F&N, while Citigroup and Credit Suisse are advisers to Heineken. Morgan Stanley and HSBC are advising the Thais.

NEWS,17.08.2012

What U.S. and Iranian Leaders Can Do to Avert War

 

It is clear that if U.S. and Iranian political leaders continue down the present course they will almost certainly lead us into another bloody war. Out of empathy for those who will do the fighting and dying, here are a few things they can do to avert conflict:

• U.S Political Leaders: Have the courage to stand up publicly to AIPAC lobbyists and their supporters who would pressure you to send our troops into another preventive war. While it remains unclear whether the Ayatollah Khamenei is sincere or engaging in strategic deception when he says that nuclear weapons are forbidden to Iran, he is almost certainly more likely to pursue them if he feels that his government is being backed into a corner with no way out.

• Iranian Political Leaders: Disavow statements made by President Ahmadinejad that have been interpreted as genocidal toward Israel. Your president's threatening statements in the context of your nation's nuclear pursuits -- whether peaceful or not -- have arguably done more harm to your cause than almost any other statement you've made or action you've taken. Israel not only appears to be poised to attack you unilaterally but will probably draw the U.S. in as well if it does. Your president's inflammatory and threatening rhetoric may result in a conflict that will likely cause great suffering to you and your people. On the other hand, the international community would undoubtedly be more open to your pursuit of nuclear energy if you distanced yourself from such irresponsible and seemingly irrational statements.

• U.S. Political Leaders: Stand up for American principles by imposing real political and economic costs on Israel for its settlement expansions and denial of Palestinian rights. Continued economic aid should no longer be a given but, rather, should be contingent upon the Israeli government's demonstrated progress in this area. American policymakers' selective application of human rights standards on this issue is an affront to the Muslim world as well as to American values and can only exacerbate the U.S.-Iran diplomatic situation.

• Iranian Political Leaders: Fully comply with IAEA inspections to allay the international community's concerns over alleged clandestine nuclear weapons sites. Time is needed to build trust. Set aside your pride and compromise on higher levels of uranium enrichment in order to avoid provoking U.S. and Israeli alarm. Viewing the unfolding of events from the U.S., it appears that American policymakers are poised to make the same foolish mistake they made with Saddam Hussein: that the absence of proof that your government is not engaged in nefarious activities means that you must be. Don't play into the hands of U.S. and Israeli hawks by playing Saddam's guessing game.

• U.S. Political Leaders: Acknowledge the courage behind such concessions if Iranian leaders commit to them and offer them more in return: not only alleviation of sanctions but positive economic and political incentives as well.

While there is no guarantee that these steps will lead to a peaceful outcome, continuing down the current road will only lead to greater economic deprivation and bloodshed. Though the current diplomatic impasse may appear insurmountable, commit to a renewed effort while there is still time. You owe it to the men and women you will be sending into battle if you fail.

Is Italy in Denial of Its Public Debt?

 

This week, the amount of government debt of Italy at the end of June was published: 1,972 billion euros. By this time it must have exceeded 2,000 billion euros ($2.4 trillion).Mario Monti, the Prime Minister cum Minister of Finance, toured the capitals of Europe to obtain support for Italy, indicating that Italian sentiment would turn anti-Euro without such help. He chose Berlin to accuse Germany of profiting from the European sovereign crisis. Needless to say, it immediately backfired. It was, to put it bluntly, particularly stupid. In an interview with the Wall Street Journal he stated: What we ask is that European authorities certify Italy's good conduct by translating that into interventions to keep spreads within reasonable limits. I have often told Merkel that, if this isn't done, she risks finding herself before an Italian parliament that repudiates Europe, monetary stability and the euro and is not friendly toward Germany.What is worse, however, is that he sent completely contradictory messages: he said that the European crisis was reaching the end of the tunnel.The reality is much scarier: Italy is facing 500 billion euros of refinancing and deficit financing between now and the end of 2013. The measures taken by the Italian Government did not translate into an interest rate decrease, let alone a debt decrease.When he states that Italy does not need a bail out he is right: not that Italy is not in need, but that there is no way the current resources, even if they were entirely allocated to Italy, would be sufficient to bail the country out.What is currently missing, however, is a serious crisis debt management. It would be perfectly possible to launch a consolidation bond issue, open to holders of 2012 and 2013 debt. With a maturity of 5 years and an interest rate of 5 percent it would not require any haircut from the banks and it would help the country bridge the reimbursement gap of the next two years.But Italy is scared to propose what would be a voluntary transaction. Should there be an increase in its refinancing rates, it would be a disaster.This lack of debt management might create the perfect conditions for a European tornado that would affect global markets everywhere. France would definitely be next. The main source of discontent for the investors is not only those facts. It is the benevolent way with which the Italian Treasury is handling the problem, shortening the maturities of its bonds,and not increasing its refinancing risk.We are talking about actions, not words. E la nave va...

World execs have confidence in Obama

Twice as many business executives around the world say the global economy will prosper better if incumbent US president Barack Obama wins the next election than if his Republican challenger Mitt Romney does, a poll showed on Friday. Democrat Obama was chosen by 42.7% in the 1 700 respondent poll, compared with 20.5%for Romney. The rest said "neither". The result was different among respondents in the United States, where a slim majority thought Romney would be better for their businesses than Obama.Obama maintains a seven-point lead over Romney among registered voters in the race for the November 6 presidential election, despite the fact Americans are increasingly pessimistic about the future, according to a Reuters/Ipsos poll conducted last week. The FT poll was conducted before Romney picked Wisconsin Congressman Paul Ryan as his vice presidential running mate at the weekend, a move that could dramatically shift the election debate between two sharply contrasting views of government spending and debt. Romney's choice for running mate gave him no immediate boost to his White House prospects.

NEWS,16.08.2012

Beyond Money

The hole was too deep; these words couldn't fill it. But there they remain, floating on the regret, vibrant with the possibility of a different kind of world. We've always been in the process of building that world, but the process has lacked a central cohesion... a god, if you will, to bless it and keep it. Antonis Perris, an unemployed musician from Athens, found himself at age 60 living in a world where the love of his community didn't matter and probably wasn't even noticeable: He had lost his means to earn a living. Until Europe's economic crisis hit, he had sustained himself and his elderly mother performing at local taverns. He had done well. Then business dried up. Finally, he reached a point where he saw no way to keep on living. The brief story of his death last May one more "economic suicide" was reported recently in the Post:” The next morning, Perris took the hand of his ailing 90-year-old mother. They climbed to the roof of their apartment building and leapt to their death."Europe has had thousands of economic suicides in the last few years. They always shock the community. In Greece, which has been reeling in economic crisis for five years now, "The suicide notes left in coat pockets or on desks," the Post writes, "... are being passed around on the Internet and studied like the final treatises of revered scholars."Everyone loved him," a local café owner said. People would have helped him out, and helped his mother, who suffered from Alzheimer's. But they didn't know how badly the two were doing. Now their deaths are a gash across the community, across the country and perhaps all of Europe and perhaps large parts of the so-called First World, where the middle class is crumbling. The poverty and despoliation the dark side of capitalism are no longer contained, relegated to the Third World and the Third World pockets of the First.The situation has gotten so bad that the idea of debt forgiveness is gaining mainstream cachet. Erik Kain, writing last October in Forbes, brought up "the old biblical idea of a jubilee  a national cancellation of private debts.” In many ways," he observed, "rather than creating a sustainable economy built around steadily rising middle and working class wages, we've built an unsustainable economy built on consumer debt. That debt has propelled the growth we've seen in recent years, acting as a sort of perpetual Keynesian injection into the economy. Now we're paying the price.” While I see debt forgiveness as a move in the right direction -- an acknowledgment that debt isn't simply a moral failing, and that the wealth of creditors, who have in so many ways rigged the game in their favor, isn't all the matters I wince at the provincialism of those who limit their concern to the American middle class, or would do no more to fix the system than increase wages for the working and professional classes. Better wages that are the result of devastated environmental regulations or that come at the expense of the Third World or future generations? The economic crisis is global in nature and the flaws of the system are deep and profound. "The economy's only valid purpose is to serve life," David Korten wrote this month in Yes! Magazine. The economy should not be an end in itself, an irresistible force that we fail to serve at our peril yet that's the conventional attitude. The economic suicides of Europe and, indeed, of every country on the planet, are testimony to the prevalence of this belief. We serve money as though it were God. When it disappears from our life, the most honourable alternative, as we stare into the abyss, is suicide. We live within an economic system that is cruel and impersonal, divorced from gratitude, empathy, compassion, love and nurturance. (Money, whatever else it is, is the root of all cynicism.) This system is also voracious. It's eating the planet: eating, i.e., privatizing and selling back to us, what was once the human and environmental commons, the context of all life. "Real capital assets," writes Korten in his excellent essay, "have productive value in their own right and cannot be created with a computer key stroke. The most essential forms of real capital are social capital (the bonds of trust and caring essential to healthy community function) and bio system capital (the living systems essential to Earth's capacity to support life). We are depleting both with reckless abandon.” Trapped within the present economic system, so many people have limited patience for what they value most deeply, e.g., the happiness and loving growth of children, the glorious fecundity of the earth, the peace that passes all understanding. Who has time? We all loved him, but...As the system crashes; we have the opportunity to look beyond it. Let's dig deeply to establish the foundation of its replacement. 

 

How One Disappearance Case May Prove China's Commitment to Rule of Law Post-Transition

 

A key question about the Chinese government's leadership transition later this year is whether as a rising power China can achieve internationally agreed-upon standards to respect and implement the rule of law for the benefit of its people. For all of the attention paid to the Bo Xilai scandal and circumstances involving government critics Ai Weiwei and Chen Guangcheng, one ongoing, largely unnoticed case may serve as a barometer for China's future in this area.Gendun Choekyi Nyima was just six years old in 1995 when he and members of his family were detained in Tibet and taken into "protective custody" by the Chinese government. Earlier that year the Dalai Lama declared the child to be the reincarnation of the Panchen Lama, the second-most influential leader in Tibetan Buddhism, following the death of the previous Panchen Lama in 1989.His whereabouts remain a closely guarded state secret. No reliable outside source knows where he is or what his condition is, apart from a few cryptic statements issued over the years by China's government, who most recently claimed Gendun Choekyi Nyima now 23 is in mainland China and doesn't want to be disturbed. "It's a reminder about how exceptionally efficient and capable the Chinese state is when it has a security priority, when it wants to hide someone away or keep something secret," said Robert Barnett, director of Columbia University's Modern Tibetan Studies program. The Panchen Lama, like the Dalai Lama, is a crucial figure to Tibetans, and plays a key role in identifying candidates to be the next Dalai Lama. Lobsang Nyandak Zayul, the Dalai Lama's representative for the Americas, expressed to me that the whereabouts and condition of Gendun Choekyi Nyima "are of great concern to the Tibetan people," whose right to interact with their spiritual leader has been taken away. Soon after detaining Gendun Choekyi Nyima and his family, China's government identified another Tibetan boy as the "official" Panchen Lama, whose rare and carefully managed public appearances to date have been punctuated with public statements supportive of China and state stability. Why did the Chinese government, which is officially atheist, get involved in a case of religious leadership succession? China views the Dalai Lama spiritual leader of Tibetan Buddhism and, until last year, head of Tibet's government in exile as a separatist threat. Less about religion, according to the Economist, "China has its eyes on a complex struggle that will play out" once the current aging Dalai Lama dies. "With the endorsement of its own Panchen Lama, China wants to choose a successor to the current Dalai Lama and seek to control him." Beijing is concerned that the Dalai Lama and his exile supporters will support another candidate perceived as Tibetans' spiritual leader. It’s a complicated story rooted in China's claims of historic sovereignty over Tibet. The implications are enormous, but the basic facts are simple: The Chinese government detained a six year-old and his family 17 years ago and nobody has seen them publicly since. By virtually any national or international standards this is illegal and morally outrageous. What does it say about the rule of law in China if people can be disappeared so easily? Meanwhile, circumstances for Tibetans worsen. Chinese authorities aggressively put down major riots in 2008, and in the last 18 months 45 Tibetans monks, nuns, and ordinary people have self-immolated in protest of China's harsh policies. Earlier this year China installed government monitors in nearly every monastery in Tibet in an effort to prevent separatist activities, and last month Human Rights Watch reported restrictions on news and information accessible by Tibetans inside China, to prevent views about the Dalai Lama and his followers not controlled by the Chinese government. According to Columbia's Barnett, "This is much deeper than just the issue of how to control the mechanics of appointing the next Dalai Lama," explaining that in attempting to establish stability in Tibet, on the one hand the "Communist Party recognizes that it can't win over Tibetans just by argument, ideology, or economic benefit. They believe they have to have a major traditional or religious leader as a puppet figure who will endorse their claims to the Tibetan people.” The greater political value for the Chinese government in having a quasi-official Panchen Lama is that he can be paraded around "not for Tibetan audiences but for Chinese audiences," Barnett said. The government, ever concerned with stability, "can use the army to control or suppress the six million or so Tibetans if they don't agree with China's choice for the Dalai Lama, but they can't use an army to force a billion Chinese to agree.” According to Michael Davis, visiting professor of law at Hong Kong University, China appears to believe "the Tibet problem will just go away if they grind down the Tibetans." But the unrest will continue because "Tibetans will continue to mobilize opposition to the Chinese policies and China will continue to bear foreign policy cost.” He added, "People figure if China treats its border Tibetan community like this, how will it treat other neighbours it dominates?” A spokesperson for China's United Nations mission in New York did not respond to repeated requests for comment, and calls to Beijing's embassy in Washington, D.C. went unanswered. While no one with whom I spoke had any information about the condition of Gendun Choekyi Nyima, it is possible the Chinese government may view him as a bargaining chip in stalled talks with Tibet's government in exile.” It would be extraordinary for China not to realize that they need to have that missing boy alive in order to get more concessions out of the exiles, if they ever go so far as to have serious talks," said Barnett. "But at the same time, they'll have to make some kind of compromise with the Tibetans' Panchen Lama, which would mean recognizing him in some secondary role.” What’s in it for China?” I think the upside is enormous," said Davis. The Dalai Lama, who has called for autonomy for Tibet but not independence from China, "is surely the most reasonable representative of the Tibetan community they are likely to encounter," he said. "They should take advantage of this while they can. The Dalai Lama is also peculiarly suited to gain popular Tibetan support for any settlement.” From the exiles' perspective, Lobsang Nyandak Zayul noted that "most of us have given up hope with the present administration in Beijing." Reengagement with the Chinese government may be possible "once they have established the next generation of leaders," he said. If Gendun Choekyi Nyima is alive and well, one of the following moves by China post-transition could send strong signals to its people, its neighbours, and to outside powers: Unconditionally release Gendun Choekyi Nyima, as the Dalai Lama's representatives have called for. Or at least allow a neutral party to actually meet with him and verify his well-being. The new leadership in China could seize an opening and signal a policy shift on talks with exiles, and quietly raise whether Gendun Choekyi Nyima could be released as a possibility in any talks. Of course, sustained media focus on the case could make China consider reputation impacts abroad. Broader factors involved in China's treatment of its peripheral communities unsettles China's neighbours, as well as powers like the United States and the EU, so the status quo seems to carry significant costs. If China is ready to assume its role as a major power on the world stage, with new political leadership it should accept the associated responsibilities -- including respect for the rule of law at home. China can start with credible information about Gendun Choekyi Nyima.

NEWS,15.08.2012

U.K. Recession Drives More Than 1,000 To Suicide: Study

 

A painful British economic recession, rising unemployment and biting austerity measures may have driven more than 1,000 people in England to commit suicide, according to a scientific study published on Wednesday.The study, a so-called time-trend analysis which compared the actual number of suicides with those expected if pre-recession trends had continued, reflects findings elsewhere in Europe where suicides are also on the rise."This is a grim reminder after the euphoria of the Olympics of the challenges we face and those that lie ahead," said David Stuckler, a sociologist at Cambridge University who co-led the study, published in the British Medical Journal (BMJ).The analysis found that between 2008 and 2010 there were 846 more suicides among men in England than would have been expected if previous trends continued, and 155 more among women.Between 2000 and 2010 each annual 10 percent increase in the number of unemployed people was associated with a 1.4 percent increase in the number of male suicides, the study found.The analysis used data from the National Clinical and Health Outcomes Database and the Office of National Statistics.Keith Hawton, a professor at the Centre for Suicide Research at Oxford University who was not involved in the study, said its findings were "of considerable interest and certainly raise concerns", but that they must be interpreted carefully."It is also important that they are not over-dramatised in a way that might increase thoughts of suicide in those affected by the recession," he said in an emailed comment.Stuckler, who worked with researchers from Liverpool University and the London School of Hygiene and Tropical Medicine, stressed while this kind of statistical study could not establish a causal link, the power of the associations was strong. Its conclusions were strengthened by other indicators of rising mental health problems, stress and anxiety, he added.He also pointed out the study showed a small reduction in the number of suicides in 2010 which coincided with a slight recovery in male employment.A survey of 300 family doctors published by the Insight Research Group on Tuesday found that 76 percent of those questioned about the effects of the economic crisis said they thought it was making people unhealthier, leading to more anxiety, abortions and alcohol abuse.Data this month from the government's Health and Social Care Information Centre showed the number of prescriptions dispensed in England for antidepressants rose 9.1 percent in 2010.A study published last July, also by Stuckler, found that across Europe, suicide rates rose sharply from 2007 to 2009 as the financial crisis drove unemployment up and squeezed incomes.The countries worst hit by severe economic downturns, such as Greece and Ireland, saw the most dramatic increases in suicides.In Britain, there's little doubt times have been getting harder. The economy has shrunk for the last nine months and now produces 4.5 percent less than before the economic crisis.Many Britons have had the worst squeeze in living standards for 40 years and the crisis has hit young people hard, with youth unemployment soaring above 20 percent.Stuckler's BMJ study found that the number of unemployed men rose on average across Britain by 25.6 percent each year from 2008 to 2010, a rise associated with a yearly increase in male suicides of 3.6 percent."Much of men's identity and sense of purpose is tied up with having a job. It brings income, status, importance..." Stuckler said in a telephone interview."And there's also a pattern in the UK where men are three times more likely to commit suicide than women, while women are much more likely to report being depressed and seek help."Hawton noted that increases in suicides at times of economic recession had been reported before - for example in the Great Depression of the 1930s and in the economic downturn in South-east Asia during the 1990s.The World Health Organisation estimates that every year, almost a million people die from suicide - a rate of 16 per 100,000, or one every 40 seconds. It also estimates that for every suicide, there are up to 20 attempted ones.

HSBC gives US staff details for tax probe

Global bank HSBC has handed over details of current and former employees to the US authorities, it confirmed today, as part of a tax probe that almost sank rival bank UBS in 2009.As a result the bank could now face legal action from individuals whose details have been revealed, lawyers representing them said.In a letter to them seen by Reuters, the bank said it had passed on documents, in which their names appear, on the request of US authorities looking to hunt down US citizens with untaxed money held in Swiss accounts.After passing on a first set of documents earlier this year, HSBC has sent the new batch to the US Department of Justice and the Securities and Exchange Commission in an effort to reach a settlement over the investigation.HSBC lawyer Lenz & Staehelin has told lawyers acting for these employees that the documents included the minutes of executive, board and audit committee meetings, client visit reports, emails and other correspondence "We have submitted further information to the US authorities but it concerns the initial enquiry from December 2011. Client information has clearly not been submitted," HSBC Private Bank spokesman Medard Schoenmaeckers said by telephone.Banks including HSBC, Credit Suisse and Julius Baer have already passed on about 10,000 employee names in an attempt to avoid the fate of private bank Wegelin, which broke up in January under threat of indictment, bank employees and lawyers said.Credit Suisse said its cooperation with the US authorities was also in the interests of the bank and its employees. Baer declined to comment.Lawyer Douglas Hornung, who has filed a complaint against HSBC on behalf of its former chief legal counsel, said banks who handed employee names to US authorities infringed the criminal code and Swiss privacy laws.HSBC has avoided breaching strict Swiss banking secrecy laws by redacting from the documents any information that could lead to the identification of clients, said Lenz & Staehelin in a letter to lawyers acting for current and former employees of the bank.In 2009 the Swiss authorities reached a deal for UBS to pay a fine of $780 million to avert criminal charges, and ultimately agreed to allow the bank to reveal details of around 4,450 clients.Hornung said banks that hand over employee data to US officials are hoping to reduce the potentially huge fines they might face if they are found to have helped US clients avoid tax."HSBC could face a much higher fine than UBS, $1.3 to 1.4 billion would be logical. In cooperating HSBC can expect the fine to be lowered significantly," said Hornung.The benefit of such a reduction for cooperating would far outweigh anything the banks would have to pay for breaching obligations to employees in Switzerland, where the maximum fine is 5 million Swiss francs ($5.15 mln) and there are no punitive damages, Hornung said.A spokeswoman for the Swiss Attorney General confirmed that a legal complaint against HSBC had been received and said it was considering whether to open an investigation.A former HSBC employee, who asked not to be named, told Reuters he had never dealt with US clients and only realised US officials had his name during a background check when he was shortlisted for a new banking job.He was not offered the job."It can be difficult to inform former employees because as a company we don't keep records of their whereabouts. If they contact us, then we do inform them," Schoenmaeckers said.But Hornung, a partner at Geneva-based Hornung Avocats, said allegations of professional damage might be hard to prove."I have spoken to five or six people in the same situation, which means there is some chance of demonstrating a direct link between being on the list and difficulties in finding further employment," said Hornung.Bruno Seeman, a lawyer from small but locally renowned Zurich law firm Anwaltsbuero Landmann who is representing another former HSBC employee, said those wishing to sue the bank were unlikely to get any help from the largest law firms."The big five in Switzerland are all employed by the large banks, all the big commercial law firms with the capacity and know-how to act against big Swiss organisations cannot do so because it would be a conflict of interest," Seemann said."The effect is to prevent employees from approaching them because these law firms can't act against existing clients."

NEWS,14.08.2012

Europe's Economic Crisis -- Follow the Politics

 

If you've been following the Eurozone's crisis but have found the economic technicalities trying (or worse, boring) don't despair. The roots of the crisis, the obstacles impeding solutions, and the consequences of success or failure are essentially political.The technicalities of bond yields, the implications of creating Eurobonds, the appropriate size and ground rules of the proposed European Stability Mechanism (ESM), the proper role of the European Central Bank (keeping inflation low vs. providing stimulus to economies crippled by massive unemployment and stalled growth), and the pros and cons of cutting budgets as opposed to running short-term deficits to create jobs and increase demand  these are all undoubtedly important. But ultimately the economic decisions will depend on what European leaders  those needing help and those able to give it  decide they can do politically.German Chancellor Angela Merkel leads the European Union's powerhouse and is certainly no economic neophyte. She knows that the downside of pushing Greece and Spain to slash public spending is that their unemployment rates could increase, thus reducing demand and preventing the economic recovery that will produce the increased tax revenues required to reduce their debt and increase their creditworthiness. She also understands that the worse things get in Spain, the more likely that the bond markets will make life untenable for Italy's leaders, and that the euro itself will then be in (greater) peril.Yet Merkel isn't an economics professor; she's a politician and, as such, can't ignore the political reality that German taxpayers are unwilling to guarantee bonds that will allow the Greek, Spanish, and Italian governments to borrow at lower interest rates, or to make big contributions to schemes that will enable them to revive their economies by spending more in hopes of creating jobs and boosting demand. On the streets of Stuttgart or Hamburg, it doesn't much matter what Keynes said. True, Germany's big export surpluses have been enabled in large measure by the big imports of the very European countries now being castigated for their profligacy. So it is in Germans' self-interest to help them recover. But imagine Merkel the politician making this pitch to the German electorate. For all the happy talk of the European Union having created a unity that has transcended nationalism, the reality is that that stubborn sentiment remains alive and well on the continent. Germans won't write checks or take big economic risks for foreigners (even of the European variety) who, as they see it, are suffering from self-inflicted wounds. Pumping huge sums of money  over 1 trillion euros since 1990  into the former East Germany was one thing; making sacrifices for Greeks and Spaniards, let alone for "Europe," is another. Likewise, while Greek and Spanish leaders understand that they must cut government spending, they can't keep doing so at the risk of losing ground to opposition parties that accuse them of succumbing to the diktat of a German-dominated EU and ignoring the plight of the poor, the unemployed, and the retired. Elections are not imminent in either country, but in democracies all politicians are exquisitely and perennially sensitive to polls, and the risk of social unrest in Greece and Spain is ever present. So imagine Greek Prime Minister Antonis Samaras telling his fellow citizens that, yes, he feels their pain, but that, unfortunately, it's the price they must now pay for their rampant tax evasion and attachment to social programs that had to be financed by running red ink. Picture Spanish Prime Minister Mariano Rajoy whose country's problems, unlike Greece's, stem from the insolvency of its banks rather than outsize government spending giving a national television address, the gist of which is that, yes, the bankers messed up and damaged the economy, but now everybody has to pay for the repairs and that bigger bills await. That refrain won't be well received at a time when a nearly a quarter of the Spanish workforce is jobless and feels that it's footing the bill for the blunders of well-heeled bankers.Politics also explains the roots of the Eurozone's crisis. A common economic explanation is that what's happening was bound to happen because the EU foolishly decided to create a monetary union without a fiscal counterpart. That's true as far as it goes, but the choice didn't result from economic illiteracy. Countries were simply unwilling to transfer that much political power to distant European institutions and bureaucrats. The primacy of politics applies to the future as well. It's in the political realm that we'll see the biggest results of the Eurozone's success, or lack thereof, in solving its economic crisis. If it succeeds, the idealistic post-World War II project of pan-Europeanism will survive, even if the Eurozone may not retain all of its current members. The coordination of domestic and foreign policies and EU enlargement will resume, albeit at a reduced tempo, and Europe will prove that it is indeed more than the sum of its parts. If it fails, European politics will be transformed as parties with nationalistic, populist, anti-immigrant platforms overshadow moderate ones. "European" positions on major global issues will prove elusive. NATO's unity and sense of purpose, already hard to maintain in a non-Soviet world, will fray as American presidents, facing their own budgetary pressures, push European allies to spend more on defense and the latter, preoccupied with domestic problems and facing inward-looking voters, refuse.So if you find the economic details of Europe's crisis soporific keep your eyes on the politics. That's the main event.

 

Eurozone economy shrinks by 0.2%

The eurozone's debt-ravaged economy shrank in the second quarter, having flatlined in the first, despite continued German growth which economists said could soon be snuffed out.The 17-nation currency bloc contracted by 0.2% on the quarter, data showed on Tuesday. Germany eked out growth of 0.3%, marginally beating forecasts, but its forward-looking ZEW sentiment index slid for a fourth month running, undercutting even the lowest estimate in a Reuters poll.Economists said worse is likely to come and even Europe's largest economy is unlikely to defy gravity for long unless decisive action is taken to tackle the bloc's debt crisis. "Growth turned out to be pretty solid. But this could be the last positive piece of news out of Germany for some time," said Joerg Kraemer at Commerzbank. "The German economy could contract in the summer. It is fundamentally in good structural shape, but can't decouple from the recession in the euro zone, plus the global economy has also shifted down a gear."Aside from a downward blip in the last three months of 2011, the eurozone has posted pretty consistent, albeit anaemic, growth over the past three years although some of its debt-laden members have been in recession for some time."Overall it confirms the idea that the euro zone is in a recession phase," Aline Schuiling, economist at ABN AMRO, said."What we see is a vicious circle of budget cuts, high interest rates in the periphery and sovereign debt rising," she said. "Policymakers are moving very slowly ... We expect another contraction in Q3."For France, it was the third consecutive quarter of zero growth. The central bank has already said it expects a mild contraction in the third quarter. "These figures are not excellent, but at the same time France is not in recession while the majority of its European partners are," Finance Minister Pierre Moscovici told Europe 1 radio. Safe-haven German Bund futures fell and European stocks rose after the slightly stronger than expected German and French GDP reports. The euro also rose though its climb was thwarted after the ZEW survey came in worse than expected. The think tank's monthly poll of economic sentiment slid to -25.5 from -19.6 in July. ZEW economist Christian Dick said the German economy would slow due to weak growth in its main export markets, but would not deteriorate sharply.Austria and the Netherlands almost matched Germany's performance, each posting growth of 0.2%. But Finland, one of Germany's northern European allies in pushing for austerity, suffered a 0.7% year-on-year (y/y)fall in GDP.EU Economic and Monetary Affairs Commissioner Olli Rehn said the European Union and European Central Bank (ECB) were ready to act if needed to shore up the currency bloc."To my mind it is clear that both the European Union and ... ECB are ready to take action once certain conditions are met and if there is a request by some member state," he said in an interview.Spanish and Italian bond yields have steadied since ECB President Mario Draghi promised to do whatever it takes to save the eurozone although a government would first have to ask for help from the bloc's rescue funds.For the countries at the sharp end of the debt crisis, the picture is bleaker still and as economies shrink, so do tax revenues, making deficit-cutting even harder to achieve.That has fostered a growing debate inside and outside Europe about the sense of austerity drives.Bailed-out Portugal's recession deepened with GDP diving by 1.2% on the quarter and Cyprus contracted by 0.8%. Figures released on Monday showed deficit-cutting measures helped to shrink Greece's economy 6.2% y/y in the second quarter. Economists say the slump will persist as the government scrambles to secure billions in additional cuts to keep bailout funds flowing. Italy's second quarter data last week showed the economy contracted 0.7% quarter-on-quarter, compounding the difficulties for Mario Monti's technocrat government as it tries to avoid a bailout. Spain's economy shrank 0.4% over the same period, pushing it deeper into recession. The big unanswered question is whether a weakening economy will make Germany, the EU's paymasters, less likely to support government rescue efforts for the broader eurozone. German Chancellor Angela Merkel has said repeatedly over the past year that she will do everything to save the euro, most recently after the ECB signalled it would intervene in the bond market to lower Spanish and Italian borrowing costs.Not all Germans support that course and the chancellor's room for manoeuvre appears to be shrinking at a time when both Greece and Spain may soon require new rescues. However, if ordinary Germans start to feel real economic pain, their response could be to demand their leaders sort out the crisis that is now finally knocking at their door."I have full trust in the German people and political leaders that they are fully committed to the euro," Rehn said.It is quite possible that Madrid and Rome will seek help from the euro zone's rescue funds and the ECB before the year is out. If so, most economists expect the German economy at least to rebound after a gruelling third quarter as confidence revives.Christian Schulz, an economist at Berenberg Bank in London, said it was vital to get a grip on the euro zone crisis. "We expect that the ECB has initiated a turning point with its signal of bond purchases," he said. "After a weaker summer the German economy will be able to grow faster again from the fourth quarter."

Eurozone narrowly escapes recession

The eurozone economy narrowly skirted recession in the first half of the year, but austerity programmes across the region and a debt crisis weighing ever more heavily on its periphery suggest the reprieve will be short-lived. Gross domestic product (GDP) shrank by 0.2% in the second quarter from the first after risk-averse businesses and consumers reined in spending, European statistics agency Eurostat said on Tuesday. Quarterly growth flatlined in January-March, meaning the region averted the two consecutive quarters of contraction that define a recession. Eurostat revised up the year-on-year GDP figure for that period to zero from a 0.1% contraction. Europe’s debt crisis intensified during the second quarter, with Greece coming closer to an exit from the single currency and Spain struggling with a banking crisis that pushed its borrowing costs to danger levels. Analysts agree the gloomy picture is not about to change. “What we see is a vicious circle of budget cuts, high interest rates in the periphery and sovereign debt rising,” said Aline Schuiling, an economist at ABN AMRO. “There is still a lot of uncertainty related to the crisis.” A decline in GDP from the end of last year levelled off in the first quarter of 2012 as exports offset a plunge in investment and inventories. “The economy is avoiding recession by the skin of its teeth, but it will be a temporary reprieve,” Kenneth Wattret, economist at BNP, said. “You could argue we have one leg in the recession already,“ said Martin Van Vliet, economist at ING. “Leading indicators point to a further contraction in the third quarter, so we might indeed see a technical recession.” Tuesday’s flash GDP estimate for the second quarter was in line with the average of economists’ expectations as polled by Reuters. Industrial production, a key component of GDP, fell 0.6% in June from May and 2.1% compared to June 2011, another reading from Eurostat showed. This was slightly above forecasts of a 0.7% and 2.2% fall respectively. Earlier on Tuesday, Germany posted modest growth in the second quarter, while France stagnated, as Europe’s core gets drawn further into to the debt crisis. German analyst and investor sentiment also dropped for a fourth straight month in August, undercutting even the lowest forecast in a Reuters poll, a survey showed on Tuesday.

NEWS,13.08.2012

An Impediment or an Opportunity for Peace?

 

There is an ongoing debate in and outside of Israel as to whether or not this is the right time to forge peace with the Palestinians in light of the regional upheavals and instability. The peace process, at this juncture, is hopelessly frozen while the expansion of the Israeli settlements and the continued internal Palestinian strife and factionalism increasingly dims the prospect of reaching an agreement. That said, the Arab Spring, which has triggered the rise of the Arab youth against their governments and has been accompanied by uncertainty, is not an impediment but an opportunity to solve the Israeli-Palestinian conflict based on a two-state solution. The reality on the ground strongly suggests that maintaining the status quo will be particularly detrimental to Israel.Those inside the Netanyahu government who suggest that now is not the right time to seek a peace agreement with the Palestinians because of the regional turmoil and the existential threats that Israel now faces are both misguided and disingenuous. On the contrary, given the threats from Iran and its surrogate Hezbollah and the potential consequences of a failed state in Syria, it is a particularly critical moment for Israel to forge peace with the Palestinians. By doing so, Israel would be in a position to focus on the vastly more serious threats emanating from its real adversaries and would prevent the rise of a Palestinian fifth column, should Israel become mired in these regional conflicts. To enhance their positions, those who oppose peace now offer three faulty arguments to justify their stance.First, the Palestinians cannot be trusted and Israel "correctly" points to the precedents of the partial disengagement from the West Bank between 1993 and 2000, the complete withdrawal from southern Lebanon in 2000 and the withdrawal from Gaza in 2005. From the Israeli perspective, all of these moments attest to the Palestinians' inability or unwillingness to forge a permanent peace, despite having ample opportunities.Second, due to Palestinian factionalism and infighting, there is no credible partner with whom Israel can negotiate as the Palestinians have been unable to sustain a unity government. The Netanyahu government is convinced that even if an agreement is reached, it will still prove transient.Third, there are extremist Palestinian groups, such as Hamas, Islamic Jihad and others, along with non-Palestinian factions, including Hezbollah and Al Qaeda, that are vehemently antagonistic toward Israel and remain committed to its destruction.However, none of the three arguments above can pass careful scrutiny. These types of arguments are used as excuses and a cover for the Netanyahu government's deep conviction that the Jews have an inherent right to whole "land of Israel". This remains an indefatigable nonstarter to reaching a peace agreement that requires significant territorial concessions, including the conversion of Jerusalem to the capital of Israeli and Palestinian states. From the Netanyahu government's perspective, the conditions of no peace and no war that currently prevail are preferable to a compromise of the Jews' historical rights and through a strong and determined will, Israel will eventually triumph.In light of the reality on the ground, which both the Israelis and the Palestinians alike must face by virtue of their inevitable coexistence, Israel must act now because the passage of time may well be to its detriment, if not its very existence. There are three critical issues that increasingly work against Israel.Considering Israel's demographic situation, its evolutionary path has shifted radically as emigration from Israel over the past two decades (about one million) is roughly equal to the immigration into Israel for the same period. This, along with low birth rates relative to the Palestinian population, continues to erode the sustainability of Israel's national character as a Jewish state. Should this growing demographic imbalance between the Jewish and Palestinian populations continue, Israel will be forced to either establish a single state (an unacceptable proposition for them as it will instantly make the Jewish population a minority) or resort to apartheid policies that will be vehemently rejected by the international community.In recent years Israel has been fortunate that Gaza and the West Bank were generally quiet with limited resistance to the occupation and only marginal rocket attacks from Gaza that the Israeli military was able to handle with ease. Maintaining the occupation, however, and the continuance of the creeping expansion of the settlements, coupled with the uprisings of Arab youth against their own governments, now make it only a matter of time before the Palestinians will be inspired, if not forced, to rise against the occupation. They will not remain indefinitely passive, as they clearly see that the longer they wait, the more their land will be consumed, resulting in an irreversible reality on the ground that will deny the rise of an independent and viable state.Moreover, Israel will continue to face intensifying pressure from the international community due to the perpetuation of the status quo, which will dramatically increase Israel's isolation. For the United States and the European Union, who continue to be steadfast supporters of Israel, the lack of progress has a destabilizing effect on the region, which directly and indirectly impacts their national strategic interests and undermines Israel's national security. Israel should not be surprised if its closest allies, especially the U.S., decide to advance their own frameworks for peace largely based on prior Israeli-Palestinian negotiations in an attempt to save Israel from charting its own disastrous path.In a broader context, Israel's current enemies, specifically Iran and Hezbollah, will continue to exploit the Israeli-Palestinian conflict to their advantage. To counteract this encroaching threat, Israel can at least begin to neutralize its antagonists' positions by taking steps that open the door for a negotiated solution and normalization of relations with the Arab states by accepting the Arab Peace Initiative as a basis for negotiations. While this strategy may not initially and necessarily change the principle objection to Israel's very existence by actors such as Iran and Hezbollah, Israel could shift the geopolitical conditions in the region in its favor. As I was convincingly told time and time again by top Arab officials, the Arab states are prepared to move toward establishing full diplomatic relations with Israel once an Israeli-Palestinian peace is achieved. They cite the changing dynamics in the region in the wake of the Arab spring and the ensuing battle between Sunnis led by Saudi Arabia and Turkey and Shiites led by Iran who seeks regional hegemony.Despite the complex situation that Israel finds itself in, the basic question remains: how much longer can it sustain its present course without experiencing horrific and self-inflicted wounds? Israel must face the inevitable now while it is still in a strong position to negotiate an agreement with the Palestinians, a population that has, and can continue to, withstand the test of time. Unlike the precipitous withdrawal from Southern Lebanon and Gaza, any agreement with the Palestinians should be made with the Palestinian Authority in the West Bank and should be based on a quid pro quo that would involve phased withdrawals from the West Bank over a few years in order to foster mutual trust and normalization of relations while ensuring Israel's national security.Set against the context of the Arab Spring, Israel remains an oasis of stability with its economic, military and technological advantages continuing to strengthen over time. The inability of the Palestinians to change the dynamics in their favor has deepened the Israelis' complacency while removing any sense of urgency to solve the conflict, as they remain intoxicated by their military prowess and the deceptive calm before the storm. Simply put, passively waiting for the region to achieve a modicum of stability while Israel further entrenches itself in the territories is a non-starter as the Arab upheavals are not a fading phenomenon and will remain an engine of change for years, if not decades, to come. The Palestinian's turn will come sooner than expected.I must emphasize that the Palestinians, by their own violent actions and hostile public utterances, have directly contributed to the Israelis' skepticism and deepening of their conviction that the Palestinians are not partners to be trusted nor are they a population with whom they can negotiate a lasting peace. That said, it is up to Israel not to allow past experiences to blur its vision for the future and it must now chart its own future course by ending the occupation under specific "rules of disengagement" with the Palestinian Authority. Israel must never abandon the principles of equality and human rights regardless of race, color or religion, as they are the very basis on which the state arose from the ashes of the Holocaust.Netanyahu will eventually have to answer to the Israeli public as to what he has achieved over the past four years. The Israelis must now determine whether or not Netanyahu has made the conflict with the Palestinians considerably worse since he took office in 2009 and what price Israel will have to pay for his misguided and ominous policies.

Greek economy shrinks 6.2%

The Greek economy, struggling in a fifth year of recession, shrank 6.2% in the second quarter compared with a year earlier, official data showed on Monday.The economy contracted 6.5% in the first quarter, worse than the initially given 6.2%, according to revised figures issued in June.The Bank of Greece expects the economy to shrink 4.5% for 2012 as a whole, following a 6.9% drop last year.The country is relying on two financial rescue packages backed by the EU, the International Monetary Fund and the European Central Bank worth around €240bn for its economic survival.Last year, private creditors agreed to write-off more than €100bn in debt, roughly half the amount they were owed, as part of a second bailout programme.Harsh austerity measures and economic reforms linked to the aid agreements have taken their toll on the economy, with unemployment hitting record highs.The conservative-led coalition government has yet to finalise spending cuts of about €11.5bn in order to unlock its next aid installment worth some €31bn.

UK tourism slumps during Olympics

The Olympics brought less tourist money to recession-hit Britain than officials promised, a trade group said on Monday, with a majority of businesses reporting losses from last year A survey of more than 250 tour operators, hoteliers and visitor attractions found that tourist traffic fell all over Britain, not just London, said UK inbound, a leading trade association representing British tour operators said. The survey said 88% of British tourism-oriented businesses reported some losses during the games compared with the same period last year. Officials are still tallying up the total number of tourists who came to or avoided  London this summer. The capital normally sees about 1.5 million tourists on average in August, but UK inbound and other trade groups say a significant number have chosen to steer clear of London, and even the rest of Britain because they thought it would be too busy. The official visitor figures won't be available until September. Tourism officials say that international Olympics visitors to London, including athletes, officials and tourists, totalled about 300 000. Domestic spectators from Britain made up the majority of people visiting games venues Restaurants and shops have complained that these games visitors did not spend as much money on food and shopping as typical summer tourists. "The people who came to the Games really didn't do very much sightseeing, didn't do very much shopping, didn't do very much eating out,"said Miles Quest, a spokesperson for the British Hospitality Association.London's hotels have hit about 80% occupancy, not more than typical August rates, Quest added.Visa, the only credit card accepted at the Olympics, reported that international visitors to Britain spent more than £450m ($705m) on their cards during the first week of the games, up by 8% on the same time last year.Around £12.7ms were spent on Visa cards in London restaurants last week, an increase of almost 20% on a year ago.