Tuesday, 27 November 2012

Greece gets $57B in critical loans, debt relief

Greece (AP) — European and global financial leaders have agreed to release €44 billion ($57 billion) in critical loans to Greece and provide billions in additional debt relief in order to help the country stabilize its ailing economy.

After three weeks of negotiations, Greece's euro partners and the International Monetary Fund agreed early Tuesday morning to release the loans in four installments beginning next month. The leaders also settled on a raft of measures — including a debt buyback program and an interest rate cut on loans — that will reduce the country's debts by about €40 billion.

Greek Prime Minister Antonis Samaras hailed the agreement in Brussels as a victory that heralds "a new day for all Greeks." But the country will still face years of economic pain as austerity measures agreed to as part of the bailout package are implemented.

Most stock markets in Europe were modestly higher on the news out of Brussels with the Stoxx 50 index of leading European shares closing up 0.2%. Meanwhile the euro gave up earlier gains to trade 0.4% lower at $1.2941. The interest rate charged on Greece's benchmark 10-year bonds, an indicator of investor confidence in a country's finances, fell 0.2 percentage points to 14.47% on the news of the debt deal.

"There remains the potential for this deal to fall apart in the medium term as there are a lot of moving parts and it is a long way away from the permanent fix that the IMF had been insisting upon," said Gary Jenkins, managing director of Swordfish Research.

"It is just one more big kick of the can down the road."

For three years, Greece has struggled to convince markets and its creditors that it can get a grip on its public finances, which had spiraled out of control. The country is predicted to enter its sixth year of recession and is weighed down by an unemployment rate of 25%.

The so-called troika of the European Central Bank, IMF and the European Commission has twice agreed to bail out Greece, pledging a total of €240 billion in rescue loans — of which the country has received about €150 billion so far. In return for its bailout loans, Greece has had to impose several rounds of austerity measures and submit its budget to scrutiny.

Without the bailout money, the country would be facing bankruptcy and a possible forced exit from the 17-country eurozone. This would have potentially chaotic repercussions for the world economy.

Nonetheless, the spending cuts and reforms insisted on by the troika have been painful. Ordinary Greeks are struggling to make ends meet as wages have been cut and taxes increased. The country is routinely shut down as strike after strike is called in protest of yet more austerity. Meanwhile, extreme political views on both the left and right are enjoying increased popularity.

The eurogroup and IMF agreed to release in December €34.4 billion in loans originally scheduled for June. The remainder will be issued in three installments in the first quarter of 2013. The money will be used to help recapitalize Greece's struggling banking industry and pay back suppliers, including its pharmacists which have gone for months without any payment from the Greek state welfare system.

Greek Finance Minister Yannis Stournaras said the deal was "very important for it keeps Greece in the euro, offers it a significant opportunity to exit the vicious cycle of recession and over-indebtedness, and contributes to its debt reduction."

But Germany's finance minister, Wolfgang Schaeuble, warned that Greece still has to stick to its side of the bargain for the bailout loans and debt relief to work.

"We can do what we want, from the IMF to the eurogroup, if Greece itself doesn't implement the necessary, difficult reforms and adjustment measures step by step, then it's a mission impossible," he told reporters in Berlin.
Click here to read complete news.

Saturday, 10 November 2012

Japan to spend $700 million in Central Asia

TOKYO: Japan pledged Saturday to launch projects worth $700 million in Central Asia to help the resource-rich region promote trade, energy-saving and regional cooperation in stabilising nearby Afghanistan.

The commitment followed a meeting in Tokyo between foreign ministers from Japan and five Central Asian nations -- Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan.

"We had frank discussions to help build a stronger, richer and more open Central Asia," Japanese Foreign Minister Koichiro Gemba told reporters after the meeting, the fourth edition of the "Central Asia plus Japan dialogue" which started in Kazakhstan in 2004.

According to a joint statement, the projects will cover five areas -- trade investment, environment and energy-saving, narrowing the wealth gap, regional cooperation in stabilising Afghanistan and cooperation in disaster prevention.

"Promoting cooperation between Japan and Central Asia will contribute to help sustain peace and stability in Afghanistan and resolve problems in the international community," said Gemba in an opening speech at the meeting.

Japanese Prime Minister Yoshihiko Noda told the visiting ministers on Friday: "I place importance on Central Asia which is placed in a geopolitically important position and rich in resources and energy."

Tokyo wants Japanese firms to play a greater role in the mineral business in the region, which has ample reserves of crude oil, natural gas, uranium and other natural resources, media reports said.

Obama to Insist on Tax Increase for Rich

President Obama said Friday that he would insist that tax increases on affluent Americans be part of any agreement to avoid a year-end fiscal crisis, setting up a possible confrontation with Congressional Republicans who say they will oppose a rise in tax rates for the rich.

In his first remarks from the White House since his re-election, Obama made it clear that he believed his victory had validated his relentless campaign call for wealthier Americans to pay more and that he expected Republicans to heed that message.

“I just want to point out this was a central question during the election,” he said in brief remarks in the East Room. “It was debated over and over again. And on Tuesday night, we found out that the majority of Americans agree with my approach.”

Obama said he had invited Congressional leaders to the White House next week to begin talks as they return for a lame-duck session of Congress. He said he was willing to make some concessions as long as the final fiscal bargain was properly balanced between new tax revenue and spending cuts.
“I’m not wedded to every detail of my plan,” Obama said. “I’m open to compromise.”

At the same time, he encouraged Congress to quickly pass an extension of the existing lower rates for those making under $250,000 even while the broader negotiations take place.

“While there may be disagreement in Congress over whether or not to raise taxes on folks making over $250,000 a year, nobody — not Republicans, not Democrats — want taxes to go up for folks making under $250,000 a year,” he said. “So let’s not wait.”

The President’s comments came shortly after Speaker John A. Boehner, who had been striking a conciliatory tone since Republican election losses in the Senate and the House, told reporters that Republicans had won a mandate of their own by retaining control of the House and that he supported continuing rates enacted in the Bush-era tax cuts for all income levels.

“Raising tax rates will slow down our ability to create the jobs that everyone says they want,” said Boehner, who said he favored generating any new federal revenue to offset the deficit by closing tax loopholes and limiting deductions.

“It’s clear that there are a lot of special interest loopholes in the tax code, both corporate and personal,” he said. “It’s also clear that there are all kinds of deductions, some of which make sense; others don’t. And by lowering rates and cleaning up the tax code, we know we’re going to get more economic growth.”

The President and Boehner were careful with their language and left room for compromise despite their fundamental differences about shifting more of the tax burden to high-income Americans. Boehner would not be very specific on what his goal might be for raising new federal tax dollars.

“I don’t want to box myself in,” he said. “I don’t want to box anybody else in. I think it’s important for us to come to an agreement with the president. But this is his opportunity to lead.”

Read complete news here-

Thursday, 8 November 2012

ECB Stands Ready to Buy Bonds as Economy Weakens

European Central Bank President Mario Draghi said the economic outlook is worsening and the bank stands ready to activate its bond-purchase program if governments fulfil the necessary conditions.
“We are ready to undertake” Outright Monetary Transactions, “which will help to avoid extreme scenarios,” Draghi said today at a press conference in Frankfurt after policy makers left the benchmark interest rate at a historic low of 0.75 percent. “The risks surrounding the economic outlook remain on the downside” and underlying inflation pressures “should remain moderate,” he said.
Draghi yesterday fuelled speculation that the ECB might put rate reductions back on the agenda, saying the debt crisis is starting to hurt Germany -- the pillar of economic strength in the euro area -- and that inflation risks are “very low.” Today he said monetary policy is already “very accommodative” and real interest rates are negative in some countries.
“We have pencilled in an interest-rate cut in December,” said Howard Archer, chief European economist at IHS Global Insight in London. “However, it is very possible that the ECB could delay trimming interest rates until early 2013 due to concerns that the impact of a near-term cut could be diluted by the problems in monetary policy transmission channels.”

Policy Transmission

The ECB’s efforts to repair its policy transmission mechanism are being hampered by Spain’s reluctance to ask for a bailout that would open the door to ECB bond purchases.
“It’s entirely up to Spain and the Spanish government to take the decision,” Draghi said. At the same time, “since the OMT announcement there have been a series of improvements” on financial markets, including “a return of flows from the rest of the world,” he said.
Spanish Prime Minister Mariano Rajoy said on Nov. 6 he needs to know how much the ECB would push down Spain’s bond yields before his government applies for aid and signs up to the conditions attached.
“The ECB can’t give any assurances ex ante,” Draghi said. “The Governing Council will take the decision in total independence. There isn’t any automatic quid pro quo.”
The euro weakened as Draghi spoke before recovering to trade little changed at $1.2745 at 3:35 p.m. in Frankfurt.

To read more about this news click here.

Wednesday, 7 November 2012

Google to introduce real bank cards for online 'Wallet' accounts

Soon, Google's electronic payment system will be available on a plastic card, too.

The world’s biggest search engine Google wants to make virtual accounts in Google Wallet service real. The Company plans to introduce plastic cards linked to its online payment system, which could in effect turn the engine into a sterling bank.

The plastic synchronized with an account in Google Wallet will look like a normal bank card, allowing all kinds of payments, deposits, as well as money transfers. A smart phone with a Google Wallet account automatically saves all the information about purchases, as well as transfers the data about the state of the account.

At the moment money from Google Wallet may be used through a smart phone that has a special chip using Near Field Communication (NFC) technology. Users can pay by presenting a smart phone to a NFC reader, and the Google Wallet card can be used in places that don’t have NFC readers and will help those who don’t have smart phones with an NFS chip.

“The card makes payments more flexible. In the end, in the future one will be able to leave all credit cards at home and just take a smart phone and a Google Wallet card,” according to experts from Droid Life portal.

The Google Wallet payment system was launched in the United States in spring 2011 in cooperation with card operator MasterCard, Citigroup and a mobile operator Sprint. The card is set to promote the payment service that currently operates through 10 smart phone models across the US in more than 100,000 shops.

Popularity of the payment system is now limited by a small range of smart phones that support NFC technology. Also, the market of internet payment systems is quite a settled place, with almost each country having its own big player, such as Webmoney and Yandex.Money in Russia, the Russia business edition of Expert magazine concludes.

Click here to read more about this news.