European Union officials estimate that a rescue package for Ireland may amount to about 85 billion euros ($114 billion), according to two officials familiar with the talks.
The European Commission cited the figure as a preliminary estimate on a conference call of euro-region finance ministers on Nov. 21, said the people, who spoke on condition of anonymity because the talks were private. Of the total, 35 billion euros would be earmarked for banks and 50 billion euros to help finance the Irish government.
Ireland is in negotiations with the EU and the International Monetary Fund after the country’s property crash threatened to topple the banking system.
“The overall figure is linked to the outcome of the current discussions on the three-year EU-IMF program, which includes also potential capital needs for the banking sector,” Amadeu Altafaj, spokesman for EU Economic and Monetary Affairs Commissioner Olli Rehn, said by telephone in Brussels cash advance today.
Economists’ estimates on the size of the bailout have varied. Goldman Sachs Group Inc. says Ireland may ask for about 95 billion euros. UniCredit SA put the package at as much as 85 billion euros, while Deutsche Bank AG sees a 90 billion-euro plan.
Canadian copyright law promises to dominate discussion in Ottawa over the coming weeks as hearings on Bill C-32, the controversial copyright bill, are set to begin within a few days.
If the past six months are any indication, members of Parliament will be asked to sort through confusing rhetoric in order to understand the implications of the proposed changes. Separating fact from fiction will not be easy, but getting straight answers to the following questions will be crucial:
1.Will Bill C-32 give education institutions the right to engage in massive uncompensated copying?
No. The inclusion of education as a fair dealing category will not mean that any educational copying will be free. It will only mean that educational copying will be eligible for analysis under a six-part test developed by the Supreme Court of Canada to determine whether the copying qualifies as fair dealing. The changes in Bill C-32 are more modest than often claimed as they merely fill some gaps in the existing list of fair dealing categories.
2.Will Bill C-32 give consumers the right to make backup copies and view or read their purchases on the device of their choice?
Sometimes. The bill includes new consumer exceptions that open the door to legally recording television shows (time shifting), moving content between devices (format shifting) and making personal backup copies. However, the bill also says that if the content, such as DVDs and e-books, contains a digital lock, consumers can???t circumvent the lock in order to exercise their rights. Since digital locks are commonly found on these products, Canadians may not actually get to exercise their new ???rights.???
3.Aren???t the digital lock rules in Bill C-32 required by international law?
No. The government has made implementing the World Intellectual Property Organization???s Internet treaties a key priority and those treaties include a requirement to provide legal protection for digital locks. However, the treaties feature considerable flexibility that permits countries to allow users to circumvent digital locks for legal purposes.
The Bill C-32 model is one of the most restrictive approaches in the world ??? even the U.S. permits circumvention of DVD locks for some non-commercial purposes ??? and could be amended to match the more flexible implementations found in countries such as New Zealand and Switzerland.
4.Does Bill C-32 require Internet providers to help combat piracy?
Yes. The bill codifies a ???notice-and-notice??? system that gives rights holders the power to notify ISPs of alleged infringements and requires the ISPs to forward the notifications to the targeted subscribers. ISPs bear the costs of this system, which has been used informally in Canada for more than five years. Studies have shown that a majority of users that receive notifications cease placing the infringing file back on file sharing networks.
5.Does Bill C-32 create a ???licence to steal??? by reducing statutory damages awards?
No. Canada is one of the few countries in the world with statutory damages for copyright, which can lead to liability of up to $20,000 per infringement. The lofty awards were designed for commercial infringement, as no one envisioned multi-million dollar lawsuits against individuals. Since that has become a reality in the U.S., Bill C-32 establishes a $5,000 cap for non-commercial infringement, which still represents a very significant penalty for such activities.
6.Will Bill C-32???s user-generated content provision deprive creators of commercial opportunities?
No. The provision, which legalizes the creation of certain forms of user-generated content, is limited to non-commercial activities, requires attribution, and does not apply if there is a substantial adverse effect, financial or otherwise, on the exploitation or potential exploitation of the original work.
Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at or online at www.michaelgeist.ca.
Poles voted Sunday in local elections expected to reward the government’s reluctance to trim the welfare state in the EU’s largest new member _ the only one in Europe to avoid a recession.
The government led by Prime Minister Donald Tusk and his pro-business Civic Platform party has privatized some state-run enterprises, but overall has not met its promise to trim back the welfare state.
That policy over the last three years seems to have bolstered the government’s popularity because it means Poland has avoided painful cuts during the global economic crisis, boding well for Civic Platform in local elections and in national elections next year California payday loan lenders.
Sunday’s vote for mayors, city council members and other officials is the first round in the election. In many cases, results will only be determined in a runoff vote in two weeks.
Poland’s economy slowed during the financial crisis but the nation was the only one in Europe to avoid a recession, another factor which has given Tusk’s governing team a boost.
However, the budget deficit has grown, prompting the government to plan an unpopular 1 percentage point increase in the value added tax to 23 percent on many goods and services.
Due to Europe’s economic turmoil and the growing deficit, the government also has postponed plans to adopt the euro currency. Though many business owners favor the currency change, many Poles oppose it because they fear it will lead to a rise in prices.
Opinion polls ahead of Sunday’s voting indicated that Tusk’s Civic Platform remains the country’s most popular party.
The election also is a test for the main opposition group, Law and Justice. The conservative and nationalist party was founded by the late President Lech Kaczynski _ who was killed in a plane crash this year _ and his twin brother Jaroslaw Kaczynski, who remains its leader cheap payday loan lenders.
Kaczynski has clashed with some of his closest party supporters in recent weeks. He has expelled two close aides, and several others have left in protest, raising questions about whether the turmoil will weaken support for the party.
A national election for parliament must be held by late 2011, but no date has been set.
The high-flying commodities markets hit a patch of rough air this week, but analysts expect strong demand from developing countries will continue to support prices into next year.
Investors have been plowing money into gold, oil and other commodities since September on speculation that the Federal Reserve would pump more money into the economy. The Fed officially announced its $600 billion bond-buying program earlier this month.
But the months-long rally came into question earlier this week amid renewed concerns that Ireland’s long-term debt problems could undermine the fragile European economy. Those fears eased Thursday after officials in Dublin signaled that the country is willing to accept aid from the European Union and International Monetary Fund.
Commodities were also pressured this week by signs that China will act to cool its red-hot economy, raising concerns about demand from one of the world’s biggest consumers of raw materials. Oil prices plunged 2% on Tuesday after Chinese Premier Wen Jiabao said that the government is preparing steps to tame inflation.
James Cordier, president of brokerage firm Optionsellers.com, said short-term market drivers such as Fed policy and sovereign debt worries are "just noise," adding that an improved economic outlook is the main reason to be bullish on commodities.
"The global economy is doing extremely well right now," said Cordier. "In China, India and parts of Brazil, there are hundreds of millions of people who are looking forward to driving and consuming. That’s going to continue to put upward pressure on commodity prices."
Prices for industrial metals were higher on Thursday, with copper gaining nearly 3%. Among agricultural commodities, corn and soy beans gained 3%, while wheat prices rose 2%.
Cotton prices, which have benefited from weather-related supply disruptions, rose about 3%. Cocoa and sugar also rose, while coffee prices declined.
After falling sharply Wednesday, oil prices rallied 1.7% to close Thursday at $81.85 a barrel. Gold prices also moved higher, rising $16.10 to end at $1,353 an ounce, as the U.S. dollar weakened against the euro and other more risky currencies.
The weak dollar tends to support prices for commodities that are priced in the U.S. currency. Many analysts expect the dollar to remain soft into next year as the Fed pumps money into the economy.
But Cordier said demand from developing nations will continue to boost commodity prices even if the dollar turns around. He said a strong dollar would also reflect improved economic conditions in the United States, which could signal stronger domestic demand.
"Even if the dollar is on firmer footing, I don’t think that spells the end of a bull market in commodities," he said.
Rates on fixed mortgages jumped from their lowest levels in decades this week.
Freddie Mac says the average rate for 30-year fixed loans rose to 4.39 percent from 4.17 percent, the lowest level on records dating back to 1971. The 15-year loan also climbed to 3.76 percent from 3.57 percent, the lowest since that survey began in 1991.
Mortgage rates rose because Treasury yields climbed to their highest level since July week. Mortgage rates tend to track those yields. Fears over the health of the economy eased on a strong retail sales report for October.
Global demand for U.S. stocks, bonds and other financial assets fell in September from a month earlier, the Treasury Department reported.
Net buying of long-term equities, notes and bonds totaled $81.0 billion during the month compared with net buying of $128.7 billion in August, according to data issued today in Washington. Including short-term securities such as stock swaps, foreigners purchased a net $81.7 billion compared with net buying of $11.2 billion the previous month.
“The U.S. is still an attractive place for foreign investors, but U.S. yields were pushed lower relative to some foreign markets in anticipation of the Federal Reserve’s quantitative easing,” said Gary Thayer, chief macro strategist at Wells Fargo Advisors LLC in St. Louis, by telephone after the data were released. “That may have reduced the attractiveness a bit. Longer-term, we’re still the reserve currency of the world and that continues to support inflows.”
The Treasury’s reporting on long-term securities captures international purchases of government notes and bonds, stocks, corporate debt and securities issued by U.S. agencies such as Fannie Mae and Freddie Mac, which buy home mortgages.
China remained the biggest foreign holder of U cash advance companies.S. Treasuries, after its holdings rose by $15.1 billion to $883.5 billion in September from $868.4 billion in August, according to the Treasury’s statistics.
The yield on the 10-year Treasury note, which moves inversely to its price, fell to 2.87 percent at 9:34 a.m. from 2.96 percent late yesterday.
Japan, Hong Kong
The Treasury’s statistics on other countries showed Japan, the second-largest holder, increased its holdings by $28.4 billion to $865 billion in September from $836.6 billion in August.
Total foreign purchases of Treasury notes and bonds were $78.3 billion in September compared with purchases of $117 billion in August. Foreign demand for U.S. agency debt from companies such as Fannie Mae and Freddie Mac registered net selling of $8.2 billion in September after buying of $4.6 billion in August.
Net foreign purchases of equities were $20.7 billion in September after net purchases of $4.8 billion in August. Investors purchased a net $578 million in U.S. corporate debt in September after buying $10 billion in August.
Republican Senator Bob Corker called for Congress to consider narrowing the Federal Reserve’s mandate to stabilizing prices and said Congress should consider setting a target for inflation.
Corker, who met yesterday with Fed Chairman Ben Bernanke, said today in an interview the Fed’s dual role of fighting inflation and maintaining full employment “can create sort of a bipolar mentality as it relates to the Fed” that’s “confusing to the market.”
The Tennessee senator, a member of the Senate Banking Committee, said his proposal would not prevent the Fed from addressing any threat of deflation or its program to buy $600 billion in Treasuries. The Fed cited low inflation for its decision to buy government debt securities to inject money into the lagging U.S. economy.
Congress should consider voting to set inflation targets because the Fed’s actions can cause “a lot of confusion for all concerned” he said. “The next question, do we actually vote on the Senate floor” on “an actual target for inflation?” Corker said.
“My sense is that might be a very good idea,” he said. “I am going to be talking to colleagues” about it, he said. “But minimally changing the mandate to price stability is a step in the right direction.”
Europe’s stock markets mostly fell Monday while the euro was battered again amid mounting fears that Ireland will end up having to look for outside financial help to get a handle on its mounting debt burden.
The FTSE 100 index of leading British shares was down 18.85 points, or 0.3 percent, at 5,778.02 while the CAC-40 in France fell 12.47 points, or 0.3 percent, to 3,816.65. Germany’s DAX was up just over a point at 6,735.76.
Wall Street was poised for modest gains at the open _ Dow futures were up 11 points, or 0.1 percent, at 11,163 while the broader Standard & Poor’s 500 futures rose 2.2 points, or 0.2 percent, at 1,197.60.
Investors are jittery at the moment amid reports that the Irish government is in talks with the European officials to discuss the country’s debt position. All eyes are likely to shift towards Brussels Tuesday when the finance ministers of the 16 countries of the eurozone meet, with Ireland more than likely to top the agenda.
Though the Irish authorities have claimed that they have made no application to tap a financial support package implemented after the bailout of Greece in May and continue to insist that they don’t need any more money until June, a number of investors think the country will have no choice but to seek outside help, primarily because of the shaky state of its banks.
“Greece adopted a similar tactic right up until it formally asked for international assistance,” said Ben May, European economist at Capital Economics.
The worry that Ireland will be forced to request international help has been particularly evident in the currency markets where the euro has taken a battering _ by late morning London time, the euro was down 0.7 percent on the day at $1.3607.
What’s particularly worrying for EU policymakers is that Ireland’s problems may spill over to other countries on the so-called periphery of the eurozone _ that’s certainly considered a possibility in the markets, which have priced up the cost of Portuguese and Spanish debt, alongside those of Ireland’s. The Greek and Portuguese governments are due to present their budgets for 2011 this week, while Spain is due to hold bond auctions on Tuesday and Thursday.
“While Ireland does not need to access capital markets until mid-2011, it is the risk of contagion to Spain and Portugal which seems to concern EU policymakers,” said Neil MacKinnon, global macro strategist at VTB Capital.
Even though Greece got a euro110 billion bailout in May from its partners in the eurozone and the International Monetary Fund, the country still has the potential to generate worries in the markets.
The news earlier that Greece’s 2009 budget deficit was nearly two percentage points higher than previously predicted at 15.4 percent of the country’s gross domestic product did not cause much of a stir in the markets as the EU’s statistics office had already indicated that an upward revision was likely. It also said all the issues surrounding the unreliability of Greece’s data have been addressed and that it no longer had any reservation over the Greek numbers.
More important to markets was the fact that Greece’s governing Socialists emerged the winner of local government elections, despite a record low turnout and renewed pressure on the crisis-hit nation to impose a new round of drastic spending cuts. Its candidates won eight of 13 races for regional governor, including greater Athens _ giving Prime Minister George Papandreou a badly needed boost amid recession and rising unemployment.
Mitul Kotecha, head of global foreign exchange strategy at Credit Agricole, said the results suggest that support for deficit cutting measures remains intact, reducing the prospect of early general elections.
However, Kotecha noted that reported comments from Greek Prime Minister George Papandreou over the weekend that he does not rule out extending the repayment terms of the $110 billion “will not auger well for sentiment.”
The outcome of the results comes as an an EU and IMF team visits Athens to assess the country’s progress in meeting its debt reduction obligations and whether the country should receive its third installment of the bailout package.
The other overarching concern in the markets aside from Europe’s sovereign debt crisis is whether China will raise interest rates to cool inflation, which rose to a 25-month high in October. Any slowdown in the Chinese economy, the world’s second-largest, would likely reduce its demand for oil, metals, grains and other imports.
Despite those concerns, China’s Shanghai Composite Index gained 1 percent to 3,014.41 after tumbling more than 5 percent Friday on expectations Beijing will raise interest rates.
Hong Kong’s Hang Seng shed 0.8 percent to 24,027.18, South Korea’s Kospi gained less than 0.1 percent to 1,913.81 and Australia’s S&P/ASX 200 dropped 0.1 percent to 4,688.00.
Japan’s Nikkei 225 stock average rose 1.1 percent to 9,827.51 as the yen continued to weaken to the relief of the country’s major exporters. Sentiment was also buoyed by the news that the Japanese economy grew by an annualized 3.9 percent in the third quarter of the year, more than double the previous quarter’s 1.8 percent and way ahead of analysts’ expectations for a 2.6 percent increase.
By late morning London time, the dollar was 0.5 percent higher on the day at 82.90 yen.
Benchmark oil for December delivery was up 47 cents at $85.34 a barrel in electronic trading on the New York Mercantile Exchange. The contract dropped $2.93, or 3.3 percent, to settle at $84.88 on Friday.
Ireland is being urged by European policy makers to take emergency aid to contain a debt crisis rattling their markets, according to a person briefed on the discussions.
In a conference call of European Central Bank officials around noon Frankfurt time yesterday, Ireland was pressed to seek outside help within days, the person said on condition of anonymity. Separately, a European Union official said a request for assistance was likely even as Irish Finance Minister Brian Lenihan told RTE Radio that such a call “makes no sense” as the government is fully funded to mid-2011.
Irish bonds rose from a record low yesterday, gaining for the first time in 14 days as traders bet a bailout was near. Prime Minister Brian Cowen said for the first time that he is working with fellow EU leaders as “there are issues affecting the wider euro area” and that they are trying to “ensure that the bond markets respond positively to the euro.” He reiterated that his debt-strapped country has not sought cash.
“It seems difficult for Ireland to avoid tapping the fund unless they have new rabbits to pull out their hat,” said Julian Callow, chief European economist at Barclays Capital in London.
An ECB spokeswoman declined to comment and the Finance Ministry in Dublin said no talks on emergency funds were under way. ECB President Jean-Claude Trichet, speaking today in Tutzing, Germany, declined to comment on Ireland.
Possible Aid
Ireland could draw on the 60 billion euro ($82 billion) segment of the broader 750-billion-euro fund set up by the EU and International Monetary Fund in May, Irish state broadcaster RTE said, without saying where it obtained the information. The smaller pool is funded directly by the European Commission, the EU’s Brussels-based executive branch.
Luxembourg Prime Minister Jean-Claude Juncker, who chairs the panel of euro-area finance ministers, said yesterday there was “no immediate reason” to think Ireland will request cash and that officials would not meet before regular monthly talks in Brussels next week.
IMF Managing Director Dominique Strauss-Kahn said he was prepared to help. “If at one point in time, tomorrow, in two months or two years, the Irish want support from the IMF, we will be ready,” he told reporters today in Yokohama, Japan.
Cowen’s Conversations
Irish officials yesterday spoke to the offices of Trichet, European Commission President Jose Barroso and German Foreign Minister Guido Westerwelle, resisting the bailout that EU officials hope would calm markets, the Irish Times said without citing sources.
The British Broadcasting Corp. reported today that preliminary talks were under way for emergency aid. A Finance Ministry spokesman repeated a denial from yesterday that such talks were happening.
The premium that investors demand to hold Irish 10-year sovereign bonds over the benchmark German bonds was 564 basis points at 3:59 p.m. in London, down from a record 646 points yesterday.
Yields on bonds of Spain and Portugal jumped earlier in the week amid concern that fallout from Ireland would spread. The extra yield that investors demand to hold Portuguese 10-year bonds instead of German bunds climbed to a record 484 basis points on Nov. 11.
A decision by Ireland to use the European Financial Stability Facility would be a “circuit breaker” for the market turmoil and boost the euro, Emma Lawson, a Hong Kong-based currency strategist at Morgan Stanley, said in a report yesterday.
Euro’s Decline
At the end of European trading yesterday the euro was poised for its biggest weekly loss since August although it climbed yesterday from a six-week low against the dollar.
Ireland’s woes formed part of the debate at the Seoul summit of Group of 20 leaders, from which the finance chiefs of Germany, France, the U.K., Spain and Italy successfully cooled market concerns by saying in a statement that a plan being debated to have investors cover future bailout costs would have “no impact whatsoever” on existing debt.
The drafting of that crisis program hasn’t “been helpful,” Cowen said in an interview with the Irish Independent newspaper published yesterday. German Chancellor Angela Merkel rejected such criticism, saying in Seoul yesterday “the future crisis mechanism has nothing to do with the debate going on right now.”
“Clarification was needed and it is good news it’s now out there,” said Erik Nielsen, chief European economist at Goldman Sachs Group Inc.
Bailout Fund
EU countries established the bailout fund in May to protect the euro area from the fallout of the Greek-led debt crisis. Speculation has grown that Ireland would need it after a housing-led recession and the need to save its biggest lenders plunged it into fiscal turmoil.
Bailing out Ireland’s financial system could cost as much as 50 billion euros under a “stress case” scenario compiled by the Finance Ministry and central bank. The country’s gross funding need for 2011 will be 23.5 billion euros, falling to 18.6 billion euros in 2014, the nation’s debt agency said yesterday.
Irish officials have indicated they hope a 2011 budget, due for release on Dec. 7, will placate markets as they try to cut a budget deficit which will be about 12 percent of gross domestic product this year, or 32 percent when the costs of the banking rescue are included. Lenihan’s plan includes 6 billion euros of spending cuts and tax increases next year.
Time Needed
“The more time elapses, the bigger is the chance that the results of fiscal policies will show,” said Holger Schmieding, chief economist at Joh Berenberg Gossler & Co. in London. “The more time elapses before a country taps the fund the better.”
Ireland’s banks are nevertheless becoming more dependent on the European Central Bank after it said in September saving its lenders may cost as much as 50 billion euros as the state sinks more funds into nationalized Anglo Irish Bank Corp. and other lenders. Lenders’ borrowings from the ECB rose 7 percent last month, according to statistics published on the central bank’s website yesterday.
“The chances are rather big that at some point they need to ask for financial assistance just to calm down the situation,” Aline Schuiling, an economist at ABN Amro Bank NV in Amsterdam, said yesterday. “There will have to be a solution.”
France’s expansion slowed in the third quarter as a surge in imports and a decline in manufacturing overshadowed increasing household spending.
Gross domestic product rose 0.4 percent in the three months through September, down from the 0.7 percent gain in the previous quarter, Paris-based statistics office Insee said today. The increase was less than the median 0.5 percent forecast in a survey of 20 analysts by Bloomberg News.
France’s sixth straight quarter of growth underlines how Europe’s recovery remains fragile in the wake of the worst recession since World War II. A 4.1 percent jump in imports meant that the trade balance created a 0.5 percent drag on growth in the quarter, while the pace of growth in consumer spending doubled to 0.6 percent.
“France keeps its atypical growth structure, driven by private consumption,” said Dominique Barbet, an economist at BNP Paribas in Paris. “The foreign trade weakness is limiting the pace of economic recovery. More of the same is expected in the next few months.”
GDP rose 1 no fax cash advances.8 percent from its year-earlier level.
Factory output fell 0.1 percent from the second quarter, when it advanced 1.5 percent. Investment spending increased 0.5 percent, down from the 0.9 percent increase in the three months through June. Inventory building contributed 0.3 percent to growth, down from 0.6 percent.
So far, French consumer spending has supported the economy, limiting the drop in output during the recession relative to other countries. Spending climbed more than economists forecast in September as expectations of better job prospects and higher wages boosted confidence.
“One of the consistent surprises for me has been the resilience of consumer spending,” said Joost Beaumont, an economist at ABN Amro in Amsterdam. Growth may moderate in the months ahead “as fiscal retrenchment as well as weak labor market conditions leave their mark.”
Powered by WordPress -- XHTML 1.0