Dutch Finance Minister Jan Kees de Jager expects euro-region countries to make new financing pledges to bolster the European Financial Stability Facility while maintaining its AAA credit rating.
“The 440 billion euros ($612 billion) need to be available to lend out,” De Jager told parliament in The Hague today. He expects the so-called second-line guarantees to be about 75 percent of the commitments the Netherlands and other euro-area countries provided to create the aid facility last year.
“That risk doesn’t relate to the country borrowing from the emergency fund, but actually to all participants to ensure the AAA status can be used,” De Jager said before a meeting of European Union leaders in Brussels on March 11.
The need for a capital buffer to back up a AAA rating cuts the EFSF’s lending capacity to about 250 billion euros from a theoretical maximum of 440 billion euros. The other components in the emergency aid program are 60 billion euros in a fund managed by the European Commission and 250 billion euros from the International Monetary Fund.
The 750 billion euros pledged by the EU and the IMF to help European countries with financing problems is “more than sufficient,” De Jager said. Ireland applied for a bailout in November to help fund itself and save its banks, becoming the second euro member to seek a rescue after Greece.
The Federal Reserve said the labor market improved throughout the country early this year, driven by increasing retail sales and “solid growth” in manufacturing.
“Labor market conditions continued to strengthen modestly, with all Districts reporting some degree of improvement,” the Fed said today in its Beige Book report, an anecdotal account of the economy released two weeks before meetings of the Federal Open Market Committee. Its last survey, released Jan. 12, said the job market was “firming somewhat.”
Overall, the economy “continued to expand at a modest to moderate pace,” the central bank said in Washington. Eleven of the Fed’s 12 regional banks, including San Francisco and Philadelphia, described their regions as expanding, improving or experiencing moderate growth. Only Chicago reported growth “at a pace not quite as strong” as before.
Fed policy makers at their last meeting in January took a more optimistic view of the economy while maintaining their dissatisfaction with job growth. Policy makers, who are pressing ahead with their plan to buy $600 billion in Treasuries through June, raised projections for economic growth this year and made little change to forecasts after 2011 for unemployment and inflation.
The Beige Book reported that all districts except St. Louis “experienced solid growth in manufacturing production” and noted an increase in retail sales in every district except Richmond and Atlanta.
Extended Gains
Treasuries extended losses after the report. The yield on the 10-year Treasury note rose to 3.45 percent as of 2:22 p.m. in New York, from 3.39 percent yesterday. The yield on the 30- year Treasury bond rose to 4.54 from 4.48 yesterday.
Fed Chairman Ben S. Bernanke, in congressional testimony today, said he’s still not satisfied with the strength of the recovery from a recession that the National Bureau of Economic Research describes as the longest since the Great Depression.
“The economy’s recovery is not firmly established, and we think monetary policy needs to be supportive,” Bernanke said in semiannual testimony to the House Financial Services Committee.
Responding to a question from Representative Nydia Velazquez, a New York Democrat, Bernanke said the Fed’s policy of keeping its benchmark rate near zero for an “extended period” helps provide support to the economy, “which in our judgment, it still needs.”
Economies Growing
The Beige Book’s characterization of growth was little changed from the report in January, when six Fed regions, including Atlanta and Chicago, showed economies growing “modestly to moderately,” and four, including New York and Boston, reported “improving” conditions.
The Commerce Department last week reduced its estimate of fourth-quarter economic growth to a 2.8 percent annual pace from 3.2 percent as state and local governments made deeper cuts in spending. Consumer purchases rose at a 4.1 percent pace, the most since 2006, providing a boost for retailers.
Last week Target Corp., the second-largest U.S. discount retailer, projected sales at stores open at least a year may rise as much as 5 percent this year, after a 2.1 percent gain the prior period.
“Retail spending strengthened compared with a year ago across all Districts except Richmond and Atlanta,” today’s report said, while noting that winter weather “had a negative impact on retail activity” in Boston, New York, Philadelphia, Atlanta, Kansas City and Dallas.
Beige Book
The Beige Book report released today reflects information collected on or before Feb. 18 and summarized by the Atlanta Fed.
“The Boston, Cleveland, Minneapolis, and Dallas Districts cited noticeable improvements in the manufacturing sector, and the Boston and Cleveland Districts also observed increased labor demand in the health-care and medical sectors,” today’s the report said.
The Labor Department will report March 4 that the economy added 190,000 jobs in February, the most since May 2010 when the government was hiring to conduct the decennial census, according to the median forecast of a Bloomberg News survey. The unemployment rate will rise to 9.1 percent.
“Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established,” Bernanke said this week.
The chairman repeated his call for lawmakers to adopt a long-term plan to reduce the federal government’s debt, and said the Fed won’t buy state debt to alleviate any funding crunch, even as it’s “possible” that U.S. states could pose a risk to the financial system.
Real Estate
The Beige Book report described the real estate market as “varied, but overall sales and construction remained at low levels across all districts.”
Four Fed districts, including Dallas and Boston, described the manufacturing outlook as “optimistic” and four, including Philadelphia and Atlanta, reported “more rapid improvement in factory orders.”
Manufacturing in the U.S. grew in February at the fastest pace in almost seven years, driven by gains in orders, employment and exports that signal factories will continue to propel the expansion.
The Institute for Supply Management’s factory index increased to 61.4, exceeding the median forecast of economists surveyed by Bloomberg News and the highest level since May 2004, the Tempe, Arizona-based group said yesterday.
Auto dealers are seeing improved demand. General Motors Co. yesterday said U.S. sales of its four remaining brands rose 49 percent in February, topping analysts’ estimates.
Company Profits
Berkshire Hathaway Inc.’s quarterly profit rose 43 percent to the highest since 2007, boosted in part by Chairman Warren Buffett’s purchase last year of Burlington Northern Santa Fe, the second biggest railroad in the United States. Economic expansion in the U.S. fueled profit gains at the freight-hauling unit in 2010.
The improvement in the job market has not translated to pay increases, the report said, describing wage pressures as “minimal across all Districts.”
The report noted that “non-wage input costs increased for manufacturers and retailers” and that many manufacturers “reported having greater ability to pass through higher input costs to customers.”
“Retailers in some Districts mentioned they had implemented price increases or were anticipating such action in the next few months,” the Fed said.
Price Gauge
The Fed’s preferred price gauge, which excludes food and fuel, rose 0.8 percent in January from a year earlier, matching December’s year-over-year gain, the lowest in five decades of record-keeping. Fed officials aim for long-run overall inflation of 1.6 percent to 2 percent.
Oil and crop prices have soared even as core inflation has remained low. The price of gasoline, among the most visible expenses consumers, has risen 25 percent in the last year, according to an index from the American Automobile Association.
Experience with such price gains in recent decades, along with currently stable labor costs, suggests a “temporary and relatively modest increase in U.S. consumer price inflation,” Bernanke told Congress today.
Farmland values also are rising as commodities soar. A report last month from the Chicago Fed showed Midwest farmland values rising 12 percent in the fourth quarter from a year earlier. The Kansas City Fed has recorded cropland prices nearly 20 percent above year-earlier levels in Kansas and Nebraska.
Kansas City Fed President Thomas Hoenig warned Feb. 17 that the surge in farmland prices may be part of an “unsustainable bubble.”
The Fed said today that for now, “strong commodity prices were benefitting producers” of many crops, even as there were reports “of rising input prices, particularly in fertilizer and feed prices.”
Here I am celebrating
Incumbent leader Laurent Gbagbo’s government has ordered the seizure of the regional central bank’s offices in Ivory Coast in an attempt to retain control of state finances after being cut off from the money used to pay civil servants.
His political rival Alassane Ouattara, who is the internationally recognized winner of the presidential election held nearly two months ago, condemned the move Wednesday.
“This illegitimate and illegal decision to requisition is null and void. Thus, anyone who participates directly or indirectly in its implementation will be subject to sanctions and criminal prosecution,” the statement said.
A spokeswoman at the bank’s headquarters in Dakar, Senegal was not immediately available for comment.
Without access to government funds, it’s unclear whether Gbagbo will be able to continuing paying the country’s military and security forces. Ouattara supporters hope that by stemming the flow of funds to Gbagbo’s government they can force a mass defection.
Gbagbo’s finance minister Desire Dallo announced on state television late Tuesday that the Ivorian government was seizing the regional bank’s offices in Ivory Coast. Employees are to answer to local officials in Ivory Coast instead of the regional bank headquarters in Senegal, the order said.
The bank’s branch in Abidjan was open Wednesday, and dozens of soldiers and military police surrounded the building, only allowing bank employees to enter.
A security guard, who did not want his name used because he was not authorized to speak to journalists, said two top officials in Gbagbo’s government had entered the building to speak to employees.
The Central Bank of West African States, known by its acronym BCEAO, regroups the treasuries of eight West African countries: Benin, Burkina Faso, Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal and Togo.
Gbagbo’s access to state accounts was first revoked in December, when officials said that only representatives of Ouattara’s government would have signing privileges on state accounts payday loans in 1 hour. However, Ouattara officials said despite that action, Gbagbo had been able to still access money from the central bank.
The head of the central bank, a Gbagbo supporter who had been accused of not cooperating with Ouattara, resigned Saturday.
As the political crisis over the disputed election drags on, the two men vying for power in Ivory Coast have increasingly tried to step up the financial pressure on one another. Earlier this week, Ouattara called for a one-month on cocoa exports from the country, which is the world’s largest cocoa producer.
The 15-nation West African bloc of countries known as ECOWAS also has threatened to oust Gbagbo by force if negotiations fail, but has set no deadline for such an intervention.
Ivory Coast was divided into a rebel-controlled north and a loyalist south by a 2002-2003 civil war. The country was officially reunited in a 2007 peace deal, but the long-delayed presidential election was intended to help reunify the nation. Instead, the U.N. says at least 260 people have been killed in violence since the vote.
Human Rights Watch said Wednesday that security forces and militias loyal to Gbagbo have been carrying out systematic killing and rapes targeting Ouattara supporters.
The report cited several witnesses who said that the militiamen would demand to see identity cards of those stopped at the roadblocks and decided to kill them if they had last names from the north of the country, where Ouattara’s support is strong.
Police also targeted midlevel Ouattara party members, arriving at their houses and asking for them by name before kidnapping them, the report said. In some cases, family members were raped during these house calls and several party members were found later in city morgues riddled with bullets, it said.
Gbagbo’s allies have repeatedly denied any involvement in the postelection violence.
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.
Results of a Field Poll that measured voter awareness and sentiment toward four of 10 propositions slated to appear on the state’s November general election ballot were released Friday.
Voters are opposing Proposition 23, the initiative to suspend AB 32, California’s greenhouse gas reduction law, and Proposition 19, the marijuana legalization initiative, and supporting Propositions 25 and 18, the Field Poll said.
Proposition 25 would require a majority vote to approve the state budget while retaining a two-thirds vote to increase taxes, while Proposition 18 is an $11.1 billion bond measure to fund water supply and protection facilities.
Voter awareness of the measures varied widely, according to the survey. More than three in four likely voters (77 percent) report some familiarity with Proposition 19, the marijuana legalization initiative. Most voters (56 percent) also had heard of Proposition 25, which would change vote requirements needed to pass the state budget.
Fewer potential voters (39 percent) had heard of Proposition 23, which would suspend AB 32, or water bond measure Proposition 18 (24 percent).
According to the Field Poll:
The poll has a sampling error rate of plus or minus 3.2 percentage points for likely voters and a higher margin for subgroups. Pollsters surveyed 1,005 people by telephone between June 22 and July 6.
Just over 3,000 homeowners in the Albany, N.Y., region have received a bank notice since mid-February telling them they are at risk of foreclosure, according to a report.
The data is based on notices mailed under a new law requiring lenders to give homeowners 90-day notice of a possible foreclosure.
The information was compiled by the New York State Banking Department and a group of housing assistance agencies based in Albany called the HomeSave Coalition.
HomeSave is sponsoring a free legal clinic June 9 to help homeowners avoid being scammed by companies promising to help those facing foreclosure.
The clinic will be held at 5:30 p.m. at Stuyvesant Plaza on Western Avenue. To attend or for more information, contact the HomeSave Coalition at 518-434-1730.
A total of 3,009 home owners in Albany, Columbia, Fulton, Greene, Montgomery, Rensselaer, Saratoga, Schenectady, Schoharie and Washington counties received the notices since Feb. 13.
That represents just under 1 percent of all owner-occupied homes in the 10 counties.
The highest per-capita ratio was in rural Montgomery County, where 1.27 percent of owner-occupied homes received a pre-foreclosure notice. The lowest ratio was in Saratoga County, 0.79 percent.
The per-capita figures for the Albany region are in line with data compiled by RealtyTrac, an online seller of distressed properties that reports on the number of foreclosure notices filed in county clerk’s offices nationwide.
Unlike RealtyTrac, however, the new report tracks the number of homeowners at risk of a foreclosure action, not those that have already received a foreclosure filing. The foreclosure process takes months to complete and involves several procedural steps in court.
Under the new state law, which took effect in February, lenders must sent notices to homeowners at least 90 days before starting a foreclosure action.
Lenders must also file certain information with the state Banking Department about the pre-foreclosure notices. The Banking Department, in turn, shares that with nonprofit groups that help people in danger of losing their home.
The HomeSave Coalition is responsible for outreach in the 10-county region surrounding Albany.
The top three mortgage service companies that sent the notices were Wells Fargo, HSBC and Citi Mortgage/ABN Amro Mortgage.
Treasury prices fell for a second day on Thursday as stocks soared and the euro firmed.
What prices are doing: The benchmark 10-year note fell 2/32 to 101-4/32, pushing the yield up to 3.37%, from 3.19% on Wednesday. Bond prices and yields move in opposite directions.
The 30-year bond lost 4/32 to 102-29/32 and yielding 4.3%. The 5-year note edged lower by 1/32 to 99-21/32, yielding 2.21%, while the 2-year note fell less than 1/32 to 99-24/32, yielding 0.89%.
What’s moving the market: Treasury prices were pressured Thursday as demand for riskier investments increased and stocks recovered losses from the previous session.
Treasurys are viewed as low-risk investments since they are backed by the U.S. government; therefore, they are particularly attractive during times of economic uncertainty.
Confidence in the euro zone was also boosted on Thursday and the euro strengthened versus the dollar after China’s government called Wednesday’s reports that it may reduce its holdings of euros "groundless."
"There’s been some significant pickup in risk appetite today," said Kim Rupert, a fixed-income analyst at Action Economics. "Some of the fears that dogged the market late yesterday have been assuaged a bit, and that has revived confidence in the market payday advance lenders."
In the last of the week’s auctions, the Treasury Department auctioned $31 billion in 7-year notes on Thursday, receiving bids totaling $89 billion.
Economy: Economic reports from the government sent mixed signals Thursday.
The Commerce Department said the economy didn’t grow as much as originally reported, with the gross domestic product rising at an annual rate of 3% in the first quarter, compared with the 3.2% rate the government had previously announced.
Meanwhile, the Department of Labor said initial jobless claims fell to 460,000 last week from 474,000 in the previous week, beating the drop to 455,000 expected by economists.
Outlook: While Treasurys may pare losses as investors prepare for a long holiday weekend, trading is likely to remain volatile, she said.
"I think we’re going to stay choppy," Rupert said. "Markets have been very vulnerable to news headlines, and I think we’ll remain susceptible to this kind of trading pattern for some time."
European finance chiefs sought to bolster international confidence in Greece’s ability to cut its budget deficit by endorsing the country’s austerity plan and promising to ensure the government delivers on it.
“The European members of the G-7 will make sure it is managed,” French Finance Minister Christine Lagarde told reporters on Feb. 6 after meeting counterparts and central bankers from the Group of Seven in Iqaluit, Canada. European Central Bank President Jean-Claude Trichet said the ECB is “confident” Greece will cut its deficit below the limit of 3 percent of gross domestic product in 2012 from 12.7 percent.
The struggles of the Greek government to convince investors it can reduce the largest budget gap in the European Union without outside assistance forced their way on to the agenda of the G-7 talks after the MSCI World Index of stocks fell to its lowest in four months on concern of a default.
“I just want to underscore they made it clear to us, they the European authorities, that they will manage this with great care,” U.S. Treasury Secretary Timothy F. Geithner said in Iqaluit. “The European authorities gave us a very comprehensive review of the program now in place to address the challenges faced by the Greek economy.”
Greek bonds have tumbled in the past two months, pushing the yield on the country’s 10-year debt above 7 percent, the highest since 1999, the year the euro began trading. The premium investors charge to hold Greek 10-year bonds over the benchmark German bund has widened to 356 basis points, about 10 times what it was two years ago, and credit-default swaps on Greek debt rose to a record on Feb. 5.
Foreign-Exchange Markets
“No measure of official reassurance would be enough unless the nations in question retain credibility in financial markets, which remains to be seen,” Geoffrey Yu, a currency strategist at UBS AG in London, said in a note to clients. “We expect foreign-exchange markets to continue trading on a risk-averse tone.”
Borrowing costs have also jumped for Portugal and Spain, raising concern among policy makers that Greece’s woes will be shared elsewhere in Europe and overseas as governments try to rein in the record budget deficits they ran up fighting the worst global recession since World War II.
“This is a crisis that has been on the horizon for quite a while,” Harvard University Professor Niall Ferguson told Bloomberg Television, adding that Belgium and Italy are also at risk. “The contagion is going to spread.”
‘Intense Concern’
German Finance Minister Wolfgang Schaeuble said in Iqaluit that policy makers outside Europe “have the impression that Europeans will solve this problem and that they’re aware of the problem.” Canadian Finance Minister Jim Flaherty said the size of Greece’s economy means “in global terms it’s not of intense concern.”
Schaeuble said Greece still has to “pay a price” for running up the deficit and said the euro remains “stable.”
“Euro-area members of the G-7 gave an update on the efforts and commitments by the Greece government to ensure fiscal sustainability and economic reform,” Trichet said. “We said that the euro area would continue to monitor closely the implementation of this stability program.”
Greek Prime Minister George Papandreou has already pledged to step up budget cuts if needed and EU Monetary Affairs Commissioner Joaquin Almunia, who also attended the G-7 meeting, said last month that leaders have no “plan B” to help Greece.
Painful Measures
Most Greeks object to increases in the retirement age and fuel taxes even as a majority say painful measures are needed to reduce the budget gap, according to a Kappa Research poll for To Vima newspaper, published yesterday.
Harvard’s Ferguson said Greece’s economy will suffer as it tries to restore fiscal order with the resulting increase in unemployment triggering public strikes. Teachers, hospital workers and tax collectors already have called a 24-hour strike for Feb. 10 and private-sector workers will follow two weeks later.
“It’s going to be messy,” said Ferguson, who predicted Germany and France will provide financial aid if needed. “Suddenly the markets woke up and realized these weren’t credible fiscal policies.”
Motor Trend magazine named the Ford Fusion mid-sized sedan as its 2010 Car of the Year on Tuesday. The award includes both the gas-only and hybrid versions of the Fusion.
This year’s Car of the Year was selected from among a field of 22 different cars all of which were newly introduced or, like the Fusion, substantially redesigned for the 2010 model year.
The Fusion was first introduced in 2006 but has been substantially upgraded and redesigned for the 2010 model year.
"It’s a credit to the [Ford] team to deliver a car in the hottest selling segment in the market and to make it absolutely competitive with the benchmarks," said Motor Trend editor-in-chief Angus McKenzie at an award presentation ceremony.
The benchmark cars in the mid-sized segment are generally considered to be the Toyota Camry and Honda Accord, which have been the two top-selling cars in America for years.
McKenzie praised the Fusion for the excellence of all versions of the car including the 4-cylinder, V6 and hybrid models.
"Another thing that impressed us was the attention to detail," McKenzie said cash til payday.
While the 2010 Fusion shares much of its engineering with the previous version, the car looked and felt like a completely new car, McKenzie said.
Motor Trend, one of the most influential automotive enthusiast magazines in the United States, also gives out SUV of the Year and Truck of the Year awards. The SUV of the Year was announced earlier with the award going to the 2010 Subaru Outback. The Truck of the Year will be announced in December.
Vehicles were judged on six different criteria: design, engineering, efficiency, safety, value and how well the vehicle fulfills its intended function.
The cars were put through track tests by Motor Trends editors. Then cars that were not eliminated in the track testing process were put through additional road tests.
Derrick Kuzak, Ford Motor Co. group vice president for product development credited the Fusion with "getting Ford back into the car market" in 2006 after the carmaker had become competitive only in large trucks and SUVs.
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