Monthly Archives: June 2012

GLOBAL MARKETS-Stocks, euro surge on EU bond support

  • *EURO LEADERS RENOUNCE SENIORITY ON SPAIN LOANS
  • *EURO LEADERS AGREE TO OPEN FUNDS WITHOUT AUSTERITY PROGRAMS
  • *BANKS CAN RECAPPED DIRECTLY WITH AID FUNDS, VAN ROMPUY SAYS
HYPERINFLATION ON THE CARDS?

 

By Chikako Mogi

TOKYO (Reuters) – Asian shares and the euro surged on Friday after European leaders agreed that euro zone banks could be recapitalized without adding to government debt and opened the way for tapping a rescue fund, soothing fears over growing credit strains in Italy and Spain.

European Council Chairman Herman Van Rompuy said the aim was to create a single supervisory mechanism to break the “vicious circle” between banks and sovereign government debt.

He also said countries complying with EU budget policies would be able to access the bloc’s temporary EFSF and permanent ESM rescue funds to support their government bonds on financial markets.

http://finance.yahoo.com/news/asian-shares-down-eu-deadlock-004736109.html

Malaysia’s Felda surges 20 percent in debut of world’s No.2 IPO

(Reuters) – Malaysian palm oil firm Felda Global (FGVH.KL) surged 20 percent in its trading debut on Thursday, as investors cheered on the world’s second largest IPO after Facebook’s (FB.O) botched float and the company pledged stronger profits in the coming months.

The firm raised $3.1 billion in Asia’s biggest initial public offering of this year, running against the global gloom in IPO markets and giving the government a political dividend ahead of what is likely to be a closely fought election.

http://www.reuters.com/article/2012/06/28/us-malaysia-felda-ipo-idUSBRE85R07S20120628

 

US-Russia Row

US Senate panel approves Magnitsky bill

 

In a time, when the US empire is losing its shine, its increasingly trying to defend its existence by the use of sanctions, in a tit for tat show. Something of, Look, we can submit you into admission, in the process creating dissent among its allies. The collapse of the empire…. is underway.

Global picture emerging

Quote from the web

“The picture that’s emerging is pretty clear: there’s a global slowdown of significant proportions,” said Martin Murenbeeld, the chief economist at Toronto-based DundeeWealth Inc., which manages about C$100 billion ($97 billion) of assets. “Commodities are simply reacting to the facts as they are on the ground.”

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Turkey Isn’t the Right Model for Egypt

Excellent analysis by Bloomberg

Turkey Isn’t the Right Model for Egypt

Ever since Egyptians occupied Cairo’s Tahrir Square to face down former President Hosni Mubarak last year, Western diplomats and analysts have hoped aloud that the most populous and politically important Arab nation might follow the “Turkish Model.”
They were wrong then, but they may be right now.
Sunday’s decision by Egypt’s election commission to acknowledge the results of the country’s first free presidential elections — a win for the Muslim Brotherhood’s Mohamed Mursi — was heartening. The alternative, a stolen election, would have been depressing and had unpredictable consequences.
But the Egyptian military’s attempt to dismiss parliament and eviscerate the president’s office ahead of the vote is a clear sign of a stunted democratic system in the making — one that’s all too familiar to Turks.
Until the last decade, civilian governments in Turkey operated within strict confines delineated by the military. Sometimes, as in 1971 and 1997, the generals forced governments out with blunt or veiled threats. Sometimes, as in 1960 and 1980, they asserted themselves in an armed coup. On a daily basis, the courts and other state structures — some extra-legal — helped enforce the military’s will. Turks called this the “deep state,” a phrase meant to express the shallow nature of the country’s democracy.
Wrong Model
This isn’t the Turkish model you usually hear about — one in which a predominantly Muslim nation is ruled by a civilian and moderately Islamist government committed to free-market democracy. Unfortunately, Egypt appears determined to follow the earlier version of the Turkish model.
The relatively prosperous and democratic Turkey we know today is still very much evolving. It has existed only since about 2007, when the ruling Justice and Development Party, better known as AKP, took on the military over the right to elect former Islamist Abdullah Gul as president, and won. The government responded to its victory by effectively putting the armed forces on trial. Hundreds of officers, including dozens of generals, remain behind bars awaiting verdicts.
The Turkish and Egyptian militaries have a lot in common. Both see themselves as defenders of the state from an Islamist takeover. Both built vast economic empires at home: Turkey’s Oyak Group remains one of the country’s biggest conglomerates, funded by military pensions and making everything from Renault cars to cement. Both militaries enjoy, despite everything, deep wells of popular trust as effective institutions that in the relatively recent past carried out armed feats of national importance.
The first lesson to draw in Egypt from the Turkish model is that a military that ran the nation for decades will have deep roots in the establishment and among significant parts of the population who are frightened of what Islamists may bring. It won’t give up easily. This is a process that will probably take years, and may involve a long period of cohabitation between rival centers of power.
Second, the U.S. should recall that it was a key sponsor of the military in Turkey — a North Atlantic Treaty Organization member and an important Cold War ally — and was widely resented by Turks for supporting the generals through thick and thin. That changed after the Cold War, but deep skepticism over U.S. motives lingers among Turks today, as it does in Egypt. As we have said before, the U.S. should strictly condition the $1.3 billion in aid it gives to the Egyptian military based on its democratic record. Right now, that record is poor.
Military Parallels
Finally, Egypt’s military can draw lessons of its own from the Turkish experience. Turkey’s military has felt lingering humiliation since 2007, when it warned in a statement about Gul’s election that it was ready “to protect the unchangeable characteristics of the Republic of Turkey” against threats “in the guise of religion,” but was unable or unwilling to follow through. The civilian authorities are now using the same politically charged judicial system against the military that the generals abused for so many years in suppressing real and imagined radical Islamists.

A week to Iran Sanctions, July 1st the Date.

http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8433528
EU to implement sanctions against Iran July 1 as planned
Brussels (Platts)–25Jun2012/1125 am EDT/1525 GMT

The EU’s sanctions against Iran — including a ban on oil imports and a ban on the provision of insurance for tankers shipping Iranian oil — will come into force as planned on July 1, EU foreign ministers said Monday.

The Response, http://www.dailystar.com.lb/News/Middle-East/2012/Jun-26/178183-four-us-navy-minesweepers-arrive-in-the-gulf.ashx#axzz1yqTv4bak

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“They need the propping up of oil price, Russia has oil at 150$ on the barrel in its budget, with oil trading at almost half of that, and public dissent at historical highs, Russia needs high oil prices to quell any disharmony at home. A war is inevitable”. -dtrader
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Pressure builds up among the elite. Vice President Joe Biden warned President Barack Obama

Pressure builds up among the elite. Vice President Joe Biden warned President Barack Obama that the underlying rationale for the 2009 troop surge in Afghanistan was profoundly flawed, according to a leaked memo that is set to be published this week in a new book about the war in Afghanistan.

http://news.yahoo.com/blogs/ticket/biden-obama-troop-surge-afghanistan-memo-131420413.html;_ylt=AsIVtk6vcEpPyICVS.g5XVSs0NUE;_ylu=X3oDMTNtZGZhZ2RuBG1pdANKdW1ib3Ryb24gRlAEcGtnA2MzMzlkYTk2LTllMTMtM2U4OS1iZjY4LTE2ODRjMjZhMzRhOARwb3MDMgRzZWMDanVtYm90cm9uBHZlcgM1M2YyZjNmMS1iZWQ4LTExZTEtYmRmZi00ZDM3MjE3ODU0NmY-;_ylg=X3oDMTFpNzk0NjhtBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25z;_ylv=3

Greece’s designated finance minister resigns

Greece’s designated finance minister resigns, he justs walks in, sees greece balance sheet, and resigns, splat! How funny is that! Can greece agree to austerity without greece finance minister who fell ill earlier. Don”t know now when they will have that special euro meeting again.

ATHENS, Greece (AP) — Greece’s designated finance minister resigned Monday after being rushed to the hospital on Friday, the prime minister’s office said.

Vassilis Rapanos, chairman of the National Bank of Greece, had been named finance minister last week in the country’s new three-party coalition government. But he was taken ill before he could be sworn in Friday and has been in hospital ever since.

Rapanos has sent a letter of resignation to Prime Minister Antonis Samaras and that was accepted.
The startling development came as Germany tamped down expectations that this week’s European Union summit would emerge with any significant action on Greece as the debt-strapped nation’s two key politicians struggled with health problems.

Samaras himself was released from hospital Monday after undergoing eye surgery to repair a detached retina over the weekend, but will have to stay home for several days and won’t be able to travel to Brussels for the EU summit. He was still planning to speak by telephone later Monday with President Barack Obama.

The EU summit this Thursday and Friday comes just a week after Greece’s new coalition government was formed following months of political turmoil and two inconclusive elections. It was to have been a key test of Athens’ hopes of renegotiating some of the austerity measures it has agreed to in return for billions of euros in rescue loans from the International Monetary Fund and other European Union nations that use the joint euro currency.

It was to have been preceded by a visit to Athens starting Monday of Greece’s debt inspectors, known as the Troika — representatives from the European Commission, the European Central Bank and the IMF. But that visit was postponed until Samaras and Rapanos can recover.
Rapanos, meanwhile, remained in the hospital after being admitted Friday complaining of severe abdominal pain, dizziness and nausea. The hospital said he would be released on Tuesday but did not elaborate.

Without the troika report on Greece’s progress in economic reforms required by its international bailout, Germany said it would be premature to expect any new decisions this week. Samaras has been pressing Greece’s creditors to revise the bailout deal, which is despised by many ordinary Greeks.

“The troika needs to go to Athens, they need to assess the status of the program, then they need to brief the eurozone and IMF leadership,” said Steffen Seibert, the spokesman for German Chancellor Angela Merkel. “On the basis of this assessment, one can talk about necessary updating of the program — that is the road map that everyone in Europe is following and that’s why we don’t expect any sort of a resolution on Greece at the EU council.”

With fears that Greece’s problems are not getting resolved soon, the Athens Stock Exchange general price index closed 6.84 percent down Monday.

Greece will still be present at the EU summit, sending a delegation with outgoing Finance Minister Giorgos Zanias, one of the key negotiators in Greece’s bailout agreement. As Rapanos fell ill before he could be sworn in, Zanias still holds the title.

And the delegation will be led by the country’s president, 83-year-old Karolos Papoulias, the government announced Monday. While the presidency in Greece is a largely ceremonial post, his presence would adhere to EU regulations about summits.

It was unclear when the postponed troika visit would take place.

“First, our concern is for the health of the prime minister and finance minister,” European Commission spokesman Amadeu Altafaj Tardio said in Brussels, adding that debt inspectors would head to Greece “as soon as possible.”

Samaras’ government, comprised of his New Democracy conservatives, their long-time socialist rivals PASOK and the small Democratic Left party, has issued a policy statement outlining changes it would like to make to the terms of its international bailout. Those include repealing certain tax hikes, freezing public sector layoffs and extending by two years the mid-2014 deadline for tough austerity measures.

Whether Greece can amend the terms of its loan agreement will depend on how the proposals are viewed by its international creditors. Germany, the largest single contributor to eurozone bailouts, has repeatedly said Athens must stick to its austerity pledges.

“One thing is clear,” German Foreign Minister Guido Westerwelle said from Luxembourg. “We cannot allow everything to be negotiated again. We can also not allow discounts to be granted. What has been decided upon stands. That the (Greek) election campaigns have cost time is obvious. That’s the situation and we have to deal with it. But the fact remains that the agreements must be implemented.”

Seibert also stressed that Greece must stick to its commitments.

“A program has been agreed upon, a program goes for every government, no matter if it’s a new government, and the program is the best way to see Greece return to economic health,” he said.
In Brussels, Altafaj Tardio also stressed that “Greece has to face its financial obligations,” adding that before any further funds can be disbursed “there has to be a thorough analysis.”

“It’s no secret that there have been delays in several areas of implementation,” he added.
The latest figures released by the finance ministry Monday showed that Greece’s budget deficit for the first five months of the year was better than expected, standing at €10.87 billion ($13.63 billion) instead of the target of €12.89 billion ($16.17 billion) on a modified cash basis.

Revenue, however, was below target with the state budget net revenue standing at €19.67 billion ($24.56 billion), €926 million ($1.15 billion) short of the targeted €20.6 billion ($25.73 billion), due in part to lower domestic consumer demand and lower tax revenues.
The ministry said “this revenue shortfall was more than compensated for by the savings in State Budget expenditures for the first five months of 2012.”
____
David Rising in Berlin and Toby Sterling in Brussels contributed.