|From: Sam Citron||3/30/2009 3:15:12 PM|
|Spain becomes 1st in euro-zone to post deflation|
Associated Press, 03.30.09, 11:01 AM EDT
Spanish consumer prices fell 0.1 percent in March from a year earlier, making it the first euro-zone economy to post an annual rate of deflation - as opposed to inflation - since the international financial crisis began.
The year-on-year decline is the first of its sort in Spain since records began in 1961, the National Statistics Institute said Monday.
It was Spain's eighth consecutive monthly decline in the consumer price index. Year-on-year, prices were up by just 0.7 percent in February.
Economy Ministry secretary David Vegara said Spain was likely to see negative price growth for several more months, owing to oil price drops. However, he rejected suggestions the country was entering a deflationary spriral - where expectations of lower prices cause consumers to hold off spending, in turn causing retailers to lower prices further.
Other euro-zone countries are also expected to see prices shrink in the coming months and the European Central bank says the entire zone may experience deflation briefly this year.
Spain's once-booming economy has shrunk over the past year mainly because of stagnation in the key construction sector and the international crisis.
The country now has an EU-high unemployment rate of 13.9 percent, and the government forecasts it will rise to 16 percent by the end of the year.
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|From: Sam Citron||3/31/2009 6:50:34 AM|
|Haiti’s Woes Are Top Test for Aid Effort [NYT]|
By NEIL MacFARQUHAR
PORT-AU-PRINCE, Haiti — Paul Collier, a leading poverty guru, spent a recent morning here waxing positive about how the world’s economic freefall might prove the perfect moment for Haiti to sell more exports like T-shirts and mangoes to Americans.
His improbable enthusiasm coincided with appearances by a bevy of luminaries descending on Haiti this month, including Ban Ki-moon, the United Nations secretary general, and the entire Security Council. All of them came to stress that this destitute nation stands at a crossroads between salvation and “the darkness,” as Mr. Ban put it.
The spotlight was calculated. A landscape of deepening woe is emerging among the world’s most destitute. About 46 million more people are expected to tumble into poverty this year amid the largest decline in global trade in 80 years, according to the World Bank. The results ripple through every index. An additional 200,000 to 400,000 infants, for example, may die every year for the next six years because of the crisis, the bank said.
Amid the turmoil, the United Nations is reminding the world’s wealthy nations, however embattled their finances, not to forget the poorest. A panel commissioned by the United Nations General Assembly suggested on Thursday that one percent of any nation’s stimulus package be set aside for poor countries, while Mr. Ban has vowed that when he joins the leaders of the Group of 20 at their economic summit meeting in London on Thursday, he will voice the concerns of the uninvited.
“There are many countries who cannot even dream of formulating their own fiscal stimulus packages,” Mr. Ban said. Last week, he sent a letter to the Group of 20 members arguing that, domestic problems aside, they should give $1 trillion over the next two years to the world’s most vulnerable nations.
Mr. Ban is trying to turn Haiti into something of an Exhibit A on the need to keep foreign aid flowing despite tighter budgets. Haiti’s upheavals last year proved particularly intense, with the nation staggering beneath the double whammy of food riots that toppled the government and a series of hurricanes that killed hundreds and battered the economy.
Now the United Nations worries that while the groundwork has been laid to get past those threats, the moment will fade because of the global crisis. The organization has spent some $5 billion on peacekeeping operations here since 2004, when the government of the still popular President Jean-Bertrand Aristide was toppled — many say with a shove from the Bush administration.
The peacekeeping force declared war against the gangs that plague Haiti, with some success. Kidnappings dropped to 258 victims last year from 722 in 2006, according to United Nations figures.
With the issue of security improved, Mr. Ban commissioned Mr. Collier — an Oxford University don whose book on fixing failed states, “The Bottom Billion,” turned him into a darling at United Nations headquarters — to whip up some solutions for rejuvenating Haiti.
Haiti needs jobs, a particular challenge in the current economic climate. Haitians often seek work in the United States, but that safety valve has been squeezed given the recession. With some 900,000 youths expected to come into the job market in the next five years, dismal prospects are the main threat to stability.
“There is nothing that is going to turn Haiti around until people have jobs,” said the rap artist and native son Wyclef Jean, who came to the island with Mr. Ban and former President Bill Clinton. Mr. Jean’s charity, Yéle Haiti, underwrites education for thousands of young Haitians.
In a downtown park, Idelson François, 24, said he finished high school four years ago and had failed to find a job or money to continue his education. “When you have no self-esteem, sometimes you can’t resist the desire to do something violent,” he said.
It required five months to seat a new government after the April 2008 food riots, and United Nations officials say development is stymied by a corrupt judicial system, weak land tenure laws and wildly inefficient ports. The roads are such moonscapes that some 40 percent of the mango crop gets too bruised to be sold abroad, said Jean M. Buteau, a leading exporter.
Some diplomats worry that the government does not have the capacity to carry out even Mr. Collier’s limited prescriptions for improving manufacturing, infrastructure, agriculture and the environment.
“What is lacking is the determination to put these good ideas into a coherent policy,” said Yukio Takasu, the Japanese ambassador to the United Nations, on the Security Council tour here. “I don’t think there is a focus.”
Constant upheaval has long scared off investors. To counter that, last year the United States Congress granted Haitian textiles duty-free access to the American market for a decade, giving rise to Mr. Collier’s optimism. The policy has added just 12,000 jobs thus far, but it is viewed as a possible boon in an era of rising protectionism.
Senior United Nations officials and other diplomats worry, however, that the tempo of new factory jobs is too slow, so they think money should be pumped into emergency programs like creating jobs to fix the environmental disaster by planting the denuded hills with forests.
There is also some criticism that Mr. Collier’s basic recommendation involves turning Haiti into a sweatshop for American consumers, with workers paid $5 per day or less. He and others defend the approach, with Mr. Clinton noting after a visit to a Hanes T-shirt factory here that its workers earned some two or three times Haiti’s minimum wage of $1.75 a day.
Haiti is so close to the United States that its problems tend to reverberate as illegal immigration, and the Marines have stormed ashore repeatedly since the first American occupation started in 1915.
Not every problem can be addressed with the military, and ignoring development has proved deadly, said Susan E. Rice, the American ambassador to the United Nations. “Where we have neglected it, it comes back to bite us.” Haiti could receive more than $245 million in American development aid this year.
Haitian officials hope the world gives generously, though there is a certain recognition of donor fatigue, especially in the economic storm.
But young Haitians grumble that their government has yet to paint a vision of the country’s future — complaints echoed by United Nations officials who say it is difficult to get President Réne Préval or his ministers to commit to an action plan.
“Just providing rice and beans is not a long-term solution,” said John Miller Beauvoir, 26, who founded a charity right out of college and wrote a book calling on other young Haitians to get involved in development. “If the captain does not know where you are going, no boat will take you in the right direction.”
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|From: Sam Citron||3/31/2009 2:23:17 PM|
|Despite Downturn, Japan Tries to Increase Exports [NYT]|
By HIROKO TABUCHI
TOKYO — Japanese companies are caught in a double bind, facing markets at home that are shrinking with the population as well as the global downturn. Nevertheless, companies must expand foreign sales aggressively — or face longer-term decline.
Exports from the world’s No. 2 economy fell an unprecedented 49 percent in February. But even as Japanese policy makers call for a renewed focus on domestic markets, companies are tying themselves more tightly to overseas markets and innovation.
“Japanese companies themselves just don’t see a future in the domestic market,” said Yasuo Yamamoto, senior economist at Mizuho Research Institute. “They’re looking for opportunities overseas instead of investing at home. That makes it almost impossible for Japan to reduce its export dependence.”
Prime Minister Taro Aso announced Tuesday that Japan would put together yet another economic package to stimulate demand, with steps to create jobs and further reduce taxes. Japan has already announced stimulus plans worth 12 trillion yen, or $122 billion, including 2 trillion yen in cash handouts.
A recovery led by domestic demand will be difficult. Even as the government pumps money into the economy, household spending has continued to decline, falling 3.5 percent in February as unemployment jumped to 4.4 percent, the highest level in two years.
With the decline in domestic spending, Japanese companies have their eyes fixed overseas despite the fall in exports. A cutback in spending among consumers in the United States, Japan’s biggest export market, is simply turning attention toward new foreign markets. The trend is clear in companies across the spectrum.
Hurt by a global slowdown in sales, Panasonic is set to book a net loss of 380 billion yen, or $3.9 billion, just in the year through March. The electronics company will lay off 15,000 workers. But as part of a new strategy called “Double-Digit Overseas Growth,” the company is making products specifically for emerging markets like China and Vietnam. And last month, Panasonic introduced a line of household appliances in Europe.
It is a similar story for Japan’s carmakers. While most auto markets could recover from the global slump as early as next year, vehicle sales in Japan are in decline, hurt by a marked lack of interest in cars among younger Japanese.
Sales of new cars have slumped by more than half from their peak in 1990. An industry organization expects sales to fall to their lowest since 1977 in the coming fiscal year.
Even Toyota Motor, which has doubled its overseas sales since 1998, experienced a drop of almost 10 percent in Japanese sales in that period.
At a recent news conference held by Honda Motor’s incoming president, discussions about a recovery in sales inadvertently turned to the United States market.
“America will always require cars,” said Takanobu Ito, who takes the helm at the automaker in June. “In Japan, consumers aren’t finding anything they want to buy.”
Even companies that previously concentrated on the home market are turning overseas.
Kirin Holdings, one of Japan’s largest breweries, grew rapidly as bubble-era Japanese drank more beer. But consumption peaked in the mid-1990s, hurt by a long economic malaise, an aging population and a shift in consumer tastes toward wine.
To woo recession-weary consumers, Kirin introduced a cheap, low-malt beer in 1998, and an even cheaper beer-flavored beverage seven years later that did away with malt altogether. Kirin also bought a domestic winemaker. Yet the company still struggled to grow.
Now Kirin has begun an aggressive buying spree overseas to bolster its foreign sales. It recently announced it would spend $1.26 billion to raise its stake in the beer unit of a Philippine conglomerate, the San Miguel Corporation. That came after Kirin bought National Foods, an Australian company, for $1 billion in 2007.
“Australia is an attractive market compared to Japan, because population and income are actually growing there,” a Kirin spokesman, Makoto Ando, said. (Australians also drink twice as much beer per capita as Japanese.)
Underlying the rush overseas is the acuteness of Japan’s demographic challenges. Japan’s population has been falling since 2005, and its working-age population could fall by a third by midcentury.
The Japanese are also becoming poorer, relatively speaking: Japan’s income per capita, once among the top five in the world, slipped to 19th in 2007, far behind the United States and many European countries.
A mismanaged pension system, cumbersome regulation in sectors like services and health, and a stark frugality adopted by many Japanese during years of economic stagnation are also weighing on spending and darkening the prospects of many companies.
Prime Minister Aso has tried to lift domestic demand with a series of stimulus measures, but gridlock in the country’s Parliament is slowing progress. Moreover, economists say Mr. Aso’s plans will be little more than stopgap measures.
“Any government spending could support domestic spending, but the effects will be temporary,” said Hiroshi Shiraishi, a Tokyo-based economist at BNP Paribas. “Japan faces deeper structural problems.”
Marketers at a baby goods maker, Unicharm, say they have done everything to keep sales growing despite the falling birthrate and sluggish economy.
A leading maker of disposable diapers, the company seized on a striking fact: even as the number of babies was falling, the Japanese were keeping more pets. So Unicharm used its diaper technology to develop paper litter sheets for cats and dogs. The company also developed a line of adult diapers for Japan’s swelling ranks of the elderly.
But that will not be enough to stem a downward trend in sales, said a Unicharm spokesman, Yasushi Shiraishi.
To make up for the shortfall, Unicharm is increasing its sales network in neighboring China. This year, the company plans to increase its sales network to 500 cities across China, from about 300 now. The company has also started selling diapers in Southeast Asia.
“Thanks to our efforts, we’re not seeing sales fall off precipitously in Japan — yet. But a decline is inevitable in the long run, so it’s important to look overseas,” Mr. Shiraishi said.
“There are 18 million babies born in China every year,” he said. “That’s 16 times more babies than Japan.”
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|From: MattMarriott||3/31/2009 7:15:19 PM|
|German school massacre repackaged to push disarm citizens agenda to utter limits|
Illustrates illuminati repackaging; exposes worldwide first the package, uncovering it as Virginia Tech II. Compares the core hoax with the 9/11 core hoax (both media hoaxes). Explains how the satanic celebration of Virginia Tech was upscaled.
Difference between Hitler 1933-1934 and US now
Manual used by Hitler in 1933-1934, with the first edict TOTALLY denying citizens access to weapons, with monopoly reserved to the nazi forces responsible for enforcing the terror state (Gestapo and SS), is the same as now.(1)
The difference in the implementation: what the party of Hitler did alone in Germany is done now together by the two "parties" in the U.S.: one of the objectives of the role of Bush was to cause as much dissociation as required for the acceptance of the most important edict of his "democratic" successor in script: total disarmament of the citizens. (2)
Germany, once again reaches utter limits first
Massacre in German school by teenager (3), was the perfect (4) first act (5) to be repackaged and sold to push to the utter limits the "Disarm citizens" agenda, i.e. abolishing the absolute last right to self protection, to keep a weapon at home.
- "explaining" that the cause for the massacre is the possibility to buy guns legally. The same record continues to be played long after after the right of defense (prohibition on carrying weapons) was legally abolished ("coincidentally" following the first school rampage in Germany, 2002).
- using the massacre to "prove" that the right to keep a weapon at home must be completely abolished, i.e. "concluding" that it should not even be allowed to sport shooters. Repackaging this point included having the largest (both in size and audience) german newspaper, Bild, use all of the first page, the day after the rampage, a fake photo of a 10 year old, supposedly Tim Kretschmer, practicing at a shooting stand.
- censoring any question about how was is possible that nobody was able to respond to a single attacker, and that for hours.
- censoring the real reason for the massacre: Tim Kretschmer was under "psychiatric treatment", i.e. his mind had been completely destroyed by BIG PHARMA (6). While "serious" media keeps this information out from any headlines, the media playing the boulevard role report it ONCE in Sub-Headlines, repackaged ("interrupted psychotherapy" - "Psychotherapie hat er unterbrochen") to pass the opposite message (Tim K. stopped taking drugs, the cause of the massacre). And what better location for placing this than below the photo that "Bild" would confess after to not show Tim (one day later, in small font, and of course not in the front page) and the headlines "The sick world of the killer - Here he was only 10 years old" (Die Kranke Welt des Killer - Hier war er erst 10) ?
Separation between Packaging and Repackaging - Tim Kretschmer v 9/11
To explain how the official story is repackaged to serve the "Disarm Citizens" agenda the relevant question is not "how true is the package?" but "Is the package consistent, i.e. are the basic assumptions valid?".
The package has Tim Kretschmer undergoing "psychiatric treatment" and that is consistent with the profile of a teenager going on rampage. This is why it was worth to previously explain the repackaging process.
Contrast this with the 9/11 package, where despite the fact that only a small part of the basic package was consistent - "suicide bombers" being muslims, like "amok teenager" undergoing psychiatric treatment or "paparazzi persecuting Princess Diana's car" - people accepted the rest of the impossible package (what was deliberately designed to pass a terror message from the beginning, like the Pentagon "crash", not relevant in this context):
- "muslims attacking targets within Illuminatiziland, aka West" violates the fundamental law ruling behavior of muslims: the tactic of the muslims is to NOT execute any attacks in areas where they are a minority, because the demographic bomb is the weapon used to become a majority, the moment where the terror begins.
- "WTC planes evaporating after crash" or "steel melting leading to collapse of skyscrapers": any of these pieces of the package violate the laws of physics. No further evidence is required to expose 9/11 as a total lie.
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|From: Sam Citron||4/6/2009 11:54:15 AM|
|Italy muzzled scientist who predicted quake|
Mon Apr 6, 2009 11:09am EDT
By Gavin Jones
ROME (Reuters) - An Italian scientist predicted a major earthquake around L'Aquila weeks before disaster struck the city on Monday, killing more than 90 people, but was reported to authorities for spreading panic.
The government on Monday insisted the warning, by seismologist Giacchino Giuliani, had no scientific foundation.
The first tremors in the region were felt in mid-January and continued at regular intervals, creating mounting alarm in the medieval city, about 100 km (60 miles) east of Rome.
Vans with loudspeakers drove around the town a month ago telling locals to evacuate their houses after Giuliani, from the National Institute of Astrophysics, predicted a large quake was on the way, prompting the mayor's anger.
Giuliani, who based his forecast on concentrations of radon gas around seismically active areas, was reported to police for "spreading alarm" and was forced to remove his findings from the Internet.
As media asked questions about the whether the government properly safeguarded the population in light of his warning, Prime Minister Silvio Berlusconi appeared on the defensive at a news conference.
He said now was the time to concentrate on relief efforts and "we can discuss afterwards about the predictability of earthquakes."
Italy's Civil Protection agency held a meeting of the Major Risks Committee, grouping scientists charged with assessing such risks, in L'Aquila on March 31 to reassure the townspeople.
"The tremors being felt by the population are part of a typical sequence ... (which is) absolutely normal in a seismic area like the one around L'Aquila," the civil protection agency said in a statement on the eve of that meeting.
It added that the agency saw no reason for alarm but was nonetheless effecting "continuous monitoring and attention."
The head of the agency, Guido Bertolaso, referred back to that meeting at Monday's joint news conference with Berlusconi.
The Major Risks Committee concluded there was no reason to forecast a more powerful earthquake than the previous tremors, he said. "There is no possibility of predicting an earthquake, that is the view of the international scientific community."
Enzo Boschi, the head of the National Geophysics Institute, said the real problem for Italy was a long-standing failure to take proper precautions despite a history of tragic quakes.
"We have earthquakes but then we forget and do nothing. It's not in our culture to take precautions or build in an appropriate way in areas where there could be strong earthquakes," he said.
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|From: Sam Citron||4/9/2009 2:43:14 AM|
|Japanese Machinery Orders Unexpectedly Rebound 1.4% (Update3)|
By Jason Clenfield
April 9 (Bloomberg) -- Japanese machinery orders unexpectedly rose for the first time in five months in February, adding to signs that the recession may be easing.
Bookings, an indicator of capital investment in the next three to six months, climbed 1.4 percent from January, the Cabinet Office said today in Tokyo. The median estimate of 28 economists surveyed by Bloomberg was for a 6.9 percent drop.
Shares rose, led by Komatsu Ltd., Japan’s biggest maker of earthmovers, on optimism that the economy’s 12.1 percent contraction in the fourth quarter represented the worst of the slump. Prime Minister Taro Aso is poised to unveil a 15.4 trillion yen ($154 billion) stimulus package, the largest for a single year, to counter an unprecedented collapse in exports.
“It’s highly likely that when we look back at this downturn we’ll see that February was when it hit bottom,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo. Still, he added, “bottoming out doesn’t mean Japan will have a solid recovery.”
The benchmark Topix stock index climbed 2.8 percent, extending its rally to 18 percent over the past month. The machinery index surged 4.9 percent. The yen traded at 99.94 per dollar at 2:14 p.m. in Tokyo from 99.74 before the report.
Recent reports show companies plan to increase output after draining inventories, merchant sentiment climbed to an eight-month high in March, and manufacturers expect to be less pessimistic next quarter.
Economies around the world are showing signs of improvement as governments spend record amounts of money to bolster demand. Chinese urban fixed-asset investment climbed 26.5 percent in the first two months of 2009. South Korea left interest rates at 2 percent today after factory production gained and manufacturing confidence rose to a five-month high.
U.S. Federal Reserve Chairman Ben S. Bernanke said last month that he sees “green shoots” in some financial markets and the pace of economic decline “will begin to moderate.”
Japan’s Cabinet Office raised its assessment of machinery orders for the first time since May 2007, saying they’re “rising slightly but still on a downward trend.” Previously it said orders were declining “sharply.”
Bookings from service companies rose 3.3 percent from January, a second month of gains. Orders from manufacturers fell 8.1 percent, less than the 27.4 percent drop in the previous month.
Confidence among Japanese merchants surged to the highest since July last month, the Cabinet Office said yesterday, indicating factory production may recover soon, according to Takahide Kiuchi, chief economist at Nomura Securities Co. in Tokyo. Companies cut inventories at a record pace in February.
Even so, there’s no letup in the export slump that prompted Aso to order his third stimulus plan since coming to office in September. Shipments abroad plunged a record 50.4 percent in February from a year earlier, the Finance Ministry said yesterday, and another survey showed bankruptcies rose to a six-year high in March.
The increase in machinery orders “could be a temporary rebound from the rapid worsening in the past six months and it’s difficult to say Japan’s economy is heading for a sustainable recovery,” said Soichi Okuda, chief economist at Sumitomo Research Institute in Tokyo. “The private sector is still reluctant to invest as their cash flow remains severe.”
The ruling Liberal Democratic Party will propose the government spends 15.4 trillion yen in the latest package, according to a document obtained by Bloomberg News. The measures would represent 3 percent of gross domestic product, taking Aso’s total stimulus to 25 trillion yen.
Bank of Japan Governor Masaaki Shirakawa said in parliament today that the economy is likely to keep worsening and uncertainty remains high.
Plunging demand for Japanese cars and electronics drove manufacturer sentiment to a record low in March, the central bank’s Tankan survey showed last week. Big companies said they plan to cut spending by 6.6 percent this fiscal year, the bleakest projection since the 2002 recession.
While the Tankan showed large companies expect sentiment to improve in three months, it also indicated that they have too many workers and excess capacity.
Sharp Corp., which yesterday posted its first loss in half a century, is eliminating 1,500 workers and closing two production lines as global flat-panel television sales slump.
Honda Motor Co. last month delayed the opening of a new domestic factory for the second time in four months. The plant, initially scheduled to start production in 2010, will now open in 2012 at the earliest, the automaker said.
“Companies are clearly under pressure, earnings have been squeezed and you’d expect to see that reflected in the investment,” said David Cohen, director of Asian economic forecasting at Action Economics in Singapore. “Capital spending will likely remain a drag on growth for the next few quarters.”
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|From: Sam Citron||4/9/2009 3:11:13 AM|
|Greece Teeters on the Verge of Bankruptcy|
By Manfred Ertel
Greece is on the brink of bankruptcy despite the fact that the global recession has yet to hit the country with full force. Strikes are paralyzing the country and the EU is putting on the pressure. But the government is still trying to put a positive spin on things.
For 33 years now, Dionisis Sargentis, 58, has been selling medical and orthopedic supplies to hospitals, products like screws and clips for damaged vertebrae or broken joints, implants, and surgical instruments. He started out as a one-man business. Today he has 13 employees and annual sales of nearly €7 million ($9.3 million).
One would think that his line of business would be recession-proof, given that there is always a need for medical supplies and his regular customers include major public hospitals in Athens.
And yet Sargentis is currently on the verge of going out of business. "I love my work," he says, "but the business is no longer worth it." For four-and-a-half years now, the public hospitals haven't paid him for the supplies he has delivered. At the moment they owe him somewhere around €4.5 million -- more than half his company's annual sales.
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Now he's fed up with waiting. Together with a number of other hospital suppliers he drove up in front of the General Hospital of Attica (KAT), which has the largest orthopedic department in Athens. But instead of delivering new supplies, he removed existing stocks from the clinic's storerooms. "We're only repossessing what belongs to us," he said. "They were just on loan." Sargentis and his fellow hospital suppliers are hoping that the Greek government will get the message and finally pay up.
As of Dec. 31 last year, the Greek government owed the 75 member companies of the Greek association of medical equipment suppliers, which Sargentis is president of, almost exactly €800 million. An entire sector of the economy is on the brink of ruin. "Everyone has their backs against the wall," he said.
There is a systemic reason for this. In Greece, hospital suppliers sell their goods to clinics on what is virtually a commission basis. The clinics pay only for what they use and in most cases only after a considerable time lag. Two to two-and-a-half years are considered normal waiting times. The suppliers take that into account in their planning. The orders made by the hospitals serve the companies as security for bank loans they take out to pay salaries and to place new orders with manufacturers. This is the way the business works -- or rather, this is the way it used to work.
But now the banks have stopped cooperating. They are refusing to provide new loans and this has caused the entire system to collapse. "It has cut off our oxygen supply," Sargentis says. "We are being suffocated by debt." But it is not the hospital suppliers' debts the banks are worried about -- it is the highly indebted Greek government they no longer see as being creditworthy. Companies like Sargentis's are the unwitting victims of the change in attitude.
No wonder, then, that there is so much public displeasure being expressed against the Greek government. Over the past few weeks, workers and public employees have been calling strikes across the country. Last Thursday, tens of thousands of people took to the streets in Greece's major cities, paralyzing public life. Trains, buses, and ferries stopped running. Hospitals offered only emergency services. Public schools were closed.
Crisis? The situation in Greece is not all that bad, insists Panos Livadas, the government's secretary general of information. The shops and cafés are full of customers, he points out. The Greek economy is "really indestructible. I don't understand these international situation assessments."
Livadas's job is to make people see things through rose-colored glasses. He explains that in 2008 his country's economy expanded by 3.2 percent, "one of the highest growth rates in the euro zone." Over the past four years, he says, economic growth in Greece has been twice as high as the overall average in the currency union countries.
He characterizes Greece's banking sector as being "basically sound" and "in considerably better condition" than those in other EU countries and in the United States. He notes that Greece was the first EU country to provide a government guarantee for personal savings up to a total of €100,000. Nothing seems to be able to shake the official's self-satisfied depictions of Greek reality.
But is this what the situation really looks like?
Short of Cash
One needs luck, especially in difficult times. At the crisis summits of EU member countries in Brussels, Prime Minister Caramanlis was lucky in the sense that the community was under such strong pressure to act in response to the crisis in Eastern Europe that not very much attention was given to the situation in Greece.
But now the European Commission has instigated disciplinary proceedings, because Athens has exceeded the euro zone budget deficit limit of 3 percent for the third time in a row. The results of audits carried out by Brussels look very different from the information in Livadas's glossy brochures.
In EU statistics, Greek government debt is listed as amounting to 94 percent of the country's gross domestic product. Italy is the only other euro zone country which has a higher level of government debt. Greece also has the lowest credit rating of all the euro zone countries. It has to finance its government debt under terms which are worse than for any other euro zone country, with the exception of Malta.
Greece has yet to break its old habits. The level of competitiveness is low, much-needed reforms are overdue, government bureaucracy is bloated and corrupt, and the country continues to live beyond its means. Even though the national pension funds are chronically short of cash, female public employees with school-age children are allowed to retire at the age of 50.
Educated young people from the middle class have little prospect of finding employment, despite being well qualified, and are forced to take casual jobs to make ends meet. As a result, many young Greeks are forced to live with their parents until they are well past the age of 30. The anger of the "€700 generation" -- as the young people are known -- over their situation exploded last December in weeks of rioting throughout the country.
The EU is now no longer willing to accept lethargy on the part of the Greek government. European Commissioner for Economic and Monetary Affairs Joaquín Almunia called for significantly harsher cost-cutting measures, a "prudent wage policy in the public sector," and greater efforts with regard to structural reforms. Georgios Provopoulos, the governor of the Bank of Greece, the nation's central bank, warned his countrymen against "self-satisfaction" and spoke of a looming danger of national bankruptcy. And Greece has still to feel the full effects of the global recession.
"The negative factors you see here are all leftovers from the past," says one EU diplomat, adding that most of them are homegrown. Economic experts are anxiously waiting to see what's going to happen this summer. They fear there could be a decline in the tourism sector, one of the most important pillars of growth in the Greek economy, accounting for 17 percent of gross domestic product. The volume of tourist bookings from the United States is reported to have dropped by up to 50 percent. The number of British vacationers, some 3 million annually in the past, alongside 2.3 million Germans, is expected to shrink by up to 30 percent.
The situation of banks that invested in Eastern Europe and in the Balkans is uncertain. Greek financial institutions invested billions of euros in bank takeovers or in setting up their own branches in Romania, Bulgaria, and Serbia. Given that the value of the national currencies in some of those countries has fallen dramatically, what were originally seen as attractive investments in developing economies could well turn out to be huge losses.
That's what the crisis looks like in Greece. "Nobody wants to see it, but everybody is afraid of it," says Kalliope Amyg, a young political scientist. "The country is dancing on a volcano."
'We Don't Know What Tomorrow Will Bring'
In Greek, there is no direct translation for the verb "save" in a monetary sense. And that is precisely the way the Greeks live.
Greece continues to have a flourishing informal sector. "It helps to stabilize people's incomes and standard of living," observes one European businessman who works in Greece. "Families try to have as many separate sources of incomes as possible."
For 24 years, Popi Kalogeropoulou, 48, has worked as a graphic artist for publishing companies, most recently for the women's magazine Young. At the end of last year she was laid off. The magazine was forced to cut costs, which meant job cuts.
Fortunately it didn't take her long to find a new job. Since mid-January, she has been doing the layout for a weekly newspaper. The pay she was offered isn't bad, more than €2,000 a month, which is a bit more than what she was getting in her last job.
The only thing is, she wasn't given a contract -- she is being forced to work under the table. "I'm being made to do something I don't want to do," she says. She was paid for the first time eight weeks and one day after she started. But she only received €1,000 -- in cash, naturally. "Companies are simply taking advantage of the crisis," she says.
Nobody believes that Greece will be able to cope with the crisis, if and when its hits the country with full force, using just its old inefficient habits. "We don't know what tomorrow will bring," says the entrepreneur Dionisis Sargentis.
Sargentis only knows what will happen if the Greek government continues to be unable to pay its bills and the companies in his sector are unable to sell their goods. "This will spell the end of the health care system in our country." Among other things.
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|From: Sam Citron||5/13/2009 11:06:28 PM|
|Thriving Norway Provides an Economics Lesson [NYT]|
By LANDON THOMAS Jr.
When capitalism seemed on the verge of collapse last fall, Kristin Halvorsen, Norway’s Socialist finance minister and a longtime free market skeptic, did more than crow.
As investors the world over sold in a panic, she bucked the tide, authorizing Norway’s $300 billion sovereign wealth fund to ramp up its stock buying program by $60 billion — or about 23 percent of Norway ’s economic output.
“The timing was not that bad,” Ms. Halvorsen said, smiling with satisfaction over the broad worldwide market rally that began in early March.
The global financial crisis has brought low the economies of just about every country on earth. But not Norway.
With a quirky contrariness as deeply etched in the national character as the fjords carved into its rugged landscape, Norway has thrived by going its own way. When others splurged, it saved. When others sought to limit the role of government, Norway strengthened its cradle-to-grave welfare state.
And in the midst of the worst global downturn since the Depression, Norway’s economy grew last year by just under 3 percent. The government enjoys a budget surplus of 11 percent and its ledger is entirely free of debt.
By comparison, the United States is expected to chalk up a fiscal deficit this year equal to 12.9 percent of its gross domestic product and push its total debt to $11 trillion, or 65 percent of the size of its economy.
Norway is a relatively small country with a largely homogeneous population of 4.6 million and the advantages of being a major oil exporter. It counted $68 billion in oil revenue last year as prices soared to record levels. Even though prices have sharply declined, the government is not particularly worried. That is because Norway avoided the usual trap that plagues many energy-rich countries.
Instead of spending its riches lavishly, it passed legislation ensuring that oil revenue went straight into its sovereign wealth fund, state money that is used to make investments around the world. Now its sovereign wealth fund is close to being the largest in the world, despite losing 23 percent last year because of investments that declined.
Norway’s relative frugality stands in stark contrast to Britain, which spent most of its North Sea oil revenue — and more — during the boom years. Government spending rose to 47 percent of G.D.P., from 42 percent in 2003. By comparison, public spending in Norway fell to 40 percent from 48 percent of G.D.P.
“The U.S. and the U.K. have no sense of guilt,” said Anders Aslund, an expert on Scandinavia at the Peterson Institute for International Economics in Washington. “But in Norway, there is instead a sense of virtue. If you are given a lot, you have a responsibility.”
Eirik Wekre, an economist who writes thrillers in his spare time, describes Norwegians’ feelings about debt this way: “We cannot spend this money now; it would be stealing from future generations.”
Mr. Wekre, who paid for his house and car with cash, attributes this broad consensus to as the country’s iconoclasm. “The strongest man is he who stands alone in the world,” he said, quoting Norwegian playwright Henrik Ibsen.
Still, even Ibsen might concede that it is easier to stand alone when your nation has benefited from oil reserves that make it the third-largest exporter in the world. The money flowing from that black gold since the early 1970s has prompted even the flintiest of Norwegians to relax and enjoy their good fortune. The country’s G.D.P. per person is $52,000, behind only Luxembourg among industrial democracies.
As in much of the rest of the world home prices have soared here, tripling this decade. But there has been no real estate crash in Norway because there were few mortgage lending excesses. After a 15 percent correction, prices are again on the rise.
Unlike Dublin or Riyadh, Saudi Arabia, where work has stopped on half-built skyscrapers and stilled cranes dot the skylines, Oslo retains a feeling of modesty reminiscent of a fishing village rather than a Western capital, with the recently opened $800 million Opera House one of the few signs of opulence.
Norwegian banks, said Arne J. Isachsen, an economist at the Norwegian School of Management, remain largely healthy and prudent in their lending. Banks represent just 2 percent of the economy and tight public oversight over their lending practices have kept Norwegian banks from taking on the risk that brought down their Icelandic counterparts. But they certainly have not closed their doors to borrowers. Mr. Isachsen, like many in Norway, has a second home and an open credit line from his bank, which he recently used to buy a new boat.
Some here worry that while a cabin in the woods and a boat may not approach the excesses seen in New York or London, oil wealth and the state largesse have corrupted Norway’s once-sturdy work ethic.
“This is an oil-for-leisure program,” said Knut Anton Mork, an economist at Handelsbanken in Oslo. A recent study, he pointed out, found that Norwegians work the fewest hours of the citizens of any industrial democracy.
“We have become complacent,” Mr. Mork added. “More and more vacation houses are being built. We have more holidays than most countries and extremely generous benefits and sick leave policies. Some day the dream will end.”
But that day is far off. For now, the air is clear, work is plentiful and the government’s helping hand is omnipresent — even for those on the margins.
Just around the corner from Norway’s central bank, for instance, Paul Bruum takes a needle full of amphetamines and jabs it into his muscular arm. His scabs and sores betray many years as a heroin addict. He says that the $1,500 he gets from the government each month is enough to keep him well-fed and supplied with drugs.
Mr. Bruum, 32, says he has never had a job, and he admits he is no position to find one. “I don’t blame anyone,” he said. “The Norwegian government has provided for me the best they can.”
To Ms. Halvorsen, the finance minister, even the underside of the Norwegian dream looks pretty good compared to the economic nightmares elsewhere.
“As a socialist, I have always said that the market can’t regulate itself,” she said. “But even I was surprised how strong the failure was.”
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|From: Sam Citron||5/23/2009 8:41:08 PM|
|As Economy Struggles, Russia’s Market Has Surged|
By ANDREW E. KRAMER
MOSCOW — Despite continuing weakness in the Russian economy, the stock exchange here has surged to become the best performing in the world, after being the worst last fall.
After the sell-off last year pushed the valuations of Russian companies to record lows, rising energy prices in recent months have drawn investors back into the market, traders said, even as the government has twice downgraded its expectations for growth this year.
Other big emerging markets, including China, India and Brazil, have rebounded sharply in recent months on signs that the fractured global economy may be beginning to heal, but none have been more buoyant than Russia.
When the authorities reported this month that industrial output declined 16.9 percent in April, the stock market still continued a five-day streak.
“Investors are not analyzing macroeconomics when deciding whether to invest in Russia,” the chief economist in Moscow for Merrill Lynch, Yulia Tseplayeva, said.
“They look at oil prices, and believe that when oil prices rise so will the Russian market,” she said. “And that is true.”
Officials now expect a contraction of more than 6 percent in the Russian economy before it begins to improve. Yet investors who braved the yo-yo bounce in the Russian market have profited handsomely.
The Micex index of major Russian company shares, for example, is up 105 percent after bottoming out on Oct. 27. It rose 19.66 points, or 1.9 percent, on Friday to close at 1,054.03.
For some investors, the very air of dismal news hanging over the country inspired contrarian bets in February and March that shares were oversold.
“It seemed a consensus emerged generally that Eastern Europe was going to hell,” Ian Hague, a partner at Firebird Capital Management, a New York hedge fund that focuses on the former Soviet Union, said by telephone. “When you see that, it is very bullish. Because the reality is never as bad as people’s fears.”
Firebird, after selling Russian shares in the second half of 2008, reinvested in February, he said.
But for all Moscow’s effort to diversify the economy, the rise in Russian equity values has closely tracked the price of oil, by far its largest export commodity — much as the market plunge last fall coincided with the collapse of oil prices.
In the second half of last year, oil prices declined 75 percent and the RTS index fell by 72 percent, said an investor note from UralSib, a Moscow brokerage firm. This year, crude prices have risen 59 percent and the RTS index 58 percent. The RTS is denominated in dollars and its fluctuations reflect both share prices and the ruble-dollar exchange rate, unlike the Micex.
Still, Russian stocks plunged last fall not only because of oil price declines, but also because many Russian industrialists had pledged shares as collateral for loans, and were required to sell when credit lines were called in.
Then, uncertainty over the stability of the ruble prompted foreign investors to sell shares.
By late January, however, the ruble had stabilized and the forced selling was over, eliminating two Russia-specific risks and leaving a very depressed market behind. Then oil prices ticked back up.
Money is trickling back into Russian investments. For now, the inflow has not balanced the outflow of capital as companies repay foreign banks for loans that are not being rolled over. But the new money coming in was very nearly equal to the outflow in April, according to an estimate by Merrill Lynch.
In that month, the central bank reported a net loss of $2 billion of capital. Since roughly $10 billion in loan payments came due in April, the investor inflow probably was about $8 billion for the month, the bank said.
And the Russian stock market bounce came in spite of looming troubles in the real economy that analysts say make it look tenuous.
But given Russia’s dependence on the boom-and-bust commodity price cycles, a lack of so-called long money investing in the economy and a good deal of jitters about political stability and relations with the West, Russia’s stock market probably will remain highly volatile.
In fact, since its inception after the collapse of the Soviet Union, the Russian stock market has been either in the top five performing markets in the world or the bottom five in every year except one, according to Renaissance Capital, a Moscow brokerage.
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|From: Sam Citron||6/17/2009 10:12:14 AM|
|Iran’s Latest Protests Seen as the Toughest to Stop [NYT]|
By NEIL MacFARQUHAR
In an iconic photograph of antigovernment demonstrations in Iran, a student with flowing black hair and a headband held aloft the bloody T-shirt of a wounded protester. After his face appeared on the cover of The Economist magazine in July 1999, Ahmad Batebi paid dearly for it, enduring nearly a decade of imprisonment and torture before fleeing into exile.
On Tuesday, as he watched the swelling antigovernment protests in Iran from suburban Virginia, Mr. Batebi described a sense of dread mixing with happiness. “Every society has to make their own version of freedom and democracy, and that is what the Iranian people are doing right now,” he said through a translator. “But I know that people are being beaten, some are going to jail and some will be killed.”
The Iranian government tolerated student-led uprisings in 1999 and 2003 for only a few days before unleashing fearsome crackdowns, sending Basij vigilantes onto campuses, where they flung a few students from the windows; bloodied as many heads as they could with bricks, chains or truncheons; and jailed scores.
Similar intimidation tactics have been on display over the past few days with little result, as Iranian state news reports of seven people killed in various cities did not deter another major antigovernment rally on Tuesday. This time, analysts say, the government will have trouble bringing about a swift, sharp end to the demonstrations over the contested presidential election results in the same way it had shut down previous eruptions.
First, there is the sheer size of these demonstrations, with protests that are not limited to students, but cut across generations and economic classes. Second, there is a more pronounced, if still nebulous, leadership centered around the leading opposition candidate, Mir Hussein Moussavi, who has adopted an openly hard-edged attitude toward the government. Third, the current crisis was inspired by common anger over a national election, not the more narrow issues students took to heart.
The question mark remains how long Iran’s rulers will tolerate the demonstrations, and indeed how long the protesters will stay in the streets until what many analysts expect will be a “Tiananmen moment.” They fear a replay of the Chinese government’s rolling out tanks to ruthlessly crush pro-democracy demonstrations in 1989 — China’s economic growth and centralized control being something of a model for the mullahs.
“This is an order of magnitude different from those earlier demonstrations,” said Juan Cole, a professor of Middle East history at the University of Michigan, who has been tracking the upheaval on his Informed Comment blog. “In the earlier student demonstrations, people were saying that the hard-liners were doing things that were wrong. What these demonstrators are saying is that the regime has become so corrupt and so dictatorial that it has become rotten to the core.”
In the earlier protests, the middle class extended something like drive-by support, honking their horns or flashing their high-beam headlights as they drove past the chanting students. Iran’s supreme leader, Ayatollah Ali Khamenei, spoke like a rueful patriarch, saying he regretted the few student deaths and that people who criticized him should not be chastised. After the initial spasms of violence the president at the time, Mohammad Khatami, fearing wider bloodshed, declined to call his followers out in support.
The general sentiment was that everyone should go home and try to solve problems through the ballot box, noted Ervand Abrahamian, an expert on Iranian opposition movements at Baruch College. But the chance of that kind of compromise has been soured by the sentiment that Friday’s election was stolen.
“Those arguments don’t work now because the ballot box has proved to be a cul-de-sac,” said Mr. Abrahamian.
Mr. Moussavi was a staunch leftist in an era when such leaders admired Che Guevara, and he served as prime minister of Iran during the 1980s when postrevolutionary battles with guerrilla movements left between 10,000 and 20,000 people dead, noted Professor Cole. He is viewed as a much tougher fighter than Mr. Khatami, an ayatollah who came from the very clerical class that runs the country.
“Moussavi was around in some tough times, he has not shown any signs of being intimidated by all this,” said Gary Sick, a senior scholar at Columbia University who runs the Persian Gulf research and information Web site called Gulf 2000. Just how far Mr. Moussavi takes the mantle of leadership is another unanswered question — the demonstrations will have to continue for the demands for change to yield results, he said.
Finally, there has been a critical shift in alliances. In the earlier uprisings, it was basically the reformists calling for change, opposed by both the religious hard-liners and the more pragmatic conservatives. This time, the pragmatists and the reformists have joined forces against the hard-liners, analysts said.
With that, the route to any workable compromise over demands by demonstrators for a new election is difficult to envision, analysts said. One reason Mr. Moussavi and other leaders have labored to keep the chants focused on the election result is to avoid giving the government the excuse to open fire because the demonstrators want to topple the system.
“I expect the situation to polarize further, and given the character of this regime, I think it is a matter of time before they roll in the tanks,” said Professor Cole.
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