A week after the state ended its relationship with SynCare, the embattled Medicaid contractor, the company on Friday laid off its workers and circulated a terse memo threatening to dock their final paychecks under a variety of conditions paydayloans.
The memo struck a certain irony with SynCare workers who had awakened to learn that SynCare
Italy’s government, waffling for weeks on an emergency austerity plan, received a stern warning Saturday from the European central bank chief to promptly implement the deficit-fighting measures and to stay on target.
Premier Silvio Berlusconi is caught between trying to placate allies and satisfying both nervous markets and worried European Union officials.
Italy’s Parliament is preparing to take up approval of the package of spending cuts and new taxes which Berlusconi promised will add up to a euro45.5 billion ($64.86 billion) austerity package. But every few days has seen some measures _ including new levies on high-earners and reform of a generous pension system _ dropped to appease coalition partners.
With Italy’s uncertainty, European Central Bank President Jean-Claude Trichet urged Rome to keep to its word and push the package, announced in early August, toward completion.
“It is essential that the target which was announced to diminish the deficit will be fully confirmed and implemented,” Trichet said at an annual economics forum at a Lake Como resort. “This is absolutely decisive to consolidate and reinforce the quality and the credibility of the Italian strategy and its credit worthiness.”
Italy got a boost last month by the ECB when Rome’s borrowing costs dipped, thanks to the central bank’s program of buying peripheral bonds. The intervention helped stem the widening debt costs.
The Italian foreign minister, Franco Frattini, told reporters as he arrived late Saturday at the forum that his government will insist that the ECB keep buying the bonds, the Italian agency LaPresse reported from Cernobbio.
The outgoing central banker deemed as “extremely important” all measures to improve the “flexibility” of Italy’s economy. Both industrialists and union leaders have denounced the austerity plan as relying too much on slashed spending and new taxes and offering little to stimulate the country’s practically flat growth or to encourage job creation.
But the ECB’s own policies were being taken to task on the sidelines of the annual Ambrosetti forum.
“We need more stimulus, we need a weaker euro,” which could spur exports, said New York University economist Nouriel Roubini. “You can’t just talk about austerity.” He urged the ECB to “at least send a signal there is going to be monetary easing” soon.
Asked by The Associated Press to respond to Roubini’s criticism, Trichet, during a brief stroll of the posh lakeside Villa d’Este grounds at lunch time, declined to comment, saying he wouldn’t talk about matters related to policy.
With Berlusconi widely considered to be distracted by a sex scandal linked to his self-acknowledged penchant for young, beautiful women, Roubini expressed concern that whatever the measures are, markets won’t be reassured.
“Italy is always bickering,” the economist, who has warned of a possible double-dip recession in some European countries, told reporters during a break in the closed-door forum sessions.
“Investors have lost credibility in this government,” Roubini added, noting the repeated widening of the spread between Italy’s bond interest rates and that of benchmark German rates.
The latest Berlusconi government proposal to achieve several billion euros in deficit reduction through a crackdown on widespread tax evasion could also rattle the markets since it’s impossible to predict just how much revenue that strategy could achieve.
Earlier in the day, Italian President Giorgio Napolitano echoed Trichet’s call to his country, saying the proposed measures must be quickly “translated into concrete terms” to achieve Berlusconi’s goal of balancing the budget by 2013.
“In effect, we need now and in the near future from Italy clarity and certainty of intentions and of results,” said Napolitano, who noted that an earlier austerity plan in July failed to placate nervous markets.
Napolitano urged Berlusconi’s bickering government to be “coherent and courageous” in meeting the economic crisis. He recalled that Italy, suffering from lackluster productivity, already was lagging before the latest global economic crisis.
“There is no doubt that in general the political (arena) is struggling, in the face of the tensions of the crisis and the risks to which the eurozone is exposed, and that the internal political and social equilibrium of individual countries are being put to a tough test,” Napolitano said in a video hookup from the presidential palace in Rome.
Austria’s former chancellor, Wolfgang Schuessel, went further in characterizing the effects of the crisis on citizens.
“This loss of confidence and trust is much more damaging than any economic data,” he said.
The three-day meeting of bankers, economists and politicians began on Friday and has been marked by generally gloomy assessments of global economic prospects.
Coca Cola Co. said Thursday it plans to invest $4 billion in China as food brands scramble to expand in its fast-growing consumer market.
The investments will take place over three years beginning in 2012 and raise Coca Cola’s total investment in China between 2009 and 2014 to $7 billion, the company said.
Global food brands are investing heavily in China, looking to a relatively healthy economy that expanded by 9.5 percent in the quarter ending in June to drive sales amid global uncertainty.
“China is one of our most important growth markets,” said Coca Cola chairman and CEO Muhtar Kent in a statement announcing the plans.
Chinese retail spending in June rose 17.7 percent over a year earlier, according to the government.
In July, Nestle SA announced the purchase of a 60 percent stake in candy maker Hsu Fu Chi for $1 no fax payday loans.7 billion. Earlier this year, Nestle also bought a controlling stake in Chinese food processor Yinlu Foods Group.
Restaurant chains such as McDonald’s Corp. and Yum Brands Inc.’s Pizza Hut and KFC also are expanding.
Kent said Coca Cola’s sales volume in China for the first half of 2011 was double that of five years ago.
Coca Cola, based in Atlanta, opened five new facilities in China in 2009-10 and this year has opened one and plans to open a second and break ground for a third, according the company.
Fire trucks and concrete mixers, semis, heavy-duty pickups and all trucks in between will, for the first time, have to trim fuel consumption and emissions of heat-trapping gases under new efficiency standards announced Tuesday by President Barack Obama.
The White House said the standards will save businesses billions of dollars in fuel costs, help reduce oil consumption and cut air pollution. The standards apply to vehicle model years 2014 to 2018.
The new targets affect three categories of vehicles. Big rigs or semis will have to slash fuel consumption and production of heat-trapping gases by up to 23 percent. Gasoline-powered heavy-duty pickups and vans will have to cut consumption by 10 percent, or by 15 percent if the vehicles run on diesel fuel.
The standards also prescribe a 9 percent reduction in fuel consumption and greenhouse gas emissions for work trucks, which include everything from fire trucks and concrete mixers to garbage trucks and buses.
In a statement, Obama said the new standards had the support of companies that build, buy and drive medium and heavy-duty trucks.
The president had planned to unveil the standards at a trucking business in Virginia, a state crucial to his re-election hopes, but the White House canceled the trip Tuesday morning without explanation. Instead, the president he met privately at the White House with industry officials to discuss the initiative.
The White House projected savings of 530 million barrels of oil and $50 billion in fuel costs over the expected lives of the vehicles covered by the new standards, along with improved air quality and public health.
The administration released no miles-per-gallon equivalent for the new standards, saying that doing so would be confusing given the different categories of vehicles, the different types of vehicles in each category and the varying payloads that each one carries.
Officials did stress that the costs of making the trucks more fuel-efficient _ ranging from hundreds to thousands of dollars per vehicle _ will be recouped through reduced fuel costs over the lifetime of the vehicles.
It’s the second round of fuel efficiency standards in the past month.
Last month, Obama announced a deal with automakers to double overall fuel economy to 54.5 mpg by 2025, starting in model year 2017. Cars and light trucks now on the road average 27 mpg.
That followed a 2009 deal committing cars and trucks to averaging 35.5 mpg by model year 2016.
Greece’s opposition leader wasn’t invited to Thursday’s European Union summit but he became its hapless star.
Antonis Samaras wants to block spending cuts, tax increases and economic reforms that Greece has to approve to win more loans next month and avoid what some fear would be economic catastrophe.
Samaras came to Brussels for a meeting on the sidelines of the summit and pushed other European conservative leaders to back a “corrected” version of the plan.
But he swiftly came under fire from the leaders of Germany, Netherlands and Sweden _ in an unusual case of collective meddling by EU leaders in a member country’s domestic politics.
EU leaders have been struggling for more than a year to keep Greece’s debt woes from bringing the rest of the eurozone down, and some appear to be losing patience.
Germany’s Angela Merkel said Samaras’ conservative party _ which was in power for years before rival Socialists took over and acknowledged crushing debt problems _ should take its “historical responsibility.”
Sweden’s Prime Minister Fredrik Reinfeldt said: “It is very important that no Greek political leader tells the Greek people that they have a shortcut.”
Samaras acknowledged that he came under pressure Thursday by other European conservative leaders to lift his objections to the bailout agreement. But it’s unclear how much they chipped away at his resolve.
“European leaders listen to our view. Some agreed with our position, but most stuck to their own positions,” Samaras told Greek state-run NET television. “I explained to them that we cannot give our backing to a mistake.”
Samaras, a U.S.-educated economist, is a controversial figure in Greek politics, too.
He spent years in political exile after forming a breakaway party in the early 1990s that caused a damaging split in the conservative electorate.
A few months after he was elected leader of the New Democracy party, he expelled his predecessor after she voted for last year’s international rescue package for Greece.
Without the next euro12 billion ($17 billion) installment of its existing euro110 billion bailout, Greece will default on its massive debt my mid-July. The country is also negotiating a second rescue package as it remains stuck in recession and locked out of international debt markets.
Samaras’ party has stubbornly refused to back Socialist Prime Minister George Papandreou over the bailout program, arguing that its excessive reliance of tax hikes is counterproductive and locking Greece’s economy in recession.
Surprise talks with Papandreou this month to form a grand coalition government collapsed. Samaras’ party recently took a slim lead in opinion polls, after trailing for three years.
As a result, Samaras is demanding early elections.
Nobel Prize-winning economist Peter Diamond withdrew on Monday his nomination for a seat on the Federal Reserve Board, complaining that Republicans who have blocked his confirmation for more than a year failed to understand the importance of his work on unemployment.
Diamond announced his withdrawal in an opinion article in The New York Times with the headline “When a Nobel Prize Isn’t Enough guaranteed unsecured personal loan.”
“Last October, I won the Nobel Prize in economics for my work on unemployment and the labor market. But I am unqualified to serve on the board of the Federal Reserve
Spanish financial markets slumped Monday after voters angry about austerity measures dealt the governing Socialist party a painful loss in local and regional elections, raising doubts over the country’s ability to enforce debt cuts.
Investors worried that the government of Prime Minister Jose Luis Rodriguez Zapatero had lost support in its drive to heal public finances and faced a period of political uncertainty. Daily protests against both the Socialists and the opposition conservatives, meanwhile, were spreading to cities across the country and expected to last for days.
The Ibex 35 index on the Madrid stock market closed down 1.4 percent and the yield on Spanish 10-year bonds on the secondary market was up to 5.5 percent. That indicates investors are more cautious about the country’s ability to repay its debts.
The spread, or difference in yield between that bond and the equivalent benchmark German one, stood at about 250 basis points in the afternoon, up from 240 on Friday. A basis point is one-one hundredth of a percent.
The governor of the Bank of Spain said the country cannot sustain spreads of more than 200 basis points for a long period because this will raise government borrowing costs and leave less money available for providing financing for companies and getting stagnant credit flowing again.
Miguel Angel Fernandez Ordonez also said in a speech that the government needs to press ahead quickly with labor market reforms to create jobs and reassure investors. He called for more flexibility in how collective bargaining agreements are negotiated. Economists say the current system is too rigid because in a given sector it treats money losing and profitable companies with the same terms when it comes to giving workers raises.
Investor appetite for Spanish bonds will be tested Tuesday with a treasury auction of 3- and 6-month bills.
Alejandro Varela of brokerage Renta 4 in Madrid said that besides debt worries spilling over from other troubled countries such as Greece, investors feared that conservatives taking over town halls and regional governments might discover bigger debt piles than had been previously disclosed.
That’s what happened late last year when the wealthy and powerful Catalonia region held similar elections. The center-right Catalan nationalists took over from a Socialist-led coalition and recently announced the region’s deficit was much bigger than previously known. Catalonia did not vote on Sunday.
In 13 other regions that were up for grabs Sunday, the conservative opposition Popular Party won virtually all of them from the Socialists, causing new debt concerns to sprout, Varela said.
“There had been speculation to this effect for a week and now that melon will be sliced open,” Varela said.
The Popular Party also cleaned up at municipal elections by winning 2 million more votes than the Socialists with a margin of victory of about 10 percentage points. The party said those numbers show Spain is hungry for change.
Varela said he expects Zapatero to call early elections and that it would be good for the country, although the prime minister said Sunday night as he acknowledged defeat by his party that he would not and plans to serve out his term. General elections must be held by next March. Zapatero has said he will not seek a third term.
Varela said, “Spain is in a very weakened situation and this transitory period is particularly dangerous.”
The Popular Party favors early elections but on Monday refrained from calling for them outright.
“Spain can’t wait another year,” said party Secretary General Maria Delores de Cospedal. “No more time should be lost.”
She ruled out, however, trying to push a no-confidence vote through Parliament where the Socialists still have enough allies to reject it.
The elections were local and regional, but many Spaniards said they had the national picture in mind as they voted. The country is saddled with a eurozone-high jobless rate of 21.3 percent and is struggling to recover from nearly two years of recession triggered by the collapse of a real estate bubble and the end of an overzealous period of free-flowing credit.
For the past week, central Madrid’s Puerta del Sol plaza has been home to a makeshift protest camp to mainly young Spaniards angry over their bleak economic prospects _ the youth jobless rate exceeds 40 percent. The protesters dismiss both Socialist and conservative politicians as inept, corrupt and distant from the plight of everyday people and said the elections result made little difference to them.
“It’s not that important because this protest never had an electoral goal,” said Javier Perez, one of the Madrid camp’s spokespersons. “In the end, the results are another example of Spain’s two-party system and how it fails to resolve the anger, the indignation and our problems.”
United behind the slogan “Real Democracy Now”, the Madrid protest has drawn tens of thousands of people of all ages and spread to dozens of other cities. On Monday, the activists debated how to proceed with their campaign after voting Sunday to stay on for at least another week. They discussed gradually dismantling the camps and taking the protests to city neighborhoods to get more people involved.
Royal Dutch Shell PLC will construct the biggest floating man-made object ever, a natural gas processing plant longer than four football fields and more massive than any aircraft carrier.
The “Prelude FLNG” facility, to be anchored off the Australian coast, will be made of 260,000 tons of steel _ five times more than Sydney’s famed Harbour Bridge, Shell said Friday.
It is designed to take in the equivalent of 110,000 barrels per day in gas from undersea fields 200 kilometers (125 miles) off Australia’s Northwest coast and cool it into liquefied natural gas, known as LNG.
Shell claimed the plant will be able to withstand category 5 cyclones, the worst type of storms, and is planned to remain moored above the Prelude gas field for 25 years after completion.
Shell said the facility will be built in a South Korean shipyard but did not say how much it would cost.
A company spokeswoman declined to set a date for the platform’s completion date, but noted the Prelude gas field is scheduled to start production around 2017.
“We don’t give specific guidance on project level spend, but we are making a substantial investment in Australia LNG,” said spokeswoman Kirsten Smart in an email.
Shell plans $30 billion in various investments in Australia over the coming five years, the company has said.
“This project is certainly competitive with more traditional Australian LNG developments on a cost and economics basis,” Smart wrote.
Financial newswire Dow Jones cited Australia’s Resources Minister Martin Ferguson as saying the project will benefit the country’s economy by creating around 1,000 jobs and contributing A$12 billion ($12.8 billion) in tax revenues over 25 years.
Sales at U.S. retailers probably climbed in April, reinforcing evidence that employment gains are allowing Americans to weather higher fuel costs, economists said before reports this week.
The projected 0.6 percent gain in purchases would follow a 0.4 percent increase in March, according to the median forecast in a Bloomberg News survey ahead of Commerce Department figures May 12. Another report may show the cost of living increased.
Demand at chains including Limited Brands Inc. and Macy’s Inc. (M) topped analysts’ estimates last month as payrolls nationally increased more than projected. While mounting fuel and food costs are pinching household budgets, improving job prospects mean consumer spending, which accounts for about 70 percent of the economy, can keep growing.
“We’re seeing a pretty resilient consumer, even with the headwinds from higher fuel prices,” said Omair Sharif, an economist at RBS Securities Inc. in Stamford, Connecticut. “What’s driving this is the pickup in employment. The labor market will continue to improve and sustain consumer spending.”
The retail sales figures, which aren’t adjusted for inflation, probably got a boost from receipts at service stations that reflected higher gasoline costs. Regular fuel averaged $3.81 a gallon in April, up from $3.54 the prior month. The price reached $3.99 on May 4, the highest since July 2008, according to AAA, the nation’s biggest motoring organization.
Payrolls grew by 244,000 last month, the seventh straight monthly gain, after increasing a revised 221,000 the prior month, the Labor Department reported on May 6. Nonetheless, the jobless rate climbed to 9 percent, the first increase since November, a separate survey of households showed.
Same-Store Sales
More hiring helps explain the better-than-forecast retailer results for April. Sales at stores open at least a year rose 8.7 percent from the same month last year, the 20th straight gain, a report from Retail Metrics Inc. showed last week.
Limited, the Columbus, Ohio-based operator of Victoria’s Secret, reported a 20 percent jump in same-store sales, almost double the average estimate of analysts compiled by Retail Metrics, which tracks more than two dozen U.S. chains. Sales at Cincinnati-based Macy’s, the second-largest U.S. department store chain, rose 10.8 percent, also surpassing projections.
The Standard & Poor’s Supercomposite Retailing Index has risen 3.7 percent from the end of March through May 6, outpacing the broader S&P 500, which advanced 1.1 percent.
Autos, Gasoline
The retail report may also show sales excluding automobiles and service stations rose 0.5 percent last month after rising 0.6 percent in March, economists said.
Industrywide light-vehicle sales ran at a seasonally adjusted annual rate of 13.2 million in April, topping the 13 million pace for the third straight month, according to researcher Autodata Corp. Detroit-based cash advance.bloomberg.com/general-motors-co/” href=”http://www.bloomberg.com/apps/quote?ticker=GM:US” density=”sparse” title=”Get Quote” ticker=”GM:US” class=”web_ticker”>General Motors Co. (GM)’s U.S. deliveries jumped 26 percent, while Dearborn, Michigan- based Ford Motor Co. (F) had a 13 percent gain.
“We continue to believe that the economy will stay on the current steady recovery course,” Don Johnson, GM’s vice president of U.S. sales operations, said on a May 3 conference call.
Labor Department figures due May 13 may show the cost of living index rose 0.4 percent in April after a 0.5 percent gain the prior month, and was up 3.1 percent from April 2010, according to the Bloomberg survey median. Core prices, which exclude volatile food and fuel, may have climbed 0.2 percent in April from a month earlier.
The consumer-price index is the broadest of three monthly price gauges the Labor Department releases. Figures earlier in the week may show wholesale prices and the cost of goods imported into the U.S. also rose in April.
Confidence Stagnant
Bigger grocery and fuel bills are limiting confidence. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment rose to 70 in May from 69.8 in April, according to the Bloomberg survey median ahead of the May 13 report.
Federal Reserve Chairman Ben S. Bernanke and his chief deputies have said in recent speeches that the threat from accelerating prices will prove “transitory.”
“The broader economy is in a moderate recovery, and we have recently seen some welcome, if gradual, improvement in the labor market,” Bernanke said in an April 29 speech in Arlington, Virginia.
Also this week, Commerce Department figures may show the trade deficit widened in March from the prior month, reflecting costlier oil imports, according to the Bloomberg survey median.
Bloomberg Survey ============================================================== Release Period Prior Median Indicator Date Value Forecast ============================================================== Import Prices MOM% 5/10 April 2.7% 1.8% Trade Balance $ Blns 5/11 March -45.8 -47.0 Retail Sales MOM% 5/12 April 0.4% 0.6% Retail ex-autos MOM% 5/12 April 0.8% 0.6% Retail exauto/gas MOM% 5/12 April 0.6% 0.5% PPI MOM% 5/12 April 0.7% 0.6% Core PPI MOM% 5/12 April 0.3% 0.2% PPI YOY% 5/12 April 5.8% 6.5% Core PPI YOY% 5/12 April 1.9% 2.1% Initial Claims ,000’s 5/12 7-May 474 428 CPI MOM% 5/13 April 0.5% 0.4% Core CPI MOM% 5/13 April 0.1% 0.2% CPI YOY% 5/13 April 2.7% 3.1% Core CPI YOY% 5/13 April 1.2% 1.3% U of Mich Conf. Index 5/13 May P 69.8 70.0 ==============================================================
To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
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