France plans to unilaterally impose a 0.1 percent tax on financial transactions starting in August, President Nicolas Sarkozy said, brushing aside opposition from the nation
A four-year economic crisis has left societies battered and widened the gap between the haves and have-nots, financial leaders conceded Wednesday _ with one suggesting that Western capitalism itself may be endangered.
With the global economic outlook gloomy at best as Europe struggles with its debt crisis, there’s a sense at the heavily guarded World Economic Forum in the Swiss Alps that free markets are on trial.
There’s a widespread acceptance that more must be done to convince critics that Western capitalism has a future and that it can learn the lessons of its massive failures.
For David Rubenstein, the co-founder and managing director of asset management firm Carlyle Group, leaders must work fast to overcome the current crisis or else different models of capitalism, such as the form practiced in China, may win the day.
“As a result of this recession, that’s lasted longer than anyone predicted and will probably go on for a number more years … we’re gonna have a lot of economic disparities,” said Rubenstein.
“We’ve got to work through these problems, if we don’t do in 3 or 4 years … the game will be over for the type of capitalism that many of us have lived through and thought was the best type,” he added.
His stark appraisal may have been an outlier, but there was a clear defensive posture among many participants on this opening day of the World Economic Forum in Davos.
There were numerous references to the need to innovate, the need to consult with employees and the realization that power in the world is shifting from the west to the east. While the traditional industrial economies of the United States and Europe have limped through the last few years, often from one crisis to another, many economies in Asia and Latin America have been booming.
As Ben Verwaayen, the chief executive of Alcatel-Lucent, said, there’s a “very different view” of capitalism in Brazil.
“This is a very different discussion depending where you are,” Verwaayen said.
Many rejected the suggestion from Sharan Burrow, the general secretary of the International Trade Union Confederation, that capitalism has lost its “moral compass” and needed to be “reset.” Still, representatives of the business community insisted they were learning from the mistakes that dragged the world into its deepest economic recession since the World War II.
Bank of America’s CEO Brian Moynihan said the excesses of banks in the run-up to the banking crisis of 2008 reflected the economies they were operating in, so it was important that policymakers don’t overreact.
Moynihan, whose bank was forced to back down on plans to start charging a $5 debit card fee after protests by the Occupy movement and others, said banks have “done a lot” to reduce excesses. He also noted that boom and bust cycles are a part of the Western capitalist structure.
Many outside the confines of the Davos conference center disagree, after years of crisis in which hundreds of millions of people have lost their jobs even as top executives have continued to reap huge pay packets.
Davos activists on Wednesday sent aloft big red weather balloons carrying a huge protest banner reading “Hey WEF, Where are the other 6.9999 billion leaders?”
The activists were from the Occupy WEF movement, a small group camping out in igloos here and following in the footsteps of the Occupy Wall Street movement that spread to cities around the world.
Davos is a hard-to-reach place to protest, tucked in the Swiss Alps. Some 2,600 of the world’s most influential people are gathered for the forum this week, amid increasing worries about the global economy and social unrest due to rising income inequalities.
The CEO of accounting giant Deloitte, Joe Echevarria, talked about developing “compassionate capitalism.”
“You’re going to have to deal with regulation _ balancing the need to protect society along with stifling growth,” he told The Associated Press in an interview. “I think that has to manifest itself through the choices that governments and businesses make.”
While the bigwigs debated at Davos, key Greek bondholders were holding closed-door meetings in Paris to discuss how _ and whether _ to continue talks central to resolving Europe’s debt crisis that would forgive 50 percent of Greece’s enormous debt.
Mark Penn, global CEO of the public relations firm Burson-Marsteller, told AP “the whole crisis has raised larger questions about how is capitalism working, how do you redefine fairness in the 21st century?”
Later Wednesday, German Chancellor Angela Merkel may chart her course for Europe’s crisis in her keynote speech at the Davos forum.
In an interview with six European newspapers published Wednesday, Merkel drove home the need for reform in debt-troubled eurozone nations instead of spending more to beef up the region’s bailout fund.
Surveys ahead of the meeting showed pessimism among world CEOs and plunging levels of public trust in business and government leaders and concerns that fragility in the U.S. and European economies will bring the whole world’s economy down.
Treasuries (YCGT0025) had the biggest annual return since the depths of the financial crisis in 2008 as Europe
Jon Corzine is expected Tuesday to once again distance himself from an estimated $1.2 billion in customer money that vanished when MF Global collapsed this fall.
This time, Corzine will have company.
Bradley Abelow, MF Global’s president and chief operating officer, and Henri Steenkamp, the chief financial officer, are also scheduled to testify to the Senate Agriculture Committee.
All three say they don’t know where the money is, according to prepared remarks and Corzine’s previous testimony to a House panel last week. Nor do they take responsibility for authorizing the movement of money out of customer accoun.
Depending on the circumstances, transferring money from customers’ accounts could violate securities laws and, in some cases, could amount to a crime. Federal authorities have begun criminal investigations. And regulators are looking into whether the firm broke securities rules.
MF Global collapsed into the eighth-largest bankruptcy in U.S. history on Oct. 31 after a disastrous bet on European debt. Corzine stepped down as CEO on Nov. 4.
Corzine told the House Agriculture Committee last week that he didn’t know what happened to the money. He said he didn’t become aware of the shortfall until Oct. 30, one day before the firm filed for bankruptcy protection.
In his prepared testimony, Steenkamp says he had no direct involvement in the transfer of funds.
“Direct involvement with operational matters such as bank accounts or fund transfers has never been part of my duties,” Steenkamp says.
Abelow says he cannot explain what happened to the money without having access to MF Global documents, which a trustee now controls.
“At this time … I do not know the answers to those questions,” he says in his prepared testimony.
Anthony Sabino, a law professor at St. John’s University in New York, said Steenkamp and Abelow “are in a riskier position” than Corzine because they were responsible for day-to-day operations of MF Global.
Tuesday’s hearing will include an added element of drama because Corzine, a former Democratic senator from New Jersey, will be pressed by some senators he served with from 2000 through 2005 payday loans.
The Senate panel is one of three congressional committees to have issued subpoenas to compel Corzine’s testimony on the issue. It marked the first time a former senator has been subpoenaed by his former peers in more than 100 years, according to the Senate historian’s office.
Many lawmakers have heard from farmers, ranchers and small business owners in their states who are missing money that was deposited with the firm. Agricultural businesses use brokerage firms like MF Global to help reduce their risks in an industry vulnerable to swings in oil, corn and other commodity prices.
Corzine, who also was New Jersey governor from 2006 until early 2010, told lawmakers last week that he never intended to authorize the transfer of funds from customer accounts. If any subordinates moved clients’ money in the belief that Corzine had authorized it, “it was a misunderstanding,” he said.
Along with Corzine, Steenkamp and Abelow have been sued in class-action complaints on behalf of MF Global shareholders. The lawsuits accuse the executives of making false and misleading statements about MF Global’s financial strength and cash balances.
MF Global didn’t list the European debt on its balance sheet for all to see. Instead, those holdings were shifted to the company’s “off-balance sheet,” deep in its financial statements. Some separate filings with regulators excluded the European debt entirely.
A lawyer for the trustee overseeing the liquidation of MF Global’s brokerage operations said in court Friday that the trustee’s staff has discovered some “suspicious” trades in MF Global customer accounts that were made in the last days before the firm failed. The lawyer didn’t provide details.
Corzine said last week that customers’ losses weigh heavily on him.
“I think about this every day,” he said. “I could not be more regretful, more distressed that we are ruining people’s lives.”
Exxon expects to see more and more hybrids on the world’s roads, with gas-sipping models like the Toyota Prius making up half of all vehicles by 2040.
The largest publicly traded oil and gas company says in its annual energy outlook that the use of hybrids _ vehicles that rely on both gas and electricity for power _ and other efficiency gains will keep energy demand in check for the U.S. and other major industrialized countries for years.
Exxon Mobil Corp. predicts that energy demand will remain flat through 2040 in developed nations instant payday loan.
However, Exxon says that China and other developing nations will increase their thirst for oil and other petroleum based fuels. Energy demand within developing nations is expected to rise nearly 60 percent from 2010 to 2040.
China Shougang Group has tied up with Malaysia’s Hiap Teck to build a 1.8 billion ringgit ($573 million) steel mill, its first such investment outside of China.
A joint statement says the mill in Malaysia’s northern Terengganu state will produce 700,000 metric tons of steel slabs a year to cater to Southeast Asia’s growing markets when completed in mid-2013. It said Monday the mill, run by a joint venture called Eastern Steel, will later be expanded to raise output to 1.5 million metric tons.
Shougang, one of China’s top steel makers, controls 40 percent of Eastern Steel. Hiap Teck holds 55 percent.
Officials say there is strong demand in Southeast Asia, which imports more than 4 million metric tons of steel slabs annually, mostly from eastern Europe.
The European Commission backed the introduction of jointly issued eurobonds, coupled with stricter budgetary discipline, as the best way out of a debt crisis that’s threatening the 17-country eurozone.
EU Commission President Jose Manuel Barroso said Wednesday that the countries using the euro currency needed to work more closely together to dovetail their budgetary policies and avoid having one nation endanger all others by not living by its financial commitments. The crisis, which started in Greece nearly two years ago, has now spread to much-bigger economies such as Italy and Spain and there was a hint Wednesday that not even Germany is immune.
Barroso, who heads the executive arm of the European Union, said there was a need to “embrace deeper integration for the euro area” and that “implemented in the right way, the joint issuance of debt in the euro area could bring tremendous benefits.”
Barroso said it could lead to greater financial integration and to the creation of a much larger bond market, comparable to that of the United States treasuries.
Germany has opposed the use of eurobonds and has long called on profligate member states to clean up their own houses with as little outside intervention as possible. A big worry for Germany is that its low borrowing costs would get diluted if eurobonds came into issue and it would then be forced to pay higher rates to tap bond markets.
Anticipating the proposal, Chancellor Angela Merkel poured cold water on the idea in the German Parliament earlier in the day.
“It is extremely troubling, I might say inappropriate, that the Commission is now focusing on proposals on eurobonds in different varieties,” she told legislators.
Merkel argued that it was a pretense to suggest that a “collectivization of the debt would allow us to overcome the currency union’s structural flaws.”
While Merkel was voicing her opposition to the idea of eurobonds, Germany suffered what many in the markets are describing as a failed bond auction.
Despite being touted as the European bedrock of financial stability and rigor, Germany failed to raise as much money as it hoped in its latest bond auction, in a sign that even it may not be immune from the debt crisis raging across the continent.
Germany’s Financial Agency said its latest euro6 billion ($8.1 billion) auction of 10-year bonds met with only 60 percent demand. It blamed “the extraordinarily nervous market environment” for the weak demand.
Since Greece pushed the eurozone into its ever-worsening financial mess last year, many member states have seen their cost of government borrowing rise to record levels. Germany’s borrowing rates though have dropped sharply as investors buy up its bonds as a safe haven.
Germany has long been reluctant to bail out member states like Greece, Ireland and Portugal, insisting it was up to their governments to live by sound economic principles and win investor confidence.
Barroso said that eurobonds, or so-called stability bonds, “will not solve our immediate problems.”
Still he said “stability bonds are examples of reinforced governance, of a strong will to live together in the euro area and a good example of discipline.”
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Juergen Baetz in Berlin contributed to this report.
Thailand’s prime minister is urging people in flooded areas to be patient because the government is working as hard as it can to drain the water.
Prime Minister Yingluck Shinawatra said Monday the flooding situation that has plagued the country since late July is improving as waters recede. However, she noted that water spreading across western Bangkok could drain more slowly than in other areas of the capital.
She urged people to “tolerate the flooding situation and turn unity into power to struggle through the crisis payday advance low fees.” Yingluck made the comments on her Facebook page.
The national death toll from Thailand’s worst floods in more than half a century has reached 562. The floods are still affecting 22 of the country’s 77 provinces.
For a growing number of young American men, the childhood bedroom is the new bachelor pad.
The percentage of men 25 to 34 years old who live with their parents has increased by almost a third during the past five years, data from the U.S. Census Bureau show.
The economic downturn has accelerated that trend for young men, while women continue to be less likely to bunk with their parents.
Since 2006, the year before the recession began, the percentage of young men living with their parents has grown to 18.6 percent this year from 14.3 percent. Just 9.7 percent of women in that age group now live with their parents, up from 8.8 percent in 2006.
“It’s a way to save money and survive the hardship,” said Qian Cai, director of the Demographics and Workforce Group at the University of Virginia’s Weldon Cooper Center for Public Service.
Young women traditionally have left the house before men because they marry at a younger age. That reason may be changing: Now more women than men are getting college educations, so they may be less likely to be unemployed or lose jobs, Cai said.
Since the beginning of last year, the unemployment rate for women between 25 and 34 averaged 9.1 percent, compared with 10.4 percent for men in this age group.
On the flip side, parents may also be more generous than they used to be. “They have more resources than earlier generations, so they can help out more,” Cai said.
In the past year, the proportion of 25- to 34-year-old men living with parents jumped 2.2 percentage points, while the number of women in that age group staying or moving back home didn’t change significantly, the Census Bureau said.
While the trend is a reflection of the sluggish economy, there may be other factors, said Cheryl Russell, a demographer in Beaufort, S.C., and editorial director of New Strategist Publications.
“Women mature at a younger age, so they are probably more able to hold down a job and pay the rent,” she said. “Men sort of thrash around a bit.”
Rupert Murdoch’s News International promised to pay all of News of the World editor Andy Coulson’s legal fees only a month after he resigned from the paper in disgrace, according to a court document obtained by The Associated Press on Tuesday.
The former editor, who later served as communications director for Prime Minister David Cameron, is a central figure in the phone hacking scandal that has convulsed the British media. He’s been arrested on suspicion of abetting a culture of illegal spying while at the top of the News of the World, an allegation he’s fighting with the help of the high-powered international law firm DLA Piper.
Such an open-ended promise to foot Coulson’s legal bill would have been highly unusual, according to Jo Keddy, an employment partner with the London law firm Winckworth Sherwood. She called it the equivalent of “writing a blank check for a former employee.”
The generous deals struck by News International with its victims and former staff members have emerged as a key issue for lawmakers investigating the scandal, with some suggesting that the company had tried to buy the silence of those involved to help bury the scandal, which first erupted more than five years ago.
The exact nature of the promises made to Coulson are under dispute.
According a nine-page lawsuit filed by Coulson in the court’s Queen’s Bench Division, News International subsidiary News Group Newspapers has recently refused to pay expenses incurred by Coulson’s criminal defense team, telling him that allegations of phone hacking fell “outside the scope of your contract of employment.”
Coulson’s lawyers reject the assertion, saying that News Group had made a blanket deal to pay any legal fees stemming from his time at the News of the World.
The complaint says News International struck the deal with Coulson in February 2007, a month after his royal editor, Clive Goodman, was jailed for hacking into the phones of members of the royal household. While Coulson denied knowing anything about the practice, he said he was resigning out of a sense of responsibility for what happened.
Goodman’s sentence was meant to draw a line under the scandal, but Coulson’s deal appeared to suggest that both parties feared trouble down the line.
The lawsuit says that News International promised to repay Coulson for “any professional (including without limitation, legal and accounting) costs and expenses … which arise from his having to defend, or appear in, any administrative, regulatory, judicial or quasi-judicial proceeding as a result of his having been the editor of the News of the World.”
The suit goes says that “it was anticipated” that Coulson would be drawn into the criminal investigation into phone hacking which was relaunched early this year.
News International declined to comment on the suit. DLA Piper, Coulson’s law firm, did not immediately return an email seeking further comment on Coulson’s complaint.
Coulson was arrested over the phone hacking allegation on July 8 _ making him one of more than a dozen former News of the World employees who’ve been arrested since the beginning of the year. The scandal has led to the closure of the 168-year-old paper and the resignation of several top Murdoch executives.
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