Links: 2013-03-01
News links for 1 March 2013
“The Government has secretly ramped up a controversial programme that strips people of their British citizenship on national security grounds – with two of the men subsequently killed by American drone attacks.
An investigation by the Bureau of Investigative Journalism for The Independent has established that since 2010, the Home Secretary, Theresa May, has revoked the passports of 16 individuals, many of whom are alleged to have had links to militant or terrorist groups.
Critics of the programme warn that it allows ministers to “wash their hands” of British nationals suspected of terrorism who could be subject to torture and illegal detention abroad.
They add that it also allows those stripped of their citizenship to be killed or “rendered” without any onus on the British Government to intervene.
At least five of those deprived of their UK nationality by the Coalition were born in Britain, and one man had lived in the country for almost 50 years.”
“The German parliament has passed a controversial law that will force search engines and news aggregators to pay publishers royalties for providing short snippets of their articles in results.
The Bundestag passed the Leistungsschutzrecht für Presseverleger (LSR), or “ancillary copyright for press publishers” law, on Friday by 293 votes to 243. Germany’s coalition government was the driver behind the law, and the main opposition, the SPD, now says it will try to defeat the law in the country’s second legislative chamber, the Bundesrat.”
Le chômage atteint 11,9% dans la zone euro, un nouveau record – Libération
As predicted a few days ago, France has turned in a record high unemployment level of 11.9%. This is the highest since 1997, before the euro zone was created.
Steinbrück Raises Ire of German Clowns – SPIEGEL ONLINE
“Now, even the clowns themselves are involved. Three days after Peer Steinbrück, the Social Democratic candidate to challenge Chancellor Angela Merkel in elections this autumn, referred to Italian political leaders Silvio Berlusconi and Beppe Grillo as “clowns,” the head of Germany’s most famous circus has expressed his displeasure at being compared to the former Italian prime minister.
“A circus clown is no fool who can be placed on the same level as Berlusconi,” Bernhard Paul, director of Circus Roncalli, told the German news agency DPA. “Being a clown is an honorable, very difficult, sensitive and artistic occupation,” he said. “How can you compare that with bunga bunga?” he added, in reference to Berlusconi’s infamous frolicking with women a fraction of his age.”
BBC News – Eurozone unemployment hits 11.9%
“The jobless rate in the 17 countries that use the euro rose to 11.9% in January from 11.8% in December, the statistics agency Eurostat said.
The highest rate was 27% in Greece, although the most recent figure there was from November, while the lowest rate was 4.9% in Austria.”
UK manufacturing shrinks unexpectedly in February, triggers slide in the pound – Telegraph
“The Markit/CIPS Manufacturing Purchasing Managers’ Index (PMI) fell to 47.9 from 50.5 in January, well below the 50 level that divides growth from contraction, as employment levels in the sector fell at the fastest pace in more than three years.
The pound sank by almost a cent against the euro to €1.152 and one-and-a-half cents against the dollar to $1.5012 on the back of the news, which economists described as “very disappointing”.”
Foreclosure Files Detail Error Gap – WSJ.com
“Some of the country’s biggest banks were on pace to find a higher rate of past foreclosure mistakes than regulators disclosed in January when they halted a review in favor of a $9.3 billion settlement for homeowners.
The figures show wide discrepancies in how banks performed in the review and raise questions among some observers about how the process was conducted, according to people who have reviewed figures provided to a federal bank regulator.
The banks were ordered in 2011 to hire consultants to review foreclosures in search of possible errors that could result in compensation for borrowers.”
Freddie Mac Posts $11 Billion Profit, Its Largest Ever – WSJ.com
“Freddie Mac, buoyed by the housing market’s rebound and an improving economy, reported an $11 billion annual profit for 2012 on Thursday—its largest ever annual gain and first profitable year since 2006.
Freddie’s profit compares with a year-earlier loss of $5.3 billion. The fortunes of Freddie and its larger sibling, Fannie Mae, have turned around as home prices have stabilized and mortgage delinquencies slowed. That has allowed the government-controlled companies to set aside less money for loan losses.”
U.S. stares down start of steep automatic budget cuts | Reuters
“Barring any breakthroughs in the next few hours, the cuts will begin to come into force at some time before midnight on Friday night. The full brunt of the belt tightening, known in Washington as “sequestration,” will take effect over seven months so it is not clear if there will be an immediate disruption to public services.”
China Banks’ Bad Loans Rise for Fifth Quarter as Economy Weakens – Bloomberg
“Chinese banks’ bad loans increased for a fifth straight quarter, the longest deterioration streak since the data became available in 2004, after the economy slowed.
Loans overdue for at least three months rose by 14.1 billion yuan ($2.3 billion) in the three months ended Dec. 31, to 492.9 billion yuan, the China Banking Regulatory Commission said in a statement on its website today. Bad loans rose most at mid-sized lenders and rural banks, the regulator said.
China’s banking system is grappling with rising defaults and shrinking loan profitability after the world’s second- largest economy expanded at the slowest pace in 13 years. Net interest margin at the nation’s 3,800 lenders contracted to 2.75 percent in the fourth quarter from 2.77 percent in the third, the regulator said.”
China HSBC PMI recedes from 2-year high to 50.4 | South China Morning Post
“The final HSBC Purchasing Managers’ Index (PMI) fell to 50.4 after seasonal adjustments from January’s two-year high of 52.3, in line with a flash reading in late February and above the 50-point level demarcating growth from contraction on a monthly basis.
The combination of moderate economic growth and tame price pressures reinforces bets that China will be in no hurry to abandon loose policy and raise interest rates, analysts said. Official data showed consumer inflation ran at 2 per cent in January.”
“In a letter to staff Mason wrote: “After four and a half intense and wonderful years as CEO of Groupon, I’ve decided that I’d like to spend more time with my family. Just kidding – I was fired today. If you’re wondering why … you haven’t been paying attention.”
Pressure had been mounting on Groupon as the demand for daily coupons, which make up most of its revenue, appears to be stalling. On Wednesday Groupon said first-quarter revenue would be $560m to $610m, well below the $647.7m analysts had been expecting, according to data compiled by Bloomberg.
Groupon’s shares lost more 24% of their value Thursday after its disappointing quarterly results. Losses from the Chicago-based company reached $81.1m in the fourth quarter, up from $65.4m a year earlier.”
Without Big Subsidies, iPhone Is a Tough Sell – WSJ.com
“Leap disclosed that it was on track to sell only half as many iPhones as it had committed to in the first year of its contract with Apple. If the pace doesn’t pick up, Leap said it could be forced to buy $100 million of unsold iPhones this summer.”
HTC vs. Samsung: The Battle has Begun. – Droid Life
“Are you ready for it? Did you even know that it had started? It has, so get your mind right. The battle between HTC and Samsung for 2013 is already underway and we’re excited about it. Thanks to the announcements of flagships from both companies, March is going to be a wild month for smartphone lovers, particularly those with an addiction to the latest and greatest running Android. HTC is trying to survive and to recapture some of its lost marketshare, while Samsung will only attempt to continue on in their dominant ways, pushing all attackers aside. “
Blackstone Profits From Regulation With Citigroup Deal – Bloomberg
“Blackstone Group LP (BX), the world’s largest private-equity firm, has devised a way to profit from regulation: It’s helping banks meet tougher capital rules without the pain of selling assets or raising equity.
The firm last year insured Citigroup Inc. (C) against any initial losses on a $1.2 billion pool of shipping loans, said two people with knowledge of the transaction, who asked not to be identified because the matter is private. The regulatory capital trade, Blackstone’s first, will let Citigroup cut how much it sets aside to cover defaults by as much as 96 percent, while keeping the loans on its balance sheet, the people said.
For banks, the transactions offer a way to redeploy capital more profitably while meeting the stiffer requirements of the latest round of Basel rules. Critics say the practice doesn’t make the lenders any safer and pushes the lending risk into the unregulated shadow-banking industry.
“It’s a form of financial engineering,” said Philippe Bodereau, London-based head of European credit research at Pacific Investment Management Co., the world’s largest bond investor. “It was dead but it seems to be coming back as investors scramble for yield. “
Central banking: Doomed to fail? | The Economist
“MANY agree that central banks need to rethink their objectives and tools in light of the crisis. Few, however, agree on what those new objectives should be or what the available tools actually are. (Those interested in some of the latest research should read this.) While some ideas have more merit than others, I am sceptical that any central bank is capable of fulfilling its objectives over any meaningful length of time because, as the late Hyman Minsky explained, lower observed macroeconomic volatility in the short term encourages greater financial risk-taking. Thus, the longer the perceived good times last, the more fragile the economy becomes. “
Household Debt Q4 – Business Insider
“The New York Fed just published its latest Quarterly Report On Household Debt And Credit.
At $11.34 trillion in Q4 2012, total household debt is up from $11.31 trillion in Q3. This suggests that the great consumer deleveraging story may be over.”
Italy’s centre-left rules out grand coalition: paper | Reuters
“In an interview with the daily La Repubblica, Bersani, whose group holds a majority in the lower house but not in the Senate, said center-right leader Berlusconi had “no concept of responsibility beyond his own interests”.
“I want to spell it out clearly: the idea of a grand coalition does not exist and will never exist,” he said.”
Italy’s election: Send in the clowns | The Economist
This article is completely at odds with the view that our reader from Italy sent in a few days ago. In fact, calling major candidates for office clowns is offensive. I will have more to say about this in a future article because I think the Economist is off base here.
Fitch: We’re ‘More Than Likely’ to Downgrade India
“”If you look at the totality of measures that have been announced over the last six months, there have been some positive elements…but obviously the macro economic backdrop has weakened,” he added.
Slowing growth, which came in at 4.5 percent in the December quarter, coupled with high inflation, hovering around 7 percent and a ballooning current account deficit, were some of Woo’s concerns.
Fitch, which has assigned India a BBB- rating – the lowest investment grade rating – cut its outlook on the country to negative from stable in 2012. The ratings agency in January warned of a possible downgrade within the next 12-24 months, the Indian media had reported.”
BBC News – House prices up 0.2% in February, says Nationwide
“UK house prices rose by 0.2% in February compared with the previous month, but were the same as a year ago, the Nationwide has said.”
Italy’s Berlusconi Investigated in New Corruption Case
“According to the document, former Senator Sergio De Gregorio told prosecutors Berlusconi paid him 3 million euro ($3.92 million) to switch parties in 2006, a move which destabilized the center-left government and contributed to its eventual collapse.
“I told Berlusconi what I wanted… that the party should give me, either the party or he personally, should pay me 3 million,” De Gregorio is quoted telling investigators, adding that he needed the money to get out of financial difficulties.”
Lib Dems sweep to Eastleigh victory – FT.com
“Mike Thornton, the Lib Dem candidate, took 13,342 of the votes against 11,571 for Diane James of Ukip. The Tories were left reeling after their candidate, Maria Hutchings, trailed behind on 10,559.”
Arbeitslosigkeit nahezu auf Rekordniveau – Arbeitsmarkt – derStandard.at › Wirtschaft
Austria has the lowest unemployment rate in the EU at 4.9%. What is interesting in this article, however, is that it points out that the rate differs based on how it’s measured. Using the traditional Austrian measure the rate is 8.7%. In fact, the article’s point is that Austrian unemployment is near a record level with the number registering unemployment at 326,401. This points to a level of hidden unemployment beneath the official EU figures.
Peak Oil, The Shale Boom and our Energy Future: Interview with Dave Summers
“Summers discusses:
* Why new drilling techniques aren’t enough to put peak oil off
* Why the shale revolution will not lead to energy independence
* Why the potential of nuclear energy isn’t being realized
* Why ‘plan B’ for Keystone isn’t beneficial to the US
* Why we should be worried about the South China Sea and the Middle East
* How low natural gas prices cannot be sustained
* Why Europe’s shale future is still indeterminate
* Why the coal industry’s days aren’t necessarily numbered
* Why geothermal energy has the greatest potential
* How media manipulation figures in to the climate debate
* Why nuclear fusion remains a fantasy in our lifetimes and beyond”
Manufacturing growth accelerates – The Irish Times – Fri, Mar 01, 2013
“The latest NCB Manufacturing Purchasing Managers’ Index rose to 51.5 in February, up from 50.3 in January. A reading above 50 indicates expansion.
Irish manufacturing activity has now expanded for 12 successive months.”
Lloyds Banking Books a $2.2 Billion Annual Loss – NYTimes.com
“The Lloyds Banking Group reported a net loss on Friday of £1.4 billion, or $2.2 billion, partly because it was forced to set aside billions of dollars to compensate customers that were inappropriately sold financial products.
Lloyds, which is 39 percent owned by the British government after receiving a bailout during the financial crisis, said it had made a further £1.9 billion of extra provisions during the fourth quarter related to a number of wrongdoings.”
China’s manufacturing growth slows – FT.com
“China’s manufacturing sector grew more slowly in February, according to a survey that suggests the country’s recovery could be slackening.
The official purchasing managers’ index dipped to 50.1, from 50.4 in January, data on Friday showed. It was the fifth consecutive month above the midpoint of 50, which indicates an expansion in industrial activity, but the decline in the index means that the pace of expansion has likely slowed.”
Bradley Manning Pleads Guilty For Supplying Wikileaks, Says Newspapers Ignored Calls | TechCrunch
“Private First Class Bradley Manning has pleaded guilty to leaking classified government documents to WikiLeaks. Reading from a 35-page statement, Manning said he leaked diplomatic cables to “spark a domestic debate as to the role of the military and foreign policy in general,” but denies aiding the enemy. Perhaps most revealing, Manning said that he first attempted to go to media outlets, such as The New York Times and The Washington Post, but his calls were rerouted to voicemail.”
UK did not flat-line but grew 0.2pc last year, says ONS – Telegraph
“Hopes for the recovery have been given a boost by official figures showing that the economy did not flat-line last year, but grew by 0.2pc, and a leading economist claimed that the UK even avoided a double dip.”
Ireland’s unemployment rate drops significantly – Telegraph
“Ireland’s unemployment fell from 14.6pc in the third quarter of 2012 to 14.2pc in the final three months of the year.
The headline rate in the bailed-out eurozone nation fell for the third quarter in a row after the number of people employed increased by 6,500 to end-December on a seasonally adjusted basis, the latest Live Register figures showed.
It had been 14.6pc in the previous quarter.
The data measuring unemployment benefit showed those claiming benefits fell by 1,400 in February to a seasonally adjusted 428,800, the eighth successive monthly fall, putting the estimated unemployment rate at 14.1pc.”
Sequester 101 – MarketBeat – WSJ
A video on the sequester in the US for those not following it closely.
Slovenia faces two nerve-racking weeks | beyondbrics
“Slovenia’s political crisis has moved into a new phase after parliament ousted the centre-right government of prime minister Janez Janša and gave Alenka Bratusek (pictured), acting leader of the centre-left Positive Slovenia party, two weeks to win parliamentary approval for a new cabinet.
While the move creates an opportunity for Brastuek to forge the political stability Slovenia needs to tackle its mounting economic difficulties, there’s no guarantee of success. As Citigroup said in a note, “the key game-changer for the current political stalemate will be the formation of a new government.””
A Phoenix Housing Boom Forms, in Hint of U.S. Recovery – Businessweek
“The housing market in Phoenix presaged and magnified the collapse in real estate. Now its recovery could reveal much about the prospects for a nationwide turnaround. Mortgage rates are low everywhere. In many places, so too is inventory. Home prices increased in 88 percent of metropolitan areas around the country in the last three months of 2012, including Las Vegas, Miami, and even Detroit, according to the National Association of Realtors.
“Phoenix is the most advanced market,” says Stan Humphries, the chief economist at real estate website Zillow (Z). “It was one of the first to go into recession, and one of the first to emerge from recession. Phoenix has been a lab where we’ve gotten to see the effects of a high foreclosure rate and high negative equity,” which is when homeowners owe more on their mortgage than their houses are worth.”
A BusinessWeek cover crosses a line : Columbia Journalism Review
“The cover stands out for its cast of black and Hispanic caricatures with exaggerated features reminiscent of early 20th century race cartoons. Also, because there are only people of color in it, grabbing greedily for cash. It’s hard to imagine how this one made it through the editorial process.”
Reach for Yield: Student-Loan Version – MarketBeat – WSJ
“SLM Corp., the largest U.S. student lender known as Sallie Mae, on Wednesday sold $1.1 billion of asset-backed securities supported by private student loans, drawing nearly 15 times the required demand to sell out the riskiest slice, people familiar with the deal said.”
Obama’s SEC Pick Wary of Zealous Wall Street Prosecutions – Bloomberg
This is a case of regulatory capture. Is it a surprise? It shouldn’t be. Banks play by different rules.
“As Manhattan’s top federal prosecutor during the 1990s, Mary Jo White could have sought the corporate equivalent of the death penalty: indicting Prudential Securities Inc. for fraudulently marketing $8 billion in ruinous energy partnerships to small investors.
Instead, Prudential’s attorneys pressed White, who had earned notice as an aggressive litigator in terrorism and organized crime cases, to consider something less punitive. She ultimately accepted, agreeing to a $330 million fine and placing Prudential on probation, allowing it to avoid criminal charges.”
S Africa: record trade gap hits rand | beyondbrics
“The South African rand plunged by as much as 2 per cent against the dollar on Thursday after the country posted a record trade deficit last month of R24.5bn ($2.8bn) – compared to R2.7bn in December and forecasts of around R10bn.
The numbers bore the mark of the strikes which have disrupted the mining industry and the effects of a surge in machinery imports, which were probably a bit of a one-off blip.”
Goldpreis auf längster Talfahrt seit 16 Jahren – News Wirtschaft: Konjunktur – tagesanzeiger.ch
Gold is in its longest downward fall in about 16 years, according to this Swiss article. Last year, I had said gold would underperform i.e. fall on the year. While I was a bit early, it seems that I am now seeing this bear out in the markets. The rationale here has a lot to do with real interest rates and inflation. If real interest rates are becoming MORE negative, then gold is a good hedge as opposed to holding cash. But the opposite is true right now. If inflation does rise, while rates remain constant, gold will again be in favour.
The state and regional deficits in Spain were a collective 1.73% in 2012, that’s 0.23% above the planned 1.5% level.
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