Building euro-zone competitiveness

CARD 1

Building euro-zone competitiveness

Mobile moans

It should be easier for unemployed Europeans to move in search of work. The latest in an occasional series

Apr 28th 2012 | from the print edition

 

NEARLY a quarter of Spain’s workforce—and roughly half of Spain’s young people—have no jobs. Unemployment rates in Austria, Germany and the Netherlands, by contrast, are dramatically lower. When Americans are faced with depressed labour markets, many saddle up in search of work. But Europeans are far less likely to uproot, both within borders and, especially, across them (see chart).

There is an obvious reason for that: Europe’s linguistic diversity. Language matters. In Canada, for example, mobility is much higher across the country as a whole than it is between French-speaking Quebec and the English-speaking provinces and territories. An analysis of European language borders, by Nicola Fuchs-Schü ndeln of Goethe University Frankfurt and Kevin Bartz of Harvard University, concludes that language hurdles are better predictors of low mobility than national borders. Europe’s demography also counts. Migration does less good to older workers, who have fewer working years ahead of them in which to benefit from moving.

Such built-in barriers make the need to clear away other obstacles all the more important. In principle, migration across European Union borders, except Bulgaria’s and Romania’s, is as easy as migration within member states. In practice, residents face a pile of disincentives.

Tax and benefit policies that compress Europe’s wage distribution are one of these. Income differentials gave East Europeans a very good reason to move to western Europe after the 2004 enlargement. But income gaps are much smaller within the euro zone. Generous severance packages and unemployment benefits also reduce the incentives to migrate. Peripheral governments are under pressure to rein in such benefits—Spain and Italy are trying to chip away at lavish severance pay, for instance—but opposition is fierce.

The housing market is another source of friction. Transaction fees and taxes for home-buyers are much higher in Europe than America, according to the OECD, a think-tank. Transaction costs are 10-15% of the price of a house in Greece, Italy and Spain, compared with roughly 5% in America. Renters are discouraged from moving by generous rent-control policies and public-housing programmes.

 

 

Polymetal обязалась выплачивать бывшим владельцам месторождения Кубака 2% ее выручки

02.05.2012

Как выяснилось, помимо тех 15 млн долл., которые Polymetal заплатила за месторождение Кубака «дочке» Kinross Gold в 2008 году, компания обязана ежегодно выплачивать бывшим владельцам актива 2% от его выручки. Только в 2011 году Polymetal потратила на это около 1, 1 млн долл. По итогам текущего года эти выплаты в связи с ростом производства на Кубаке могут увеличиться в два-три раза.

В 2008 году Polymetal выкупила у Kinam Magadan Gold Corporation (дочерняя компания Kinross Gold Corporation) 98, 1% акций Омолонской золоторудной компании, получив право разработки месторождения Кубака (позднее компания довела свою долю в ней до 100%, докупив 1, 9% акций у государства). В придачу Polymetal достались полная инфраструктура рудника, золотоизвлекательная фабрика, а также четыре лицензии на право пользованием недрами. За все это компания заплатила Kinam 15 млн долл., а также обязалась выплачивать так называемую переменную роялти от будущего производства.

Как выяснилось, эта переменная имеет вполне постоянное значение. Как следует из отчетности Polymetal по МФСО за 2011 год, компания обязана выплачивать бывшим владельцам Кубаки 2% от выручки выкупленных активов. При этом компания поясняет, что в 2011 году стоимость обязательств компании, к которым Polymetal относит и переменную роялти, из-за роста цен на драгметаллы увеличилась на 6, 8 млн долл. Получается, что чем больше компания зарабатывает, тем больше выплачивает бывшим собственникам месторождения.

В 2011 году Polymetal пришлось заплатить Kinam в каче­стве переменной роялти 1, 1 млн долл., рассказал РБК daily заместитель гендиректора компании по стратегическому развитию Павел Данилин. В текущем же году Polymetal анонсировала значительный рост производства на Кубаке, напоминает Анастасия Грачева из UBS. В результате выплаты бывшим владельцам месторождения могут возрасти в два-три раза, предупреждает она. Впрочем, по сравнению с увеличением расходов, которые естественным образом возникают у компании в результате роста производства, это капля в море, добавляет аналитик.

В самой Polymetal тоже недовольны парадоксальным обязательством, рассказал РБК daily источник, знакомый с ситуацией. По его словам, компания ведет переговоры с бывшими соб­ственниками Кубаки о том, чтобы переформатировать обязательства и расплатиться с Kinam раз и навсегда. Впрочем, Павел Данилин наличие таких переговоров с Kinross опровергает. Представитель Kinross на запрос РБК daily не ответил.

 

 

CARD 2

Free exchange

Petrodollar profusion

Oil exporters are the main drivers of global imbalances

Apr 28th 2012 | from the print edition

 

FIRST, the good news: China, the country at the centre of the debate about global imbalances, has a current-account surplus that has fallen sharply over the past few years. Now the bad: China was never really the prime culprit when it comes to imbalances at the global level. The biggest counterpart to America’s current-account deficit is the combined surplus of oil-exporting economies, which have enjoyed a huge windfall from high oil prices (see left-hand chart). This year the IMF expects them to run a record surplus of $740 billion, three-fifths of which will come from the Middle East. That will dwarf China’s expected surplus of $180 billion. Since 2000 the cumulative surpluses of oil exporters have come to over $4 trillion, twice as much as that of China.

One reason why this enormous stash has received much less attention than China’s is that only a fraction of it has gone into official reserves. Most of it is in opaque government investment funds. Middle Eastern purchases of Treasury bonds are often channelled through intermediaries in London, hiding their true ownership. A lot of money has been invested in equities, hedge funds, private equity and property, where ownership is harder to track. Oil exporters’ surpluses are also proving much more durable than those accumulated after previous oil-price shocks. This is partly because the tightness of oil supplies has kept prices high, and partly because oil exporters have spent less of their windfalls on imports than in previous booms.

The impact of higher oil prices on the world economy depends on whether oil exporters spend or save their petrodollars. If they recycle them by buying more from oil-importing countries, this cushions global demand. But if they save them, income is permanently transferred from oil consumers to oil producers, depressing global demand. After the oil-price shocks in the 1970s, about 70% of the increase in export revenues was spent on imports of goods and services. But IMF figures suggest that less than 50% of the windfall is likely to be spent in the three years to 2012.

Стройка оживает

«Судя по объему новых предложений по объектам застройки, которые девелоперы вывели на рынок, начиная с осени прошлого года, складывается ощущение, что ситуация существенно выровнялась, — говорит заместитель директора департамента розничных операций Инвестторгбанка Эмма Пономарева. — Компании либо реализуют новые объекты за счет собственных средств, либо наконец-то получают доступ к банковским кредитам, которые в одно время были им очень ограниченно доступны».

По словам аналитика, дополнительным стимулом застройщикам к вводу новых объектов служит рост спроса на качественное и относительно недорогое жилье. Это для экспертов и является главным сигналом окончательного восстановления уровня платежеспособности населения. «Люди перестали бояться вкладывать в строящееся жилье», — отмечает Эмма Пономарева.

Понятно, что возвращать сданные в кризис высоты застройщикам активно помогают кредитные организации. К примеру, сегодня банки медленно, но верно возвращаются в сегмент кредитования в строящуюся недвижимость — ту область, которая пару лет назад была для них почти табу. «Мы обратили внимание, что на большинстве объектов, которые кредитует наш банк, либо уже представлено несколько банков, либо они присоединяются достаточно быстро. Это говорит о том, что конкуренция достаточно высока. Некоторые банки, которые не кредитовали стройку в период 2009—2010 годов, аккуратно возвращаются к этому, начиная с объектов высокой стадии готовности, наблюдая, вводятся ли они в срок, и после этого принимая решение, переходить ли на кредитование квартир в домах с более низкой стадией готовности», — говорит Эмма Пономарева.

CARD 3

Free exchange

Petrodollar profusion

Recycling initiative

Whatever recycling of petrodollars occurs is unevenly distributed. Oil exporters buy a lot more of their imports from Europe and Asia than from America, so a shift in the “terms of trade”, which redistributes income from oil consumers to oil producers, tends to reduce the relative demand for American goods. According to research by the International Energy Agency, for each dollar America spent on oil imports from OPEC countries last year, only 34 cents came back in exports, whereas the European Union got back more than 80 cents. For each dollar China handed to OPEC, 64 cents flowed back in increased exports.

Oil producers understandably do not want to repeat the mistakes of previous times, when spending surged as oil prices rose—only to leave behind large deficits when prices later fell. Saudi Arabia, for instance, shifted from a current-account surplus of 26% of GDP in 1980 to a deficit of 13% in 1983. Exporters should certainly run a surplus as a buffer for when oil prices drop or wells run dry. The surpluses of 5-7% of GDP run by Russia, Nigeria and Venezuela seem sensible, but some countries’ prudence looks excessive. Saudi Arabia’s current-account surplus could hit 28% of GDP this year, and Kuwait’s 46% (see right-hand chart). Kuwait’s cumulative surpluses over the past decade, even ignoring capital gains, amount to a whopping 200% of last year’s GDP.

Normally, a large current-account surplus would be eroded over time by stronger domestic spending and a higher exchange rate. But the Gulf currencies are pegged, or closely linked, to the dollar. Over the past ten years their real trade-weighted exchange rates have stayed flat or fallen, despite the massive gain in their terms of trade. A floating exchange rate could lead to excessive volatility and discourage diversification of these economies (by making other sectors uncompetitive as the currency appreciates), but a bit more flexibility might assist global rebalancing.

Some economists have suggested that oil exporters’ currencies should be pegged to a basket which includes the oil price as well as other currencies. A more flexible exchange rate which rose (and fell) with the oil price would boost (or reduce) consumers’ purchasing power, and hence imports, and also smooth out the local-currency value of government oil revenues. But that would not be a silver bullet. A 2009 IMF working paper* concluded that exchange-rate appreciation is unlikely to have much impact on oil exporters’ external balances. The authors estimated that it would take a 100% appreciation to reduce a surplus by just 2.5% of GDP, both because a revaluation has no effect on oil revenues, which are priced in dollars, and because there is little scope for imports to substitute for domestic production since the manufacturing sectors of these economies are generally tiny. A huge appreciation would also drive down the local-currency value of the large net external assets of some of these countries.

 

 

Победные рапорты

О том, что ситуация на рынке первичной недвижимости нормализуется, свидетельствуют и новости самих девелоперов. Так, ГК «СУ-155» во второй половине апреля произвела выплаты по текущей задолженности Сбербанку РФ (1 млрд 035 млн руб.) и АКБ «Инвестторгбанк» (400 млн руб.). Оба банка входят в число основных финансовых партнеров ГК «СУ-155». Таким образом СУ-155 сократила свой долг почти на 1, 4 млрд руб. Вообще же за первые четыре месяца 2012 года СУ-155 уже выплатила различным российским кредитным учреждениям в счет погашения текущих обязательств 5, 9 млрд руб., в том числе Сбербанку — одному из своих ключевых финансовых партнеров — ГК выплатила в первом квартале нынешнего года 1, 34 млрд руб., а за прошлый год — 11, 8 млрд руб.

В СУ-155 эти выплаты называют очередным этапом программы планомерной оптимизации долговой нагрузки, сформировавшейся у компании во время кризисных для строительной отрасли 2008—2010 годов. Всего с января 2011 года по апрель 2012 года ГК погасила кредиты с процентами и выполнила обязательства перед инвесторами в общей сложности более чем на 25, 5 млрд руб.

CARD 4

American-Afghan relations

Over to you

CARD 5

Chen Guangcheng

The great escape

May 2nd 2012, 12: 26 by J.M. | BEIJING

THE STORY of how Chen Guangcheng, a 40-year-old blind villager, escaped through the prison-like security cordon surrounding his home and ended up hundreds of miles away in Beijing under American diplomatic protection will long be recounted as one of the most dramatic episodes in America’s dealings with China over human rights. After six days at the American Embassy, Mr Chen left “of his own accord”, the two governments said, to receive medical treatment in a Beijing hospital. Mr Chen, it was reported, would stay in China and be allowed to attend university. A subsequent report from Associated Press stated that Mr Chen left the embassy after threats were made against his wife.

Despite ubiquitous complaints by Chinese about human-rights abuses, there has only been one other known example of a dissident being granted protective custody by a foreign diplomatic mission in Communist-ruled China. That was in 1989, when Fang Lizhi, an astrophysicist accused by China of stirring up the Tiananmen Square unrest that year, was admitted with his wife to the American ambassador’s residence. Arrangements for their safe passage to America, where Mr Fang died last month, took more than a year. China is now a much stronger country and America far more anxious not to displease it. The announcement on May 2nd that Mr Chen had left the embassy (he checked into a hospital, accompanied by America’s ambassador, Gary Locke) appeared to signal at least a temporary compromise. But China also demanded an apology from America for taking Mr Chen into the embassy and gave no public guarantee of his safety.

Both countries were anxious that Mr Chen’s flight should not spoil their annual high-level “strategic and economic dialogue”, a two-day event which began in Beijing on May 3rd. They are being led on the American side by the secretary of state, Hillary Clinton, and the treasury secretary, Timothy Geithner, neither of whom want a human-rights case to overshadow discussions about issues ranging from a possibly imminent nuclear test by North Korea to global economic rebalancing. The timing was especially bad for China, which was already under enormous political stress following the flight of a senior provincial official to an American consulate in Chengdu in February and the dismissal it led to of a Politburo member, Bo Xilai.

Mr Chen’s journey began in the village of Dongshigu in Shandong Province, more than 500 km (300 miles) south-east of Beijing, where he had been kept under house arrest since his release at the end of a four-year jail term in 2010. Local officials have long been determined to silence Mr Chen, a self-taught legal worker who became widely known for championing victims of local injustice. Mr Chen particularly angered the authorities by exposing forced sterilisations and abortions involving thousands of women in connection with China’s one-child policy. No legal basis was ever produced for keeping Mr Chen confined to his home, nor for deploying dozens of thugs to keep visitors away, sometimes with violence. The goons appeared to enjoy backing from at least some leaders in Beijing.

 

CARD 6

Pensions

CARD 7

The euro-zone crisis

Call it a depression

May 2nd 2012, 15: 21 by R.A. | WASHINGTON

IN DECEMBER, The Economist warned that without dramatic intervention the euro zone could face a new depression. Soon after, the European Central Bank sprang into action, averting an immediate financial meltdown through heavy lending to banks. The resulting calm looked like an opportunity for euro-area leaders to seize the moment and escape, once and for all, from crisis. Instead, complacency set in. The ECB's financial anaesthetic has not prevented a steady economic deterioration that now threatens to engulf—and perhaps end—the euro zone.

Across the euro area, unemployment is worsening. The unemployment rate touched a new record high in March: 10.9%, up a full percentage point from the prior year.

Of course, the pain is not evenly distributed. It is low and reasonably steady in the north but high and climbing in the south. Youth unemployment rates are staggering—over 50% in Greece and Spain, 36% in Portugal and Italy, rising sharply in all four.

There is worse to come. Manufacturing activity is slowing sharply across the euro area, and the core is no longer immune.

The details of these reports are most worrying. April's decline was stunning, but new order inflows tumbled at the fastest pace since December. The job decline in manufacturing is now impacting Germany and France.

The picture is distressing. It is not surprising. The euro-zone economy is large and overwhelmingly driven by domestic demand. That demand has been steadily squeezed by a broad, sustained fiscal tightening. Monetary policy is providing almost no relief. The ECB raised rates last year, and while it has since unwound the 50-basis-point increase from 2011, it shows no interest in cutting rates further below the present 1% level. Quantitative easing looks out of the question. The ECB's extraordinary lending to banks seems to have stabilised bank-financing conditions; it does not appear to have prevented a sharp slowdown in lending to the private sector. There was no way to avoid a return to recession amid such circumstances.

Ordinarily, of course, policymakers would react to this deterioration by taking steps to stabilise the economy. What is most frightening about the euro-area picture is that this is not happening. For now, austerity remains the rule. Despite the nastiness of the economic picture, the ECB is widely expected to take no action at its meeting tomorrow. The euro area is walking, eyes wide open, into depression. Led by its periphery, which is already there.

 

CARD 8

Deleveraging

CARD 9

Голливуд попался на взятках

26.04.2012

Комиссия по ценным бумагам и биржам США (SEC) проводит расследование деятельности крупнейших киностудий Америки, которые подозреваются в использовании взяток для организации съемок и показов кинофильмов на территории Китая. Подобная практика ведения дел в Поднебесной оправдывает себя — быстрорастущий рынок КНР становится настоящей золотой жилой для американских киношников, столкнувшихся с падением прибыли у себя дома.

В течение последних двух месяцев SEC направила официальные письма с требованием предоставить информацию о ведении бизнеса в Китае как минимум пяти американским киностудиям, в число которых вошли 20th Century Fox, Disney и DreamWorks Animation. В запросах на предоставление информации SEC, в частности, интересуется связями студий с китайскими чиновниками различного уровня, а также потенциально незаконными платежами последним за право снимать кино или показывать фильмы на территории Китая. Кинорынок Поднебесной сейчас жестко контролируется государством через корпорацию China Film Group, которая устанавливает правила ведения дел для всех участников сектора.

Начало расследования против киностудий, отмечают аналитики, совпало с существенной либерализацией правил ведения бизнеса в КНР. Договоренности об этом были достигнуты по итогам февральского визита в США заместителя председателя КНР Си Цзиньпина, который вскоре должен стать новым китайским лидером. Пекин расширил ежегодную квоту на показ кинофильмов иностранного производства с 20 до 34 лент, а также позволил иностранным кинокомпаниям получать больше прибыли от продажи билетов. Теперь вместо 15—17, 5% от сборов им полагается примерно четверть.

«Оттепель» на китайском кинематографическом рынке стала настоящим подарком для американских студий, которые столкнулись с падением интереса соотечественников к кино. За прошлый год кассовые сборы в США сократились на 5%, составив 10 млрд долл. В Китае, напротив, был зарегистрирован рост на 35%, до 2, 1 млрд долл. Поднебесная теперь является третьим по величине рынком после США и Японии. Предполагается, что к концу этого года общее количество китайских кинотеатров вырастет более чем на 20% и достигнет отметки 13 тыс. залов.

Вдохновившись подобными перспективами роста прибыли, американские компании стали чаще обращать внимание на Китай как на место проведения съемок или даже размещения собственных студий. К примеру, руководство компании Disney уже объявило о том, что будет частично снимать третью часть блокбастера «Железный человек» именно в Китае, причем при участии местных киношников, а компания DreamWorks Animation в партнерстве с тремя местными студиями намерена открыть в Поднебесной свое подразделение.

Интерес американских властей США к деятельности кинокомпаний неудивителен. В последние годы SEC и Министерство юстиции ведут масштабные проверки национального бизнеса на наличие признаков коррупции. Их жертвами, в частности, уже стали Daimler и General Electric. Значительная часть случаев подкупа чиновников со стороны американских компаний зафиксирована именно в Китае — с 2002 года власти США выявили около 50 подобных случаев. Больше взяток американцы давали только в Нигерии.

 

CARD 10

 

'Government should leave pensions alone'

Chancellor George Osborne has been urged to resist the temptation to treat pensions “like an ATM”, amid speculation that a tax raid on them is being planned for the Budget.

Last month, Treasury Chief Secretary Danny Alexander said wealthier savers should be stripped of higher-rate tax relief on pensions and insisted the better-off were benefiting disproportionately from the tax break.

Reducing tax relief from 40% to 20% would save more than £ 7 billion and make the system fairer, according to Mr Alexander.

For every 60p currently saved in a pension by a higher-rate taxpayer, the Government contributes 40p in tax relief to make it up to £ 1, but suggestions have been made that this should be cut to around 20p.

But analysts said the Government should leave pensions alone and called for a period of stability at a time when ministers are trying to encourage a savings culture.

The calls come ahead of a huge overhaul of the pensions system this autumn when up to 10 million people will start being automatically placed into schemes to tackle the pension savings crisis.

Tom McPhail, head of pensions research at Hargreaves Lansdown, said: " The Government should leave pensions alone. Better still, it should give a commitment that it will leave pensions alone for at least the remainder of this parliament and it should call on the opposition to form a consensus that pension taxation is off the agenda for the next 10 years.

" This year marks the start of auto-enrolment. If it fails then there is no hope left for the UK's retirement provision.

" The Government should resist the temptation to treat pensions like an ATM - what we need is a period of stability."

Association of British Insurers (ABI) director-general Otto Thoresen said: " In opposition, George Osborne repeatedly stressed he would be a pro-savings Chancellor.

" At this very difficult time for savers, he needs to live up to his promises and resist the temptation to view pensions as an easy, short-term hit."

Pensioners have been faced with high living costs at a time when they are receiving little return on their savings and new retirees are finding annuity rates, which set the size of a pension for life, have been hit by quantitative easing.

CBI director-general John Cridland said any further reduction in pensions tax relief would be a " breach of trust with those already paying higher taxes, and harm our ability to attract the best talent to the UK...

 

CARD 11

Heeeere's Tony! Blair's plan to 're-engage' with British politics

After five years away from Westminster, the former PM is on the comeback trail

Nigel Morris

Thursday 03 May 2012

Since he left Downing Street almost five years ago, Tony Blair has been careful to avoid intervening in domestic controversies, preferring to concentrate on foreign affairs and his business interests.

That could be about to change, amid signs that the former Prime Minister is turning his attention back to British politics. He has started meeting small groups of Labour MPs to discuss the issues of the day – apparently with the approval of party leader Ed Miliband.

And in July he will appear alongside Mr Miliband and shadow cabinet ministers at a dinner to promote British sport before the London Olympics. Mr Blair has also signed a new director of communications, Rachel Grant, ahead of what has been seen as a move to rebuild his profile in Britain.

A source close to Mr Blair was quoted in Public Affairs News magazine: " He wants to re-engage in the UK. He has things to say and he thinks it's the right time. The question is how he re-enters the UK scene without re-entering domestic politics and interfering with the Labour Party."

Last night a spokesman for Mr Miliband said: " Tony Blair is a very big, successful Labour figure who won three general elections. He talks to Ed regularly and we would be delighted to see him re-engaging in British politics."

Mr Blair has mixed charitable and business projects since his departure from Downing Street and now employs 120 people around the world. He runs five organisations, including the Office of Tony Blair and the Tony Blair Faith Foundation, whose gross income last year was £ 12m. The American lecture circuit has proved highly lucrative for him and he received a £ 4m advance, which he donated to charity, for his memoirs, A Journey.

His office stresses that the largest proportion of his time is taken up with his unpaid role as the Quartet Representative to the Middle East, the organisation representing the United Nations, the United States, the European Union and Russia.

Mr Blair's appearances in Britain since 2007 have been sparing. He undertook a round of interviews to promote his autobiography, was questioned twice at the Iraq inquiry and was drafted in during the later stages of Labour's 2010 general election campaign. However, a return to the front line this year could prove a double-edged sword for Mr Miliband, refocusing attention on Blairites' worries over his leadership.

A spokesman for the former Prime Minister confirmed Ms Grant's appointment to oversee his media operation. The communications director at the National Endowment for Science, Technology and the Arts was previously a senior Whitehall press officer.

She is expected to take up her new post this month, replacing Matthew Doyle, a former Downing Street aide who recently resigned as Mr Blair's political director.

 

CARD 12

Seven killed in series of terrorist attacks in southern Israel

At least 26 wounded after armed gunmen fired on bus traveling near Eilat, close to Egypt border; IDF trades fire with gunmen; mortars fired from Egyptian border; IDF kills several terrorists.

By Anshel Pfeffer, Revital Levy-Stein, Yanir Yagna and Haaretz

 

Seven people were killed and at least 26 people were wounded Thursday in a series of terrorist attacks on Israeli targets approximately 20 kilometers north of the southern city of Eilat, close to the border with Egypt.

The first attack, at around 12 P.M., was a drive-by shooting targeting Egged bus 392 traveling from Be'er Sheva to Eilat, near the Netafim junction.

 

Shortly afterward, IDF forces rushed to the scene and were faced with several explosive devices that were detonated alongside an IDF vehicle.

At approximately 12: 35, a mortar was fired from Egypt to Israel. No casualties were reported.

At 1: 10 P.M., a terrorist cell fired an anti-tank missile at a private vehicle, wounding seven.

Minutes later, another cell fired an anti-tank missile at a private vehicle, killing six.

The IDF Spokesman reported that two to four terrorists were killed during the clashes.

According to reports, the terrorists in the car opened fire at the Egged bus, which carried a significant number of soldiers leaving their bases for the weekend.

In the aftermath of the first attack, Israeli security forces launched a search for the vehicle thought to have transported the gunmen, setting up barricades in the area. A firefight erupted once the IDF troops caught up with the vehicle, in which several of the armed men were killed.

Two IDF helicopters were called to the scene in order to evacuate those wounded to Yoseftal hospital in Eilat and to Soroka hospital in Be'er Sheva.

 

Israeli social justice campaigners cancel weekend protests after attacks in south

Head of Israel's student union says nationwide rallies, including 'central' demonstration in Jerusalem, have been called off.

By Reuters

 

Israel's student union on Thursday called off planned weekend demonstrations against the high cost of living after a series of terror attacks in the south left seven people dead.

" There were meant to be protests throughout the country, with a central rally in Jerusalem, and we decided given the events to cancel them, " union head Itzik Shmueli told Army Radio following the attacks near Israel's border with Egypt.

He added that a popular campaign against the government's economic policy, which kicked off last month and has drawn hundreds of thousands of Israelis onto the streets in mass demonstrations, would continue.

 

CARD 13

FEATURED ARTICLES

OPINION

Terrorist Acts

February 4, 1996

On Jan. 17, you published a letter written by Aaron Breitbart of the Simon Wiesenthal Center. This letter was nothing more than a personal attack on the Muslim Public Affairs Council (MPAC) and its director, Salam Al-Marayati. Breitbart clearly knows nothing about the repeated condemnation by MPAC of all terrorist acts, regardless of the perpetrator. Rather than engage Breitbart in his unfounded claims as to who has condemned what acts committed by whom, I would recommend to him that if he is seriously interested in human rights and combating terrorism, it would be more appropriate to engage in a mutually beneficial dialogue with MPAC and other groups committed to the same end. SAMER M. HATHOUT Acting Chairperson, MPAC Los Angeles

ARTICLES BY DATE

CALIFORNIA | LOCAL

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NEWS

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The Nation

July 4, 1986

Seven domestic terrorist acts killed two people and injured 10 in 1985, but the number of terrorist incidents was about half that of the previous year, the FBI reported. Jewish extremists were believed responsible for four of the domestic terrorist acts in 1985--and both deaths--while Puerto Rican terrorists were blamed for two incidents, the FBI said. The FBI said there were 13 terrorist incidents in 1984, of which 11 were bombings.

 

Hey, Big Spenders

December 25, 2004

Re " Pentagon Pressed to Cut Its Budgets, " Dec. 19: So we're spending $4 billion a month to support the invasion of Iraq? Remember, this is an action taken by a Republican administration and fully supported by a Republican majority in the House and the Senate. Don't ever again tell me that the Democrats are the party of big spenders. This $4 billion a month is to support an invasion of a sovereign country that took no part in any terrorist acts against the U.S. and was in no position to threaten our own sovereignty?

 

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CARD 23

April 2012

We are living in times of austerity: Economies all over the world are experiencing slower growth, and half of the eurozone economies are expected to shrink this year. In fact, not one major European country is expected to grow over 1 percent. Yet, the luxury market has managed to thrive despite all odds and it is showing no sign of slowing down. How can that be?

At the epicenter of the debt crisis, austerity is in vogue. From London to New York, governments are slashing budgets and raising unpopular taxes in the wake of runaway debt.

Last year, the Occupy Movement occupied the popular discourse, with Wall Street activists protesting the income divide between the “99 percent” and the ultra-rich, referred to by protesters as the “one-percent.”

The issues surrounding executive remuneration and bonuses in the financial services sector have also reentered public discourse. Securities firms in New York made an estimated $13.5 billion in 2011, down sharply from $27.6 billion in 2010 – the second consecutive year of declining profit on Wall Street.

Facing such significant declines, even the banks and bankers are trimming their discretionary pay. According to the New York State comptroller, Wall Street’s cash bonus pool fell by 14 percent to $19.7 billion last year, the lowest since 2008.

Yet, on the back of strong demand in Asia and other emerging markets, business is flourishing for luxury brands.

LVMH, the world’s largest luxury goods group, has reported bumper sales of Louis Vuitton handbags and Krug champagne, in the latest sign that consumer confidence among the super rich remains robust.

According to LVMH, its group sales jumped 25 percent in the first quarter? 6.58 billion from? 5.25 billion a year earlier, and increased 14 percent stripping out currency fluctuations and acquisitions. Sales in Asia excluding Japan, and at constant currency rates, rose even faster, at 17 percent.

Fellow French luxury house Christian Dior also posted strong growth in both the United States and Asia, and maintained its European expansion rate despite the difficult economic environment. The company recorded a 25.5 percent increase in revenue for the first quarter of 2012, reaching? 6.9 billion.

Its rivals, PPR, which owns familiar brands like Prada and Gucci, also said that its demand isn’t abating. Yesterday, Chief Executive Francois-Henri Pinault said the company is looking forward to another good year of “brisk revenue growth”, after its first quarter sales beat expectations.

 

 

CARD 24

China Leads the Way

When the Beijing Auto Show opened on Monday, global luxury car manufacturers clearly had their sights on wooing and feeding China’s voracious appetite for luxury cars, with the big names falling over themselves and offering bigger, flashier cars to Chinese consumers.

Bearing in mind that China’s GDP per capita was only $5, 414 in 2011, China has already become the world’s largest auto market, amid weak European demand and tepid growth in the United States.

According to Morgan Stanley, China's first quarter luxury vehicle sales surged 36.7 percent year-on-year to 130, 416 units, outperforming the overall market's 3.4 percent decline and the passenger vehicle segment's 1.3 percent drop.

On a broader scale, China is the world’s second largest economy behind the United States, but according to McKinsey, China is on track to top Japan as the world’s largest market for luxury goods in 2012.

Citing growing demand and declining consumption in Japan, McKinsey says that with luxury sales surging 18 percent annually, China’s luxury spending boom is expected to hit $27 billion by 2015 – or a fifth of the worldwide total. In comparison, China spent just $10 billion on luxury items in 2009.

Speaking to CNN, Wendy Trevisani, portfolio manager said:

China’s consumer is still in its infancy. It is true that exports and real-estate investment is softening, but consumer spending is growing pretty much without hesitation.

In fact, consumer spending is forecast to account for 43% of China's GDP growth by 2020, up from about a third currently, according to McKinsey. That's in line with the nation's current five-year plan, which aims to help the country become less dependent on exports and investment-led growth.

Attributing the boom to “greater sophistication”, McKinsey said:

The Chinese are increasingly exposed to luxury goods through the Internet, overseas travel, and first-hand experience. As a result, they have become more discerning.

“The Luxury Industry Is Perhaps More Resilient Than It Was In 2008”

Despite the debt crisis, long-term prospects for the luxury market remain strong.

According to industry analysts, growth in Asia and Latin America, where European luxury-goods makers have been expanding their store networks, is reason for optimism.

Speaking to Bloomberg, CEO of Salvatore Ferragamo, Michele Norsa said that not only are these countries accounting for an increasing proportion of sales, Asian and Latin American tourists are also helping to boost demand in Europe and the United States.

For instance, luxury products tend to be 30 to 50 percent higher in China than in Europe because of a hefty government tax.

 

CARD 25

April 2012

Argentina’s decision to nationalise YPF – a subsidiary of Spanish energy company Repsol – has been met by international disapproval; though the Argentine government insists that the move had been necessary in order to meet its energy needs. Yet this may not turn out to be the case, particularly with investment in exploration greatly reduced.

BUENOS AIRES – The expropriation of nearly all of the Spanish company Repsol’s stake in Argentina’s energy producer YPF, announced in a vehement speech by President Cristina Ferná ndez de Kirchner, has raised legal alarms worldwide. In fact, the move will not resolve the country’s energy problems in the absence of enormous inflows of investment to the sector.

Repsol acquired complete control of YPF in 1999; in February 2008, it transferred part of its shares to the Petersen Group, which today holds 25 percent. Repsol currently holds 57 percent, with the rest owned by stock-market investors. The Argentine government intends to expropriate 51 percent, leaving Repsol with a 6 percent stake.

In the 2008 sale of shares, the two majority stockholders agreed to distribute at least 90 percent of future profits in cash. That decision was intended to allow the Petersen Group to service the debts to banks, and to Repsol itself, that it incurred with its share purchase, for which it made no initial payment.

This is an extraordinarily high dividend in the world oil industry. In the past decade, YPF’s reserves diminished significantly, along with those of most oil companies operating in Argentina, because investment in exploration was greatly reduced.

At the same time, natural gas accounts for 51 percent of energy consumption, compared to 32 percent for oil and barely 17 percent for coal, renewables, and hydroelectric and nuclear power. Worldwide, gas accounts for barely a quarter of total energy consumption – for example, 27 percent in the United States and just 9 percent in neighbouring Brazil. Argentina has the world’s largest fleet of vehicles running on compressed natural gas; families use gas intensively; most electricity is generated with gas; and the petrochemical industry is based on it.

Of course, in a few other countries (Qatar, Algeria, the United Arab Emirates, Iran, and Russia), gas also accounts for more than half – or even more than 60 percent – of energy consumption. But there is an enormous difference: all of these countries have reserves that will last another 70-100 years. Argentina, by contrast, is a highly gas-dependent country with diminishing reserves – equivalent to less than eight years of production.

Covering this drop in reserves – more than half of gas reserves and a fifth of oil reserves have been consumed – with imports implies an annual cost of more than $300 billion. Indeed, after two decades of cheap, abundant energy and exports of surplus output, a new cycle of expensive, scarce, and imported energy has begun, as oil production has fallen by one-third since 1998, and gas production by 15 percent since 2004.

 

 

CARD 1

Building euro-zone competitiveness

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