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Big depositors in Cyprus to lose far more than feared

March 30, 2013 By Leave a Comment

Big depositors in Cyprus to lose far more than feared

(Reuters) – Big in Cyprus’s largest bank stand to lose far more than initially feared under a rescue package to save the island from bankruptcy, a source with direct knowledge of the terms said on Friday.

Under conditions expected to be announced on Saturday, depositors in Bank of Cyprus will get shares in the bank worth 37.5 percent of their deposits over 100,000 euros, the source told Reuters, while the rest of their deposits may never be paid back.

The toughening of the terms will send a clear signal that the bailout means the end of Cyprus as a hub for offshore finance and could accelerate economic decline on the island and bring steeper job losses.

Officials had previously spoken of a loss to big depositors of 30 to 40 percent.

Cypriot President Nicos Anastasiades on Friday defended the 10-billion euro ($13 billion) bailout deal agreed with the EU five days ago, saying it had contained the risk of national bankruptcy.

“We have no intention of leaving the euro,” the conservative leader told a conference of in the capital, Nicosia.

“In no way will we experiment with the future of our country,” he said.

Cypriots, however, are angry at the price attached to the rescue – the winding down of the island’s second-largest bank, , also known as , and an unprecedented raid on deposits over 100,000 euros.

Under the terms of the deal, the assets of Laiki bank will be transferred to Bank of Cyprus.

At Bank of Cyprus, about 22.5 percent of deposits over 100,000 euros will attract no interest, the source said. The remaining 40 percent will continue to attract interest, but will not be repaid unless the bank does well.

Those with deposits under 100,000 euros will continue to be protected under the state’s deposit guarantee.

Cyprus’s difficulties have sent around the fragile single European , and led to the imposition of capital controls in Cyprus to prevent a run on banks by worried Cypriots and wealthy foreign depositors.

“CYPRUS EURO”

Banks reopened on Thursday after an almost two-week shutdown as Cyprus negotiated the rescue package. In the end, the reopening was largely quiet, with Cypriots queuing calmly for the 300 euros they were permitted to withdraw daily.

The imposition of capital controls has led economists to warn that a second-class “Cyprus euro” could emerge, with funds trapped on the island less valuable than euros that can be freely spent abroad.

Anastasiades said the restrictions on transactions – unprecedented in the currency bloc since euro coins and banknotes entered circulation in 2002 – would be gradually lifted. He gave no time frame but the central bank said the measures would be reviewed daily.

He hit out at banking authorities in Cyprus and Europe for pouring money into the crippled Laiki.

“How serious were those authorities that permitted the financing of a bankrupt bank to the highest possible amount?” Anastasiades said.

The president, barely a month in the job and wrestling with Cyprus’s worst crisis since a 1974 war split the island in two, accused the 17-nation euro currency bloc of making “unprecedented demands that forced Cyprus to become an experiment”.

European leaders have insisted the raid on big bank deposits in Cyprus is a one-off in their handling of a debt crisis that refuses to be contained.

MODEL

But policymakers are divided, and the waters were muddied a day after the deal was inked when the Dutch chair of the euro zone’s , Jeroen Dijsselbloem, said it could serve as a model for future crises.

Faced with a market backlash, Dijsselbloem rowed back. But on Friday, European Central Bank Governing Council member Klaas Knot, a fellow Dutchman, said there was “little wrong” with his assessment.

“The content of his remarks comes down to an approach which has been on the table for a longer time in Europe,” Knot was quoted as saying by Dutch daily Het Financieele Dagblad. “This approach will be part of the European liquidation policy.”

The Cyprus rescue differs from those in other euro zone countries because bank depositors have had to take losses, although an initial plan to hit small deposits as well as big ones was abandoned and accounts under 100,000 euros were spared.

Warnings of a stampede at Cypriot banks when they reopened on Thursday proved unfounded.

For almost two weeks, Cypriots were on a ration of limited withdrawals from bank cash machines. Even with banks now open, they face a regime of strict restrictions designed to halt a flight of capital from the island.

Some economists say those restrictions will be difficult to lift. Anastasiades said the capital controls would be “gradually eased until we can return to normal”.

The government initially said the controls would stay in place for seven days, but Foreign Minister Ioannis Kasoulides said on Thursday they could last “about a month”.

On Friday, easing a ban on cheque payments, Cypriot authorities said cheques could be used to make payments to government agencies up to a limit of 5,000 euros. Anything more than 5,000 euros would require Central Bank approval.

The bank also issued a directive limiting the cash that can be taken to areas of the island beyond the “control of the Cypriot authorities” – a reference to Turkish-controlled northern Cyprus which considers itself an independent state. Cyprus residents can take 300 euros; non-residents can take 500.

Under the terms of the capital controls, Cypriots and foreigners are allowed to take up to 1,000 euros in cash when they leave the island.

(Additional reporting by Ivana Sekularac and Gilbert Kreijger in Amsterdam; Writing by Matt Robinson; Editing by Giles Elgood)

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EU finance ministers approve Cyprus bailout deal

March 25, 2013 By Leave a Comment

a812e9e06f8fd275300e2fa0b993751b EU finance ministers approve Cyprus bailout deal
Customers of use an ATM in Athens as the bank branch remains closed.(Photo: Thanassis Stavrakis, AP)

Story Highlights

The nation needs a 10 billion euro ($13 billion) to recapitalize its ailing banks
Eurozone finance ministers accepted the plan reached in tense negotiations
The deal will save the country from collapse, bankruptcy

BRUSSELS (AP) — Cyprus avoided bankruptcy, and potential turmoil across the eurozone, by securing a last-minute 10 billion euro ($13 billion) bailout with promises to sharply cut back its oversized and make large bank account holders take losses to help pay much of the bill.

Negotiations into ended with approval of the deal by the 17-nation eurozone’s finance ministers. The European Central Bank had threatened to cut off crucial to the country’s banks by Tuesday if no agreement was reached.

Without a bailout deal by Monday night, the tiny Mediterranean nation would have faced the prospect of bankruptcy, which could have forced it to become the first country to abandon the euro currency. That would have sent the region’s markets spinning.

“It’s not that we won a battle, but we really have avoided a disastrous exit from the eurozone,” said Cyprus’ Sarris.

The eurozone finance ministers accepted the plan after hours of negotiations in Brussels between Cypriot officials and the so-called of — the International Monetary Fund, the European Commission and the ECB.

“We believe that this will form a lasting, durable and fully financed solution,” said IMF chief Christine Lagarde.

To secure the rescue loan package, the Cypriot government had to find ways to raise 5.8 billion euros ($7.5 billion) on its own. The bulk of that money is now being raised by forcing losses on large bank deposit holders, with the remainder coming from tax increases and privatizations.

Cyprus must drastically shrink its banking sector, cut its budget, implement structural reforms and privatize state assets, said Jeroen Dijsselbloem, who chairs the meetings of the eurozone’s finance ministers. The country’s second-largest bank, Laiki, will be restructured, with all bond holders and people with more than 100,000 euros in their bank accounts there facing significant losses.

The measures are likely to deepen the recession in Cyprus.

The cash-strapped island nation has been shut out of international markets for almost two years. It first applied for a bailout to recapitalize its ailing lenders and keep the government afloat last June, but the political negotiations stalled. After a botched agreement last week, the European Central Bank threatened to cut off emergency assistance to the country’s banks.

“We’ve put an end to the uncertainty that has affected Cyprus and the euro area over the past week,” Dijsselbloem said.

That uncertainty around the tiny nation of about 800,000 had shaken the entire eurozone of 300 million people, even though Cyprus only makes up less than 0.2 percent of the eurozone’s economy.

Several national parliaments in eurozone countries such as Germany must also approve the bailout deal, which might take another few weeks. EU officials said they expect the whole program to be approved by mid-April.

The country’s second-largest bank, Laiki, will be dissolved immediately into a bad bank containing its uninsured deposits and toxic assets, with the guaranteed deposits being transferred to the nation’s biggest lender, Bank of Cyprus.

Dijsselbloem said it was not yet clear how severe the losses would be to Laiki’s large bank deposit holders, but he noted that it is expected to yield 4.2 billion euros overall — or much of the money that Cyprus needed to raise to secure the bailout. Analysts have estimated investors might lose up to 40 percent of their money.

Large deposits with Bank of Cyprus above the insured level will be frozen until it becomes clear whether or to what extent they will also be forced to take losses, the Eurogroup of finance ministers said in a statement.

Dijsselbloem defended the creditors’ approach of making deposit holders take heavy losses, saying the measures “will be concentrated where the problems are, in the large banks.”

The international creditors, led by the IMF, were seeking a fundamental restructuring of the country’s outsized financial system, which is worth up to eight times the Cypriot gross domestic product of about 18 billion euros. They said the country’s business model of attracting foreign investors, among them many Russians, with low taxes and lax financial regulation had backfired and needed to be upended.

The drastic shrinking of the , the wiping out of wealth through the losses on deposits, the loss of confidence with the recent turmoil and the upcoming austerity measures all mean that Cyprus is facing tough times.

“The near future will be very difficult for the country and its people,” acknowledged the EU Commission’s top economic official, Olli Rehn. “But (the measures) will be necessary for the Cypriot people to rebuild their economy on a new basis.”

Cypriot banks have been closed this past week while officials worked on a rescue plan, and they are not due to reopen until Tuesday. Cash has been available through ATMs, but long lines formed and many machines have quickly run out of cash.

Amid fears of a banking collapse, Cyprus’ central bank on Sunday imposed a daily withdrawal limit of 100 euros ($130) from ATMs of the country’s two largest banks to prevent a bank run by depositors worried about their savings.

The Cypriot government also approved a set of laws over the past week to introduce capital controls, in order to avoid a huge depositor flight once banks reopen.

Creditors had insisted that Cyprus couldn’t receive more loans because that would make its debt burden unsustainably high. The IMF’s Lagarde said Cyprus would now reach a debt level of about 100 percent of GDP by 2020.

A plan agreed to in marathon negotiations earlier this month called for a one-time levy on all bank depositors in Cypriot banks. But the proposal ignited fierce anger because it also targeted small savers. It failed to win a single vote in the Cypriot Parliament.

Cyprus’ bid to secure more financial aid from its long-time ally, Russia, then failed, forcing it to turn again to its European partners. Russia was expected, however, to extend a 2.5 billion euro emergency loan granted last year, also lowering the interest rate due and extending then repayment schedule.

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Cyprus seeks Russian bailout aid, EU threatens cutoff

March 20, 2013 By Leave a Comment

Cyprus seeks Russian bailout aid, EU threatens cutoff

() – Cyprus’s pleaded with Russia for help on Wednesday to avert a financial meltdown after the island’s parliament rejected the terms of a European bailout, raising the specter of a looming default and bank crash.

Finance Minister Michael Sarris said he had reached no deal on financing with his , Anton Siluanov, but talks were continuing.

Cypriot officials disclosed that the country’s energy minister was also in Moscow, ostensibly for a tourism exhibition. Cyprus has found big gas reserves in its waters adjoining Israel but has yet to develop them.

“We had a very honest discussion, we’ve underscored how difficult the situation is,” Sarris told reporters after talks with Siluanov. “We’ll now continue our discussion to find the solution by which we hope we will be getting some support.

“There were no offers, nothing concrete,” he said.

Austria’s finance minister made clear the European Central Bank could soon pull the plug on Cypriot banks after the island’s parliament rebuffed EU demands for a levy on bank deposits to raise 5.8 billion euros.

Not a single voted for a proposed levy that would have taken up to 10 percent from larger accounts, many of which are held by Russians and other foreigners, while sparing small savers with less than 20,000 euros in the bank.

It was the first time a national legislature had rejected the conditions for EU assistance, after three years in which lawmakers in Greece, Ireland, Portugal, Spain and Italy all accepted biting to secure aid.

Rejection of the key condition for a 10 billion euro ($12.9 billion) bailout, cast the 17-nation currency bloc into uncharted waters, with a risk of financial contagion to other troubled member states.

However, the EU has a tradition of pressing smaller countries to vote again until they achieve the .

“PLAN B”

President Nicos Anastasiades, barely a month in the job, met and the governor of the central bank at his office. Christos Stylianides said a “Plan B” was in the works.

“A team of technocrats has gone to the central bank to discuss a plan B related to financing and reducing the 5.8 billion euro amount,” he told reporters during a break in the meeting with party leaders. He did not elaborate.

Anastasiades was also due to hold a cabinet meeting and talk with officials from the so-called “troika” of the EU, European Central Bank and .

Among the most urgent decisions awaited was whether the government will allow banks to reopen as planned on Thursday and Friday, at the risk of a run of withdrawals, or keep them closed until next week in hopes of a solution. Deputy Central Bank governor Spyros Stavrinakis said no decision had been taken yet.

Cyprus has asked Russia for a five-year extension of an existing loan of 2.5 billion euros that matures in 2016, and a reduction in the 4.5 percent interest rate. Sarris told reporters in Moscow he had also discussed “things beyond that”.

Austrian Finance Minister Maria Fekter said the next move was up to Cyprus but the ECB would not keep Cypriot banks afloat indefinitely unless a bailout was agreed.

If Cyprus did not come up with a new plan, Fekter told reporters: “Then the banks won’t open on Friday because the ECB will not provide any more liquidity. That is a more horrible scenario than what is on the table now.

“We will certainly help the Cypriots but only under conditions that make sense. Certainly neither the ESM ( bailout fund) nor the ECB can allow a bottomless pit,” she said.

Outraged Cypriots had emptied cash machines at the weekend after news broke that they would be taxed on their savings to contribute to the bailout, breaking a taboo in Europe’s handling of the stubborn debt saga so far.

The crisis is unprecedented in the history of the divided east Mediterranean island of 1.1 million people, which suffered a war with Turkey and ethnic split in 1974 in which a quarter of its population was internally displaced.

While Brussels has emphasized that the tax measure was a one-off for a country that accounts for just 0.2 percent of Europe’s output, fears have grown that savers in other, larger European countries might be spurred to withdraw funds.

Even the Church of Cyprus offered to help.

“The entire wealth of the Church is at the disposal of the country … so that we can stand on our own two feet and not on those of foreigners,” Archbishop Chrysostomos said after meeting Anastasiades early on Wednesday,

The Church of Cyprus is a major shareholder in Cyprus’s third-largest domestic lender, Hellenic Bank

GAS DEPOSITS

Leaders of the currency union said the bailout offer still stood, provided the conditions were met.

The ECB had threatened to end emergency lending assistance for teetering Cypriot banks, crippled by their exposure to the financial crisis in neighboring Greece.

Euro zone paymaster Germany, facing an election this year and increasingly frustrated with the mounting cost of bailing out its southern partners, said Cyprus had no one to blame but itself.

“For an aid program we need a calculable way for Cyprus to be able to return to the financial markets. For that, Cyprus’s debts are too high,” said Germany’s finance minister, Wolfgang Schaeuble.

With Sarris and Energy Minister George Lakkotrypis in Moscow, there was mounting speculation that Russian oil and gas giant Gazprom had mooted its own assistance plan in exchange for exploration rights to Cyprus’s offshore gas deposits.

Noble Energy reported a natural gas recovery of 5 to 8 trillion cubic feet of gas south of Cyprus in late 2011, in the island’s first foray to tap offshore resources.

Russian authorities have denied the Kremlin plans to offer more money.

A senior source in the “troika” said dealing with Cyprus was even more frustrating than protracted wrangling with Greece.

“The Greeks wanted to cheat on you all the time, but they knew what they wanted. The Cypriots are leaving us really confused,” the source said. ($1 = 0.7760 euros)

(Additional reporting by Lionel Laurent, Noah Barkin, Gilbert Kreijger, Adrian Croft, Steven C. Johnson, Robin Emmott, Michael Shields and Lidia Kelly. Writing by Matt Robinson and Paul Taylor, editing by Mike Peacock/Anna Willard)

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Fed to stick to stimulus as Cyprus rekindles global risks

March 20, 2013 By Leave a Comment

Fed to stick to stimulus as Cyprus rekindles global risks

(Reuters) – The Federal Reserve looks set to sustain its $85 billion monthly bond-buying stimulus despite improving U.S. economic data as a new flare-up in the crisis reminds officials of a risky global environment.

As it wraps up a two-day meeting on Wednesday, the U.S. central bank’s policy-setting will continue debating the potential costs of quantitative easing, including the possibility its easy money policies will inflate asset market bubbles.

But Fed Chairman has made clear he still firmly believes the benefits are palpable, and the risks worth taking.

“The only change in the Fed statement we expect is a nod to the economy being better than what the saw six weeks ago,” said Steve Blitz, at ITG.

“This nod should only sharpen divisions within the FOMC about whether it’s time to give a hint of the potential of a promise for the Fed to begin tailing off asset purchases sometime sooner rather than later,” he said.

The Fed will release its policy statement, along with a new set of economic projections, at 2 p.m. (1800 GMT) and Bernanke will get a chance to answer reporters’ questions at a briefing a half hour later.

One key indicator that bolstered confidence in the U.S. recovery was a February showing a lower jobless rate, down 0.2 percentage point at 7.7 percent, and the creation of 236,000 net new jobs.

If that pace of job growth can be sustained for a few months, the Fed might be able to claim substantial progress has been made toward an improved employment outlook – its own stated prerequisite for the cessation of bond buys.

If anything, developments in Cyprus, where the announcement of a tax on bank deposits to help fund the country’s sent jitters through the global financial system, are likely to reinforce the resolve of Fed officials to bolster the U.S. economy.

“What this event assures is that the Fed underscores the importance of protecting against downside risk,” said Quincy Krosby, market strategist at Prudential Financial. “It assures investors Mr. Bernanke is going to keep his accommodative stance.”

The latest Reuters poll of economists showed they are looking for the Fed’s current bond purchase plan eventually to total $1 trillion, though many see the central bank easing off on the pace of buying toward the end of the year. Analysts also see a large gap, potentially one or two years, between the time the Fed stops buying bonds and when it begins raising rates.

Global concerns aside, the Fed has plenty of reasons not to begin pulling back on stimulus yet. Its preferred measure of inflation continues to run below the Fed’s 2 percent and unemployment remains far above its pre-recession levels.

“I don’t see any sign or reason for the policy to change,” said Josh Shapiro, co-founder and chairman of Sonecon, a Washington-based economic advisory firm. “If anything, one might think an expansion of the current policy might be warranted.”

The Fed cut benchmark overnight rates effectively to zero in 2008 as it battled the financial crisis. It has also bought more than $2.5 trillion in Treasury and mortgage bonds to keep long-term borrowing costs low to spur consumption and investment.

Since December, the central bank has said it will keep rates near zero until the jobless rate falls to 6.5 percent as long as inflation did not threaten to pierce 2.5 percent over a one- to two-year horizon – a commitment economists expect it to reiterate on Wednesday. The Fed has also vowed to keep policy loose even as the recovery picks up.

HAWKISH RUMBLINGS

Some of the Fed’s more hawkish members have opposed the latest round of bond buys, citing various concerns ranging from worries about future inflation to the prospect of financial instability. In a recent speech, Fed Board Governor Jeremy Stein highlighted the possibility that a bubble might already be forming in certain parts of the corporate bond market.

That emphasis means policymakers will likely touch on potential changes to the Fed’s strategy for eventually unwinding its stimulus during their discussion – and Bernanke may be asked about it at his news conference.

Officials had originally planned to sell some of the assets on the central bank’s $3.15 trillion balance sheet sometime after they begin raising interest rates.

But recent comments from top Fed officials, including Bernanke, suggest they are strongly considering holding onto those assets, in part to minimize the potential for losses that would force them to halt regular remittances to the U.S. Treasury.

(Additional reporting by Rodrigo Campos; Editing by Tim Ahmann and Dan Grebler)

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European shares, euro dip on Cyprus concerns

March 19, 2013 By Leave a Comment

European shares, euro dip on Cyprus concerns

(Reuters) – The euro and European shares fell for a second day on Tuesday as investors worried about the uncertainty over a for Cyprus aimed at preventing a and banking collapse.

A said Cyprus’s parliament was likely to reject plans agreed by officials over the weekend to part-fund a 10 billion euro rescue of the island with a tax of between 6.75 and 9.9 percent on .

“All eyes will remain on Cyprus. Lots of uncertainty persists and most pressingly you don’t seem to have a majority in the parliament even if you do a partial redesign of the deposit levy,” said Tobias Blattner at Daiwa Securities.

“Marketwise if you fail to pass the bill it would be catastrophic to a certain extent because, in theory, at that moment you would be looking at a default and you are just not sure what would happen then.”

Euro zone ministers have urged Cyprus to let smaller savers escape the levy but if its parliament, which is due to convene at 1600 GMT, cannot agree a deal it would put the bailout in jeopardy and raise the threat of default.

The uncertainty saw the euro drop 0.2 percent as it remained near a three-month low and European shares .FTEU3 fell 0.4 percent in early trades as they extended Monday’s sell-off.

Downbeat car data also weighed on sentiment as figures from Association of European Car Manufacturers showed sales fell more than 10 percent last month having hit a 17-year low in January.

This year is shaping up to be another tough slog for manufactures across Europe, as consumers and firms in recessionary economies postpone big ticket purchases.

London’s .FTSE, Paris’s CAC-40 . and Frankfurt’s DAX . were down between 0.4 and 0.6 percent by 0815 GMT, while the concerns surrounding Cyprus meant German were again in demand as investors looked to traditional safe-haven assets.

The was last up 25 ticks on the day at 144.18 while Italian and Spanish bonds fell for a second session.

“We are just waiting for another headline out of Cyprus,” one trader said, adding that buying Bunds “is the only trade to have on.”

“It’s quite serious, it’s got bigger implications. I think there is (a risk) of some cross border contamination,” he added.

(Editing by Anna Willard)

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Exclusive: Ally near $4 billion unit sale, GM seen in lead

November 10, 2012 By Leave a Comment

Exclusive: Ally near $4 billion unit sale, GM seen in lead

() – Financial Inc is nearing a deal to sell its auto financing operations in Europe and for around $4 billion, with General Motors Co emerging as the lead bidder if the company decides to sell those operations as a whole, two sources familiar with the situation said.

Ally is still considering whether to split the business geographically – Europe and Latin America – and sell it to two different parties, the sources said on Friday. A deal could come as soon as next week, they said.

Details of an agreement have not been finalized, and the outcome could change, the sources said. Ally is still talking to a handful of that have made separate bids for its European and Latin American assets, they said.

Ally, which is 74 percent owned by the U.S. government after a series of bailouts during the financial crisis, announced in May a plan to sell its in a bid to speed up repayment to taxpayers.

GM, also partly owned by the U.S. government after its own taxpayer-funded , declined to comment.

An Ally spokeswoman said, “We continue to be focused on maximizing shareholder value and finding the best solutions for the remaining international operations.”

Once known as GMAC, Ally is the former auto lending arm of GM, which has been rebuilding its finance operations. The U.S. bought AmeriCredit Corp in 2010 and in August disclosed that it was among the bidders for Ally’s international operations.

Ally Chief Executive Michael Carpenter said last week that the lender had interest from multiple parties for its Europe and Latin and that he expected a sale to be announced this month.

Last month, Ally agreed to sell its Canadian auto finance and deposit business to Royal for $4.1 billion and its Mexican to ACE Ltd for $865 million.

Those two sales are expected to bring in about $5 billion in proceeds, producing pretax estimated gains of $1.2 billion, Ally said last week. The European and Latin American operations have a book value of about $3.3 billion.

Ally is focusing on U.S. auto lending and banking in a bid to turn its business around. Its Residential Capital mortgage unit filed for bankruptcy in May, and it is looking to sell most of its remaining mortgage operations.

Of the $17 billion it owes the U.S. government, Ally has paid back $5.8 billion, including dividend payments.

(Reporting By Jessica Toonkel in New York and Rick Rothacker in Charlotte, North Carolina; Editing by Soyoung Kim, Bernard Orr)

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Election Day 2012: How Obama won re-election

November 7, 2012 By Leave a Comment

802cae85b4d9aa324ec175d57072716b Election Day 2012: How Obama won re election

( News / ) — President John F. Kennedy said that “victory has a thousand fathers, but defeat is an orphan” — though President and his aides cited a for their re-election success.

Turnout.

Obama campaign officials said their get-out-the-vote organization — the people who make calls, knock on doors, micro- potential voters and drive supporters to the polls — was more than three years in the making, building on their record-breaking effort in 2008.

“We had a good organization in ’08,” said Obama senior adviser David Plouffe. “This organization is light-years ahead of that.”

Getting Obama loyalists into voting booths helped the president overcome anxiety over the economy and well-funded on his way to a second term in the White House.

And immediately after it was over, Obama’s campaign sent an e-mail to supporters to thank them for it. “I want you to know that this wasn’t fate, and it wasn’t an accident. You made this happen,” said the message signed “Barack.” “You organized yourselves block by block. You took ownership of this campaign five and ten dollars at a time.”

Still, Kennedy had a point — many other factors sired Obama’s victory.

They included one big with a big impact on a big state — the auto in Ohio. The incumbent also appeared to benefit from nature’s version of the October Surprise, Hurricane Sandy.

Then, of course, there’s the candidate himself. Obama, enjoying the advantages of incumbency, remained a powerful speaker, with on the stump.

And historians also may cite the political influence of four very different individuals: George W. Bush, Bill Clinton, , and Romney himself.

Among the keys to Obama’s victory:

Ohio and the auto bailout. Obama aides always believed that winning Ohio — as they did in 2008 — would seal re-election. They put a special effort into the Buckeye State by touting the government rescue of Chrysler and General Motors — a resonant issue in Ohio, where an estimated one in eight jobs depends on the auto industry.

Hurricane Sandy. The massive, deadly storm that slammed into the Northeast on Oct. 29 gave Obama a chance to exhibit presidential leadership in a very public way. New Jersey’s prominent Republican Gov. Chris Christie — who had been the keynote speaker at the GOP convention in August — praised Obama’s leadership and the federal response to the devastation the storm wrought upon his state. The storm also basically froze the race, forcing Romney to suspend his campaign at a time when some pollsters saw him gaining momentum.

Defining Romney. For many voters, the Obama campaign successfully portrayed Romney as a plutocrat businessman out of touch with the concerns of middle-class Americans. Romney himself also helped that effort. A key event: The surfacing of a video from a private Romney fundraiser, in which the Republican candidate was heard dismissing “47%” of Americans who either don’t pay taxes or live off government assistance.

Former presidents. George W. Bush and Bill Clinton. Obama often talked about the “mess” he inherited from his Republican predecessor, from a near-collapse of the economy to long wars in Iraq and Afghanistan. Enough voters apparently agreed with the incumbent’s assessment that things are getting better, while Romney’s policies mirrored those of the Bush years.

Clinton, a rival after Obama defeated Hillary Rodham Clinton in the 2008 Democratic primaries, came to the incumbent’s rescue throughout this election season. His speech to the Democratic convention — defending Obama’s economic record, denigrating Romney’s economic plans, and reviving memories of the economic boom of the 1990s — may have been the highlight of the Democrats’ week in Charlotte.

Osama bin Laden. The daring 2010 raid that killed the al-Qaeda founder bolstered Obama’s national security credentials, often a weak spot for Democratic candidates. The president’s record of ending the war in Iraq and winding down of the war in Afghanistan also proved popular with many voters. The campaign’s summary message was “Osama bin Laden is dead, and General Motors is alive.”

In the end, however, Obama and his aides kept returning to organization as the key to their re-election bid. The president made this case constantly on the stump.

On Election Day itself, during a morning visit to a campaign office, Obama said: “We feel confident we’ve got the voters to win … it’s going to depend ultimately on whether those voters turn out.”

Enough of them did to give Obama a new lease on White House life.

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Business: Global shares rise, dollar at seven-week high before U.S. payrolls

November 2, 2012 By Leave a Comment

1e876af4d427b40857fa8cd7bace81f4 Business: Global shares rise, dollar at seven week high before U.S. payrolls

(Reuters) – World shares were steady near two-week highs and the dollar at a seven-week high ahead of U.S. jobs data that will provide the last major signal on the state of the world’s leading economy before its voters pick a president on Tuesday.

Expectations for a strong reading from U.S. non-farm payrolls due at 1230 GMT have been bolstered by a better-than-expected ADP report and ISM manufacturing index reading on Thursday.

By mid-morning, the FTSEurofirst 300 index of top European shares .FTEU3 was up 0.2 percent at 1111.90, its highest since October 22, helping keep the MSCI index of world shares steady .MIWD00000PUS at 332.0.

“The ADP figures were quite good,” said Peter Garnry, equity strategist at Saxo Bank. “If the non-farm payrolls are better than expected, I think it could be a catalyst for the market to continue the momentum from yesterday going into the weekend.”

Weak manufacturing data from Germany, France, Spain and Italy underscored the ’s troubles, however, and helped drive the euro to a three-week low against the dollar, which was at its strongest level for seven weeks.

Euro zone manufacturing has now contracted for 15 months running.

“All in all, the picture for the euro area economy remains extremely sluggish,” said Newedge Strategy economist Annalisa Piazza, said of the data.

German rose, testing the top of their recent range, but many investors shied away from taking large positions before the U.S. jobs data and with Greece again facing crisis.

Greece’s deepening recession has put under increasing strain and are struggling to reach an agreement with Athens over how to provide more urgently needed cash.

A next week on 13.5 billion euros of contested is key to negotiations, with the outcome increasingly uncertain.

PAYROLLS DATA

The payrolls data is expected to show U.S. employers added 125,000 jobs in October, pushing the jobless rate up to 7.9 percent from September’s 7.8 percent.

With polls ahead of the November 6 election showing President Barack Obama neck-and-neck with , news on the economy, good or bad, could be decisive.

“The unemployment rate has become extra interesting this time because of the impact it could have on the U.S. election,” said Rabobank economist Philip Marey.

“Obama benefited from the drop last time, but if it rebounds back to 7.9 he will have to do some explaining, and it will give Romney some firepower going in to the final run-in.”

U.S. stock index futures pointed to a slightly lower open on Wall Street, with futures for the S&P 500 and Dow Jones indexes both down by 0.1 percent, while Nasdaq 100 futures were flat.

Gold was heading for its fourth straight week of losses as it edged down towards $1,700 an ounce. Brent crude oil fell 31 cents to $107.86, with Europe’s problems supporting the view that demand for fuel in developed economies will remain subdued.

“If the nonfarm payrolls data are very good, it will be bearish for gold, as it will cut expectations for any additional quantitative easing,” said Nick Trevethan, a senior commodity strategist at ANZ in Singapore.

In Asia, recent data showing a pick-up in Chinese factory activity gave Hong Kong and Shanghai stock markets their best week in over a month, while the risk-sensitive Australian dollar rose to a five-week high of $1.0420.

“Downside risks are lessening,” said Toru Yamamoto, chief strategist at Daiwa Securities.

(Additional reporting by Toni Vorobyova; Editing by Will Waterman)

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Business: Watchdog faults Treasury, Fed for Libor use, wants alternatives

October 25, 2012 By Leave a Comment

1dd741b67d13c7acc9a06ee0b96270d6 Business: Watchdog faults Treasury, Fed for Libor use, wants alternatives

() – The U.S. Treasury Department and Federal Reserve need to stop using the benchmark interest rate known as Libor in financial rescue programs, as it might not be reliable and could put taxpayer dollars at risk, a federal watchdog said on Thursday.

The special inspector-general for the Troubled Asset Relief Program, the vehicle launched during the financial crisis, recommended that the Treasury and the Fed change some initiatives to ensure participating U.S. firms use alternatives to the London inter-bank offered rate in pricing billions of dollars in loans.

Libor is intended to measure the rate at which banks lend to one another and is used as a benchmark to set borrowing costs on , including derivatives and mortgages.

It has faced heightened scrutiny since Barclays agreed to pay more than $450 million in fines to U.S. and British authorities to settle charges its employees rigged the rate to increase profits.

The Treasury and the Fed should “cease using Libor in programs,” the said in the report. “ who funded TARP may have been at risk and continue to be at risk from the manipulation of Libor.”

Libor was set as the base interest rate in many government bailouts from 2007-2009. More than three years after the of TARP, the federal government still has bailout programs in operation, some of which will last as long as 2015 and 2017.

“The scale of what has erupted over Libor is significant,” the special inspector general, Christy Romero, said in an interview. She said that in addition to putting at risk, the reliance on Libor could undermine confidence in the TARP program.

The Treasury and the Fed have said they had no choice but to use Libor in designing the lending programs that propped up the when credit seized up. In letters to Romero, both argued it was not in the taxpayers’ interest to pursue changes now.

The watchdog’s report focused on two TARP programs. One, known as the Term Asset-Backed Securities Loan Facility, or TALF, was started to jumpstart the securitization market for credit cards, auto loans and small business loans.

The second, the Public-Private Investment Program, or PPIP, was intended to use both taxpayer money and private capital to get bad assets off the books of major banks.

There is $598.6 million in outstanding TALF loans and $5.685 billion in outstanding PPIP debt with interest tied to Libor, the report stated.

“If we sought to renegotiate the rate, it is likely that borrowers either would not agree to a rate change or would agree only to a change that would result in a lower payment to the taxpayers,” Treasury Assistant Secretary Timothy Massad said of the TALF loans in a letter to Romero Dated October 9.

Massad also said that changing the benchmark rate for the PPIP program now “may in fact harm, rather than benefit, taxpayers.” He said fund managers overseeing those investments have developed investment strategies over the years that could be adversely disrupted.

“It’s not as hard as Treasury and the Federal Reserve make it out to be,” Romero said. She cited the bailout of insurer American International Group as an example in which a benchmark rate was renegotiated.

As for TALF, the Fed wrote that neither it nor the Treasury had the “authority to unilaterally change the interest rate.”

In the Fed’s letter to the watchdog dated October 3, William Nelson, the deputy director of the central bank’s Division of Monetary Affairs, said that the borrower would either not agree to a rate change or would only agree to an alternative that would result in a lower payment to the U.S. taxpayer.

The report also recommended that AIG be designated as a systemically important firm, which would subject it to greater scrutiny and higher capital liquidity requirements.

(Reporting by Margaret Chadbourn; Editing by Dan Grebler)

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Politics: Obama wins debate by taking Romney to task over Taxes, Libya, and Immigration

October 17, 2012 By Leave a Comment

86f863c220c11ae8bcdba6e6fe887820 Politics: Obama wins debate by taking Romney to task over Taxes, Libya, and Immigration

( News / BBC News) —- Some people after last night Presidential Debate, was calling the encounter, “The Return of The Jedi”.

US President Barack Obama forcefully attacked Republican during a feisty 90-minute encounter in the second of three pre-election debates.

Mr Obama – widely perceived to have lost their – came out swinging in New York on the economy, tax and foreign policy.

But the former accused Mr Obama of broken promises and a record of failure.

The pair meet for a final pre-election debate in Florida on .

As he battles for a second term, the has been trying to hold on to dwindling leads in the nine key that are expected to decide the election on 6 November.

In the town hall- at Hofstra University on Long Island, both men freely roamed the stage, circling, interrupting and at times heckling one another as they took questions from an audience of 80 undecided voters.

The moderator, CNN’s , often had to intervene to keep order between the rivals as each fought to make his point.

“Start Quote

President Obama redeemed himself. He did what he had to, and perhaps some more”

Mark Mardell North America editor

Mr Obama set the tone from his first answer, when he contrasted his own of the US car industry with Mr Romney’s position that auto-makers should have been allowed to go bankrupt.

Candidates exchange barbs on jobs plans

The president forcefully accused Mr Romney of inconsistent positions, while claiming that his challenger could only offer a “one-point plan… to make sure the folks at the top play by a different set of rules”.

Mr Romney meanwhile hammered away at the president’s record on the economy, blaming him for unemployment of 20 million Americans and bloated federal deficits, insisting the country could not afford another four years with Mr Obama at the helm.

In one of the most scathing exchanges, they bickered over last month’s attack on the US Libya consulate that left four Americans dead.

Mr Romney suggested the Obama administration may have attempted to mislead Americans over whether it was a terrorist attack.

But the president said it was “offensive” to suggest that he had played politics on such a grave issue.

He countered that it was the Republican who had tried to turn a national tragedy to his advantage by releasing a partisan press release about the deadly assault.

As the debate progressed, both candidates made repeated and impassioned pitches to America’s middle class.

Mr Obama said he had cut taxes for middle class families and small businesses over the last four years.

But he said that if America was serious about reducing the deficit, the wealthy would have to pay a little bit more.

“Governor Romney and his allies in Congress have held the 98% hostage because they want tax breaks for the 2%,” said Mr Obama.

In his final answer he responded to an assertion by Mr Romney that the Republican would represent “100% of Americans” by bringing up Mr Romney’s secretly recorded remarks at a fundraiser in May.

In those remarks the challenger dismissed 47% of Americans as government-dependent tax avoiders who take no responsibility for their lives.

“When he said behind closed doors that 47% of the country considers themselves victims who refuse personal responsibility – think about who he was talking about,” the president said.

‘Policies haven’t worked’

Mr Obama said voters had heard no specifics on Mr Romney’s “sketchy” tax plan apart from eliminating Sesame Street’s Big Bird and cutting funding for Planned Parenthood, a family planning organization Republicans say promotes abortion.

Barack Obama: ”I don’t look at my pension, it’s not as big as yours”

“Of course it adds up,” Mr Romney said of his tax plan. He cited his experience balancing budgets in business, while running the 2002 Olympics and as governor of Massachusetts.

Mr Obama ticked off a list of achievements over the last four years: tax cuts for the middle class; ending the war in Iraq, killing ; helping the auto industry, as well as healthcare reform.

But Mr Romney said the last four years had not been as rosy as the president would like to portray, saying the the president had made pledges to deliver unemployment of 5.4%, an immigration plan, and to cut in half the deficit, but had met none of them.

“The president’s tried, but his policies haven’t worked,” said Mr Romney.

One of the sharpest exchanges of the debate came when the pair clashed over former private equity chief Mr Romney’s wealth.

Mr Romney was defending his investments in China through a blind trust when he asked Mr Obama if he had looked at his own pension. He said Mr Obama would find investments in China in his retirement plan, too.

Mr Obama countered that he did not check his pension that often, adding: “Because it’s not as big as yours.”

Another fragment of the debate prompted a flurry of social media comment.

Arguing that he supports equal opportunities for women, Mr Romney said he once had “binders full of women” candidates for cabinet jobs when he was Massachusetts governor.

The third and final presidential debate is scheduled for 22 October in Boca Raton, Florida.

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