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Saturday, June 30, 2012

: Don’t mention the war?---A Point of View

It's time to stop invoking Hitler and the Nazis in arguments about everything from censorship to birth control - but we should never stop heeding the lessons of World War II, says Adam Gopnik.
Over the past few weeks, I have been talking about bees, and the Beatles, and babies (at least ones who are babies no longer), and also about books and bad reviews. I am as deep in the Bs as the crew that went hunting for the Snark in Lewis Carroll.
I hope you will forgive me if I turn this week to something, if not more serious, then more obviously sombre, and that is the question of what the memory of World War II ought to mean to people now.
It recedes, its soldiers die, its battles become the occasion for camp fantasy, or Quentin Tarantino movies - the same thing.
Recently, the Economist published a long book review asking just that; what WWII ought to mean to people now?

Find out more

Adam Gopnik
  • A Point of View is usually broadcast on Fridays on Radio 4 at 20:50 BST and repeated Sundays, 08:50 BST
  • Adam Gopnik is an American commentator and writes for The New Yorker
We know already what it means to publishers and television networks. The publishers love new books about the war's battles, and the cable shows can never get enough Nazis. A German friend once complained to me that educated Westerners often know far more about the German government during those five years of war than they do about all German governments in the 60 years of subsequent peace.
But then, as The Economist wrote: "The sheer magnitude of the human tragedy of [WWII] puts it in a class of its own, and its relative closeness to the present day makes claims on the collective memory that more remote horrors cannot."
Does it, should it, make such claims? Of course, there is a band of American neo-conservatives who insist on seeing every new year as another 1938, with whomever is the monster of the week cast as a Hitler figure.
On the other extreme, there are those who insist that there is, in a sense, nothing to learn from what happened then, because it was so uniquely, horribly evil. There is even a principle, frequently repeated during internet squabbles, and half-jokingly called Godwin's Law (after Mike Godwin, an expert in internet law of the unjoking kind, who first invoked it). It states simply that as an online discussion grows longer, the probability of a comparison involving Nazis or Hitler gets greater. The stupider the argument becomes, the more likely someone is to use the "reductio ad Hitlerium".
Therefore Godwin's law implies - and this is the law-like bit - one should try never to compare anything or anyone current to Nazis, Nazism - or for that matter, to mention 1938, Munich, appeasement or any of the rest of the arsenal of exhausted exemplars. It's a bit like Basil Fawlty's old rule when the German guests come to the hotel: "Whatever you do, don't mention the war!"
And, to an extent, this caution is sane and sound.
Tony Blair gestures (in what coincidentally looks like a Nazi salute) in 2004 Any resemblance is coincidental
The people on the right who invoke "liberal fascism" should be bundled off - with those on the left, who morph Thatcher's or Blair's picture into Himmler's - shut up in a library, and made to read some history.
But I'm always haunted by the simple words of the historian Richard Evans towards the end of his good book, The Third Reich at War, where he said that we should always remember that what happened was not some act of Satan - though Satanic acts took place - but the result of the unleashed power of long latent traditions of militarism, nationalism and the hatred of difference. It was the force of three ever-living things, braided together like hissing, poisonous snakes around a healthy tree.
The danger is that each of these things is not necessarily evil on first appearance, and each seeks a new name in new time.

Mike Godwin on Godwin's Law

"There are obvious topics in which the [Nazi] comparison recurs. In discussions about guns and the Second Amendment, for example, gun-control advocates are periodically reminded that Hitler banned personal weapons.
"And birth-control debates are frequently marked by pro-lifers' insistence that abortionists are engaging in mass murder, worse than that of Nazi death camps. And in any newsgroup in which censorship is discussed, someone inevitably raises the spectre of Nazi book-burning.
"I developed Godwin's Law of Nazi Analogies: as an online discussion grows longer, the probability of a comparison involving Nazis or Hitler approaches one."
The old distinction between patriotism and nationalism, made many times by many people, has never been more vital to our mental health than it is now - as vital for the health of the country as the distinction between sexual fantasy and pornography is for the health of a marriage. Patriotism, like fantasy, is a kind of sauce, a pleasing irrationalism that is part of what makes us human - and saucy. Nationalism, like pornography, is a kind of narcissistic addiction that devours our humanity.
Patriotism is a love of a place and of the people in a place. As GK Chesterton understood, it becomes more intense the smaller the unit gets, so that it was possible for him to feel more patriotism for Notting Hill than for Britain.
Nationalism is the opposite belief; that your place is better than everyone else's and that people who don't feel this way about it are somehow victimising you.
Recently in America, "exceptionalism" has become the new name for this illness. All nations are exceptional, but some are more exceptional than others, and America is the most exceptional of all. This sounds like a mordant joke, but it is actually what many people in the US believe, and want everyone else to believe, and routinely arraign President Obama for not believing in enough. (As it happens, for good or ill, he does.)
To believe this, it is necessary first of all to be exceptional in never having lived in any other place that thinks itself exceptional.

The review Adam Gopnik read

"History is full of wars that were bloodier than the Second World War. As a proportion of the population, more people were killed during the An Lushan rebellion in 8th Century China, for example, or by the Thirty Years War in 17th Century central Europe.
"But the sheer magnitude of the human tragedy of WWII puts it in a class of its own, and its relative closeness to the present day makes claims on the collective memory that more remote horrors cannot."
Any American lucky enough to grow up in Canada, as I did, which believes itself rightly to be exceptional among the world's nations in its ability to cover an entire continent in common values without the governments ever having once resorted to internal violence. Or else to have lived, as I also have been lucky enough to do, for many years in France, which believes itself to be exceptional among the countries of the world because… well, I haven't time to enumerate all those reasons, though they were nicely summed up in Noel Coward's remark, just after the death of General De Gaulle. Asked what De Gaulle might say to God, Coward said that that depended entirely on how good God's French was.
Exceptionalism, it seems, is the least exceptional thing on earth.
Just as nationalism is the opposite of patriotism, not its extension, so militarism is an emotion opposed to the universal urge to honour soldiers for their courage. Militarism is the belief that the military's mission is moral, or moralistic. That the army can be used to restore the honour of the nation, or to improve our morals, and that a failure to use it to right every imagined affront is a failure of nerve, rather than a counsel of good sense

Don't mention the war!

Fawlty Towers
Basil Fawlty: Is there something wrong?
German guest: Will you stop talking about the war?
Basil: Me?! You started it!
Guest: We did not start it!
Basil: Yes you did, you invaded Poland!
After 9/11, in the US we suffered from a plague of militarism of this kind, again mostly from sagging middle-aged writers who wanted to send someone else's kids to war so that the middle-aged men could feel more manly in the face of a national insult. Militarism is not the soldiers' faith that war can be conducted honourably, but the polemicist's belief that war confers honour.
Hatred of difference - notice I carefully did not say racial hatred, or religious hatred. Hitler hated Jews because of their religion, and because of their race, but he hated them above all because of their otherness.
When I read well-intentioned people talking about the impossibility of assimilating Muslims in my adopted country of France, for instance, I become frightened when I see that they are usually entirely unaware that they are repeating - often idea for idea and sometimes word for word - the themes of the anti-Semitic polemics that set off the Dreyfus affair a century ago. For those writers, too, believed not that Jews were eternally evil, but that Judaism was just too different, too foreign to France, and tied to violence against the nation and its heritage.
And indeed there were Jewish anarchists in Europe, as there are Muslim extremists now. But there was never a Jewish problem in France, any more than there is a Muslim problem now.
Greek poster depicting German Chancellor Angela Merkel in a Nazi uniform Someone's mentioned the war
This is a question in which after a half-millennium of religious warfare, the results are really all in. If we accept the Enlightenment values of tolerance, coexistence and mutual pursuit of material happiness, things in the long run work out. If we don't, they won't.
So, from now, when we evoke Godwin's Law, as we ought to, I would like to propose Gopnik's Amendment to it. We should never believe that people who differ from us about how we ought to spend public money want to commit genocide or end democracy, and we should stop ourselves from saying so, even in the pixelled heat of internet argument.
But when we see the three serpents of militarism, nationalism and hatred of difference we should never be afraid to call them out, loudly, by name, and remind ourselves and other people, even more loudly still, of exactly what they have made happen in the past.
We should never, in this sense, be afraid to mention the war. We should say, listen: you've heard all this before - but let me tell you again just what happened in the garden the last time someone let the snakes out. It is exactly the kind of lesson that history is supposed to be there to teach us.

Kim takes helm of World Bank

Jim Yong Kim begins his term as president of the World Bank on Sunday, taking over from fellow U.S. citizen Robert Zoellick.
Mr. Kim, a physician who co-founded the non-governmental organization Partners in Health and helped pioneer public health strategies against tuberculosis and AIDS, was also president of Dartmouth College in New Hampshire.
Mr. Zoellick will serve as a distinguished visiting fellow at the Peterson Institute for International Economics in Washington, the think tank announced last week.
Since the World Bank and the International Monetary Fund (IMF) were established in 1944, a European has always headed the crisis-lending IMF while its sister development agency has been led exclusively by Americans.
Developing nations have pushed in recent years for a greater say in the international finance system and have sought to have one of their own lead at least one of the two Washington-based institutions.
The processes that led to the appointments of Mr. Kim at the World Bank and French finance minister Christine Lagarde as IMF chief were officially open but still ended with the U.S.-European consensus.
After being named to the post in April, Mr. Kim said he would “seek a new alignment of the World Bank Group with a rapidly changing world. Together, with partners old and new, we will foster an institution that responds effectively to the needs of its diverse clients and donors.” 

IPL spot-fixing: BCCI bans 5 players

Cracking the whip on domestic cricketers caught in the IPL spot-fixing scandal, the BCCI on Saturday slapped a life ban on pacer T P Sudhindra and handed lighter punishments to four other players who were also exposed in a TV sting operation.

The decision to ban the players for varying degrees was taken by the BCCI’s disciplinary committee, headed by President N Srinivasan, which met here to discuss the report submitted by the Board’s Ant-Corruption Unit chief Ravi Sawani on the matter.

While the 28-year-old Sudhindra was the worst hit as his career seems all but over, Shalabh Srivastava was banned for five years. Mohnish Mishra, Amit Yadav and Abhinav Bali were banned for a year each.

“The Committee held Sudhindra guilty of actually receiving a consideration to spot-fix in a domestic cricket match, and hence imposed exemplary penalty on him. Sudhindra has been debarred for life, from playing any cricket matches conducted or authorised by the ICC or BCCI, or any affiliated unit of the BCCI,” the Board said in a statement.

Sudhindra will not be entitled to the monthly gratis, benevolent fund, benefit match or any other facility offered to players by the BCCI. He also cannot hold any position in any cricket association affiliated to the BCCI for life.

“Shalabh Srivastava was held guilty of agreeing to fix a match and negotiate terms for the same, even though no actual match-fixing or spot fixing took place,” the Board stated.

“He has been debarred for a period of five years, from playing any cricket matches conducted or authorised by the ICC or BCCI, or any affiliated unit of the BCCI,” it added.

Like Sudhindra, he will also not be entitled to the monthly gratis, benevolent fund, benefit matches or any other facility, during this period.

Srivastava has been also barred from holding positions in any cricket association affiliated to the BCCI, for a period of five years.

“The (other) three players, through loose talk and unsubstantiated bragging, brought the game into disrepute, and hence, have been held guilty of the lesser offence,” the Board explained.

“They have been debarred for a period of one year, from playing any cricket matches conducted or authorised by the ICC or BCCI, or any affiliated unit of the BCCI,” it added.

The penalties will be effective from the date of the suspension of these players which was May 15.

The television sting operation had claimed that they agreed to shadowy deals in the Indian Premier League and other matches.

Three of the five players -- Sudhindra, Mishra and Bali -- attended the meeting today to present their points of view before the panel whose other members are Board vice-presidents Arun Jaitely and Niranjan Shah.

Srivastava and Yadav pleaded their respective cases through teleconference during the meeting.

The five uncapped players were allegedly caught indulging in corrupt practices, including spot-fixing, by a TV channel which conducted a sting operation during this year’s IPL.

BCCI had then asked Sawani to conduct a probe in the matter and he submitted his report to Srinivasan a few weeks back.

The channel -- India TV -- had claimed to have blown the lid off “murky deals” in the IPL among players, organisers, owners and big guns of Indian cricket.


Global shares rise on eurozone bank bailout deal

European and US stock markets surged on Friday after eurozone leaders agreed a bailout deal for the region's debt-laden banks.
In Greece, the Athex index of leading shares rose 5.63%, led by its banking stocks.
In France the Cac 40 index rose 4.75%, while the German Dax index rose 4.33%.
In London, the FTSE 100 ended the day 1.42% higher, while the US's Dow Jones rose 2.2%.
Spain and Italy, the two countries likely to benefit most from the EU banking agreement, also saw shares gain. Madrid's IBEX index rose 5.66% to its highest level for two years, while Milan's FTSE MIB added 6.59%.
Falling yields Banking stocks were the main winners, with Greek lender Eurobank rising nearly 16%.

Russia-US still split ahead of talks on Syria

Areas of "difficulty and difference" remain between Russia and the US ahead of key talks on the crisis in Syria, a US official says.
The state department spokesman played down chances of a deal at the talks, to take place on Saturday in Geneva.
Russian Foreign Minister Sergei Lavrov earlier met US counterpart Hillary Clinton, and said there was a "very good chance" of finding common ground.
More than 100 people have been killed in Syria since Thursday, reports say.

Friday, June 29, 2012

Europe summit surprises with bold moves

After 18 disappointing summits, Europe’s leaders appeared on Friday to have finally come up with a set of measures that show they are serious about solving their crippling debt crisis.
Meeting for the 19th time since the debt crisis exploded in late 2009, leaders of the 17 countries that use the euro currency agreed to let funds intended to bail out indebted governments funnel money directly to struggling banks as well. The move is intended to stop banks from piling debt onto already stressed governments.
The leaders also agreed to ease austerity requirements for countries that take bailouts a victory for Spain and Italy,

Strong earthquake hits Xinjiang in China

A strong earthquake has jolted China’s Central Asian frontier, shaking buildings and cutting off electricity in the remote mountainous area and sending rescuers in search of casualties.
The U.S. Geological Survey measured the Saturday morning quake that hit the Xinjiang region at 6.3 magnitude, while China’s Earthquake Networks Centre put it at 6.6 magnitude.
China’s state-run Xinhua News Agency reported that residents near the epicentre were shaken out of bed in pre-dawn darkness and that some households lost electricity. It reported that the quake shook buildings 200 kilometres, or 120 miles, to the west in the regional capital, Urumqi.
Xinhua said rescuers are being dispatched to the sparsely populated area to search for casualties. 

20 Naxalites killed in encounter with CRPF

In a major crackdown by CRPF, at least 20 Naxalites, including a woman, were killed in a fierce overnight encounter in the dense jungles of Dantewada in Chhattisgarh that left six jawans wounded.
The encounter, which took place in the forests of Silger, an uncharted Maoist zone between the Naxal hotbed of Jagargunda and Basaguda in Bijapur district of Bastar region, was launched on Thursday night in a joint operation by over 300 CRPF and State police personnel from three directions.
Seventeen bodies of the ultras have been recovered from the spot, Chhattisgarh ADG (Naxal operations) Ram Nivas said, adding the combing operations were underway and the toll may rise.
Two Maoists, who were injured in the encounter, were apprehended and have been airlifted for medical treatment to Raipur, a senior CRPF official said.
CRPF officials said two “prominent” Naxals, operating in the Bijapur-Dantewada axis, were also killed in the encounter.
Six CRPF men, including two CoBRA commandos, sustained bullet injuries and have been airlifted for medical aid to Raipur. Two of them are critical, he said.
Keeping in view the tough terrain and presence of a big Naxal squad in mind, the CRPF had deputed a DIG and two commandant rank officers, supported by an additional SP of State police, to lead the operation.
The CRPF has mobilised three units of commandos and regular troops, aided by two helicopters for the encounter from three directions — Jagargunda, Chintalnar and Basaguda.
This is the same area, close to Chintalnar, where Naxals had carried out an audacious attack on security forces killing 75 CRPF men and one State police personnel in April 2010. 

GAAR to be finalised after approval of PM: Govt

Within 24 hours of Finance Ministry issuing the draft guidelines on controversial General Anti-Avoidance Tax Rules (GAAR), the PMO appears to have distanced itself from the proposal saying that were not seen by Prime Minister Manmohan Singh and would be finalised only after his approval.
“These (draft guidelines) have not been seen by the Prime Minister and will be finalised with the approval of the Prime Minister, who holds the Finance portfolio, only after considering the feedback received”, Prime Minister’s Office (PMO) said in a release.
The Finance Ministry last evening had issued draft guidelines on GAAR - a budgetary proposal to check tax evasion - to seek feed back of the stake holders.
The draft guidelines seek to address the concerns of the investors over misuse of the tax proposal. Besides other things, it said that there would be a threshold limit for invocation of GAAR and it would apply on income accruing after April 1, 2013.
In view of the widespread protest against the proposal, former Finance Minister Pranab Mukherjee postponed its implementation by a year to April 2013. 

Eurozone to help Italy and Spain

Eurozone leaders agreed at a summit dragging into Friday morning to change the terms of an upcoming Spanish bank rescue and allow countries like Italy to tap into eurozone funds to reduce its borrowing costs, European Union President Herman Van Rompuy said.
Spain will be allowed to channel eurozone loans directly to stricken lenders to avoid adding to its public debt load, but only after “an effective single supervision mechanism is established” for the European banking sector, he said.
Until then, existing rules will apply, meaning that the Spanish government will be the intermediary for the loans and remain liable for them.
Madrid also won acceptance for its request that its eurozone creditors should not enjoy preferential treatment over private investors, which it feared could have deterred private investment.
In reference to Italy, financial stability instruments to reduce borrowing costs should be made available “already this summer” for countries that are complying with EU policy prescriptions on deficits and economic reforms, top eurozone official Thomas Wieser added. 

Wednesday, June 27, 2012

More banks face interest rate rigging investigation

A number of banks are being investigated and could face sanctions after Barclays was fined £290m ($450m) for trying to manipulate interest rates at which banks lend to each other.
Regulators in Europe, the US and Asia have said that investigations into other banks are "ongoing".
The UK's Financial Services Authority said the early signs were that Barclays had not been the only firm involved.
Barclays has said its actions "fell well short of standards".
Its traders lied to make the bank look more secure during the financial crisis and, sometimes - working with traders at other banks - to make a profit.

Politics without policy

The acrimony between the government and the opposition has worsened to such an extent that it has subverted attempts to reach workable solutions to practical problems
The French sociologist and columnist Raymond Aron had pointed out that in English, there are two different terms, “politics” and “policy” whereas in his own language there is only one single term, “La politique,” to cover both. It is the same in German as in French, for the same German word, “politik,” covers both policy and politics. We should make use of the resources of the English language to reflect on a distinction that has acquired crucial importance in the present phase of our democratic system.
The central concern of politics, as I understand it,

Stuxnet and now Flame: The US and Israel Continuing Cyber War against Iran

 Prabir Purkayastha
Last two weeks have brought out that cyber war is no longer in the realm of science fiction, but very much a part of what is happening here and now. First, we had David Sanger in New York Times confirming what was widely held – that the Stuxnet virus that had damaged a number of centrifuges in the Natanz uranium enrichment facility, was the joint product of the US and Israeli teams. What is new in David Sanger's report is that these attacks – codenamed Olympic Games – started under George Bush and was expanded under Barack Obama. Not only did they continue, they were directly overseen by the White House. The second is the discovery of another virus – Flame – that is also directed against Iran and has been active from at least 2009.
Why should the discovery of a new kind of virus be of such concern when computer viruses have been around for so long?

The Current Presidential Election ---Prakash Karat

The Presidential election is being contested by two candidates – Pranab Mukherjee, standing on behalf of the UPA, and P. A. Sangma, supported by the BJP (and sponsored initially by the AIADMK and the BJD). This election is not to be seen as just a contest between these two candidates. Beneath the surface are stirrings and a churning process that presage a political realignment.
In the background of the presidential contest are the troubles afflicting the UPA government, which include the worsening economic situation due to its bankrupt policies, the lack of cohesiveness in the alliance itself and its inability to take political and policy initiatives. Price rise and corruption have eaten into popular support for the Congress and the UPA government.
The BJP’s credibility has also taken a battering.

Samsung Galaxy Tab 10.1 sales banned by US court

A court has banned sales of Samsung's Galaxy Tab 10.1 tablet in the US while it decides on the firm's patent dispute with Apple.
Apple has claimed that Samsung infringed its design patent and copied the look of its popular device, the iPad.
The Samsung tablet is considered by most analysts as the biggest rival to Apple's iPad.
The ban does not apply to the Galaxy Tab 10.1 II, the tablet's new edition.
The trial for the case is scheduled to begin in California on 30 July.
Apple will have to post a $2.6m (£1.67m) bond to enforce the injunction, which it applied for in May, to compensate Samsung if the ban subsequently proves to have been unnecessary.
"Although Samsung has a right to compete, it does not have a right to compete unfairly, by flooding the market with infringing products," said US District Judge Lucy Koh.
The judge had previously denied Apple's appeal for an injunction on the Galaxy tablet and smartphones, but was asked by a federal appeals court to reconsider Apple's request on the tablet PC.
In December 2011, a German court threw out Apple's complaints about Samsung's redesigned Galaxy 10.1N.


Another day, another patent battle - and another sales ban on a popular product.
Samsung and Apple are tied up in several legal cases, each becoming increasingly bitter as they each try to hinder each other's chances in the lucrative tablet market.
As well as today's ruling, Apple is also seeking to ban Samsung's flagship smartphone, the Galaxy S3.
Last week, a Dutch judge ruled that Apple must pay Samsung an unspecified amount in damages over the use of patents relating to the way phones and tablet PCs connect to the internet.
Surprisingly enough, the feud hasn't stopped the companies working together - the latest iPad uses several Samsung-made components.
Elsewhere, in a sign of increasing frustration at the tit-for-tat nature of the patent disputes, a US judge threw out a separate case involving Apple, this time against Google-owned Motorola Mobility.
The judge said Apple's claim that Motorola's alleged patent infringement had harmed the iPhone's standing in the smartphone market was "wild conjecture".
In an emailed statement to the BBC, Samsung said that it "will take necessary legal steps" and that the ruling was unlikely to have a significant impact on its business.
Apple has been filing suits against various manufacturers who use the Google Android operating system in their tablets and smartphones.
Motorola, HTC and Samsung have all seen their patents challenged in the courts.
'Extraordinary' Apple and Samsung are involved in a variety of legal cases in various countries across the globe amid claims and counter claims of patent infringement.
While Apple had accused Samsung of "blatant copying" of its design and look, the South Korean firm has alleged that Apple infringed its patents relating to the way phones and tablet PCs connect to the internet.
Analysts said the order passed by the judge was a significant development in the continuing legal battle between the two companies.
"The relief being given to Apple here is extraordinary," said Colleen Chien, a professor at Santa Clara Law in Silicon Valley.
"Preliminary injunctions are rarely asked for and rarely granted."
'Legal manoeuvre' Apple and Samsung are two of the biggest manufacturers of tablet PCs and smartphones in the world.
Sales of the iPad more than doubled to 15.43m for the three months to 31 December 2011.
And in the first quarter of 2012 it sold 13.6m, giving it about 63% of the global tablet market, according to research firm Display Search.
Samsung sold 1.6m tablets over the same period, giving it a 7.5% share.
The success of Apple's iPhone and iPad has seen the firm recently become the world's most valuable company.
Meanwhile, Samsung has enjoyed considerable success in the sectors with its Galaxy range of products.
The demand for tablet PCs and smartphones is likely to grow even further in the near term.
Analysts said that given the growth potential, the two firms were using every possible tactic to ensure that they capture a bigger share of the market.
"They are going to use every legal manoeuvre they can, including patent battles, to keep each other out of the market," Tim Charlton of Charlton Media told the BBC.

Global tablet sales forecasts

2011 2012 2013 2016
Source: Gartner

Rajoy says--Spain cannot Afford High Rates for Long Time

Spanish Prime Minister Mariano Rajoy has said Spain cannot afford to finance itself for long at current rates.
Spanish 10-year government bonds have been trading at yields above 6.8%, coming close to the 7% considered unaffordable.
Mr Rajoy was speaking ahead of this week's European Union (EU) summit.
"The most urgent subject is the subject of financing," he said. Spain has asked for funding for its banks, but the country has not been bailed out.
Eurozone countries have agreed to lend up to 100bn euros ($125bn; £80bn) to support Spain's banks.
The yield on government bonds trading on the markets is taken as an indication of the interest rates that governments would have to pay to borrow money.
 Shrinking economy
Mr Rajoy told the Spanish parliament: "There are institutions and also financial entities that cannot access the markets.
"It is happening in Spain, it is happening in Italy and it is happening in other countries," he said.
Separately, there was bad news from the Bank of Spain, which said that the country's recession had probably deepened in the second quarter of the year.
The country's economy contracted by 0.3% in the last three months of 2011 and another 0.3% in the first three months of 2012.
The Bank of Spain said its latest data suggested further contraction in the second quarter "at a more intense pace".
On Tuesday, EU authorities put forward their vision for the future of monetary union, which they hoped would reassure investors that they could safely lend to eurozone countries, and avoid further bailouts being needed.
The big dispute in the eurozone is whether bonds will ever be issued jointly by all of its members in order to keep borrowing costs down for those currently facing unaffordable debt.
Tuesday's release from the EU said that could be part of its 10-year plan involving closer fiscal union.
But German chancellor Angela Merkel seemed to dismiss that, reportedly saying: "I don't see total debt liability as long as I live", having already said that the idea of eurobonds was "economically wrong and counterproductive".
Italy held a bond auction on Wednesday, selling 9bn euros of six-month bonds with an interest rate of 2.96%, up from the 2.10% it paid at the last comparable auction at the end of May.
Italian Prime Minister Mario Monti and French President Francois Hollande would like eurozone bailout funds to buy government bonds at cheaper rates to help lower the cost of borrowing for indebted eurozone governments such as Spain and Italy on the commercial markets.
In Rome on Tuesday, Mr Monti warned that the EU summit, which is scheduled to take place on Thursday and Friday, could go on into late Sunday if he did not get what he wanted.
But, as the BBC's economics editor Stephanie Flanders points out, the two rescue funds, EFSF and the ESM do not have enough funds to be able to make a serious impact on Spanish and Italian borrowing costs.
For this to work, Germany needs to be willing to allow the ESM to obtain a banking licence, so it can borrow much larger amounts from the European Central Bank, something Chancellor Angela Merkel rejected at last year's July summit.
Cyprus 'not for sale' Also on Wednesday, Cypriot President Demetris Christofias assembled Cypriot political leaders to discuss the country's bailout, which he has told eurozone authorities he will be requesting.
As he emerged from the talks, a journalist told him: "I heard that the island is for sale."
But Mr Christofias replied: "Cyprus island is not for sale and the Cypriot people have dignity and don't challenge me with such questions."
His finance minister said reports that Cyprus would ask for a 10bn euro bailout were speculation.

Interest rates and the rupee--C. P. Chandrasekhar

The “markets” and the corporate sector, the media report, are once again disappointed with the Reserve Bank of India. With growth slowing persistently and inflation thought to be less of a concern than earlier, the RBI was expected in its Mid-Quarter Monetary Policy Review in June to continue with its recent turn to reducing rather than hiking interest rates. That shift, recorded in April (see Chart), was seen as signalling a longer-term change in policy focus from combating inflation to spurring growth. Prior to April, over a period of two years and in more than a dozen steps, the RBI had hiked the base repo rate by as much as 3.5 percentage points to its October 2011 level of 8.5 per cent. The motivation was clear: inflation was seen as India’s most important problem, necessitating measures to moderate demand by discouraging investment and consumption.
However, in April, the RBI was seen as sending out a strong signal with a full fifty basis points reduction in the repo rate to 8 per cent. Since that has had little visible effect either on demand and growth or on confidence in the markets, expectations were that the RBI would persist with rate cuts and monetary easing. What is more, even the outgoing Finance Minister, Pranab Mukherjee, suggested in public that this was the way the RBI would respond.
However, on June 17, the RBI chose to stand firm, and leave the interest rate unchanged, inviting media and corporate criticism. The argument advanced by the critics sounds painfully obvious. Since, in their view, inflation is moderating while growth is decelerating, the RBI should have stuck with the policy of cutting rates. By adopting an asymmetric attitude with respect to its two tasks of combating inflation (for which it continuously hiked rates) and reviving growth (for which it must continuously reduce rates), the central bank’s leadership has, it is argued, chosen to be excessively conservative. In sum, the corporate sector is looking to the “independent” central bank for a bail out.
One among the many problems with this argument is that it presumes that inflation and growth are the only two concerns weighing on the minds of central bank officials. There are, however, other concerns in most contexts, important among which is the management of the exchange rate in countries with liberalised exchange rate systems. In India’s case, an issue agitating the government and the central bank is the close to 25 per cent depreciation of the rupee via-a-vis the dollar over the last year, which has brought its value to the current level of around Rs. 57 to the dollar. The sharp and persisting depreciation of the currency makes the task of halting and reversing its decline crucial for both the government and the RBI.
The rupee’s depreciation has implications even for the task of addressing inflation. A falling rupee increases the domestic prices of imports. Such increases, especially those in the prices of imported universal intermediates like oil, tend to aggravate domestic inflation. Seen in that light the objective of stalling the rupee’s decline should take precedence over that of directly addressing inflation.
Two sets of factors are known to underlie the rupee’s depreciating trend. The first is an increase in the trade and current account deficits on the balance of payments as a result of the rise in the prices of oil and the sharp increase in the imports of gold. The other is the decline in the volume of net capital inflows into the country, largely as a result of the outflow of FII investments in recent months. What has been particularly disconcerting is that despite the moderate fall in oil prices in recent weeks, which would have reduced the strain on the trade and current account balance, the rupee’s depreciation has continued.
In other circumstances a depreciating rupee would have helped shore up the balance of payments by reducing the dollar prices of India’s exports and increasing the rupee prices of imports. Falling export prices would increase global demand for Indian goods and rising import prices would restrict the domestic demand for imports. However, with the world economy in recession, export demand has not risen in response to falling prices. On the other hand, the domestic demands for commodities like oil and gold, which account for a large proportion of the increase in India’s import bill, are also not sensitive to prices. So the depreciation of the rupee has not helped to correct the country’s trade and current account imbalances. The effort to increase the supply of dollars in the market must, therefore, rely on drawing down the RBI’s foreign exchange reserves or on increasing the flow of capital into the country.
The RBI has indeed opted to use its reserves in recent months, resulting in a significant decline in the volume of foreign currency assets it holds. But this has at most prevented a sharper depreciation of the rupee than has actually occurred. It has not helped correct the depreciating tendency. Continued reliance on this means of enhancing the supply of foreign exchange in the market could shrink reserves to a degree that risks triggering a speculative run on the rupee. Not surprisingly, the RBI is seeking ways of enhancing capital flows into the economy.
The rupee’s depreciation does however affect foreign investor sentiment adversely. Returns in the form of profits, dividends and capital appreciation earned in rupees deliver fewer dollars to investors. As a consequence the slowdown in foreign investment inflows induced by the global crisis and the fall in domestic growth rates has been aggravated. This poses a challenge to policy makers needing to enhance dollar availability in the market to stabilise the rupee. The RBI’s reckless response seems to be to encourage the inflow of foreign debt, since equity investments are proving more difficult to attract. Interest rates on non-resident Indian deposits have been hiked in the past and are likely to be hiked further. Restrictions on the kind of foreign agents/entities that can enter and the volume of foreign investor involvement in domestic debt markets, including the market for government securities, have been relaxed. And ceilings on foreign borrowings by different kinds of domestic entities have been raised. Such measures the government and the central bank hope would increase foreign investor interest in domestic debt markets leading to larger foreign capital inflows that contribute to stabilising the falling rupee. In a quirky response, increased foreign indebtedness is being seen as a solution to the problem of a weakening rupee.
However, since that seems to be the official strategy, opting for a reduction in interest rates would be self-contradictory. As noted earlier, even now the rupee’s depreciation is eroding the returns in foreign exchange that foreign investors in both equity and debt markets earn. If, in addition, a decline in interest rates is engineered with the aim of spurring growth, it would discourage rather than attract the debt that is seen as solution to the problem of a shortfall in dollar availability. For lack of more prudent alternative measures, that could leave the rupee floundering and convert a problem into a crisis.
In sum, focusing on the growth-inflation dichotomy to prescribe the appropriate interest rate policy may be missing the point altogether. Understanding what the central bank is doing or not doing requires examining the challenge of exchange rate management as well. That may allow a realistic assessment of how much help the corporate sector can expect from the central bank as opposed to the government.
The Hindu

No Quick and Easy Solution to the Eurozone Debt Crisis

 German Chancellor Angela Merkel is renewing her insistence that there is no quick and easy solution to the eurozone debt crisis.
Ms. Merkel insisted that Europe must tackle its problems at the roots which she says are a lack of competitiveness and high debts in a step-by-step process. She said any other approach is condemned to failure.
The German leader is holding out against mounting pressure for her country to give up its resistance to pooling debt for example by agreeing to jointly issued government bonds, or eurobonds. 
 Ms. Merkel told the German Parliament on Wednesday ahead of a European Union summit there is no “magic formula” that will make the crisis go away fast.

Tuesday, June 26, 2012

Facebook's email switch prompts criticism by users

Facebook is facing a backlash from users after replacing email addresses listed in members' contacts with those provided by its system.
The company said it had acted to make details "consistent" across its site.
If Facebook's email system takes off it could drive more traffic to the firm's pages helping boost advertising sales.
But some users have branded the move "annoying" and "lame" and publicised instructions on how to display original addresses instead of the Facebook ones.
Facebook first announced plans for the move in April, although the news attracted little attention at the time.
"We are providing every Facebook user with his or her own Facebook email address because we find that many users find it useful to connect with each other, but using Facebook email is completely up to you," said a statement from the company.
Emails sent to addresses appear alongside posts sent via the network's internal message system, allowing users to pick up both types of communication from the same place.
Annoyed users One analyst told the BBC the effort could backfire.
"It reeks of the same move Google did with its Buzz product when it automatically opted people in, and users recoiled against the action," said Anthony Mullen, interactive marketing analyst at Forrester Research.
"This is a direction Facebook needs to move in - your email is a proxy for your identity on the internet and Facebook want to usurp people's pre-existing email identities with their own to help drive up traffic to its site and lock users into its service.
"The problem is the lack of transparency - it has acted without asking for members' permission first."
Messages posted to the rival social network Twitter suggested the move had annoyed some users.
"Warnings would have been nice Facebook, don't just go and change email addresses," tweeted Josselyn Arundell from Manchester.
"More stunningly bad work from Facebook," posted London-based Darren Gough.
"Good idea to get people to use it. Poorly executed!!!" added Brent Jagodnik from California.
Few messages supported the move.
Users wishing to undo the change can do so by clicking on the "about" link in their profile and then clicking the "edit" button next to their contact information.
They then need to click make their Facebook email address "hidden from timeline" and then - if they wish - make one or more of their other preferred addresses visible.

EU unveils its vision for the future of monetary union

European authorities have unveiled their vision for the future, which gives them much greater powers.
It includes the creation of a European treasury, which would have powers over national budgets.
European Commission President Jose Manuel Barroso said it was "a defining moment for European integration".
The 10-year plan is designed to strengthen the eurozone and prevent future crises, but critics say it will not address current debt problems.
This week, some markets fell sharply on fears that leaders at the EU summit on Thursday and Friday would fail to agree immediate measures to try to stem the current crisis, which has now engulfed five eurozone members.
Spain is negotiating the terms of loans worth up to 100bn euros for its banks, and the new Greek government wants to ease the terms of its huge bailout.
The governor of the Bank of England, Sir Mervyn King, expressed concern about the recent response of European authorities.
"I am pessimistic. I am particularly concerned because over two years now we have seen the situation in the euro area get worse and the problem being pushed down the road," he said, while appearing at a parliamentary hearing.
The latest document, titled Towards a Genuine Economic and Monetary Union, was released by European Council President Herman Van Rompuy and was drawn up with the presidents of the European Commission, the Eurogroup and the European Central Bank.
Eurogroup president Mr Van Rompuy said it was "not meant to be a final blueprint", but that he expected "to reach a common understanding amongst us on the way forward" at the EU summit.

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It has generally been true that the European project has been driven forward when France and Germany are in step. They are not at the moment. There is a deep philosophical and political divide between them.
European Commission President Jose Manuel Barroso said the guiding principle was that "greater solidarity and greater responsibility must go hand in hand".
Proposals in the report included:
  • Limits on the amount of debt individual countries can take on
  • Annual national budgets can be vetoed if they are likely to mean a country exceeding its debt limits
  • The eurozone borrowing money collectively "could be explored"
  • A European treasury office to be set up to control a central budget and keep an eye on national ones
  • A single European banking regulator and a common scheme guaranteeing bank deposits
  • Common policies on employment regulations and levels of taxation
  • Joint decision-making with national parliaments to give it "democratic legitimacy"
One of the big changes under the new proposals is that while in the past eurozone members had to keep their budget deficits below a certain level, a European treasury would be able to force them to make changes to their budgets to keep their deficits down.
Earlier, German Finance Minister Wolfgang Schaeuble also called for there to be a European finance minister, with the power to veto national budgets as well as an elected president of Europe.
The document said greater fiscal union could lead to common debt being issued by eurozone countries.
Eurobonds, as they are known, would help weaker countries such as Spain borrow more cheaply, but they have so far been resisted in Germany, as they require stronger countries to take on the risk.
A term increasingly used for the idea of a common, jointly-guaranteed bond of the eurozone governments. It has been mooted as a solution to the eurozone debt crisis, as it would prevent markets from differentiating between the creditworthiness of different government borrowers.
Confusingly and quite seperately, "Eurobond" also refers to a bond issued in any currency in the international markets.
"By beginning with pooling of debt, we're heading toward a dead end," said Germany's deputy foreign minister Michael Link.
Chancellor Angela Merkel, who this week described eurobonds as "counterproductive", may have gone further on Tuesday. According to one account given to a news agency, she told a political meeting that that would be no shared debt "as long as I live".
French Finance Minister Pierre Moscovici has said leaders at this week's summit should, "lay the groundwork for the second phase of the euro".
As BBC Europe editor Gavin Hewitt points out, the area's two biggest economies "are on different pages" about how to fix the crisis.
"It has generally been true that the European project has been driven forward when France and Germany are in step.
"They are not at the moment. There is a deep philosophical and political divide between them," our correspondent says.
Others were also sceptical about what might be achieved at the summit.
"The EU summit will likely produce re-hashed plans for closer fiscal integration and a banking union but without any substantive detail of how it will actually be put into practice," said analyst Neil MacKinnon of VTB Capital.

China offered $10bn loan for Latin America countries

China has offered to set up a $10bn (£6.4bn) credit line for Latin American countries to support infrastructure projects in the region.
The proposal was made by China's Premier Wen Jiabao as he wrapped up his visit to the region.
He also proposed a free trade pact between China and South American trade bloc Mercosur, which includes Brazil, Argentina, Uruguay and Paraguay.
"The Chinese government... will continue to offer economic assistance to countries in the region that are interested," Premier Wen was quoted as saying by the Reuters news agency.
 China has been keen to increase its trade with the region's economies.

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China is also considering the possibility of negotiating and signing agreements for local currency swap agreements... and increasing the reciprocal creation of bank branches”
Wen Jiabao Chinese Premier
Many of the Latin American countries are still at a development stage and are building new infrastructure in a bid to boost growth in their economies.
Meanwhile, China, which has the world's largest foreign exchange reserves, has been looking to for new areas invest some of its cash.
At the same time, China's infrastructure development companies have been keen to tap into new markets to expand their business.
Analysts said that the offer of a credit line by China, may turn out to be a win-win situation for both sides.
They explained that Latin American nations could benefit from Beijing's expertise, while Chinese firms may play a big role in developments of these projects.
"China has the manpower and the technical skills required to undertake massive infrastructure projects and also the deep pockets to fund them," Charles Chaw of China Knowledge Consulting told the BBC.
"They have proven their ability with success in their own country."
Increased trade Latin American countries are also rich in natural resources and China is one of the biggest consumers in the world of those resources.
Beijing imports various commodities, including iron ore, copper and corn from these countries.
An iron ore mine China is one the world's biggest consumer of natural resources
Meanwhile, China, which is known for the manufacture of low-cost goods, has been looking to increase its exports to the region as it faces slowing demand from key markets such as the US and Europe.
Premier Wen said that China was keen to double its trade with the region to $400bn over the next five years.
However, he said that for that to happen, both sides will have to work towards easing trade barriers.
"We have to combat trade protectionism, broaden the mutual openness of our markets, optimize the trade structure and diversify cooperation in terms of customs and quality control," Premier Wen said.
Currency swaps Along with increased trade, Premier Wen also pushed for currency swap agreements with the region's economies.
The agreements allow respective central banks to swap currencies and can be used by firms to settle trade in local currencies rather than in US dollars.
Beijing has been using these pacts as part of its push for a more global role for its currency, the yuan.
Last week, it announced a swap agreement with Brazil worth $30bn and Premier Wen said that Beijing was keen to making similar deals with other economies in the region.
"China is also considering the possibility of negotiating and signing agreements for local currency swap agreements... and increasing the reciprocal creation of bank branches," he said.
China has also signed similar agreements with other trading partners such as Japan, Australia and Hong Kong.

Q1 revenue growth set to hit 6 quarter low: Crisil

With 15 out of 26 sectors facing severe margin pressure due to higher interest cost and slowing sales in the current quarter, Crisil expects revenue growth of leading corporates to report their weakest quarterly numbers in the past six quarters.
“Revenue growth in the April-June quarter is forecast to drop to around 14 per cent from 17.5 per cent a year ago, given the slowdown in economic activity and gross fixed investments.
“Accordingly, Ebidta (earnings before interest, taxes, depreciation and amortisation) margins are projected to decline by 100-150 basis points (bps) or 1-1.5 percentage points on a y-o-y to 19-20 per cent, but remain flat compared sequential (Q4 of FY12),” Crisil said on Tuesday.
The report is based on the analysis of aggregate financial performance of 247 large companies across 26 key sectors, excluding banks and oil & gas companies and constitute around 65 per cent of the BSE 500 Index.
“The revenue growth in Q1 FY13 is expected to be much weaker due to a sharp deceleration in airlines, auto components, commercial vehicles, hotels, metals, organised retail, real estate and textiles,” said the report.
Although, overall Ebidta margins are expected to remain flat in Q1 on a q-o-q basis, 15 of the 26 sectors will continue to face margin pressure, said the agency.
“For sectors like commercial vehicles, cement, construction and real estate, Ebidta margins are set to contract by 100-200 bps q-o-q, due to slower demand growth and high input costs,” said Crisil Research senior director for industry and customised research Prasad Koparkar.