Sunday, February 24, 2013

Gloomy Italians vote in election crucial for euro zone

from Reuters

Gloomy Italians vote in election crucial for euro zone

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A nun casts her vote at a polling station in Rome February 24, 2013. REUTERS-Yara Nardi
By Catherine Hornby
ROME | Sun Feb 24, 2013 11:29am EST
(Reuters) - Italy voted on Sunday in one of the most unpredictable elections in years, with many voters expressing rage against a discredited elite and doubt that a government will emerge strong enough to combat a severe economic crisis.
"I am pessimistic. Nothing will change," said Luciana Li Mandri, 37, as she cast a ballot in the Sicilian capital Palermo on the first of two days of voting that continues on Monday.
"The usual thieves will be in government."
Her gloom reflected the mood across Italy, where many voters said they thought the new administration would not last long, just the opposite of what Italy needs to combat the longest slump in 20 years, mounting unemployment and a huge public debt.
The election is being closely watched by investors whose memories are fresh of a debt crisis which forced out scandal-plagued conservative premier Silvio Berlusconi 15 months ago and saw him replaced by economics professor Mario Monti.
"I'm not confident that the government that emerges from the election will be able to solve any of our problems," said Attilio Bianchetti, a 55-year-old building tradesman in Milan.
Underlining his disilluion with the established parties, he voted for the 5-Star Movement of comic Beppe Grillo.
An iconclastic, 64-year-old Genoese, Grillo has screamed himself hoarse with obscenity-laced attacks on politicians that have channeled the anger of Italians, especially a frustrated young generation hit by record unemployment.
"He's the only real new element in a political landscape where we've been seeing the same faces for too long," said Vincenzo Cannizzaro, 48, in Palermo.
Opinion polls give the centre-left coalition of Pier Luigi Bersani a narrow lead but the result has been thrown open by the prospect of a huge protest vote against Monti's painful austerity measures and rage at a wave of corruption scandals.
A weak government could usher in new instability in the euro zone's third largest economy and cause another crisis of confidence in the European Union's single currency.
Television tycoon Berlusconi, showing off unrivalled media skills and displaying extraordinary energy for a man of 76, has increased uncertainty over the past couple of months by halving the gap between his centre-right and Bersani.
"I am pessimistic. There is such political fragmentation that we will again have the problem of ungovernability" said Marta, a lawyer voting in Rome who did not want to give her family name. "I fear the new government won't last long."
Another Roman voter, lab technician Manila Luce, 34, said: "I am voting Grillo and I hope a lot of people do. Because it's the only way to show how sick to the back teeth we are with the old parties."
Voting continues until 10 p.m. (4 p.m. EST) and resumes on Monday at 7 a.m. Exit polls will be published shortly after polls close at 3 p.m. on Monday. Full official results are expected by early Tuesday.
Snow in the north was expected to last into Monday and could discourage some of the 47 million eligible voters. Authorities said they were prepared for the weather and in the central city of Bologna roads were cleared of snow before voting started.
TOPLESS FEMINISTS
Several bare-breasted women protested against Berlusconi when he voted in Milan. They were bundled away by police.
The four-time premier, known for off-color jokes and a constant target of feminists, is on trial for having sex with an underage prostitute during "bunga bunga" parties at his villa.
Most experts expect a coalition between Bersani and Monti to form the next administration, but whatever government emerges will have to try to reverse years of failure to revitalize one of the most sluggish economies in the developed world.
The widespread despair over the state of the country, where a series of corruption scandals has highlighted the stark divide between a privileged political elite and millions of ordinary Italians struggling to make ends meet, has left deep scars.
"It's our fault, Italian citizens. It's our closed mentality. We're just not Europeans," said voter Li Mandri in Palermo.
"We're all about getting favors when we study, getting a protected job when we work," she said. "That's the way we are and we can only be represented by people like that as well."
ECONOMIC AGENDA
Even if Bersani wins as expected, Analysts are divided over whether he will be able to form a stable majority that can force through sweeping economic reforms.
His centre-left is expected to have firm control of the lower house, thanks to rules that give a strong majority to whichever party wins the most votes nationally.
But a much closer battle will be fought for the Senate which is elected on a regional basis and which has equal law making powers to the chamber.
Berlusconi has clawed back support by promising to repeal Monti's hated new housing tax, the IMU, and to refund the money. He relentlessly attacked what he called the "Germano-centric" policies of the former European Union commissioner.
Think-tank consultant Mario, 60, said on his way to vote in Bologna that Bersani's Democratic Party was the only group serious enough to repair the economy: "They're not perfect," he said. "But they've got the organization and the union backing that will help them push through structural reforms."
Despite Berlusconi's success, Grillo has tapped into the same public frustration as the conservative tycoon and pollsters say his 5-Star Movement of political novices could overtake the centre-right to take second place in the vote.
Rivals have branded Grillo a threat to democracy - a vivid image in a country ruled by fascists for two decades until World War Two. Several voters who spoke to Reuters said Grillo was not the answer because of his lack of concrete policies and the inexperience of those who will sit in parliament for 5-Star.
"Grillo is a populist and populism doesn't work in a democracy," said retired notary Pasquale Lebanon, 76, as he voted for Bersani's Democratic Party in Milan.
"I'm very worried. There seems to be no way out from a political point of view, or for being able to govern," said Calogero Giallanza, a 45-year-old musician in Rome as he also voted for Bersani.
"There's bound to be a mess in the Senate because, as far as I can see the 5-Star Movement is unstoppable."
(Additional reporting by Cristiano Corvino, Lisa Jucca, Jennifer Clark, Matthias Baehr, Jennifer Clark and Sara Rossi in Milan, Stephen Jewkes in Bologna, Wladimir Pantaleone in Palermo, Stefano Bernabei and Massimiliano Di Giorgio in Rome; Writing by James Mackenzie and Barry Moody; Editing by Alastair Macdonald)
WORLD
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AIG’s former chief Greenberg suing Feds for bailing out his company


from the Washington Post

Posted by Joann Weiner on February 23, 2013 at 9:48 am
Greenberg Feb
A fighter never quits, and if there’s one way to describe Maurice R. “Hank” Greenberg, the former head of the American International Group, it’s as a fighter.
Beginning on D-Day, when he participated in the storming of Omaha Beach as a teenager, continuing through his fight with then-New York Attorney General Eliot Spitzer about an accounting scandal that led him to resign from AIG in 2005, and up to a series of bitter lawsuits against the company he led for nearly 40 years, Greenberg’s been a fighter.
His latest offensive is a $25 billion lawsuit filed against the federal government for, he alleges, forcing AIG to accept an $85 billion bailout at a 14.5 percent interest rate and then taking over the company without providing just compensation in September 2008. Despite having more than $120 billion in revenue in 2007, AIG’s immediate problems nine months later centered on a lack of liquidity:  It didn’t have enough cash to meet $15 billion worth of collateral calls.
“AIG should never have accepted the bailout,” Greenberg said during a talk at the National Press Club in Washington on Feb. 21. Greenberg insisted that the Fed could have figured out a way to get AIG the needed funds without taking over the company. “The company had $800 billion in assets that it could have put up as collateral for the loan,” he said. Greenberg added that if the Fed had given AIG the same type of offer it  had extended to other troubled financial institutions at that time, AIG wouldn’t have needed the bailout.
At age 87, Greenberg, who was in town to promote his book, “The AIG Story,” co-authored with George Washington University law professor Lawrence A. Cunningham, shows no sign of backing down.
Nearly five years later, Greenberg continues to challenge not just the terms of the bailout, but its very purpose. Greenberg argues that the Fed bailed out AIG primarily to save the so-called counterparties to AIG’s insurance-like contracts known as credit default swaps that provided a way for investors to buy insurance protection against default.
“Sixty billion of the $85 billion was a backdoor bailout,” Greenberg said, adding that “Fourteen billion of that amount went to Goldman Sachs.”
He still loathes Spitzer, who resigned as governor of New York in 2008 amid a prostitution scandal. Greenberg condemned Spitzer for essentially convicting him of “murder for a foot fault” relating to a reinsurance transaction. Following Greenberg’s resignation as head of AIG in March 2005, AIG lost its triple-A credit rating and had to post more than $1 billion in collateral.
Despite AIG’s downgrade, AIG ramped up its lucrative credit default swap business. While there’s disagreement over how many of those swaps were written on sub-prime mortgages, with Greenberg insisting that he hadn’t authorized such swaps, there’s no dispute that AIG eventually wrote swaps worth more than half a trillion dollars.
Though Greenberg admits that he led  AIG into the credit default swap business, he won’t admit that his actions may have contributed to AIG’s collapse.
“Just look at the record,” Greenberg said, pointing to AIG’s $1.3 trillion value when he resigned.
When asked whether he knew that AIG’s Financial Products unit had moved into a very risky business of insuring exotic derivative products, Greenberg said, “No, we were at war with each other.” When I asked him whether he thought that Goldman Sachs “pushed AIG over the edge,” as has been asserted, he nodded in agreement.
We’ll never know if Hank Greenberg could have staved off the disaster that struck AIG. But, if he hadn’t been forced out, it’s entirely plausible that AIG wouldn’t have gotten into the financial trouble it did. Greenberg cared a lot, both emotionally and financially, about AIG. He joined the company that later became AIG in 1960 and took it public in 1969. With control of some 300 million shares of AIG that were once worth $21 billion, he had a very strong interest in the company’s financial health. The collapse of AIG drove Greenberg’s personal fortune from the billions down to around $100 million and pushed him off Forbes’ list of the richest Americans for the first time since 1985.
Greenberg is right about one aspect of the bailout. Although it wasn’t public knowledge in September 2008, in March 2009, AIG revealed that it had sent billions of dollars of the Fed’s bailout funds straight to companies, including Goldman Sachs, Merrill Lynch and UBS, that were holding the riskiest derivatives. We also know that AIG had been making collateral payments to Goldman Sachs well before the September rescue.
By now, taxpayers are probably tired of hearing about AIG. The fact that Greenberg asked the company to join him in his lawsuit against the U.S. government led to ridicule and insistence from AIG that it was “grateful” to the government for saving it in 2008 and wouldn’t join the lawsuit.
Given the hysterics that have surrounded AIG, taxpayers would be forgiven for being misinformed about how AIG has helped them. In fact, although Greenberg may not agree, taxpayers have no right to be outraged over the AIG bailout, which eventually grew to more than $180 billion.The government recently sold its stake in the company for a $22.7 billion profit. And that may make the argument about the cost of AIG’s bailout somewhat beside the point.
Joann Weiner teaches economics at The George Washington University. She has written for Bloomberg, Politics Daily, Tax Analysts and worked as an economist at the U.S. Treasury Department. Follow her on Twitter: @DCEcon.


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Friday, February 22, 2013

The Bush Years And What A "Lapdog" Press Really Looked Like


from mediamatters.org




Blog ››› ››› ERIC BOEHLERT
Perpetually fuming about President Obama, Sean Hannity widened his rant Wednesday night on Fox News and condemned the "lapdog, kiss ass media" that allegedly lets Obama have his way. Echoing the same attack, Karl Rove wrote in the Wall Street Journal this week that "Mr. Obama is a once-in-a-generation demagogue with a compliant press corps," while the anti-Obama Daily Caller pushed the headline,  "Lapdog Media Seeking Lap To Lie In."
Complaining about the "liberal media," has been a running, four-decade story for conservative activists. But what we're hearing more of lately is the specific allegation that the press has purposefully laid down for the Democratic president, and that it's all part of a master media plan to help Democrats foil Republicans.
The rolling accusation caught my attention since I wrote a book called Lapdogs, which documented the Beltway media's chronic timidity during the previous Republican administration, and particularly with regards to the Iraq War. I found it curious that Hannity and friends are now trying to turn the rhetorical tables with a Democrat in the White House, and I was interested in what proof they had to lodge that accusation against today's press.
It turns out the evidence is quite thin. For instance, onenever-ending partisan cry has been the press has "ignored" the terrorist attacks on the U.S. consulate in Benghazi last year; that they're protecting Obama. Yet theNew York Times and Washington Post have published nearly 800 articles and columns mentioning Benghazi since last September, according to Nexis.  
What the lapdog allegation really seems to revolve around is the fact that conservatives are angry that Obamaremains popular with the public. Rather than acknowledge that reality, partisans increasingly blame the press and insist if only reporters and pundits would tell 'the truth' about Obama, then voters would truly understand how he's out to destroy liberty and freedom and capitalism.
Sorry, but that's not what constitutes a lapdog press corps. And to confuse chronic partisan whining with authentic media criticism is a mistake. The Hannity-led claim also isn't accurate. Studies have shown that during long stretches of his first term, Obama was  hammered with "unrelentingly negative" press coverage.
By contrast, the lapdog era of the Bush years represented nothing short of an institutional collapse of the American newsroom. And it was one that, given the media's integral role in helping to sell the Iraq War, did grave damage to our democracy.
Looking back at his tenure as Washington Post ombudsman, Michael Getler wrote in 2005 that the mainstream media's performance in 2002 and 2003 likely represented the industry's worst failing in nearly half a century. "How did a country on the leading edge of the information age get this so wrong and express so little skepticism and challenge?" Getler asked.
Let's recall some concrete examples of what helped the Bush era press rightfully earn its title of lapdogs so we can understand why today's conservative claims ring so hollow.  
A defining trait of Bush's obsequious press corps was its collective refusal to take seriously anti-war voices prior to the preemptive invasion of Iraq, even voices such as Democratic party stalwart Sen. Ted Kennedy (D-MA). In September 2002, Kennedy made a passionate, provocative, and newsworthy speech raising all sorts of doubts about the war, doubts that would later prove well-founded. The event garnered exactly one sentence -- thirty-six words total -- of coverage from the Post.
The daily was hardly alone in turning away from Kennedy's prescient  speech. The night of his address,  Nightly News devoted just 32 words to it. On ABC's World News Tonight, it received 31 words, and on the CBS Evening News, 40 words.
Kennedy gave that speech on a Friday. Two days later the Sunday talk shows discussed Iraq in detail, but Kennedy's name never came up. For the network pundits, the anti-war speech from one of the nation's political giants basically did not exist. It was irrelevant to the around-the-clock media chatter about a looming war.
Given that tentativeness, it's not surprising that a survey conducted by the liberal media watchdog group Fairness and Accuracy in Reporting found that during the first two weeks of February 2003, when the debate about the war should have been raging on the public airwaves, just 17 percent of the 393 people interviewed on-camera for network news reports expressed "skeptical or critical positions" on Iraq.
Additionally, Media Matters found that while 23 percent of U.S. senators voted to oppose the war in the fall of 2002, only 11 percent of the senators invited to appear on the Sunday morning talk shows prior to the invasion were antiwar.
According to figures from media analyst Andrew Tyndall, of the 414 Iraq stories broadcast on NBC, ABC, and CBS from September 2002 until February 2003, all but 34 -- eight percent of the total -- could be traced back to sources from the White House, the Pentagon, or the State Department. Only 34 stories, or 8 percent or the reports, were of independent origin.
Meanwhile, given its current primetime lineup, sometimes it's hard to recall that in 2003 MSNBC was so nervous about employing a liberal host who opposed Bush's ordered invasion that it fired Phil Donahue preemptively, just weeks before war began. An internal memo warned that Donahue presented "a difficult public face for NBC in a time of war." (He was MSNBC's highest rated host at the time of his firing.)
Months worth of chronic timidity and newsroom bowing-down to the White House's war culture clearly helped pave the way to war.  
Laying out the reasons for an unprecedented invasion during his final, pre-war invasion press conference on March 6, 2003, Bush mentioned al-Qaida and the terrorist attacks of September 11 thirteen times in less than an hour. Not a single journalist that night challenged the presumed connection Bush was making between al-Qaida and Iraq, despite the fact that intelligence sources had publicly questioned any such association.
The egregious, look-the-other-way coverage continued long after the invasion. The U.S. media's collective disinterest in Britain's Downing Street Memo represented a perfect example of dogged lapdog behavior.
Consisting of minutes from a July 23, 2002, meeting attended by then-Prime Minister Tony Blair and his closest advisers, the memo revealed their impression that the Bush administration, eight months before the start of the Iraq war in 2003, had already decided to invade and that American officials seemed more concerned with justifying a war than preventing one.  
The blockbuster memo was leaked to the Times of London, which printed it on May 1, 2005. How did the American press respond?
It yawned.
Between May 1 and June 6, the story received approximately 20 mentions on CNN, Fox News, MSNBC, ABC, CBS, NBC and PBS combined, According to TVEyes. By contrast, during the same five-week period, the same outlets found time to mention more than 260 times the tabloid controversy that erupted when a photograph showing Saddam Hussein in his underwear was leaked to the British press.
In the five weeks following the memo being published in the Times of London, White House spokesman Scott McClellan held 19 daily briefings, at which he has fielded more than 900 questions from reporters, according to the White House's online archives. Exactly two of those 900 questions were about the Downing Street memo and the White House's reported effort to fix prewar intelligence.
That, unfortunately, is what a lapdog press corps looks like. Let's not diminish the significance of that historic failure by pretending today's Beltway press is repeating that catastrophic and unprecedented abdication under Obama. Just because Obama's most strident critics have failed to turn voters against the president doesn't mean the press isn't doing its job.
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Wednesday, February 20, 2013

World shares hit 4-1/2-year highs on growth hopes

from Reuters.com

World shares hit 4-1/2-year highs on growth hopes

Traders are pictured at their desks in front of the DAX board at the Frankfurt stock exchange January 4, 2013. REUTERS-Remote-Joachim Herrmann
By Richard Hubbard
LONDON | Wed Feb 20, 2013 9:32am EST
(Reuters) - Signs of an improving global economic recovery lifted world shares to 4-1/2-year highs on Wednesday, while investors waited to see if Federal Reserve minutes would hint at any changes to its support of the U.S. economy.
The minutes from the Fed's most recent meeting, due for publication later, will come alongside key U.S. housing and inflation data and give investors the latest temperature reading on the world's largest economy.
Global equity markets have surged over the last seven months as major central banks have repeatedly delivered support.
After European shares jumped on Tuesday on forecast-beating German sentiment data, it was the turn of the MSCI world share index .MIWD00000PUS on Wednesday, which hit its highest level since June 2008.
"The MSCI world and the S&P 500 are the ones driving up here, although there is nothing really new driving this move other than the general favorable backdrop of economic data and reduced tail risks," said NationalAustralia Bank market strategist Gavin Friend.
Details from the last Bank of England meeting showed its policymakers were more inclined than had been thought for more asset purchases under its quantitative easing (QE) program and had even considered cutting interest rates.
The pound, which has been on a rapid slide in recent weeks, slumped to an 8-1/2-month low against the dollar of $1.5336, while the euro climbed to a near 16-month high of 87.565 pence.
"Today's minutes have made us more comfortable with our view that more QE is likely this year, particularly if GDP growth continues to fall short of the Committee's expectations," said Samuel Tombs, UK economist at Capital Economics.
Britain's main FTSE 100 stock index .FTSE jumped 0.4 percent to 6,402.43 points, a fresh five-year high and above the 6.400 psychological level that some traders said could encourage further moves higher.
The gains offset slightly weaker levels across some other European markets to lift the MSCI World Equity index by 0.25 percent to a 4-1/2 year high of 359.37 percent before dropping back slightly to 358.38 ahead of the open on Wall Street.
ITALY ELECTION JITTERS
Gains in Europe were being held in check by the approach of euro zone flash Purchasing Managers Index reports on Thursday and a German business sentiment survey on Friday that could show whether the region's recovery is taking hold.
Italian elections at the weekend are also creating market uncertainty. Rating firm S&P warned there could be "a loss of momentum on important structural reforms" after the February 25 poll.
The FTSEurofirst 300 index .FTEU3 index of top European shares was down 0.1 percent, though this followed a 1.1 percent rise on Tuesday - its best day for three weeks. Frankfurt's DAX .GDAXIwas up 0.15 percent, while Paris's CAC-40 .FCHI fell 0.2 percent. .EU
"I see no reason why we can't consolidate the gains and possibly move higher," said Michael Hewson, an analyst at CMC Markets.
U.S. stock index futures meanwhile pointed to a steady open when trading resumes later, with the S&P 500 and Dow Jones contracts almost flat.
Data on U.S. new housing starts and building permits confirmed a continued recovery in that market as new permits for construction rose to a 4 1/2-year high.
Attention in U.S. markets is likely to be focused on the minutes from the U.S. Federal Open Market Committee's January meeting, due at 1900 GMT, which may provide clues on how long monetary policy in the U.S. is likely to remain ultra loose.
SAFE HAVENS SLIDE
The recent rise in equities was weighing on assets perceived as safe havens, with German Bund futures down 0.3 percent to 142.32, though news that Spain may be about to issue a U.S. dollar bond helped support sentiment.
Gold was also losing ground from a declining safe-haven appeal, hitting a six month low of $1,597.99 an ounce.
"Fundamentals for gold haven't really changed, but other asset classes have now become more attractive," said Tobias Merath, global head of commodity research at Credit Suisse.
In the currency markets the yen resumed its climb against the dollar after Japanese Prime Minister Shinzo Abe said the need to establish a special fund to buy foreign bonds had receded.
Strategists said Japan was stepping back from some of its more aggressive policy-easing proposals after the Group of 20 nations declared at a meeting in Moscow on Saturday that there would be no global currency war.
Abe's comments came a day after Japan's finance minister also played down talk of such a scheme, which would have helped drive down the value of the yen.
The dollar fell as low as 93.12 yen after Abe's remarks before swinging back into positive territory at 93.62 yen, still some distance from the near three-year high of 94.46 it hit on February 11.
In the commodity markets copper and oil prices were mostly softer after big moves in the previous session.
Having posted the first gain in four days on Tuesday, Brent crude dipped back below $117 a barrel as the prospect of more supply from Saudi Arabia offset optimism about an improving global economy bolstering demand.
Copper prices slipped to a near four-week low of $8,019 a tonne, dragged lower by demand concerns from top consumer China and the recent fall of the euro.
(Additional reporting by Marc Jones and Clara Denina; Editing by Will Waterman)
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