Friday, 18 October 2013

The European Union Times

‘Manufactured’ crisis cost US $24bn – S&P

Posted: 17 Oct 2013 05:26 AM PDT

Standard & Poor’s says the shutdown in total cost the US economy $24 billion, or $1.5 billion per day, the rating agency said Wednesday. The agency also estimated the shutdown will pare fourth quarter GDP by 0.6 percent.
Obama has signed legislation that will avoid a technical debt default, ending the 16-day partial shutdown of the government that has cost the world’s largest economy billions of dollars.
“The bottom line is the government shutdown has hurt the US economy,” the S&P statement said.
Moody’s Analytics has estimated the government shutdown could cost the US government up to $55 billion, the same amount as devastating Hurricane Katrina in 2005.
The deal will reopen the government after 16 days of partial shutdown and fund spending through January 15 while extending the $16.7 trillion debt ceiling through February 7. This time frame would be longer than the 6-week extension Obama promised to veto.
The next major deadline is the December 13 target date for a budget negotiation.

US Speaker Boehner did not block a vote on the legislation in the House, as the lower chamber passed the bill 285-144, putting an end to the weeks-long stalemate.
The Senate passed the plan earlier Wednesday by a vote of 81-18.
If the ceiling wasn’t lifted by October 17, the world’s biggest economy would not have had enough cash on hand to pay its bills.
Previously, IHS Global Insight, a Massachusetts-based research firm, estimated the shutdown was costing America $1.7 billion per week in lost economic output according to a study.
Shutdown.com, whose data models and averages the IHS estimate, marks the cost of the government shutdown at $4.7 billion.
The financial burden of the shutdown has already surpassed the at least $2 billion in destruction brought by floods and mudslides in Colorado in September, according to Eqecat Inc., a California-based catastrophe-risk consultant.
Damage is done
In place for almost a century, first introduced in 1917, the US has never defaulted on their debt. Republicans and Democrats have used the debt ceiling as a political gambit to rehash budget wars, and every time, put investors on nerve and world markets on edge. These political games have damaged the US’ reputation, and could have a lasting effect.
State-owned Chinese media lambasted the US for creating “manufactured crises”. China, which holds the lion’s share of US foreign debt in dollar reserves, nearly $1.3 trillion, would have a lot to lose if it wakes up on October 18 and the US dollar has tanked and Treasury bonds and yields fall.
Fitch Ratings agency announced on Tuesday it has put the United States’ ‘AAA’ credit rating on review because of the stalled debt ceiling negotiations.
The ‘political brinkmanship’ and ‘reduced financial flexibility’ of the US were cited as reasons to consider downgrading the superpower. The 26 day shutdown in 1995-1996 cost the US economy over $2.1 billion in current dollars, according to the Office of Management and Budget Data.
However, the far-reach of the American economy and the dollar as a reserve currency may preserve the US’s dominant role in the world economy.
“While the US economy still growing and remains the most efficient in the world, it cannot worry too much about their image,” Igor Nikolaev, director of the strategic analysis department at PKF told RT.
US gross domestic product is still projected to grow 2 percent in the fourth quarter, but some economists worry the dollar, already at an 8-month low, is at more of a risk because of the default, and the more politicians play with fire and brinkmanship the markets will flinch.
Last time Congress debated the debt ceiling in 2011, Standard & Poor dropped the United State’s ratings from AAA to AA+.
The first shutdown in 17 years hit America at a vulnerable time, as it is still digging its heels out of recession and starting to recuperate from the 2008 financial crisis, which stemmed from America’s ‘too big to fail’ banking industry.
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15,000 Greeks to be kicked out of their homes by the government

Posted: 17 Oct 2013 05:21 AM PDT

Now that Samaras has kept his word to the US Zionists about repressing Golden Dawn in every way, Samaras and his government now proceed to keep their promise to the international money lenders. He is now lifting his axe getting ready to evict 15,000 Greeks who due to circumstances of the crisis cannot meet their mortgage obligations.
The finance and development ministries have for the initial wave identified 15,000 cases of loans that are in the red with assets attached to them. Now the government will give them a choice, either sell off or go into foreclosure and into the street.
So far according to reports coming out of Brussels, these Auctions will begin in 2014, yet there are other leaked sources claiming that this could start as early as the end of next month.
It is clear that after this mockery of our justice system made with the attempted criminalization of Golden Dawn, the government is now switching gears and continuing it’s relentless assault on Greek people. They believe Golden Dawn has suffered a fatal blow and with nobody to stand in their way, they can increase their efforts to pillage the country. They are mistaken, the Greek people have not taken the bait, and they will never forget this brutal attack on them from Samaras and his lackeys, the fatal blow that will be delivered, will be that to this oppressive regime by the Greek People.
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Cold War ongoing between Russia and EU?

Posted: 17 Oct 2013 04:39 AM PDT

Polish MEP Jacek Saryusz-Wolski believes that the Cold War is ongoing between Russia and the EU that can take a long time. Both European officials and the Russian leadership have already stated that economic integration with the EU and membership in the Customs Union are incompatible. Ukraine and Moldova have about one month left for consideration.
Armenia has already “surrendered,” according to the deputy, now the Europeans have to prevent Ukraine and Moldova rejecting the EU association. “Russia is challenging the European Union that seeks to associate with the countries of the “Eastern Partnership,” including Armenia, Moldova, Georgia and Ukraine, and is trying to prevent their association with the EU. Russia is threatening to introduce barriers associated with the energy supply, protectionist trade barriers, and has already introduced embargo on Moldovan wine. It threatens to complicate the employment of nationals of the countries associated with the European Union,” said the deputy in an interview with Polska Times.
The MEP believes that Europe should develop mechanisms to protect the countries of Eastern Europe and shield them from Russia’s attempts to influence their choice. What are these mechanisms? European officials spoke about it repeatedly. They include imposing sanctions against the Russian Federation, for example, joining the Magnitsky list, tightening of the visa regime, and resolution of controversial issues in favor of the EU through the mechanisms of the WTO. Saryusz -Wolski also proposed to allow Moldovan wines to the EU market, and supply gas to Moldova and Ukraine through alternative pipelines.
By 2015-2017 a number of regions of Ukraine and Moldova are expected to be included in the Unified Energy System of the European Union (ENTSO-E). The optimistic scenario assumes a complete parallel introduction of both countries in the EU energy network. For Russian companies “Gazprom” and “Inter RAO” operating in these countries the prospect means a significant reduction of their market share of electricity produced from natural gas.
If “Gazprom” uses gas as a political weapon, it can be legally charged for taking these measures. However, after accusing Russia of putting pressure on Ukraine and Moldova, the deputy turned to threats himself. He stated that if the Ukrainian authorities do not make a decision on the release of Yulia Tymoshenko serving her sentence in prison, the Association Agreement with the EU will not be signed.
“At the moment there are no reasons for optimism. As soon as it comes to the release of Tymoshenko, the negotiations reach an impasse. If the issue is not resolved, the contract will not be signed,” Saryusz -Wolski said in an interview with PAP. The MP does not understand why Yanukovych is delaying it because Tymoshenko’s travel to Europe for treatment would mean that Tymoshenko is removed from Ukraine’s political life for a long time, which was the President’s intention. He further warned that if Ukraine does not sign an agreement with the EU, the situation in the country will deteriorate, and “Yanukovych will have to face the discontent of the population that wants to integrate with Europe.”
From threats to Ukraine, the MP moved to threats to Russia. He said that the European Union would not allow Russia to introduce visa regime with Ukraine before the EU cancels visas with Ukraine. He continued that the EU will use the same actions with Russia as Russia used with the EU partners in the East. He added that the EU must protect the countries with which it has associations. Russia knows that it will suffer if it continues to sabotage this free choice of independent countries.
How serious are the consequences that the Polish MP is threatening Russia with? “There are considerable difficulties in the relations between Russia and the EU as the parties are unable to determine the formula of interaction as neighbors,” Dmitry Danilov, Head of the Department for European Security with the Institute of Europe commented on the situation for Pravda.Ru.
The EU and Russia cannot agree on a combination of the two integration processes of European integration and integration around Russia in the framework of the Customs Union and the Common Economic Space. If the signing of an Association Agreement with Ukraine and Moldova and the EU takes place in Vilnius on November 28, it is unlikely that it will be possible to talk about the integration of these countries with Russia. Both these countries and Russia will face significant issues. Russia, on the one hand, will lose the prospect of deepening and expanding integration in the CIS, on the other, it will have to take protective measures to ensure that the new rules on trade and visa regime do not hit the member countries of the Customs Union. This is why the introduction of protectionist trade barriers and even the visa regime with Ukraine and Moldova is possible, the expert believes.
This position is considered in the West as politicized, a threat, a “stick,” but, according to Danilov, European officials are to blame because they are unwilling to compromise and do not try to take into account the existing realities, the Customs Union and the trade and economic relations between the Russian Federation, Ukraine and Moldova. “They should develop an association agreement that is more flexible, in a consultation with experts, but they do not intend to do so. Such competition in the economic field will generate political issues that will affect the development of a new basic agreement between the Russian Federation and the European Union,” said Danilov.
The conclusion is that after the signing of the Association Agreement with the EU everyone will lose. It will be difficult for the EU to pull Ukraine and Moldova in its ranks, and it has no money for that. Russia will lose the prospect of their integration, and the dream of Slavic brotherhood, and Ukraine and Moldova will lose even more – the real export articles to fill their budgets. The only winner in the situation is Saryusz -Wolski engaged in making enemies out of neighbors on the continent.
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30 million living in slavery worldwide: WFF report

Posted: 17 Oct 2013 04:14 AM PDT

A report by an international foundation on modern slavery has revealed that nearly 30 million people are enslaved across the globe.
The index released by the Walk Free Foundation (WFF) on Thursday said the slaves are either trafficked into brothels, forced into manual labor, fall victims to debt bondage, or are even born into servitude.
Almost half of these people are in India, where “by far the largest proportion of this problem is the exploitation of Indian citizens within India itself, particularly through debt bondage and bonded labor,” the survey found.
The index also showed that aside from India, the problem is most rampant in the West African country of Mauritania, where four percent of the population is estimated to be held in slavery.
The report by the Australian-based group described Mauritania as a nation with “deeply entrenched hereditary slavery,” where “people in slavery may be bought and sold, rented out and given away as gifts.”
Benin, Gambia, Gabon, Ivory Coast, Haiti and Nepal are among other countries with the highest prevalence of modern slavery, the report said.
The WFF index ranked 162 countries on the number of people living in slavery, the risk of enslavement, and the strength of government action to counter the illegal activity.
Figures indicate human trafficking along with arms dealing is the second largest industry in the world after drug dealing.
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US avoids default as Congress passes deal to end shutdown

Posted: 17 Oct 2013 03:29 AM PDT

US President Barack Obama has signed legislation passed by Congress Wednesday to temporarily lift the debt ceiling and end the government shutdown, averting the threat of default just hours before the October 17 deadline.
The legislation funds the government through to January 15 and lifts the $16.7 trillion debt ceiling until February 7. The White House budget director, Sylvia Mathews Burwell, said she has issued a directive to all government employees to return to work.
The 16-day budget crisis has subtracted an estimated $24 billion in from the American economy and triggered a flurry of criticism from major foreign lenders and domestic business captains.
As promised, Obama signed the legislation shortly after it was passed in the House of Representatives.
As indicated before the US Senate vote, Republican House Speaker John Boehner did not block the fiscal deal from moving on, and it passed by a vote of 285-144 in the lower chamber.
The measure was supported by every Democratic member of the House, but was rejected by a sizeable portion of Boehner’s GOP caucus.
Conservative Republicans were nearly unanimous in their opposition to the plan, as the federal health care law – the Affordable Care Act, or Obamacare – they so object to will go virtually unscathed after all.
The Senate approved the proposal by a vote of 81-18 earlier on Wednesday evening.
Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell spent previous days constructing a deal as the House failed to come to an agreement on a proposal Tuesday.
“This compromise we reached will provide our economy with the stability it desperately needs. It’s never easy for two sides to reach consensus. It’s really hard, sometimes harder than others. This time was really hard,” Reid said ahead of the vote. “The country came to the brink of a disaster. But in the end, political adversaries set aside their differences and disagreement to prevent that disaster.”
Republicans Senators Ted Cruz, Rand Paul and Marco Rubio were among the 18 ‘nay’ votes in the Senate.
“This is a terrible deal,” said Senator Ted Cruz on the Senate floor before the vote. “This deal embodies everything about the Washington establishment that frustrates the American people.”
President Obama said in a statement after the Senate vote that Washington must begin to gain back the trust of voters given that more confrontations on debt, governmental budgeting, and other issues await.
“Hopefully next time, it won’t be in the eleventh hour. We’ve got to get out of the habit of governing by crisis,” Obama said.
The US Treasury’s authority to borrow money to pay down US debt obligations was scheduled to end Thursday, October 17. With no full spending bill from Congress, many government operations have been on hold since October 1.
The 16-day government shutdown has cost the US $1.7 billion per week in lost economic output, according to a study by IHS Global Insight, a Massachusetts-based research firm. The S&P ratings agency declared Wednesday the shutdown has subtracted $24 billion from the US economy, cutting 0.6 percent from the fourth quarter GDP growth.
Major US creditors like China – which holds $1.3 trillion in US Treasuries – have openly discussed “de-Americanizing” as the crises-hopping US government has become increasingly volatile to the world economy. China has introduced a so-called “haircut,” or a discount, on the value of US Treasuries held as collateral against futures trades.
Developing and developed nations are equally concerned, and institutions like the World Bank and the International Monetary Fund (IMF) have issued several warnings.
Some US business leaders are too voicing their discontent with Washington’s political turmoil.
“Most CEOs I speak to in the United States say they’re seeing a slowdown in business because of this,” Laurence Fink, the CEO of giant asset manager BlackRock Inc, told Reuters in an interview on Wednesday.
“I was on a conference call with many of them, and I heard across the board, a slowdown from the American consumer because of this narrative, so it’s having an impact on our economy already – and it’s going to have an impact on job creation at a time when we need more job creation,” he added.

Upon news of a deal, the Dow Jones Industrial Average shot up by more than 200 points.
“Investors are relieved that it looks like we’re not going to go over the cliff,” Ben Hart, a research analyst at the Pennsylvania-based Haverford Trust Co., told Bloomberg News. “It takes the worst case scenario off the table.”
The Senate deal will provide back pay to furloughed government workers and will allow the US Treasury to pay US debt bills should Congress not come to an agreement on the ceiling by February 7.
In addition, the deal comes with an income verification requirement for anyone receiving health insurance subsidies under the Affordable Care Act.
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