Taiwan President Ma Ying-jeou named Sean Chen as premier, choosing an official who oversaw the island
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U.K. retail sales rose in December as stores cut prices to lure consumers during the year-end holiday shopping season.
Sales including fuel rose 0.6 percent from November, when they fell a revised 0.5 percent, the Office for National Statistics said today in London. The December increase matched the median forecast of 21 economists in a Bloomberg News survey. From a year earlier, sales were up 2.6 percent.
The gain may not be maintained as U.K. unemployment rises, inflation outpaces wage increases and consumer confidence falls. With global growth cooling and the euro-area crisis damping export demand, concerns are growing that Britain is heading for another recession. A report today indicated Chinese manufacturing shrank for a third month in January.
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The financial world initial rejoiced Friday when word came of a deal by most European countries _ including all 17 that use the euro _ to allow the European Commission to oversee national budgets and impose penalties if a country’s debt grows too much.
Since then questions have emerged about the willingness of each individual country to ratify the agreement, the lack of a short-term solution to high debt in Greece, Italy and Spain, and what the future monetary policy of the European Central Bank will be.
The Associated Press spoke with four experts Sunday about the deal and what implications it will have for the markets. Here are their thoughts, edited for clarity.
Peter Tchir, founder of TF Market Advisors: It has to go and be ratified. They’re talking about doing balanced budget amendments in each of the countries. It seems like this was done very last minute. I’m highly suspicious that there’s really a full buy in. I think some of these balanced budget acts are going to take a while to implement. There was also more document space talking about being able to waive penalties than what the penalties would be.
How serious are those punishments going to be and will they ever be enforced? If you look at monetary punishments, where there’s a fine, the country already believes it’s necessary to run a deficit in the current year because their economy is stagnating, are they going to get afraid because of the fine or just lump that into part of the cost? Will they get kicked out of the euro? Clearly at this point the EU has shown anything but a willingness to kick somebody out. They became so scared of that, that they cobbled out bailout after bailout.
On Monday and Tuesday the stock market is going to be looking for the ECB to come in and say, “We can buy as much sovereign debt as we want now.” I don’t think we are going to get that statement and that’s going to put downward pressure on the stock market. It’s going to finally hit home in the U.S. that the ECB does not believe in quantitative easing in the same way that the U.S. does and they’re not going to view this pact as a reason to change their view. That is going to disappoint the market.
Brian Gendreau, market strategist at Cetera Financial Group: There’s a long-term solution in place but there’s no solution to the current crisis. There’s still the prospect of default on Greek bonds and there’s still problems faced by Italy meeting the financing obligations moving forward. It is a welcome first step. I think there’s widespread recognition that it’s going to be a long process one way or another. There were compromises in the agreement.
There are a lot of questions that still remain. One of them is the role of the European Central Bank as a lender of last resort. The ECB has made it clear that they are willing to undertake the role of lender of last resort to banks but there’s a question of to what extent will the ECB be lender of last resort to countries.
This is going to set a better tone for the market going forward. There is a lot of repressed demand for stocks. There are a lot of people who have moved into CDs and Treasurys. People are going to be looking for the green light to move out of those funds. When they do, they’re going to move into stocks. Ultimately, the big beneficiary might be stock markets, including the U.S. stock market.
Paul Zemsky, chief investment officer for multi-asset strategies for ING Investment Management: Overall, it was a very positive step in the right direction but it wasn’t this grand bargain that I was hoping for and others were hoping for earlier last week. But some very good things did happen. The member states did agree to some legislation that would be more binding in terms of the deficits and debt. It would be overseen by the European courts.
I see two problems. One is that overall growth is slowing throughout the region. Germany is the bright spot. Most economists, including ourselves, have (forecast) a mild recession for next year. With slowing growth, it’s hard to get good budget numbers. Second, the agreement has been made but the laws haven’t been passed and signed.
There’s going to need to be pressure kept on these peripheral countries to go through with this. That means you are going to have to keep walking close to the edge in terms of the markets and the threat of the euro region breaking up if these guys don’t come through. We’re still not done with this dance with death. Until these laws are passed, there are going to be scares. There’s going to continue to be volatility coming from this region.
Marc Chandler, global head of currency strategy at Brown Brothers Harriman: On the eve of the European summit, the ECB provided an incredible amount of liquidity to the market. I don’t know if the market fully appreciates that yet. They were willing to loan money to banks for three years. We’re not talking about a short-term, one-week loan. This is a three-year loan essentially. As much as they want, provided they have the collateral, which they also liberalized the definition of.
The take-away point is that the euro and eurozone survives without the ECB being a backstop for the sovereigns and without European bonds being issued. They live to fight another day. But it doesn’t change things. They’re still heading toward a recession. The ECB is still going to have to ease policy. They still have something on the magnitude of 1.8 trillion euros ($2.41 trillion) of bonds maturing, concentrated in the first half of next year.
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Scott Mayerowitz can be reached at http://twitter.com/GlobeTrotScott.
Anticipating a strong presence in the new Egyptian parliament, ultraconservative Islamists outlined plans Friday for a strict brand of religious law, a move that could limit personal freedoms and steer a key U.S. ally toward an Islamic state.
Egypt’s election commission announced only a trickle of results from the first round of parliamentary elections and said 62 percent of eligible voters cast ballots in the highest turnout in modern history.
However, leaked counts point to a clear majority for Islamist parties at the expense of liberal activist groups that led the uprising against Hosni Mubarak, toppling a regime long seen as a secular bulwark in the Middle East.
The more pragmatic Muslim Brotherhood is poised to take the largest share of votes, as much as 45 percent. But the Nour Party, which espouses a strict interpretation of Islam in which democracy is subordinate to the Quran, could win a quarter of the house, giving it much power to affect debate.
A spokesman, Yousseri Hamad, said his party considers God’s law the only law.
“In the land of Islam, I can’t let people decide what is permissible or what is prohibited,” Hamad told The Associated Press. “It is God who gives the answers as to what is right and what is wrong.”
The Nour Party is the main political arm of the hard-line Salafist Muslim movement, which espouses a strict form of Islam similar to that practiced in Saudi Arabia. Salafis, who often wear long beards and seek to imitate the life of the Prophet Muhammad, speak openly about their aim of turning Egypt into a state where personal freedoms, including freedom of speech, women’s dress and art, are constrained by Islamic law _ goals that make many Egyptians nervous.
Salafis object to women in leadership roles, citing Muhammad as saying that “no people succeed if led by women.” However, when election regulations forced all parties to include women, Salafi cleric Yasser el-Bourhami relented, saying that “committing small sins” is better than “committing bigger ones” _ by which he meant letting secular people run the government.
In the end, the party put women at the bottom of its lists, represented by flowers since women’s photos were deemed inappropriate.
This week, Salafi cleric and parliamentary candidate Abdel-Monem Shahat caused a stir by saying the novels of Egypt’s Nobel laureate Naguib Mahfouz, read widely in Egyptian schools, are “all prostitution.”
Salafis are newcomers on Egypt’s political scene. They long shunned the concept of democracy, saying it allows man’s law to override God’s. But they formed parties and entered politics after Mubarak’s ouster, seeking to enshrine Islamic law in Egypt’s new constitution.
By contrast, the Muslim Brotherhood, Egypt’s largest and best organized political group, was officially banned under Mubarak but established a nationwide network of activists who built a reputation for offering services to the poor. After Mubarak’s fall, the group’s Freedom and Justice Party campaigned fiercely, their organization and name-recognition giving them a big advantage over newly formed liberal parties.
Stakes are particularly high since the new parliament is supposed to oversee writing Egypt’s new constitution. The Supreme Council of the Armed Forces, which took control of the country when Mubarak fell, has tried to impose restrictions on membership in the 100-member drafting committee. The Muslim Brotherhood has said it will challenge the move, and a strong showing by Islamists in the elections could boost its popular mandate to do so.
Hamed, the Nour Party spokesman, said democracy can’t pass laws that contradict religion.
“We endorse Egyptian democracy,” he said. “However, I don’t give absolute freedom to people to legislate to themselves and decide on what is right or wrong.
“We have God’s laws that tell us that.”
He suggested, for example, that alcohol should be banned and that a state agency could penalize Muslims for eating during the day during the holy month of Ramadan, when the devout fast from dawn to dusk.
The Muslim Brotherhood and Salafis have both cooperated and disagreed in the past.
They tried to form an electoral alliance, which broke down over disagreements about including Christians and women in their electoral lists. However, the two parties campaigned together in some areas and declined to contest certain seats so as not to split the Islamist vote and allow liberal candidates to win.
The strong Islamist showing worries liberal parties who fear the two groups will work to push a religious agenda. It has also caused many youth activists who launched the anti-Mubarak uprising to feel that their revolution has been hijacked. Still, the liberal Egyptian Bloc coalition, which is competing with the Salafis to be the second-largest parliamentary bloc, could counterbalance hard-line elements.
Cooperation between the Brotherhood and Salafis in parliament isn’t guaranteed, said Shadi Hamid, Middle East expert with the Brookings Doha Center. The Brotherhood is a pragmatic organization that will work with other parties to achieve its goals, while the Salafis shun compromise.
Once the parliament is seated, Hamid expects the Brotherhood to focus on establishing a strong parliamentary system, reforming state institutions and boosting the economy _ goals they share with liberal groups.
“Banning alcohol or passing laws on women’s dress are not on their priority list, and they see these issues as a distraction from the issues at hand,” he said.
Still, a strong Salafist bloc in parliament will have a “massive effect,” he said, by giving the group a larger platform for its views.
“The Salafis are going to insert religion into the public debate in a way that would not have happened otherwise,” he said.
Many in Egypt’s Coptic Christian population, which makes up 10 percent of the country, fear the Salafis will push for laws that will make them second-class citizens.
Even some religious Egyptians see the Salafi as too extreme.
“I am religious and don’t want laws that go against my beliefs, but there shouldn’t be religious law,” said Ahmed Abdel-Rahman, a geography teacher. “I don’t want anyone imposing his religious views on me.”
The election commission said Friday that more than 8 million eligible voters _ 62 percent _ participated in the first round. But it announced final results in only a few races. It remains unclear when complete final results will be released.
This week’s vote, held in nine provinces, will determine about 30 percent of the 498 seats in the People’s Assembly, parliament’s lower house. Two more rounds, ending in January, will cover Egypt’s other 18 provinces.
The National Corn-to-Ethanol Research Center has added $3.5 million in advanced corn fractionation technology, provided by Cereal Process Technologies LLC of Overland Park, Kan., with support from the Illinois Department of Commerce and Economic Opportunity.
Located on the campus of Southern Illinois University Edwardsville, the nonprofit research center focuses on improving efficiencies in the production of ethanol for fuel. The new equipment will enhance advanced ethanol research and career training programs at the center payday loans direct lenders.
Kenneth “Pete” Moss, vice president of marketing for Cereal Process Technologies, said the company’s fractionation technology is “the foundation for a revitalized ethanol industry.” He said it enables ethanol plants to reduce energy consumption while producing more ethanol and edible corn oil.
Markets plunged Tuesday on fears that Europe’s plan to save the euro was already unraveling after the shock decision by Greek Prime Minister to call a referendum on the country’s latest rescue.
Stock markets plunged across Europe on Tuesday, with the Athens exchange losing almost 7 percent, while the euro fell another 1.2 percent, on worries the Greek government could lose the referendum vote with the potentially devastating consequence of a disorderly debt default and Greece’s exit from the common currency.
George Papandreou stunned investors, as well as his own citizens and his partners in the eurozone, by announcing late Monday that a plebiscite will be held in what he called “a supreme act of democracy and of patriotism for the people to make their own decision.” A confidence vote in the Socialist government will also take place at the end of this week.
The referendum _ the country’s first since 1974 _ is expected to be held early next year. The renewed uncertainty it creates deflated any remnants of optimism over last week’s grand European plan to contain the debt crisis. After weeks of complex negotiations, eurozone leaders agreed last Thursday that private holders of Greek bonds should take a 50 percent loss on their holdings, reducing Greece’s debt burden to 120 percent of national income by 2020 from around 180 percent at present.
“While it may be the democratic thing to do … what happen if Greece votes ‘no’, which is possible given how unpopular the bailout plan appears to be amongst Greece’s voters,” said Michael Hewson, markets analyst at CMC Markets. “The resulting fallout could well result in a complete meltdown of the European banking system and throw Europe into turmoil.”
News that Greece’s Finance Minister Evangelos Venizelos went to a clinic after suffering stomach pains added to the renewed bout of fears in the markets.
Unsurprisingly, Greek shares led the retreat. The Athens Stock Exchange’s benchmark General Index fell 6.8 percent just after trading started Tuesday, with the bank index losing more than 13 percent.
All other markets were sharply lower too. Germany’s DAX was 3.6 percent lower, while France’s CAC-40 dropped 3.2 percent. The euro fell to a daily low of 1.37 while borrowing rates jumped higher for Italy and Spain, considered the next weakest links in the crisis.
A recent opinion poll suggested that 60 percent of Greeks were against the austerity measures that have been required by international creditors from the eurozone and the International Monetary Fund in return for crucial bailout loans bad credit pay day loans. However, other polls show broad support for remaining in the eurozone.
Given that Greece is heading for its fourth year of recession next year, investors aren’t hopeful that Papandreou will be able to pull off a victory. Success in the referendum, however, could shore up Europe’s battle to contain its crippling debt crisis.
Even before Papandreou’s pledge, the shine from last week’s three-pronged plan to contain the crisis was wearing off. As well as increasing the private sector involvement in the Greek bailout, eurozone leaders agreed to boost the firepower of the bailout fund to euro1 trillion ($1.37 trillion) and a recapitalization of the banking sector.
Jacques Cailloux, an analyst at Royal Bank of Scotland, noted that Papandreou’s referendum pledge is likely to derail any hopes that the international community will contribute to the plan to boost Europe’s bailout fund, the European Financial Stability Facility, at the upcoming summit of the Group of 20 leaders in Cannes, France.
“The added uncertainty surrounding a potential referendum in Greece will likely block any new potential financial support from countries outside the monetary union given the potential implications for the future of the Union,” Cailloux said. “We thus view this as a major negative for Greece and the rest of the momentary union.”
Greece’s main opposition conservatives called for Papandreou’s resignation, accusing him of incompetence and blackmail.
“Mr Papandreou is unscrupulous and dangerous,” party spokesman Yiannis Michelakis said late Monday. “He has tossed Greece’s participation in Europe into the air like a coin. … Instead of seeking ways to extract us from our impasse, he is presenting the Greek people with the ultimate blackmail.”
Respected conservative Kathimerini daily called Papandreou’s announcement “a high-risk initiative” that further dents the country’s international image and will accelerate the country’s return to its old national currency, the drachma.
“The last thing Greece needs right now is additional uncertainty,” the paper said. “It is certain that the country will be paralyzed and will be caught in an endless debate lasting weeks, during which obviously neither the state nor the government nor any other institution will function.”
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Pylas contributed from London
Slovakia’s prime minister has raised the stakes ahead of a crucial vote on expanding Europe’s bailout fund, by linking it to a confidence vote in her government.
Ahead of talks with her coalition partners, Iveta Radicova confirmed that a coalition partner has not accepted a compromise offer and added that the vote later in Parliament “will be linked to a confidence vote in this government.”
That suggests her government will fall if the vote is not carried, though it does not necessarily mean early elections under the terms of the Slovak constitution.
On Monday, the four-party coalition, which met for three hours, was unable to agree on a compromise deal.
The 17 nations that use the euro must all approve expanding the powers of the bailout fund, which is designed to shore up Europe’s defenses against the debt crisis.
Slovakia’s “no” would be a bad signal for already nervous financial markets. Ahead of the vote, European markets were giving up some of their recent gains though remained sharply higher on the week. The euro meanwhile was solid above $1.36.
All other EU nations have backed the expanded powers for the EU bailout fund.
Slovakia, a nation of 5.5 million people, would contribute about 1 percent, or euro7.7 billion ($10.5 billion). With the help of EU funds and foreign investments, it has benefited significantly from its membership in the eurozone and the EU and become a leading European car exporter.
The outcome of the Slovak parliamentary vote is uncertain because a junior member of the four-party governing coalition is strictly opposed to boosting the fund.
The Freedom and Solidarity Party’s chairman, Richard Sulik recently described the expanded bailout fund “a road to hell” and vowed again Monday to block it.
Without the votes from Sulik’s party, the coalition government would have to rely on the opposition, but it’s unlikely to provide any help.
The major opposition party, Smer-Social Democracy of former Prime Minister Robert Fico, supports the fund expansion in principle but was ready to vote for it in exchange for nothing less than early elections.
The more than 1,000 hourly employees at the General Motors plant in Wentzville are voting today on a local contract.
Voting began at 4 a.m. and will run until 7 p.m., said Tom Brune, communications coordinator for United Auto Workers Local 2250. The local contract covers work rules, transfers and job classifications.
Last week, Local 2250 employees voted overwhelmingly to approve a national four-year contract with GM. Local 2250 represents the 1,196 hourly workers at the Wentzville plant. As part of the new contract, GM is proposing investing $380 million in the Wentzville facility and adding 1,850 jobs.
Some of those new jobs will be added in the coming weeks. GM spokesman Greg Martin said Wentzville employees were told today that a second shift at the plant for full-size van production will be added in early 2012, adding about 400 jobs easy payday loans. The plant currently produces GMC Savana and Chevrolet Express vans.
“We’ll start bringing them on as soon as we can,” Martin said. Workers for the second shift will start to receive training within the next month, he said.
GM has not yet offered details about the addition of a mid-size pickup slated for Wentzville, which union officials announced as part of the national contract last month. Analysts have speculated that GM will begin producing the next generation Colorado pickup in Wentzville. Colorados are currently produced at a plant in Shreveport, La., which is slated to close.
U.S. stock futures are rising sharply ahead of a meeting of the European Central Bank that could provide solutions to Europe’s debt crisis.
Investors expect that officials at the European Central Bank will announce plans to provide support to the region’s struggling banks.
In the U.S., investors will be looking toward a report on first-time applications for unemployment benefits last week.
Shares of Apple Inc. fell 1 percent in premarket trading. The company says co-founder and former CEO Steve Jobs died Wednesday.
Two hours before the opening bell, Dow futures rose 115 points, or 1.1 percent, to 10,953. S&P 500 futures rose 12, or 1 percent, to 1,147. Nasdaq 100 futures gained 16, or 0.7 percent, to 2,183.
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