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Richemont chairman Johann Rupert to take 'grey gap... Billionaire 62-year-old to take 12 months off from Cartier and Montblanc luxury goods groupRichemont's chairman and founder Johann Rupert is to take a year off from September, leaving management of the...

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Cambodia: aftermath of fatal shoe factory collapse... Workers clear rubble following the collapse of a shoe factory in Kampong Speu, Cambodia, on Thursday

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In France, Hollande is losing the battle for the eurozone | Jonathan Fenby

Category : Business

The president’s woes matter outside France. The failure of his anti-austerity pledge has left the balance of power with Germany

It is just 11 months since France elected François Hollande as its first Socialist president since 1995, spurring a wave of expectation on the European left that he would lead a pro-growth offensive against the cheerleaders of austerity. When his party and its allies won an absolute majority in the national assembly, it seemed Europe might be acquiring a real challenger to the Berlin-Brussels-London consensus.

It has not turned out like that, of course, evoking inevitable reminders of the last Socialist presidency, that of François Mitterrand. He came to office in 1981 on a reflationary platform declaring that there was nothing wrong with dreaming; the trouble was that waking up proved very jarring, as the Hollande administration is now discovering.

Growth under the would-be expansionary champion has not risen; in fact, it has positively slumped. Finance minister Pierre Moscovici says it might total 0.1% this year compared with the official forecast of 0.8%. The economy contracted by 0.3% in the last quarter of 2012. France will miss the target of reducing its deficit to 3% of national output in 2013. Unemployment is at 10.6%, and much higher among young people.

France has been running a monthly trade deficit of €5 billion and its falling competitiveness in costs is widely acknowledged. The structural reforms the economy needs have been held back by vested interests, largely in the public sector. Hollande is the first president of the Fifth Republic who is a creature of his own party rather than its progenitor, limiting his authority, while his attempt to be a “normal” president sits ill with the quasi-monarchical character of the post crafted by Charles de Gaulle for himself.

What’s more, the political crisis that has blown up over a former French budget minister’s secret foreign bank deposits, and the revelation by the Guardian and other newspapers that Hollande’s presidential campaign treasurer has off-shore accounts in the Cayman Islands, gave the head of state his toughest test to date, exacerbated by his harping on the evils of money.

Already scoring the lowest opinion poll ratings of any president (27% in the latest survey), Hollande seems caught in a downward spiral. In a big television interview last week, he was earnest and spoke sense, but offered nothing to galvanise a jaundiced nation. At the weekend, the Elysée palace played down talk of a government reshuffle, but the prime minister, Jean-Marc Ayrault, cuts a lacklustre figure and some Socialists are calling for a referendum on public morality. The National Front’s Marine le Pen thunders about national decline and the hard-left leader Jean-Luc Mélenchon is mobilising his troops against “an intrinsically rotten system”.

Hollande’s woes matter outside France’s frontiers. The way the country is stumbling economically has shown just how hard it is for the European left to craft policies to redress the continent. Ed Miliband is likely to be rather more circumspect in his embrace of the beleaguered figure in the Elysée than he was in the first flush of Hollande-mania.

That leaves the field to belt-tighteners and bond markets. The chaotic outcome of the election in Italy reinforces this; having saved his country from a Greece-style crisis, the prophet of austerity, Mario Monti, trailed in fourth place, but the Socialists have been unable to form a government. The Five Star Movement of comedian Beppe Grillo is a recipe for chaos and, incredibly, Silvio Berlusconi still lurks on the fringes of power. The crisis of authority across southern Europe has been exacerbated by scandal allegations against the government in Spain while Greece remains mired in the morass of dodgy accounting. The terms of the bailout of Cyprus introduce a whole new level of uncertainty.

The wider effect of all this and, in particular, of Hollande’s troubles, is to reinforce Germany ahead of the federal elections in September. Berlin would prefer not to find itself in increasingly lonely leadership. But there is nothing Angela Merkel can do. Though her Christian Democrats have suffered setbacks at state elections and the polls show the CDU short of an overall majority – opening up the possibility of an alliance with the Greens against the Social Democrats – Merkel is personally popular. She enjoys support for her European policies. But the context is shifting.

Her country’s relationship with France has provided the backbone for the construction of Europe since the Franco-German friendship treaty signed by de Gaulle and Konrad Adenauer in 1963, but it is now in questionable shape. Merkel and Nicolas Sarkozy did not get on well, but the Frenchman knew better than to get out of step with the chancellor in public. Paris and Berlin can agree on some things, such as their rejection of David Cameron’s plan for a new European treaty to pacify his euro-sceptics. But Hollande’s proclamation of a pro-growth agenda in his election campaign widened the division; the Germans regard the pace of French structural reforms as too slow and take a dim view of France’s sympathy for critics of austerity in southern Europe.

If Hollande had been able to set out a strong pro-growth stall there might have been an equilibrium between the two big continental states, even if this discomforted Merkel. But his weakness makes that a remote prospect, with no serious alternative policies in sight to those put forward by the chancellor, despite popular resentment at austerity and the inner contradiction of expecting spending reductions to breed growth.

This means that a two-speed eurozone, divided between northern and southern states, becomes more likely, with Brussels and Berlin incurring rising unpopularity in the latter as anti-austerity election results underline the EU’s democratic deficit. France risks being caught in the middle, its heart with the south, its economic prospects tied to the north, while Cameron’s search for a fudge on Europe increasingly irritates leaders with more serious matters on their minds. Europe’s politicians have been adept at kicking the can down the road in this crisis, but the nature of the road is changing, abetted by the storm swirling round the Elysée.

Jonathan Fenby is author of The General: Charles de Gaulle and the France He Saved

French 75% tax rate struck down

Category : Business

France’s Constitutional Council overturns a new top income tax rate of 75%, a key policy pledge of new Socialist President Francois Hollande.

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Dutch elections seen as a measure of volatile eurozone

Category : Business

Vote regarded as Europe’s bellwether ballot with Socialist party expected to double seats and Labour vying closely with liberals

A year from retirement after decades working in a bank, Ger Coolan is contemplating the unlikeliest switch in his political conduct ever – voting for a bunch of former Maoists.

When the Dutch go to the polls on Wednesday in an early election seen across Europe as a bellwether ballot, the well-to-do, middle-class 64-year-old will embody the volatility surrounding the vote.

“You’ve got the Germans bossing us around. Taxes are going to go up, pensions are going to be cut. And all this because of Europe. It would be much better just to let Greece leave the euro and carry on with the strong countries,” he said. “The Socialists are much better for the common people.”

The Socialists, who have renounced their 1970s Maoism and have never been in government, look poised to double their seats in the election by campaigning against Europe and the austerity that has sent governments toppling across the union, including the Netherlands, a successful prosperous core EU member with low unemployment and high quality of life.

Between them, the hard-left Socialists and thefar-right Freedom party, united in their hostility to Brussels, their resistance to austerity at home, and their opposition to helping the struggling eurozone countries of the south, look likely to take a third of the 150-seat parliament, shifting the

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Nuclear row splits French government

Category : Business

François Hollande under pressure over economy, eurozone treaty and minister’s comments that nuclear power was the future

Cracks have appeared in the new French government after a Socialist minister made a gaffe about the future of nuclear power and tensions mounted over the thorny issue of parliamentary ratification of the European budget treaty.

The Socialist president, François Hollande, and his prime minister, Jean-Marc Ayrault, have seen their popularity ratings fall over the summer as the French economic crisis deepens. Already struggling with a difficult return to work after the holiday season, the government has now been shaken by the row over nuclear energy.

The Green party, which has two ministers in the Socialist-led government, was taken aback after the minister for industrial recovery, Arnaud Montebourg, described nuclear power as an “industry of the future”, seeming to cast doubt on a commitment to shut power stations and reduce France’s devotion to atomic energy. France is the most nuclear-dependent country in the world, with 75% of its energy coming from nuclear. In a deal with the Greens before this year’s parliamentary and presidential elections, Socialists promised to reduce the share of nuclear in French electricity production to 50% by 2025, shutting 24 nuclear reactors. But so far, only one of France’s 59 nuclear reactors, at Fessenheim in eastern France, is due to be decommissioned.

Montebourg called nuclear energy a “tremendous asset” with a key future role, saying: “We need energy that is not too expensive.” He was backed by the interior minister, Manuel Valls, who said nuclear was undeniably a part of the future of French industry.

The Green MP Noël Mamère condemned the comments as a provocation. Another Green MP, Denis Baupin, said the government was “divorced from reality”. The prime minister tried to play down the row, and Montebourg’s views were presented as personal opinions. But the timing was unfortunate, two weeks before the government’s big environmental conference, designed to convince a sceptical environmental lobby that Hollande is serious about green issues.

Meanwhile, the Socialists are trying to contain internal divisions over the ratification of the new European budget treaty. Relieved that the French constitution will not need to be modified to accommodate the treaty, the government must still submit the text to a parliament vote in October.

But some in the Greens and on the left wing of the Socialist party have misgivings about losing sovereignty to Brussels and imposing austerity rules which they say would be socially and economically damaging to France.

Jean-Luc Mélenchon’s leftist Front de Gauche and Eva Joly, the former Green presidential candidate, have called for a referendum. The debate around the treaty ratification is already reopening political wounds from the sparring about the 1992 Maastricht treaty and France’s 2005 no vote against the EU constitution.

The prime minister has taken a hard line, telling Socialist MPs they should fall in line with the government amid “risk of a European crisis”.

Meanwhile, in its first key move after the summer break, the government on Tuesday temporarily cut the price of petrol and diesel by up to six cents a litre to help French households. The cost will be shared between oil companies and the state, which will lose €300m in tax revenues. The move stopped short of Hollande’s campaign promise of a freeze on fuel prices, which had been seen as too complicated and a legal minefield.

Socialists Win French Parliament (Update1)

Category : Business, Stocks

Updated from 2:52 p.m. EDT with confirmed Socialist victory in French election, background and details.

By Angela Charlton and Jamey Keaten

PARIS — Francois Hollande is the man in charge after his Socialist Party swept France’s parliamentary election. Voters welcomed the French president’s vision of injecting government money into Europe’s economies in hopes of helping the joint euro currency stave off disaster. …

The rest is here: Socialists Win French Parliament (Update1)

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France’s Socialist leader looks set to get leftist parliament for his – Washington Post

Category : Stocks


Globe and Mail
France's Socialist leader looks set to get leftist parliament for his
Washington Post
President Francois Hollande's Socialist Party, bolstered by leftist allies, stands positioned to take control of the lower house of parliament so he can revamp a country his partisans see as too capitalist for the French, and push to save the eurozone
Hollande's leftists ahead in parliamentary vote The Associated Press
French Vote Raises Socialists' Hopes for Majority in ParliamentNew York Times
Hollande on track to win parliament controlGlobe and Mail
euronews

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France questions EU fiscal pact

Category : World News

France’s new finance minister reiterates that the country’s new socialist government will not ratify the European Union’s fiscal pact.

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Greece to hold fresh elections as unity talks fail

Category : Business

Greeks to vote again in what many see as referendum on the euro and some blame Alexis Tsipras for causing

Against a backdrop of division, despondency and despair, debt-stricken Greeks head back to the polls next month amid fears the new election will do the very thing it is supposed to stop: hasten the country’s economic collapse and exit from the eurozone.

After a week of political high drama after inconclusive elections, feuding party chiefs acknowledged their inability to form a unity government on Tuesday, with several blaming Alexis Tsipras, whose Left Coalition party has taken Greece by storm.

“Unfortunately the country is being led again to elections … under very bad conditions,” said the socialist Pasok leader, Evangelos Venizelos, after the breakdown of the last-ditch negotiations at Athens’ presidential palace. “For God’s sake let’s move towards something better, not something worse.”

Across Europe there is no illusion that the poll, expected to take place on 10 or 17 June, is a referendum on whether the near insolvent country – kept afloat by EU and IMF rescue loans – stays in the eurozone.

Within hours of the election being announced, the German finance minister, Wolfgang Schäuble, summed up the predicament Greece now faced. “If Greece – and this is the will of the great majority – wants to stay in the euro, then they have to accept the conditions,” he told reporters at a meeting of European finance ministers in Brussels. “Otherwise, it isn’t possible. No responsible candidate can hide that from the electorate.”

Enter Tsipras, who says the spending cuts and structural reforms outlined in a “memorandum of understanding” Athens signed with its creditors are not only “barbaric”, but must be revoked.

Until 6 May, when Syriza – his alliance of far-left socialists, Trotskyists, Maoists and greens – took a surprise second place in the vote, the 38-year-old former communist held little sway over Greece’s decision-making apparatus.

But now his opinion accounts. Among the under 50s who have been worst hit by galloping unemployment and deepening poverty – the most visible byproducts of austerity measures many Greeks blame Berlin for imposing – Tsipras is seen as a saviour, the man who tells it as it is.

In the nine days since the country’s general election, his ratings have risen further with surveys indicating Syriza would easily emerge on top in a new ballot – another blow to the political establishment whose two main parties, Pasok and New Democracy, were punished by the electorate for pursuing deeply unpopular policies in return for aid.

Although next month’s election is also expected to result in a hung parliament with no party securing enough votes to form a government, the radical leftists would likely hold the reins to power. Greece would then be on a collision course with Europe as Tsipras, an unabashed populist, is likely to step up his fiery anti-austerity oratory. It is a toxic mix. And in Athens the panic is almost palpable.

“Tsipras will be handed the opportunity to fulfil the left’s dream of taking power democratically,” said Brady Keisling, a prominent Athens-based analyst likening the young radical to the late socialist strongman Andreas Papandreou, who also put Greece on a collision course with the international community with his anti-European, anti-Nato rhetoric.

“Papandreou promised to give Greeks things they never had. Tsipras has made a much more dangerous promise, to restore things they recently had and still remember, their old jobs, wages and pensions.”

Thirty-one years after the country joined the then EEC and 11 since it signed up to the common currency, anxiety is widespread that Syriza’s likely election will mark the turning point in relations between the two.

Tsipras, who was born days after the collapse of military rule in 1974 and is the country’s youngest politician, denies that he has peddled false promises. On the eve of the last election he told the Guardian he was not opposed to the euro but the “policies pursued in the name of the euro”.

But with EU partners saying in no uncertain terms that cash instalments will stop if Athens fails to adhere to its tough austerity and reform programme, fears are high that Greece is hurtling towards default and with it the collapse of an economy now on its knees.

With coffers running dry, the country barely has enough money to survive until the election, officials in the outgoing government say.

Many worry that ahead of the poll Greeks, who still have vivid memories of a bloody left-right civil war, are going to become increasingly polarised in a climate already electrified by an ever deepening sense of fury and loss.

New Greece poll due as talks fail

Category : Business, World News

Debt-stricken Greece is set to go to the polls again after parties failed to agree on a new government, says Socialist leader Evangelos Venizelos.

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Greek President Tries to Forge Coalition

Category : Business

By Demetris Nellas

ATHENS, Greece — Greece’s president will meet with political party leaders Sunday in a last-ditch effort to broker a deal for a coalition government and avoid another general election.

Karolos Papoulias took the step Saturday after socialist leader Evangelos Venizelos officially gave up the mandate to form a coalition government after three rounds of negotiations proved fruitless. …

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