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Chase Bank Limits Cash Withdrawals, Bans International... Before you read this report, remember to sign up to http://pennystockpaycheck.com for 100% free stock alerts Chase Bank has moved to limit cash withdrawals while banning business customers from sending...

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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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Spate of recent shock departures by 50-something CEOs While the rising financial rewards of running a modern multinational have been well publicised, executive recruiters say the pressures of the job have also been ratcheted upOn approaching his 60th birthday...

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UK Uncut loses legal challenge over Goldman Sachs tax... While judge agreed the deal was 'not a glorious episode in the history of the Revenue', he ruled it was not unlawfulCampaign group UK Uncut Legal Action has lost its high court challenge over the legality...

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IAG losses grow over troubled Iberia

Category : Business, World News

Losses at International Airlines Group balloon in the first quarter due to its troubled Spanish carrier Iberia.

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Spain’s Bankia returns to profit

Category : Business

Troubled Spanish lender Bankia announces a return to profit after a disastrous 2012 that saw record losses and an EU-sponsored bailout.

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Borussia Dortmund, Malaga and Europe’s political football of austerity | Stefan Szymanski

Category : Business

There is a close similarity between football and the economy of Europe. Should German-style regulations control both?

The Champions League quarter final between Borussia Dortmund and Malaga is a metaphor for the economic and political fault lines of Europe. Dortmund represents solid German values, a profitable club from the tightly regulated Bundesliga. Malaga, by contrast, has been in dispute with Uefa for some time and had until midnight on 31 March to prove to Uefa that they have paid up all overdue debts or they will be excluded from Uefa competition for the next four years.

It’s true that a few years ago Dortmund had financial troubles, but they were forced to sell players and accept a loan from Bayern Munich to balance the books. Equivalent regulation and control is unknown in Spain. Last week a report suggested that Spanish clubs as a whole may come under investigation by the European commission for receiving illegal state aid, and by most accounts the majority of Spanish clubs are not commercially viable. Even Spanish MEPs have called for football clubs to live within their means.

Just as the Spanish economy is mired in recession because of a catastrophic backlog of bad debts and the German economic juggernaut continues to prosper, so German football seems ready to carry all before it while southern Europe’s traditional strength seeps away. Indeed, there is a very close similarity between football and the wider economy of Europe, in terms of the causes of crisis, the solutions, and ultimately the winners and losers.

First, the problem. Contrary to appearance, there is little difference between a football manager and a bank manager. Both are gamblers who use other people’s money to bet on the next big thing. Both work hard to present an aura of invulnerability and inevitability, when in reality both are exposed to the fickle laws of chance.

The principle of banking is to borrow short and lend long, giving rise to two sorts of risk – liquidity risk (depositors want their money back) and solvency risk (the long-term investment you lent to went belly up). Usually it is insolvency that leads to a liquidity crisis and general failure.

The principle of football is to buy players today in the expectation of future success and income, which also gives rise to liquidity risk (the future revenues are slow to arrive) and insolvency risk (the future revenues never arrive).

Given that we cannot live without banking or football, both sorts of manager are prone to moral hazard – taking excessive risk today in the knowledge that if things don’t work out tomorrow then the organisation is too big to fail. Banks and football clubs almost never disappear, but they often have to be propped up when they fail.

Historically the propping up has been carried out by local and national governments. In the case of banks, it has been the national central bank that has provided liquidity as the lender of last resort, and the central government that has bailed out losses by using the largesse of the taxpayers. In the case of football, typically local governments have provided subsidies and the national tax authorities have written off overdue payments to keep the clubs afloat.

Now Europe has a new regime, the eurozone for banking and Uefa financial fair play for football. For those nations signed up to the euro, the European Central Bank provides liquidity for the banks and if the bad debts are too large for the national government to cover – as has been the case in recent years for Ireland, Portugal, Greece, Spain and now Cyprus – then bailout has to come from the combined eurozone, whose decision-making is currently dominated by Angela Merkel and the German government.

In the past many governments were prepared to write off bad debts by printing more money and inflating the problem away, reducing the value of their currencies and thus stimulating an economic revival following a short-term crisis. Austerity will not allow this to happen, so exposed countries are forced to live with seemingly permanent recession. So long as the eurozone crisis keeps the euro exchange rate competitive, German exporters benefit and the German economy continues to grow.

This is not, as some would like to suggest, a German conspiracy. To the Germans it just seems like common sense, but it is also true that everyone goes into these things with their own interests at heart while convincing themselves they are acting in the best interests of everyone.

So too with the financial fair play regulations. Under Uefa’s rules, clubs are penalised if they lack liquidity, while EU rules against state aid prohibit a government bailout for insolvent clubs. Traditionally strong clubs from southern Europe are now being forced to live within their ever decreasing means, and this football austerity is also likely to benefit Germany.

German clubs were at the forefront of pushing for financial regulation at the European level to match their own regulation at home. Thanks to public investment in new stadiums for the 2006 World Cup, generous sponsorship from Germany’s industrial giants and a wealthy population of 80 million, German clubs are set to outspend their southern neighbours in the years to come, reversing a decade or more of weakness.

Many people argue that Europe’s austerity policy is not tenable in the long run if it impoverishes the poorer nations, and much the same can be said of the financial fair play regulations. Sound finance is a worthy goal, but not if it guarantees German and English dominance (in the latter case funded by international broadcast income) at the expense of the game’s traditional southern powers.

Cardiff airport sold to Welsh government for £52m

Category : Business

Spanish owner Abertis sells struggling airport, where passenger numbers have halved, in attempt to pay down debt mountain

Cardiff airport has been sold by its debt-laden Spanish owner to the Welsh government for £52m.

Abertis had been in negotiations with officials since November last year as it tried to pay down its €14.1bn debt mountain. Cardiff is the first of three UK airports it hopes to offload.

The deal will see the Welsh government manage the struggling airport at arms’ length in the hope of improving passenger numbers, which have halved in the past five years to just a million.

Barcelona-based Abertis, which is one of the world’s largest toll-road operators, also owns Belfast airport and controls the 30-year lease at Luton airport and could sell both, after Stansted and Edinburgh airports were sold by rival Heathrow Holdings for a combined £2.3bn. Luton council, the lease owner for Luton airport, forced the company to invest £100m or risk losing its contract, in the hope of doubling passenger numbers to 18m.

Abertis runs 29 airports around the world, but is looking at downsizing after finding itself struggling during the recession.

Iberia’s chief executive resigns

Category : Business

The chief executive of strike-hit Spanish airline Iberia, Rafael Sanchez-Lozano, has resigned, parent company IAG announces.

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TiGenix to Obtain National Reimbursement in Spain for Its Innovative Cartilage Therapy ChondroCelect(R)

Category : Stocks

LEUVEN, BELGIUM and MADRID, SPAIN–(Marketwire – Mar 12, 2013) – TiGenix NV (EURONEXT BRUSSELS: TIG), the European leader in cell therapy, announced today that it was informed by the Spanish Health Authority that its innovative cartilage repair therapy ChondroCelect® will obtain national reimbursement in Spain.

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Mondragon: Spain’s giant co-operative where times are hard but few go bust

Category : Business

The northern Spanish town is dominated by its eponymous €15bn corporation that controls over 100 smaller co-ops

José María Ormaetxea is the co-founder of Spain’s seventh biggest industrial group, but he potters around Mondragon in a Ford Fiesta and lives in an ordinary flat in this industrial town tucked into a valley in the country’s northern Basque region.

“Imagine how rich he could have been if he had founded a different sort of company,” said Kepa Oliden, a local newspaper reporter from this town of 23,000 people. “But you won’t find anyone driving a Rolls-Royce in Mondragon.”

Visitors also find little of the new poverty sweeping through other parts of Spain, for up the steep slopes of what locals jokingly call the “sacred mountain” lies the headquarters of the Mondragon Corporation, the remarkably recession-proof company that Ormaetxea helped found in 1956.

There is little flashy about the offices of the Basque country’s biggest industrial company, but then there is nothing normal about what is now the world’s biggest workers co-operative … with global sales of €15bn (£13bn).

Whereas workers at other Spanish companies must answer to shareholder needs – often by sacrificing their jobs – that is not true at Mondragon, which acts as the parent company to 111 small, medium-sized and larger co-ops.

And as Spain struggles through double-dip recession, fierce austerity and 26% unemployment, this is one company that is not about to collapse. Nor has it shed many jobs, with the workforce remaining steady at around 84,000 people worldwide – about a sixth of them outside Spain.

The reason? “We are more flexible,” said Emilio Cebrián, the social director at Mondragon’s biggest individual unit – the Eroski supermarket-based group. “When times are bad, we cut wage costs by deciding it among ourselves.” And, as owners, they also forsake dividends.

Exposed to a Spanish economy shrinking at an annual 1.9%, Eroski has just agreed a fresh round of wage reductions. Workers’ incomes will drop by 5%-10%. But, unlike other companies where wages are cut while executive pay soars, managers are taking the biggest cuts. Their salaries are already capped at eight times the lowest paid worker.

Wage cuts began in 2009 when most Spanish companies began shedding workers to reduce labour costs – eventually adding 3.5 million people to Spain’s dole queues. Mondragon has not contributed. Average salaries, instead, have dropped by around 5% while members without work are found new jobs elsewhere.

“If a co-op within the group has an excess of members, then we relocate them to other co-ops within the group,” explained Mikel Zabala, human resources boss at the corporation’s headquarters.

The crisis in Spain has also forced the corporation to think creatively about surviving the economy’s other major drama – a credit squeeze that has seen many companies close while waiting for clients to pay bills, especially public authorities.

“We invented a new system, doing the same sort of thing that we do with jobs,” explained Zabala. “If someone has money left over, and another co-operative has run out, then they can lend them that money.”

As a result only one co-operative, employing 30 people making equipment for the lumber trade, has closed. “Some of our most successful companies today are ones that needed help when things were going badly for them years ago,” said Zabala. “Now they, in turn, are helping others in need.”

Success is not just measured in job terms or in how many companies survive. In the year from 2010 to 2011, sales grew slightly while exports surged 10% to €4bn.

That does not mean life is easy. Conversations in bars and barber’s shops in Mondragon – where almost everyone has a family member in a co-operative – revolve around wage cuts and the difficulties facing co-ops in traditional sectors like white goods.

Among the hardest hit is Fagor – which makes fridges and washing machines in a market where sales have collapsed by 50%. It was founded by Ormaetxea and other graduates from a local technological college run by Roman Catholic priest José María Arizmendiarreta, who urged his students to form co-operatives.

Some recent worker-owner assemblies in the town, where managers present their plans for debate and approval, have been stormy.

“The more exposed a co-operative is to the Spanish market, the harder it generally is,” explained Zabala.

Like other European companies, Mondragon is exposed to fierce competition from developing world competitors with lower labour costs. Its response has been to set up factories – or buy companies – in other parts of the world. There are now 94 subsidiaries producing goods from Vietnam to Chile, Morocco and Russia.

Workers at these, however, are not co-op members (fewer than half of Mondragon’s workforce are members) – meaning they are also raw-blooded capitalists, living off the labour of others.

Mondragon is aware of the contradictions of preaching about co-operatives while behaving like a capitalist.

Zabala insists that even non-member workers are treated better than in most companies – though temporary workers, who are the first to go at times of crisis, may disagree. “We do not really know how to behave like simple exploitative capitalists,” he said. “Even where we cannot fully behave as a co-operative, we at least try to implant the model of co-operative administration.”

“There was a time when we tried hard to get workers who were not members to join,” he added. “But it is not that easy. People do not always understand the culture of co-operativism and do not necessarily want to join. Now we do not push so hard.” In one fully-owned Mondragon company that recently agreed to turn itself into a co-op, he said, the former union leader is now chairman of a key decision-making board.

And Cebrián says that, by bringing in members from towns and cities far from the Basque country, Eroski has proved that the Mondragon model does not rely on a shared local culture – as some theorists had feared. “Fifteen years ago we might have asked whether it was necessary to be Basque to be a co-operativist. But now we now that is not the case,” he said.

But there are no signs yet that the corporation’s 14,000 foreign workers are set to swell the ranks of its 38,000 Spanish co-operativists. That, it seems, is a dream too far.

Iberia workers begin five-day strike

Category : Business

Workers at the Spanish airline Iberia have begun a five-day strike in protest at planned job cuts and salary reductions.

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Spain’s Rajoy pledges to battle on

Category : Business

Spanish PM Mariano Rajoy fiercely denies corruption allegations as he pledges to battle on against Spain’s worst financial crisis in recent years.

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VIDEO: Spain PM denies corruption claim

Category : World News

Spanish Prime Minister Mariano Rajoy has strongly denied media claims that he and other members of the governing Popular Party received secret payments.

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