A top European Central Bank official says Greece could get another euro20 billion ($28 billion) in aid from its fellow euro countries and raise three times that through new austerity measures such as selling government property.
Lorenzo Bini Smaghi, a member of the ECB’s executive board, is quoted by the Financial Times as saying Greece needs between euro60 billion and euro70 billion through next year.
That gap could be filled in several ways, Bini Smaghi said, giving a rough sketch of a plan for additional assistance that was split between government and private-sector contributions.
The private sector money would come partly from selling government property as well as rolled-over investments from Greek banks and issuance of short-term government debt.
The government half would be split, two-thirds from the euro area countries, or about euro20 billion, and the rest from the International Monetary Fund.
He said the plan “has to be studied further” and would in any case require concrete commitments from the Greek government to keep working to fix its finances. Greek political parties, however, failed last week to agree to a new plan of austerity measures.
Bini Smaghi again rejected any reduction of the debt through restructuring _ that is, Greece delaying repayment or paying less than the full amount owed. He said that would mean a “major, economic, social and even humanitarian disaster.” He did say Greek banks might renew some of ther holdings, presumably voluntarily.
Earlier in the financial crisis, European officials successfully pressed banks to voluntarily maintain their exposures to troubled countries in Eastern Europe.
Greece already got a rescue package last year worth euro110 billion from the eurozone and the IMF. But its economy continues to deteriorate and the government says it won’t be able to tap financial markets as planned next year.
EU officials are under pressure to secure Greece’s financing for at least a year ahead, with Luxembourg’s Prime Minister Jean-Claude Juncker saying last week that otherwise the IMF’s rules would not permit it to pay out the next installment of its loans to Greece in June.
Bini Smaghi said “if the Greek government agrees to the programme, the IMF will disburse and I am convinced that the euro area countries will disburse their part.”
The government on Friday strengthened its insider trading case against a former consultant for a California research firm by securing guilty pleas and cooperation deals with a former hedge fund portfolio manager and a technology company’s senior financial analyst.
The pleas by Samir Barai, of Manhattan, and Son Ngoc Nguyen, of San Jose, Calif., included admissions that they had conspired with Winifred Jiau, a former Primary Global Research employee who’s set to go on trial in U.S. District Court on Wednesday.
Jiau was charged with securities fraud in a probe of securities industry workers who pass off inside information as legitimate research after convincing employees of public companies to provide information about their companies before it is made public. She has pleaded not guilty.
Barai, the 39-year-old owner of the Barai Capital Management hedge fund, pleaded guilty to conspiracy, securities fraud, wire fraud and obstruction after he was arrested in February. Barai admitted during his plea Friday that he instructed a research analyst to shred evidence last November after hearing about the probe. He said he engaged in a scheme to benefit from inside information from 2006 through 2010 and some of his illegal secrets came from Jiau.
“I deeply regret all of my actions in this case,” he said.
His Manhattan sentencing is set for Aug. 29.
Earlier Friday, Nguyen, a 39-year-old senior financial analyst at computer chips manufacturer Nvidia Corp., pleaded guilty to a conspiracy charge in the case in a cooperation deal. He admitted that he shared inside information with Jiau from 2007 through early 2009.
Prosecutors allege that the deal among Nguyen, Jiau and a co-conspirator who worked in the finance department of Marvell Technology Group Ltd. called for her to provide inside information about Nvidia and Marvell to Nguyen. Prosecutors said the deal also required that she provide Nguyen and the co-conspirator with stock tips that she learned from contacts she had at various companies.
There are no allegations of wrongdoing against Nvidia or Marvell.
General Motors of Canada is threatening job cuts at its Oshawa complex again to soften up workers for more concessions in bargaining next year, their union charges.
The Canadian Auto Workers alleged Thursday that GM deliberately used an announcement about production of a new-generation Chevrolet Impala mid-size sedan in the U.S. this week to create a climate of job insecurity in Oshawa, where the company has assembled the model since 1999.
The union reaction followed a GM internal management memo that asked whether it would need to build any Impalas in Oshawa, given its plan to start assembling the model at its Detroit-Hamtramck plant late next year or early 2013.
CAW Local 222 distributed a stinging leaflet to thousands of workers at the Oshawa plant that criticizes GM for trying to boost its position in contract bargaining next year when the fate of the next Impala and one of two production lines will likely be a hot issue.
A sharp devaluation of the Belarusian ruble has spread panic across the country, with people rushing on Wednesday to buy dollars, euros, toasters and canned goods _ anything that will not lose its value as quickly as the national currency.
Belarusians swept store shelves and queued for entire days at currency exchange offices in a desperate attempt to protect their savings from the country’s sinking fortunes.
President Alexander Lukashenko promised that the national currency will remain stable following the devaluation ordered a day earlier, but experts warned it will continue its nosedive if Russia doesn’t provide a quick bailout.
Confidence in the ruble, whose value is fixed in Belarus, has dropped for weeks amid fears over the country’s finances and the country’s lack of support from its neighbors, both the EU and Russia.
Belarusian officials on Tuesday cut the ruble’s official value against the dollar almost in half Tuesday _ to 4,930 rubles per dollar from the previous 3,155. The perceived value of the local currency is much lower, however _ on the black market it takes 6,000 rubles to buy a dollar.
To make matters worse, there is a physical shortage in the country of dollars and euros, which companies and households desperately want to own to protect themselves from a worse devaluation in the future.
The government’s own reserves are badly depleted and exchange offices have run out of foreign currency because they are allowed only to sell what they buy from clients.
Andrei Krylevich, 42, has spent a week in lines outside an exchange booth in downtown Minsk without a chance to buy a single dollar. The computer company he works at has sent its employees on an unpaid leave, and he urgently needs to pay back a $9,000 loan to a bank.
“In just one month, I have virtually turned bankrupt, the entire country has gone bankrupt,” Krylevich said. “Even during the Soviet collapse we didn’t go through such nightmare.”
Krylevich’s 40-year-old wife, Svetlana, also was sent on an unpaid leave.
“It’s a matter of survival _ I will soon have nothing to feed the family,” she said. “How should I treat the government that has led the nation into a deadlock?”
People in the queue show up at the exchange booth several hours before it opens in the morning, bringing chairs, food and hot drinks to spend a day in vain hopes of buying foreign currency.
Most Belarusian industries are state-owned, and the government has tried to keep its scarce currency reserves for vital imports. On Tuesday, it set tight limits on interbank currency trading, effectively stifling the market.
Many Belarusians have turned to black market traders despite the authorities’ attempts to stem the practice with arrests. The government recently cut access to a foreign-based Internet portal that currency buyers and sellers were using to find each other.
Unable to buy foreign currency, people bought all they could from stores, both to stock up on food as well as to invest in tangible goods whose value won’t deplete as quickly as the ruble’s. Home appliances, electronics and other durable consumer goods have vanished from the shelves, which now eerily resemble the waning days of the Soviet Union.
“I fought my bank to close my account and get 5 million rubles ($1,000) in cash, and I want to buy at least something before my money turns into dust,” said Dmitry Malishevsky, a 48-year old tractor factory worker who showed up at Minsk’s main department store only to see empty shelves.
“I feel scared when I think of the future,” he said. “We are struggling to survive instead of living a normal life, and Lukashenko is to blame.”
Nadezhda Gorelik, a clerk at a shopping center in central Minsk, said that people were hoarding sugar, salt and other staples. “There is a feeling that a war is about to erupt,” she said.
The flamboyant Lukashenko, in power for nearly 17 years, has kept an unusually low profile in recent weeks as his government has been pleading Russia for a vital loan. Moscow has been reluctant to provide it, with experts saying it is pushing Belarus to sell its industrial assets at a rock-bottom price.
While the two neighbors have an agreement to keep close political, economic and military ties, their relations have long turned sour as Lukashenko launched angry tirades against Moscow. He has threatened to approach the West for help to squeeze more subsidies out of the Kremlin.
But Lukashenko burned his bridges to the West when he unleashed a violent crackdown on dissenters after December’s presidential election, which international observers criticized. The EU and the U.S. responded to the repressions with new sanctions, including a travel ban on Lukashenko and his officials.
The Belarusian president sought to mend ties with the West, saying Wednesday during a trip to Kazakhstan that his government could free opposition activists jailed for taking part in the election night protest. He also defied Moscow, saying that he still sees no need to sell them any assets in exchange for help.
Russia’s Finance Minister Alexei Kudrin said Tuesday that Belarus can get the total of $3 billion in loans from an economic alliance of several ex-Soviet nations over the next three years, including the first $800-million disbursement that could be delivered next month. Kudrin added that Belarus could earn another $7.5 billion by privatizing its industries, most of which remain in state hands.
Belarus’ former National Bank chief, Stanislav Bogdankevich, said the nation needs $8 billion to shore up its economy. “The government’s policy has led the nation to a catastrophe,” he told The Associated Press.
Bogdankevich said that Lukashenko has triggered the financial crisis by raising public sector wages by one third as part of his election campaign.
“Belarus could make its ends meet as long as Russia was subsidizing it,” said Leonid Zaiko, head of the Minsk-based Strategiya independent think-tank. “But once Russia stopped offering loans, everything has collapsed.”
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Vladimir Isachenkov in Moscow contributed to this report.
World markets snapped out of the doldrums Tuesday despite fears that Europe’s debt crisis was spreading to larger economies.
Oil prices rose to near $99 a barrel after Goldman Sachs raised it crude forecasts due to concerns that the shutdown of output from Libya will drain spare OPEC supplies. In currencies, the dollar slipped against the yen and the euro.
European markets were higher in early trading. Britain’s FTSE 100 rose 0.5 percent to 5,867.94. Germany’s DAX gained 0.5 percent to 7,158.02, and France’s CAC-40 was 0.4 percent higher to 3,921.15.
Wall Street was poised to rise after sinking Monday. Dow Jones industrial futures rose 30 points to 12,392, and S&P 500 futures were 3.9 points higher at 1,319.10.
A choppy day of trading in Asia ended with key benchmarks higher.
Japan’s Nikkei 225 rose 0.2 percent to close at 9,477.17 after ending the morning session down. Shares of Toshiba rose 2.1 percent, a day after the company announced it will move into the wind power business through an alliance with Korea’s Unison Co. Ltd., a wind power equipment manufacturer.
Hong Kong’s Hang Seng was marginally higher to 22,730.78 after emerging from the red in the morning.
South Korea’s Kospi rose 0.3 percent to 2,061.76, with Kia Motors Corp., the country’s second-largest auto maker, gaining 1.9 percent and Hynix Semiconductor, a world leader in memory chip making, rising 1.3 percent.
Australia’s S&P/ASX 200 lost 0.3 percent to 4,628.80, with some mining shares hit by worries that a slowdown in Chinese manufacturing would lead to falling demand for commodities. Energy Resources of Australia Ltd. fell 2.3 percent. BHP Billiton Ltd., the world’s largest mining company, lost 0.1 percent.
Taipei-based Foxconn Technology Co. Ltd., the world’s biggest contract electronics manufacturer, was down 2.6 percent after an explosion at one of the company’s factories in China that makes the iPad 2 killed three employees and injured 15 on Friday.
Mainland Chinese shares were mixed as weak economic indicators and pessimistic forecasts for the near-term outlook weighed on sentiment fast cash without a hassle.
The benchmark Shanghai Composite Index lost 0.3 percent to 2,767.06, the lowest close in four months, while the Shenzhen Composite Index of China gained 0.1 percent to 1,150.91. Shares in precious metals, nonferrous and biotechnology companies gained.
“Funds are in short supply and investors are fretting over slowing economic growth and inflation,” said Peng Yunlang, an analyst based in Shanghai.
Europe’s debt crisis shook markets Monday as fears over the solvency of Greece combined with concerns that Spain, or even Italy, may be dragged into the turmoil that has already seen three countries that use the euro common currency bailed out.
Late last week, Fitch ratings agency downgraded Greece’s debt further into junk status. Then Standard & Poor’s said Saturday that Italy was in danger of having its debt rating lowered if it could not reduce its borrowing and improve economic growth. On Monday, Fitch cut Belgium’s outlook.
The turmoil was felt on Wall Street, where stocks took a pounding Monday. The Dow Jones industrial average fell 1.1 percent to close at 12,381.26. The Standard & Poor’s 500 index fell or 1.2 percent to 1,317.37 The Nasdaq composite index fell 1.6 percent to 2,758.9.
Benchmark crude for July delivery was up $1.14 to $98.87 per barrel in electronic trading on the New York Mercantile Exchange. The contract lost $2.40, or 2.4 percent, to settle at $97.70 on Monday.
Goldman Sachs said the civil conflict in Libya, which has shut down almost all the country’s 1.6 million barrels a day of oil production, will eventually push prices higher.
The euro rose to $1.4095 from $1.4060 in late trading Monday in New York. The euro had dipped below $1.40 earlier in the day for the first time since March. The dollar slipped to 81.93 yen from 81.97 yen.
Unemployment rates fell last month in more than three-quarters of the nation’s states, adding to evidence that companies are feeling more confident in the U.S. economy.
The Labor Department said Friday that unemployment rates dropped in 39 states in April. It’s the largest number of states to see a decrease since November 2003. Rates rose in three states and the District of Columbia. They were unchanged in eight states.
Employers added workers in 42 states, the best showing since March 2007
TOKYO
Sears Holding Corp. may need to go back to the drawing board. The company’s dependence on appliances and what seemed to be growing strength at its Kmart stores failed it in the first quarter, as the retailer reported a bigger-than-expected loss in contrast to a profit a year ago.
The company led by billionaire Edward Lampert has long seen customers drawn to the value of its appliances, under brands such as Kenmore. But the absence of a government appliance rebate program took a bite out of its performance.
On Thursday, Sears reported a net loss of $170 million, or $1.58 per share, in the quarter ended April 30 compared with net income of $16 million, or 14 cents per share, a year earlier. The adjusted loss was $1.39 per share.
Analysts surveyed by FactSet predicted a smaller loss of 99 cents per share.
Sears had cautioned earlier this month that it would post a bigger-than-expected first-quarter loss due mainly to a drop in appliance, clothing and consumer electronic sales.
But the results are still a disappointment, particularly at Kmart, which had recently been the bright spot within the company’s struggling business.
Revenue at Kmart stores open at least a year fell 1.6 percent in the quarter mostly because of fewer sales in the food and consumables and pharmacy categories. At Sears’ domestic stores, the figure dropped 5.2 percent on declining sales of appliances, clothing and consumer electronics.
Total revenue from domestic stores open at least a year slipped 3.6 percent.
This metric is a key gauge of a retailer’s health because it excludes results from stores opened or closed during the year.
Sears, which is based in Hoffman Estates, Ill., said its overall revenue fell 3 percent to $9.71 billion in part because of the weak results from its domestic stores, as well as having fewer Kmart and Sears stores open. The company also reported a 9.2 percent drop in revenue from Sears stores in Canada open at least a year.
The results also fell shy of the $9.73 billion that analysts expected.
President and CEO Lou D’Ambrosio, who was named to the company’s top spot in February, said in a statement that bad weather, economic pressures and the absence of the appliance rebate program hurt Sears’ performance.
But D’Ambrosio admitted that the company could have done a better job internally.
“We cannot control the weather or economy or government spending. But we can control how we execute and leverage the potent set of assets we have,” he said.
Sears, whose other brands include DieHard and Craftsman, also announced 10 days ago that it is considering a possible move of its headquarters. State and local incentives it receives expire next year.
The company has more than 4,000 stores in the U.S. and Canada.
Renewed concerns about Europe’s debt, falling oil prices and U.S. technology company troubles steered Asian stocks lower Tuesday.
Oil prices fell to below $97 a barrel in Asia, extending a two-week sell-off amid investor concern that slowing U.S. economic growth could undermine crude demand. The dollar strengthened against the euro and the yen.
Hong Kong’s Hang Seng index was 0.7 percent lower to 22,794.46, with oil companies incurring losses on falling crude prices. PetroChina Co. Ltd. lost 0.6 percent, and China National Offshore Oil Corp., or CNOOC, slumped 0.9 percent.
Japan’s Nikkei 225 lost 0.4 percent to 9,516.03. Among the losers were utilities that may have to pitch in to help Tokyo Electric Power Co. cope with financial losses following a tsunami on March 11 that smashed into one of the company’s nuclear plants in northeastern Japan, all but destroying the facility.
TEPCO has been struggling for two months to bring a radiation leak from the crippled Fukushima Dai-ichi plant under control. Overall damages are expected to be in the tens of billions of dollars (trillions of yen). Kansai Electric Power Co. lost 4.2 percent, while TEPCO, the company at the center of so many troubles, plummeted 15.5 percent. Chubu Electric Power Co. Inc., which carried out a government request to shut down a nuclear plant considered vulnerable to tsunamis, dropped 6.6 percent.
South Korea’s Kospi index was down 0.4 percent to 2,095.22, with high-tech shares following their U.S. counterparts down. Hynix Semiconductor Inc. dropped 3.3 percent, and rival LG Electronics was 2.2 percent lower. In the U.S., technology companies sustained the largest losses in Monday trading. Yahoo! Inc. and Amazon.com Inc. fell by more than 4 percent.
Australia’s S&P ASX 200 eked out a gain of 0.1 percent to 4,655.10. Markets in Singapore, Thailand and Malaysia were closed for a holiday.
In New York on Monday, technology company troubles and renewed concerns about Europe’s debt dragged stocks lower, the day that European finance ministers approved $110 billion in rescue loans to Portugal. They have yet to decide on a second rescue package for Greece.
The arrest of the head of the International Monetary Fund is expected to make solving Greece’s problems more difficult. The official, Dominique Strauss-Kahn of France, had been heavily involved in trying to fix the debt crises in Portugal and Greece. He is being held without bail on charges of sexually assaulting a hotel employee in New York City.
The Dow Jones industrial average lost 0.4 percent to close at 12,548.37. The Standard & Poor’s 500 index fell 0.6 percent to 1,329.47. The Nasdaq fell 1.6 percent to 2,782.31.
Benchmark crude for June delivery was down 47 cents to $96.90 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $2.28 to settle at $97.37 on Monday
In currencies, the euro weakened to $1.4131 from $1.4192 Monday afternoon in New York. The dollar was up at 81.19 yen from 80.84 yen.
The arrest of IMF chief Dominique Strauss-Kahn complicates a key European meeting on whether to give Greece billions more in aid _ but experts insisted one man’s troubles won’t keep the 17 eurozone nations from trying to contain a debt crisis that threatens them all.
Eurozone financial leaders are to discuss Greece’s deteriorating economy Monday at a Brussels meeting where experts will brief them on the situation in Athens. Key questions include what conditions to put on more help to the debt-strapped nation, with European leaders unhappy at what they see as limited Greek efforts to raise money by selling government property.
Strauss-Kahn was arrested Sunday in New York on suspicion of sexual assault on a hotel maid.
Despite the arrest, the International Monetary Fund said in a statement it remains “fully functioning and operational.” The IMF Executive Board convened an informal session Sunday and made Strauss-Kahn’s deputy, John Lipsky, acting managing director while its chief was unavailable.
The Washington, D.C.-based lending body also sent Nemat Shafik, a deputy managing director who oversees IMF work in several EU countries, to Monday’s eurozone meeting to replace Strauss-Kahn.
Strauss-Kahn had to cancel his Sunday meeting with Chancellor Angela Merkel in Berlin, where the German public is deeply skeptical about putting up any more money for Greece. Germany, as Europe’s largest economy, provided a large chunk of the euro110 billion ($157 billion) bailout for Greece from the European Union and the IMF last year.
Greek government spokesman Giorgos Petalotis insisted the arrest would not affect his nation’s efforts to resolve its financial woes.
“The Greek government deals with institutions, not individuals, and continues unimpeded to implement the program that will get it out of the crisis,” Petalotis said.
German Finance Minister Wolfgang Schaeuble struck a similar tone, saying the eurozone meeting would go ahead as planned. And European politicians had already gotten used to the idea that Strauss-Kahn may leave his post soon to run for president of France next year.
Yet others said Strauss-Kahn’s immediate departure from the financial stage adds additional uncertainty to the already difficult situation in Europe.
“The leadership vacuum at the IMF comes at a highly inopportune time for Europe, which is teetering on the brink of a full-blown debt crisis,” said Eswar Prasad, a professor of international economics at Cornell University and a former IMF official us fast cash.
Many investors believe that Greece’s financial troubles are so overwhelming that a Greek default or a restructuring that would give creditors less than the full value of their bonds is inevitable. But that would be a serious blow to the euro, and eurozone governments and the European Central Bank appear determined to prevent it.
Merkel has stressed that her government will need clear conditions for any new Greek loans before it will back more help. But Schaeuble has conceded that if the experts’ full report in June shows that Greece can’t pay its debts, something more will have to be done.
The IMF put up euro30 billion ($43 billion) of that Greek loan and also supplies expertise in assessing whether Greece and other countries that get emergency loans are living up to the conditions attached to them.
A euro78 billion ($111 billion) bailout for Portugal was also on the agenda for Monday’s meeting in Brussels, as is Ireland’s progress in dealing with the financial morass that led to its own EU-IMF bailout. With the terms of the Portuguese bailout largely decided, EU finance ministers are expected to signal approval of that deal.
Although eurozone ministers were talking about Greece, a new bailout announcement was not planned for Monday. Instead, investors expected a general statement of support, followed by days or weeks of more haggling.
Marco Valli, chief eurozone economist at UniCredit, said Greece’s troubles were separate from those of Strauss-Kahn, and he expected a decision on more help for Greece in the near future.
“There is no way that just because the IMF’s chief gets into personal trouble that Greece would be left alone,” Valli said. “Maybe it can have some impact on timing, but our view is that this is not going to have a meaningful impact on the bottom line, which is that Greece would get a second bailout package.”
Other analysts agreed that the IMF will simply navigate through the upcoming difficulties.
“The IMF is not a one-trick pony,” David Buik at BGC Partners in London. “European markets may be damaged by this news for a few hours but there is plenty of depth to the IMF.”
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