Heather Mills, the former model who was once married to Paul McCartney, testified forcefully Thursday that there was no doubt her phone had been hacked by a U.K. journalist.
Speaking before a judge-led inquiry into British media ethics, Mills said dozens of messages between her and the former Beatle were intercepted by a journalist working for British newspaper group Trinity Mirror. She said the incident happened after a fight she and McCartney had had in January 2001, when McCartney, then her boyfriend, bombarded her with phone calls.
“There were about 25 messages, all asking for forgiveness, (asking:) ‘Would I come back?’” Mills said. “One of them said: ‘Please forgive me,’ and he sang a little ditty of one of his songs into the voicemail.”
She said she found it strange that the messages were listed as having been listened to even before she had accessed them, but said she didn’t realize what had happened until the Mirror journalist _ unnamed for legal reasons _ called her up and confronted her with details of the battle.
“I said: ‘There’s no way that you could know that unless you have been listening to my messages,’” she told the inquiry. “And he laughed.”
The messages left for Mills by McCartney are at the center of the allegations against CNN star interviewer Piers Morgan, who was editor of the Daily Mirror tabloid at the time. Morgan wrote in 2006 that he had once been played an apologetic message left by McCartney for Mills, describing it in detail and noting that McCartney “even sang ‘We Can Work It Out’ into the answer phone.”
Called before the U.K. inquiry last year, Morgan denied ordering anyone to hack a phone or writing stories based on hacked messages. He acknowledged listening to Mill’s voicemail message but stubbornly refused to say anything about how he had gotten it.
Morgan even left open the possibility that the voicemail had been played to him with Mills’ approval, but Mills said Thursday that was impossible.
“Never,” she said. “Never ever.”
Mills married the popular McCartney in 2002 and had a daughter with him before they divorced in 2008. She sought and got a substantial divorce settlement, becoming a tabloid hate figure after they separated. She is a fierce critic of tabloid journalists in general and Morgan in particular.
Morgan, who has become a media celebrity in the United States since taking over from Larry King, has returned the favor, casting aspersions on her credibility and calling her a “monster.”
U.S. stock futures fell Monday as talks dragged on between Greek political leaders over a fresh austerity package that is required if the debt-ridden country is to get a crucial bailout package.
Dow futures are down 24 points at 12,769. The broader Standard & Poor’s 500 futures fell 4 points to 1,335. The Nasdaq composite futures fell 5 points to 2,519.
The declines follow a big gain Friday on the heels of surprisingly good U.S. employment figures.
In Europe, the leaders of the parties backing Greece’s coalition government are set to hold a second day of emergency talks over austerity measures that rescue creditors are demanding in return for more money.
Fears that a deal won’t emerge have reinforced concerns of a disorderly Greek debt default that could send shockwaves through the global economy. Prime Minister Lucas Papademos will meet with negotiators from the eurozone and the International Monetary Fund in the afternoon and then with the leaders of the three parties backing his coalition.
The parties all publicly oppose steep cuts in private sector pay demanded by the eurozone and IMF, but their backing is needed for the government to reach a deal for the bailout, which must be approved by the Greek Parliament. The new euro130 billion ($171 billion) bailout deal is vital for Greece to avoid bankruptcy next month as it cannot cover a euro14.5 billion ($19.1 billion) bond repayment due March 20 without the rescue funds.
The bailout’s implementation also depends on Greece’s progress in separate talks with banks and other private bondholders to forgive euro100 billion ($131 payday loans.6 billion) in Greek debt, in exchange for a cash payment and new bonds with more lenient repayment terms.
In Europe, the FTSE 100 index of leading British shares was down 0.2 percent at 5,892 while Germany’s DAX fell 0.2 percent to 6,756. The CAC-40 in France was 0.6 percent lower at 3,406.
Oil prices tracked the broader market trends, with benchmark oil for March delivery down $1.17 at $96.67 a barrel in electronic trading on the New York Mercantile Exchange.
Greece will likely remain the focal point over the week, though a raft of corporate earnings, particularly in Europe, and a host of central bank meetings could garner some interest. The European Central Bank’s monthly policy meeting on Thursday could be crucial in determining market expectations of whether there will be further interest rate reductions. Meanwhile, many traders think the Bank of England will clear the way to inject more money into the U.K. economy in the hope of boosting lending.
Earlier Asian shares mostly traded higher as investors there had their first chance to respond to join in the advance generated by Friday’s upbeat jobs data.
Japan’s Nikkei 225 index rose 1.1 percent to close at 8,929.20, its highest closing in more than three months but Hong Kong’s Hang Seng lost 0.2 percent to 20,709.94. Benchmarks in Singapore and mainland China also rose.
Europe is getting tougher on government debt. After more than two years struggling to rescue financially shaky governments, leaders of the 17 countries that use the euro are ready to agree on a treaty that will force member countries to put deficit limits into their national laws.
At first glance, it seems logical _ after all, the crisis erupted after too many governments spent and borrowed too much for too long.
But a number of economists _ and some politicians _ say the focus on cutting deficits is misplaced and that more fundamental problems are being left unaddressed.
It’s how the euro was set up in the first place, they say _ one currency, but multiple government budgets, economies moving at different speeds and no central treasury or borrowing authority to back them up.
Until those institutional flaws are tackled, the economists say, the euro will remain vulnerable. So far, Greece, Ireland and Portugal have turned to other eurozone governments and the International Monetary Fund for emergency funds to avoid defaulting on their debts.
Nonetheless, Europe’s leading countries are pushing a new Europe-wide treaty that would as the leading edge of their effort to reassure markets. European Union leaders hope to agree on the treaty’s text at a meeting starting Monday, and sign it by March.
The proposed treaty pushes countries to limit “structural” deficits _ shortfalls not caused by ups and downs of the business cycle _ to a tight 0.5 percent of gross domestic product or face a fine. That comes on top of other recent EU legislation intended to tighten observance of the eurozone’s limits: overall deficits of 3 percent of GDP and national debt of 60 percent of GDP.
European leaders are also urging countries to improve growth by reducing regulation and other barriers to business.
Yet economists like Jean Pisani-Ferry, director of the Brueghel think tank in Brussels, says it’s striking that governments are focusing on budget rules, given Europe’s earlier experience with them. An earlier set of rules were largely ignored at the behest of France and Germany in the first years after the euro’s 1999 launch.
And some of the countries that now are in the deepest trouble _ such as Spain and bailed-out Ireland _ stayed well within the debt limit for years.
“This suggests that the simplistic view _ that a thorough enforcement of the rules would have prevented the crisis _ should be treated with caution,” Pisani-Ferry wrote in a recent article for Brueghel.
Some European politicians are also voicing doubts about focusing primarily on deficits. They include new Italian Prime Minister Mario Monti, who has warned that growth is the real answer to shrinking debt in the long term. International Monetary Fund head Christine Lagarde has urged a broader approach. She calls for a willingness to share the burden of supporting banks and other financial risks so troubles in one country don’t become a crisis for the entire currency bloc.
Here are four reasons for concern cited by economists _ but not yet on the summit agendas of the eurozone’s leaders.
NO COMMON BORROWING: Without a central, pan-European treasury, there’s no steady central source of support for eurozone countries that run into economic or financial trouble. Many economists say issuing jointly guaranteed “eurobonds” would make sure no one country would ever default and governments would always be able to borrow. Governments would give up some of their sovereignty, allowing review of their spending and borrowing plans, to get the money.
Pisani-Ferry argues that this would protect governments from the kind of self-fulfilling bond market panic fueled by fears of default, that pushed Greece, Ireland and Portugal over the edge.
Yet the idea of more collective responsibility remains unpopular in prosperous EU countries such as Germany, Finland and the Netherlands. They can borrow cheaply due to their strong finances and would likely pay more to borrow at the rate that includes the shaky ones.
Eurobonds would also likely require a time-consuming change to the European Union’s basic treaty _ which currently bans members from assuming each other’s debts. There would also have to be a mechanisms in place to stop countries with shoddy finances from borrowing too much.
Opponents say that’s unrealistic. “If you have mutual debt responsibility, and freedom of each country to borrow, then each country can drive the eurozone into bankruptcy,” said Kai Konrad, managing director of the Max Planck Institute for Tax Law and Public Finance in Munich.
BANK BAILOUTS: Europe currently has no safety mechanism that would stop a country from sinking under the weight of having to bail out banks based in that country.
At the moment, each country bears the brunt of rescuing its own banks. This can create serious problems in a crisis.
For example Ireland’s loosely regulated banks borrowed heavily and loaned out money freely for speculative real estate projects. When the real estate market collapsed and the loans were not paid back, the Irish government had to step in to guarantee the bank’s bonds _ and quickly went broke. Ireland had a very low debt level of only 25 percent of annual economic output in 2007. As bank losses moved to the government’s balance sheet, by 2011 debt hit 106 percent of annual GDP. The country remains on EU-IMF life support.
Simon Tilford of the Centre for European Reform in London draws an analogy with U.S. insurer AIG, which was bailed out by the U.S. federal government in 2008. AIG was incorporated in the U.S. state of Delaware, yet Delaware did not go bankrupt handling the rescue. The central government stepped in.
TRADE IMBALANCES: Economists point out that gaps in how well countries compete and trade with one another have steadily widened since the euro was created.
Greece’s current account deficit _ the broadest measure of trade _ is even worse than its budget deficit. It buys and borrows far more than it sells and earns abroad.
Normally trade imbalances are evened out by fluctuating exchange rates _ but that can’t happen within the euro. Countries can improve their competitiveness by doing what Germany did in the 2000s _ cut labor costs to business by cutting general unemployment benefits. They can cut red tape and taxes. But that takes years.
Meanwhile, the region is also hampered by an inflexible pan-euro interest rate. Low interest rates _ set by the European Central Bank to see Germany and France through stagnation in the early 2000s _ were too low to control wage inflation and reckless borrowing in places like Greece and Ireland. Wage costs and debt levels rose. Competitiveness and exports declined, weakening the economy and undermining government finances.
CENTRAL BANK POWERS: Yet another structural issue is the limited power of the European Central Bank to support governments.
The bank resisted calls to buy larger amounts of government bonds. That resistance observes the spirit of the EU basic treaty, which forbids the central bank from financing governments.
But it’s a constraint that central banks such as the U.S. Federal Reserve and the Bank of England don’t have. They can buy up their country’s debt, a move that can push down government borrowing costs and reassure markets the state will always pay its debts.
The ECB remains “a limited-purpose central bank,” says Tilford.
He notes that Britain has more debt than Spain, 81 percent of GDP versus 67 percent, yet borrows at just over 2 percent annual interest for its 10-year bonds, while Spanish debt for the same period has a 5 percent-plus interest rate. One difference: markets know the Bank of England has the ability to support the government in a crisis by buying bonds and driving down interest rates.
Many of these issue were raised before the currency was launched in 1999, then got less attention.
Tilford says that “the tendency has been to say the currency union needs all these things but in practice it’s not necessarily the case” so long as countries obey budget rules and manage their finances well.
“It’s become harder to maintain that kind of argumentation now, given how bad things have got.”
Chevron Corp. said Friday that net income slipped 3.2 percent in the fourth quarter as its refineries struggled to pass on the higher cost of crude oil.
The San Ramon, Calif. oil giant on Friday reported net income of $5.12 billion, or $2.58 per share, in the final three months of 2011. That compares with $5.3 billion, or $2.64 per share, in the same part of 2010. Revenue increased 11.9 percent to $60 billion.
The net income fell short of Wall Street forecasts of $2.86 per share, according to FactSet. Shares dropped $2.04, or 1.9 percent, to $104.55 in premarket trading.
Chevron, the second-largest U.S. oil company behind Exxon Mobil Corp., said that oil and natural gas production declined in the quarter. Profits from its exploration and production business increased anyway, as the company sold oil at higher prices. International natural gas prices also rose in the quarter.
The refining business struggled, however, as falling prices for retail gasoline and other fuels made it harder to pass along higher oil costs to customers. Chevron’s U.S. refining operations lost $204 million from October to December, compared with a profit a year-earlier, while international refining profits fell by 46.4 percent.
For the full year, Chevron earned $26.9 billion, or $13.44 per share, compared with $19 billion, or $9.48 per share in 2010. Annual revenue increased 23.3 percent to $253.7 billion.
Exxon will release its fourth-quarter financial results on Tuesday.
Earlier in the week, ConocoPhillips reported a 66 percent increase in quarterly earnings, though much of that came from the sale of a pipeline and other assets. Occidental Petroleum Corp. reported a 35 percent jump in quarterly profits as it increased production and sold crude oil for higher prices.
Greece’s finance minister believes his country will be able to reach a deal with private bondholders to cut its debt, despite tougher terms set by its eurozone partners.
Evangelos Venizelos said Tuesday “We have the green light from the Eurogroup to close the deal with the private sector in the next few days.”
Greece is in talks with private creditors to swap their existing bonds with news ones of a lower value and interest rates.
On Monday night, eurozone ministers decided to cap interest rates on the new bonds below 4 percent, less than the private creditors would like.
The bond swap will cut the face value of Greek bonds in half, thereby slicing some euro100 billion off its debt, and push repayments far into the future.
South Africa
Fixed mortgage rates fell once again to a record low, offering a great opportunity for those who can afford to buy or refinance homes. But few are able to take advantage of the historic rates.
Freddie Mac said Thursday the average rate on the 30-year fixed mortgage fell to 3.89 percent. That’s below the previous record of 3.91 percent reached three weeks ago.
Records for mortgage rates date back to the 1950s.
The average on the 15-year fixed mortgage ticked down to 3.16 percent. That’s down from a record 3.21 percent three weeks ago.
Mortgage rates are lower because they track the yield on the 10-year Treasury note, which fell below 2 percent. They could fall even lower this year if the Fed launches another round of bond purchases, as some economists expect.
Average fixed mortgage rates hovered around 4 percent at the end of 2011. Yet many Americans either can’t take advantage of the rates or have already done so.
High unemployment and scant wage gains have made it harder for many people to qualify for loans. Many don’t want to sink money into a home that they fear could lose value over the next few years.
Mortgage applications have fallen slightly on a seasonally adjusted basis over the past four weeks, according to the Mortgage Bankers Association.
Frank Nothaft, Freddie Mac’s chief economist, said that until hiring picks up and unemployment drops significantly, the impact of lower mortgage rates will remain muted.
Previously occupied homes are selling just slightly ahead of 2010’s dismal pace. New-home sales in 2011 will likely be the worst year on records going back half a century.
Builders hope that the low rates could boost sales next year. Low mortgage rates were cited as a key reason the National Association of Home Builders survey of builder sentiment rose in December to its highest level in more than a year.
But so far, they have had little impact on the depressed housing market.
To calculate the average rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week. The average rates don’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for the 30-year loan fell to 0.7 from 0.8; the average on the 15-year fixed mortgage was unchanged at 0.8.
For the five-year adjustable loan, the average rate declined to 2.82 percent from 2.86 percent. The average on the one-year adjustable loan fell to 2.76 percent from 2.80 percent.
The average fee on the five-year adjustable loan rose was unchanged at 0.7; the average on the one-year adjustable-rate loan was unchanged at 0.6.
Richard Cordray
U.K. banks expect to toughen the criteria on loans to companies and households in the first quarter because of strains in wholesale funding markets and the weaker economic outlook.
China
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