Cyprus’ banks will be able to recapitalize on their own and won’t need state support thanks to fiscal measures buttressing the island’s financial system, the government said on Saturday.
Cyprus’ Finance Ministry said in a statement that the economy has “strong foundations” and added that it will soon unveil a growth-oriented package of measures that it’s preparing in partnership with the private sector.
The ministry made its remarks a day after international ratings agency Fitch downgraded the eurozone member by a notch to BBB-, a step above junk status.
Fitch said the downgrade was mainly due to the large Cypriot banking system’s heavy exposure to Greek debt and its greater capital needs in light of the higher likelihood that banks will take a hit on Greek government bonds that exceeds 50 percent.
Fitch said Cypriot banks would need to almost double the euro900 million ($1.18 billion) _ or 9.9 percent of gross domestic product _ to build an adequate buffer against losses on their Greek exposure if the “haircut” on Greek government bonds reaches 70 percent.
Standard & Poor’s became the first ratings agency to push Cyprus into junk territory with a two-notch downgrade earlier this month. Moody’s also rates the island just above junk.
Cyprus government spokesman Stefanos Stefanou on Saturday called the downgrades unfair.
“We consider that the downgrades don’t reflect the real state of the Cyprus economy, which is in better shape than many other economies, either in the eurozone or in the European Union in general,” he told reporters.
According to the European Commission, the island’s deficit is projected to shrink from 6.7 percent of gross domestic product in 2011 to 2.7 percent this year following a string of fiscal consolidation measures including a 2 percent sales tax hike and a two-year public sector wage freeze.
The island’s debt is projected to reach 68.4 percent of GDP this year, well below the eurozone average of nearly 87 percent.
But high borrowing costs have effectively locked Cyprus out of the international markets. The island is relying on a euro2.5 billion ($3.29 billion) low-interest loan to meet its financing needs for this year.
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Leading finance chiefs sought to reassure anxious global business leaders on Friday that Europe is on track to solve its crippling debt crisis before it drags the world’s economies down. Europe’s top banker said investors, burned after trusting the region’s governments too much, now trust them too little.
The finance chiefs said the picture in Europe has changed over the past two months as the European Central Bank has loaned billions of euros to fragile banks, indebted countries have pushed through convincing reforms and EU leaders have come near to building a closer fiscal union that would make their common currency stronger.
Several also signaled Friday that Greece is close to clinching a crucial debt-reduction deal with private bondholders _ a key element in Europe’s efforts to stem a two-year debt crisis that is causing ripples around the globe. The crisis is a central topic at the World Economic Forum, a gathering of government and business leaders at the Swiss ski resort of Davos.
“They’re making progress on reforms, they’re changing the institutions of Europe to put better discipline on fiscal policy,” said U.S. Treasury Secretary Timothy Geithner. “You have three new governments doing some very tough things. You have an ECB doing what central banks have to do. You see them move to try to strengthen the financial sector.”
Mario Draghi, head of the European Central Bank, said a combination of actions _ including super-cheap, long-term loans to shaky banks on the continent and a couple of interest rate cuts _ have helped Europe avoid deeper financial trouble.
“We have avoided a major credit crunch, a major lending crisis,” he said.
Draghi said borrowing rates would remain high “for quite a while” because bond markets are overestimating the risk involved in holding European government debt after years of underestimating it. But he called market pressure “the most potent engine for reform in different governments.”
Geithner said the fate of the U.S. economy _ and by extension of the rest of the world _ hinges on Europe’s debt crisis, along with potential tensions with Iran. He said the main piece of unfinished business for Europe is building a bigger fund to help troubled economies survive.
But while French Finance Minister Francois Baroin said that fund needs to be increased to calm markets, his German counterpart, Wolfgang Schaeuble, indicated that his government is not prepared to do so. Germany, as Europe’s biggest economy, would face the biggest bill.
“We must not give the wrong incentives,” Schaeuble said. “You can make any figure. It will not work if the real problems will not be solved.”
Both, together with Spanish Economy Minister Luis de Guindos Jurado and European Monetary Affairs Commissioner Olli Rehn, agreed that the idea of issuing “eurobonds” backed jointly by all eurozone governments is a nonstarter for now. They didn’t rule out the possibility that such bonds could be introduced once confidence in Europe’s public finances is restored, with Guindos calling that a “final target.”
Schaeuble said eurobonds would provide bad incentives by allowing debt-ridden countries to “spend money you don’t have on the bill of others.”
Many economists have said eurobonds are needed to solve the crisis as they could reduce the borrowing costs of heavily indebted countries by pooling them with bonds of stronger economies like Germany’s.
Professor Nouriel Roubini, the renowned economist who predicted the financial crash of 2008, is one who thinks that eurobonds have to form part of a eurozone strategy to fend off the possibility of a breakup.
The eurozone “could be a slow-motion train wreck,” Roubini said.
Europe has been grappling with the crisis ever since Greece conceded at the end of 2009 that its public finances were in far worse shape than previously thought. Greece remains at the epicenter of the crisis over two years later. Its borrowing costs remain too high for it to borrow in the markets so a second European-led bailout is in the offing.
The finance chiefs signaled Friday that a deal is at hand that could help ease some of the near-term tensions.
Greece has been negotiating with the a group representing banks and other lenders in the hopes that they will forgive half of Greece’s debt in exchange for Greek assurances that it will pay back the other half without defaulting on its loans. The deal would also let Greece repay over a longer period at a lower interest rate _ negotiators have been trying to agree on what that rate will be.
Schaeuble said he is “quite optimistic” about a deal, while Rehn said he hopes a deal can be reached “if not today, maybe by the weekend.”
Agreement between Greece and its creditors is needed before Europe and the International Monetary Fund agree to a second multibillion-euro bailout package.
At the heart of the problem is that the 17 countries that use the euro use a single currency but have different fiscal policies. That changes the nature of their debt, said Adair Turner, chairman of Britain’s banking regulator the Financial Services Authority.
“That debt is more equivalent to the State of California debt than the U.S. federal debt,” he said.
That’s why all but one of the 27 EU countries _ the United Kingdom has refused to participate _ are discussing a closer fiscal union. On Monday, leaders meet in Brussels to work out the details of that new compact.
Schaeuble and Baroin noted that even the agreement in principle to forge closer ties has calmed markets since a December summit, as borrowing rates have dropped and stock markets have risen.
“It’s amazing,” Draghi said. “If you compare today with even five months ago, the euro area is another world.”
The crisis threatens more than Europe: the U.N.’s refugee chief warned Friday that it is fueling conflicts around the world. Antonio Guterres told The Associated Press that rising food prices and growing unemployment are hitting those already at the bottom hardest, sparking conflict in places like South Sudan and exacerbating hotspots including Afghanistan, Iraq and Somalia.
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Frank Jordans and Edith Lederer in Davos and David McHugh in Frankfurt, Germany contributed to this story.
Brooke Gray could be either of two things: an insufficiently educated opportunist, trying to pass herself off as an equine dentist, or a young woman dedicated to horses, performing an age-old practice for an honest wage.
A circuit court judge recently said the former. Her attorney, a St. Louis-based litigator with a history of challenging the government’s licensing power, says the latter — and believes the judge’s ruling could limit everyone from cattle hands to dog groomers.
A Clinton County Circuit Court judge ruled in December that Gray had to stop a practice called “teeth floating” after the Missouri Veterinary Medical Board, which oversees veterinary licenses in the state, sued Gray because she does not have a veterinary license.
Her attorney plans to appeal the ruling, saying that Gray is merely practicing something that unlicensed lay people have done for hundreds of years.
“Up until 15 years ago no one in Missouri considered these animal husbandry practices veterinary medicine,” said Gray’s attorney, David Roland, who helms the libertarian Missouri Freedom Center. “That’s how animal agriculture has always been done.”
Roland calls Gray’s case “the tip of the iceberg” and says it could have ramifications for anyone who wants to perform “basic animal husbandry” without a license.
But state law, veterinarian groups and the board say veterinary practices are regulated for a reason: to protect animals and their owners from untrained, unskilled workers. They say the practice of teeth floating, which often requires sedation, should be done either by, or under the supervision, of a licensed veterinarian.
“The public seems to think the licensing board is there to protect veterinarians,” said Bruce Whittle, chair of the equine committee for the Missouri Veterinary Medical Association, the group that represents the state’s vets. “It’s to protect the public against veterinarians that are doing harm.”
Gray, who lives north of Kansas City, grew up on an Iowa farm and always wanted to work with horses. So, about eight years ago, she got two months of training at an equine dentistry school in Idaho, then moved to Missouri and opened B & B Equine Dentistry.
She built a steady clientele floating horses teeth, which involves filing down the sharp points that emerge on the enamel. Sharp edges can make it difficult for the horse to eat. Her customers, she says, liked her work.
“I’ve never had a complaint from a client,” Gray said.
She did, however, get a complaint filed against her from a local Clay County vet, David Leighr, whose clients told him that Gray was improperly sedating horses and, in some cases, extracting teeth. Under state law, sedation by anyone other than an owner or licensed vet is illegal, while extraction is a surgical practice, which makes it a veterinary practice, and therefore also illegal for someone to perform without a license.
“One of my clients told me that Brooke had sedated an animal and hit a vein,” Leighr said. “Brooke also had them sign a piece of paper that said she was not responsible for anything that happens. A vet doesn’t do that. That raised a red flag with me.”
When asked if she had extracted teeth, Gray said: “I’ve taken some things out of horses mouths that didn’t belong there.” When asked if she had sedated horses, she said: “I’ve been informed not to say anything about the sedation issue.”
Leighr called the board, and eventually, it began to pursue the matter.
After sending two cease-and-desist letters, the board sued Gray to make her stop. She didn’t. So in September, the matter went to trial.
Roland says he believes the board pursued the case on behalf of veterinarians who felt they were in danger of losing income to untrained teeth floaters, not because they were concerned about animal welfare.
“One of the quirks of the law is that it’s not illegal to do the work on the animals,” he explained. “But if they get paid for it, it’s a criminal offense. So this is not a health issue.”
Several states, he said, have recently changed laws to allow teeth floating by nonvets, and he’ll push for Missouri to do the same.
He also points to a number of cease-and-desist letters sent by the board aimed at stopping everything from branding to pet grooming practices. These, he says, are evidence the state is trying to regulate practices that should not require licensing.
“This is an issue that’s been gaining momentum for a couple of years,” he said.
Gray believes the board is merely requiring a costly education — vet school runs an average of $150,000 — for something she specifically trained to do.
But veterinarians, including Leighr — a fourth-generation vet who said news coverage of the issue in his practice area had cost him business — maintain this issue centers on animal welfare and training.
“Her attorney is trying to convince the public that lay professionals have been doing this for years and that it’s safe,” he said. “I don’t think it’s safe. … And the fact that’s she’s using sedation and there’s no oversight makes it even less safe.”
“I went to school for eight years,” Leighr added. “I’ll put my records out there all the way back to high school, and I challenge her to do the same.”
Gray said she would continue floating teeth, only under the supervision of vets, until the appeal is resolved. That, Leighr insisted, is all he’s wanted all along.
“I said to her: ‘You can do this all day long by having a vet present,’” he said. “Missouri is full of vets retiring every day. They’d be tickled to death to get in the truck with you and go on a farm call.”
The number of Americans filing for first-time unemployment benefits took an upswing just before Christmas.
About 381,000 people filed initial jobless claims in the week ended Dec. 24, the Labor Department said Thursday. That was more than economists had expected and marked an increase of 15,000 from the prior week, when claims had fallen to their lowest level since April 2008.
The Labor Department adjusts the figures to account for seasonal trends, but still, the holidays can sometimes distort the numbers slightly. Economists look to the four-week average to smooth out volatility. In the latest report, that number decreased to 375,000, its lowest level since mid-2008.
"Around the holidays, initial claims tend to be volatile, so I think we don’t have to read too much into the small rebound today," said Aichi Amemiya, an economist with Nomura cheap pay day loans. "We believe the labor market continues to improve."
Meanwhile, continuing claims — which include Americans filing for their second week of claims or more — increased 34,000 to 3,601,000 in the week ended Dec. 17, the most recent data available.
Investors seemed to shrug off the numbers, optimistic that next week’s monthly jobs report will show employers ramped up their hiring slightly in December.
Economists surveyed by Briefing.com predict the report will show employers added 150,000 jobs in December, up from 120,000 the month before. The unemployment rate, however, is expected to rise from 8.6% to 8.7%, as discouraged workers re-enter the labor force to look for jobs again.
Olympus Corp. faces a deadline to report revised earnings Wednesday to avoid being removed from the Tokyo stock market after a whistle-blower questioned fees and acquisitions that turned out to be part of a deception to hide $1.5 billion in investment losses.
Former President and Chief Executive Michael Woodford, who has been in the limelight for first raising questions about exorbitant fees and acquisitions, is back in Tokyo to meet investors and legislators, and to try to lead a turnaround at the camera and medical equipment maker.
Woodford, a 51-year-old Briton and a rare foreigner to lead a major Japanese company, was fired in October after going public with his doubts about massive consulting fees on the acquisition of British medical equipment maker Gyrus Group in 2008 and other spending.
He was in Japan last month to meet police and other investigative authorities. He has said he wants to fix Olympus and has expressed hopes shareholders will back him.
Olympus President Shuichi Takayama has said Woodford lacks the right teamwork style to lead the company, although now acknowledges the positive side of Woodford’s whistleblowing. Olympus initially denied any wrongdoing and lambasted Woodford.
No one has been charged in the scandal. But Olympus management has said several top company men were involved in the scheme and has promised to investigate 70 officials, including former and current executives and auditors, to pursue possible criminal charges.
Meeting the Wednesday deadline for a revised earnings report is a must for Olympus to stay on the stock exchange, but it could still be delisted if seriously dubious accounting is found fast cash.
A third-party panel set up by Olympus, including a former Japanese Supreme Court judge, released the findings of an investigation earlier this month, which said top executives who were “rotten to the core” had orchestrated the accounting cover-up spanning three decades.
As of 2003, Olympus had racked up 117.7 billion yen ($1.5 billion) in investment losses dating back to the 1990s, according to the company.
The overpriced fees for financial advice and overvalued acquisitions were part of an elaborate deception utilizing overseas banks and several funds to keep the massive losses off the company’s books, Olympus says.
Japanese magazine Facta was first to report the dubious money.
Tsuyoshi Kikukawa, who was behind Woodford’s appointment as chief executive and later his firing, has since resigned as chairman. He is among several executives suspected of knowing about the scheme.
Last month, Olympus dismissed Executive Vice President Hisashi Mori, saying he was involved in the cover-up along with Kikukawa. A company auditor also resigned.
Olympus stock plunged after the scandal broke but has since recouped some of those losses on optimism it might not be booted off the Tokyo Stock Exchange.
Libya’s transitional government was sworn in Thursday before the country’s interim leader, another step in the oil-rich country’s roadmap to elections next year.
Starting with Prime Minister Prime Minister Abdurrahim el-Keib, each minister faced the transitional council’s leader, Mustafa Abdel-Jalil, placed his hand on a Quran and swore to “remain loyal to the goals” of the revolution that overthrew longtime leader Moammar Gadhafi.
Each shook Abdel-Jalil’s hand as he stood in front of two national flags, and some also embraced him.
The country faces huge challenges now, but el-Keib said he and his ministers were “upbeat” and optimistic about leading Libya toward elections by next June.
“We are looking forward to having an exciting seven months ahead of us, with lots of things to do and hopefully good results,” el-Keib said.
The lineup of relative unknowns, almost all of them older men, will confront daunting challenges, like establishing control over the fractured nation after the ousting of Gadhafi’s 42-year regime, along with building up state institutions practically from scratch.
El-Keib pledged to represent the interests of all Libyans.
“I am a son of all Libyans,” he said. “I will represent everyone and share wealth with everyone.”
The transitional Cabinet includes 24 ministers, though several, including the defense minister, were missing from Thursday’s ceremony. The prime minister explained that they were out of Tripoli, some of them attending to personal preparations in their hometowns before taking up their new posts.
Among the institutions that must be built is a justice system that will be able to put on trial two key members of the Gadhafi regime _ Seif al-Islam Gadhafi, the dictator’s recently captured son and one-time heir-apparent, and the ex-intelligence chief Abdullah al-Senoussi.
The International Criminal Court has charged them both with crimes against humanity for alleged atrocities committed during the recent civil war.
Libyan authorities insist the be tried in Libya, and not at the court in The Hague, Netherlands, a decision aimed at asserting their national authority. However, they have promised to work with the ICC and with the United Nations in investigating the alleged crimes.
ICC prosecutor Luis Moreno-Ocampo told The Associated Press on Thursday that the court received the formal pledge of cooperation in a letter from Abdul-Jalil, the NTC chairman.
Moreno-Ocampo said he was satisfied with that move, which appeared to settle a dispute between the international court and Libyan authorities over which body should try Seif al-Islam Gadhafi.
Moreno-Ocampo said the most important thing is for “face of the old regime” to face justice.
It “is very important for the world and for Libya to understand what happened here, how they attacked these people, how they killed these people,” Moreno-Ocampo said.
He said investigations are under way into the alleged crimes committed by Gadhafi’s son and that he believed it would be ready for trial “in a few months.”
Seif al-Islam was captured on Saturday and is being held by fighters from the Libyan town of Zintan, who flew him there after his arrest in the south. He appeared to be in good health despite a hand injury, according to the International Committee of the Red Cross, which visited him Tuesday.
Officials with the NTC have reported that al-Senoussi, the former intelligence chief, has also been captured. But some later cast doubt on that assertion, and his whereabouts are not known.
Disarming former Libyan rebels could take months and weapons will not be taken by force, Libya’s new prime minister said in an interview broadcast Friday, signaling a shift from previous pledges of quick action.
Abdurrahim el-Keib also acknowledged that the National Transitional Council, which is to lead Libya to its first free election within eight months, has not yet established full control over the country, but said it is making progress. The NTC declared Libya liberated on Oct. 23, three days after the capture and killing of dictator Moammar Gadhafi.
The proliferation of armed ex-rebel militias in Libya and the NTC’s still shaky grip have raised concerns about growing instability during the transition period, which is to end with the election of a national assembly by June.
Thousands of civilians across Libya took up arms during the eight-month war that brought down Gadhafi. Some have returned to their pre-war lives, but others have remained in their fighting units, manning checkpoints and patrolling streets. In recent weeks, there have been reports of fighters using weapons to settle personal scores.
El-Keib, who will run the interim government for the next eight months, told France24 radio Friday that collecting those weapons “is going to take some time.”
“We will not force people to take quick and hasty decisions and actions and come up with some laws that just prevent people from holding arms,” he said. Instead, the government will try to work with the fighters, by offering alternatives, including training and jobs, he said.
“Hopefully, before the eight months end, we will be able to have those armed freedom fighters lay down their arms and go back to their business,” he added.
The head of the NTC, Mustafa Abdul-Jalil, said earlier this week that Libya’s interim leaders need quick access to billions of dollars in Gadhafi regime assets, frozen by a number of countries since the start of the war, to be able to disarm fighters and secure weapons.
Citing lack of funds, Abdul-Jalil said his government can’t do much in the interim period to secure weapons sites and munitions depots that were left unguarded and exposed to looting during the war. Libya border officials have reported heavy weapons smuggling into Egypt, and Israel has said some of those arms have reached the Hamas-ruled Gaza Strip.
Earlier this week, Libyan officials said they discovered chemical weapons that had previously not been declared by the Gadhafi regime when it pledged to abandon the pursuit of non-conventional weapons.
In the Netherlands, the organization that oversees the global ban on chemical weapons said it will work with Libyan authorities to verify and destroy chemical weapons. The Organization for the Prohibition of Chemical Weapons said it was told earlier this week of suspected chemical weapons caches beyond the stockpiles earlier declared by Gadhafi.
The organization said Friday that none of Gadhafi’s known chemical arsenal was plundered during the civil war. Libya declared in 2004 it had tons of sulfur mustard and other chemicals used to make chemical weapons.
U.S. Sens. Claire McCaskill, D-Mo., and Roy Blunt, R-Mo., have introduced legislation that will prevent the Federal Energy Regulatory Commission (FERC) from requiring the removal of homes or businesses built within the boundary of a hydroelectric project, the senators announced this morning.
The move comes in response to a uproar, chronicled recently in the Post-Dispatch and STLtoday.com, over a federal threat to require existing landowners to remove their properties from a federally regulated zone near the shoreline.
According to FERC, thousands of property owners built homes, decks, gazebos and patios on land that belongs to Ameren Missouri’s Bagnell Dam and Osage hydroelectric project, which the agency regulates. So FERC issued an order stating that all of the so-called nonconforming structures must be removed payday loans online.
St. Louis-based Ameren, caught in the middle of the dispute, has asked the federal agency to reconsider, at least with respect to the 1,200-plus residences in jeopardy. The utility, which manages the shoreline under federal oversight, wants to redraw the hydroelectric project boundary to exclude most, if not all, of the homes in danger.
About four thousand properties would be in jeopardy, according to a news release from Blunt and McCaskill. In September, McCaskill and Blunt strongly urged FERC to rescind its plan and allow Ameren to redraw the project boundary, according to the release.
Now they have drawn up the . which would prohibit FERC from issuing any shorelines management plan that requires the removal of structures along the lake, and would be enforced retroactively to January, 2011
The Dow Jones industrial average slipped early Tuesday, giving up some of its 330-point gain the day before, on worries that Slovakia might not approve a plan to strengthen a European financial rescue fund.
If Slovakia defeats the measure it would complicate efforts to deal with Europe’s debt crisis, which has been rattling markets for months. The measure would increase the size and powers of Europe’s financial rescue program, allowing large amounts of funds to be released quickly to banks and struggling governments before a full-blown crisis sets in. Sixteen countries that use the euro have approved it so far; Slovakia is the holdout. A vote is expected later in the day.
Investors worry that if Greece defaults on its debts, it would hurt banks in Europe and in the U.S. by causing the value of Greek government bonds they hold to plunge. With weaker balance sheets, those banks could become even more reluctant to lend to each other and to businesses and consumers, putting a drag on an already weak global economy.
The Dow Jones industrial average fell 44 points, or 0.4 percent, to 11,395 at 10 a.m. JPMorgan Chase & Co. fell 1.9 percent, the most of the 30 companies in the average.
The Standard & Poor’s 500 index fell 5, or 0.4 percent, to 1,190. The Nasdaq composite index fell 4, or 0.2 percent, to 2,562.
The declines erased some of the gains from Monday, when the Dow jumped 330 points, its largest point increase since Aug. 11. Investors were encouraged after French and German leaders said they would finalize a response to the debt crisis by the end of the month. The plan was light on details.
Dollar Thrifty Automotive Group Inc. fell 2.7 percent after the car-rental company said it was taking itself off the market after failing to get acceptable takeover proposals from Hertz or other companies.
Discount retailer 99 Cents Only Stores Inc. rose 4.3 percent. Ares Management LLC and the Canada Pension Plan Investment Board have offered to buy the company for $22 per share in cash, a 7 percent premium from Monday’s closing price.
Sprint Nextel Corp. fell 1 percent. The stock has plunged 24 percent since Friday, when Sprint said it wants to speed up plans to revamp its high-speed wireless network. Analysts say that will raise its expenses dramatically.
After the closing bell, aluminum maker Alcoa Inc. will become the first company in the Dow Jones industrial average to report third-quarter results. Analysts expect earnings from S&P 500 companies to rise about 12 percent from the same period last year, according to data provider FactSet. Revenue is expected to rise 11 percent.
Chemical manufacturer Solutia Inc. is buying Southwall Technologies Inc., a developer of films and glass products for the automotive and architectural industries, for $113 million.
Town & Country-based Solutia is buying Southwall for $113 million in cash, or $13.60 per share of Southwall’s common stock, the companies announced Friday. Solutia’s tender offer is expected to be completed in the fourth quarter this year. Southwall is based in Palo Alto, Calif.
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