UK Could Lose Prized AAA Debt Rating, Fitch Warns
THE DAILY TELEGRAPH: Britain is edging closer to losing its gold-plated sovereign credit rating due [to] weak growth and ballooning government borrowing, ratings agency Fitch has warned.

“The likelihood of a downgrade has increased,” Fitch said as it reconfirmed the UK’s “negative outlook” but slashed its forecast for 0.8pc growth this year to a 0.3pc decline and warned that international debt will hit almost 100pc of GDP.

The Chancellor will also miss one of his two cast-iron fiscal rules, the ratings agency added, but it did not call for more austerity measures to plug the gap.

Fitch’s decision to tolerate a breach of the debt reduction target without immediately downgrading the UK amounted to an implicit green light for the Chancellor to abandon the rule. It echoed comments this week by Sir Mervyn King, Bank of England Governor, who said that breaking the pledge would be “acceptable” if it was due to the global downturn.

The Government was quick to flag Fitch’s response as an “endorsement” of its austerity measures. “They stress that deliberately going out to add more to the nation’s credit card bill would threaten our international credibility and increase the chances of a downgrade,” the Treasury said in a statement.

Fitch said that “global economic headwinds, including those from the eurozone, have compounded the drag on UK growth from private sector deleveraging and fiscal consolidation”. » | Philip Aldrick | Friday, September 29, 2012

Frankreich muss sparen
Das Haushaltsdefizit eines EU-Staates darf nicht mehr als 3 Prozent des Bruttoinlandproduktes betragen. Frankreich liegt 1,5 Prozent über dieser Grenze. Deshalb muss die Regierung nun sparen.

Europe’s Austerity Madness
THE NEW YORK TIMES – OP ED – PAUL KRUGMAN: So much for complacency. Just a few days ago, the conventional wisdom was that Europe finally had things under control. The European Central Bank, by promising to buy the bonds of troubled governments if necessary, had soothed markets. All that debtor nations had to do, the story went, was agree to more and deeper austerity — the condition for central bank loans — and all would be well.

But the purveyors of conventional wisdom forgot that people were involved. Suddenly, Spain and Greece are being racked by strikes and huge demonstrations. The public in these countries is, in effect, saying that it has reached its limit: With unemployment at Great Depression levels and with erstwhile middle-class workers reduced to picking through garbage in search of food, austerity has already gone too far. And this means that there may not be a deal after all.

Much commentary suggests that the citizens of Spain and Greece are just delaying the inevitable, protesting against sacrifices that must, in fact, be made. But the truth is that the protesters are right. More austerity serves no useful purpose; the truly irrational players here are the allegedly serious politicians and officials demanding ever more pain. » | PAUL KRUGMAN | Thursday, September 27, 2012

France Unveils 'Harshest Budget in 30 Years'

THE GUARDIAN: Hollande's 2013 budget asks for 'unprecedented effort' to find €36.9bn in savings and includes 75% supertax on the rich

To the dismay of a swath of French bankers, business leaders and the wealthy, President François Hollande has remained true to his word and unveiled €20bn (£16bn) in new taxes, including a 75% "supertax" band that will hit the rich.

In what Hollande has described as France's harshest budget in 30 years, business and personal taxpayers were asked on Friday to make an "unprecedented effort" to slash the country's public spending deficit.

However, the Socialist government sidestepped swingeing cuts in public spending, including pensions and state salaries, in its 2013 budget, which aims to find €36.9bn in savings.

It was also forced to concede it could not keep its pledge to get the country out of the red by 2017.

The budget was a delicate balancing act in which Hollande sought to reassure investors and the financial markets, while simultaneously hiking taxes on large businesses and high-earners.

However, it commits the government to an austerity programme that will be unpopular with leftwingers in the party, at a time when unemployment is rising and the economy teeters on the brink of recession. » | Kim Willsher in Paris | Friday, September 28, 2012

Generalstreik in Griechenland
In Griechenland steht das öffentliche Leben heute weitgehend still. Es ist der grösste Generalstreik seit einem halben Jahr, und erste unter der neuen Regierung, die im Juni eingesetzt wurde. Einschätzungen von SF-Korrespondentin Wasiliki Goutziomitros.

Demonstrationen in Spanien
In Spanien demonstrieren die Menschen gegen den harten Sparkurs der Regierung. In Madrid wurden gestern bei Zusammenstössen mit der Polizei über 60 Menschen verletzt, 27 Demonstranten wurden festgenommen.

Breaking the Banks: Switzerland Ponders a Future of Clean Money

SPIEGEL ONLINE INTERNATIONAL: The end of Switzerland's famous banking secrecy seems inevitable as US and German authorities crack down on tax evaders. Many Swiss are asking themselves whether their prosperity will survive if the country abandons its status as a tax haven. But some academics argue that the importance of the banking sector has been wildly exaggerated.

Jean Ziegler steps onto the veranda behind his house. It's a warm day in late summer. He points to the hilly landscape on the other side of the Rhône River, to France, where Mont Blanc is visible in the distance. "That's where Switzerland finally comes to an end," says Ziegler. It's the kind of joke you would expect of Ziegler, a man notorious for never sparing his own country.

No one else is as well known for his moral criticism of Switzerland. Ziegler is 78, and until a few years ago he traveled the world as a United Nations special rapporteur. The fight against hunger and against Swiss banks has shaped his life. Has nothing changed in the last 20 years? "No, the banditry of the banks is in full swing!" he says energetically. His wife is about to serve a meal of Wiener schnitzel accompanied by white wine.

A search for answers about Switzerland begins in Ziegler's garden in Russin, a wine-growing municipality near Geneva. Where does the country's wealth come from? How much of it is due to Switzerland's tradition of banking secrecy, and for how much longer will it exist? And what happens to Switzerland when that secrecy is gone? » | Mathieu von Rohr | Tuesday, September 25, 2012

Reichtum der Reichen wächst weiter

Insight: Young Jobless on the Rise in Europe's Rich North
REUTERS.COM: At 29, Samira Ahidar just got a permanent job, her first.

Ahidar, who still lives with her parents, dropped out of school a decade ago and her adult life has been dominated by the search for work. She would still be jobless if it were not for a job creation scheme that employs her at an elderly care home.

"I've no idea where I'll be in five years time," said Ahidar, dressed in an orange apron that comes with her new role. "It is so hard to find work, you feel like giving up."

Ahidar does not live in Greece or Spain, countries where as many as one in two young people are without work, but in the wealthy Belgian port city of Antwerp. With its stunning 16th-century Gothic houses, the city is a world centre for diamond trading and boasts a cutting-edge fashion industry. It also has a fast-growing number of unemployed twentysomethings.

Youth unemployment is notoriously a problem of southern Europe. What is less obvious, as the euro zone slips into its second recession in just three years, is the scale of the problem in the north. » | Robin Emmott and Robert-Jan Bartunek | ANTWERP, Belgium | Friday, September 21, 2012

Debt Crisis: Central Bank Action Is Work of the Devil, Says Germany's Jens Weidmann
THE DAILY TELEGRAPH: The head of Germany’s Bundesbank has raised eyebrows across Europe after he appeared to compare Mario Draghi’s bond buying programme with the "devil’s work".

Jens Weidmann said that efforts by central banks to pump money into the economy reminded him of the scene in Faust, when the devil Mephistopheles, “disguised as a fool”, convinces an emperor to issue large amounts of paper money. In Goethe’s classic, the money printing solves the kingdom’s financial problems but the tale ends badly with rampant inflation.

Without specifically mentioning Mario Draghi’s bond-buying programme, he said: “If a central bank can potentially create unlimited money from nothing, how can it ensure that money is sufficiently scarce to retain its value?” He added: “Yes, this temptation certainly exists, and many in monetary history have succumbed to it,” Mr Weidmann warned. » | Louise Armitstead, Chief Business Correspondent | Tuesday, September 18, 2012

SPIEGEL ONLINE INTERNATIONAL: 'Too Close to State Financing Via the Money Press': Jens Weidmann, the 44-year-old head of Germany's central bank, has made a name for himself by championing price stability and opposing bond purchases by the European Central Bank. In a SPIEGEL interview, he criticizes the ECB's latest plans and insists he only wants to secure the euro's long-term future. | » | SPIEGEL Interview | Bundesbank President on ECB Bond Purchases | Wednesday, August 29, 2012

Angela Merkel's Austerity Postergirl, the Thrifty Swabian Housewife

THE GUARDIAN: Frugal housekeeping and balanced budgeting stems from an area with a history of poverty and a religious avoidance of worldly amusements

In the sleepy, picturesque towns and villages of south-west Germany, the paragons of thrift are doing what they do best. They shop frugally, use credit cards rarely and save up to a third of a property's value before applying for a mortgage.

The schwäbische Hausfrau – southern Germany's thrifty Swabian housewife – is frequently invoked by Angela Merkel. The German chancellor argues that Europe has been living beyond its means and can learn from these women's frugal housekeeping and balanced budgeting.

Heide Sickinger and Waltraud Maier, two housewives from Gerlingen [D], near Stuttgart, agree. "A housewife keeps the family together and the money," says Maier. "I don't buy on credit. People never used to live beyond their means here," she adds, before noting that the younger generation are more cavalier. She and her friend only use credit cards when they go on holiday, and make sure they have enough money in their accounts to pay off the debt immediately. Both believe that "southern Europeans are a different breed. They are more easy-going".

The two women say that they only tend to buy what they really need (with the exception of a flatscreen TV). Even a wardrobe counts as a luxury purchase – because Swabians don't buy cheap. They value quality, which means a wardrobe has to be solid wood, so it lasts a lifetime.

Similarly, the two women buy their food at the butcher's, local farms and markets, rather than at discount supermarkets such as Aldi and Lidl. "The quality is better," says Maier, "and you can buy two carrots rather than a whole kilogramme." She never throws anything away – old bread is made into bread dumplings, for example. Many people in this rural area grow their own fruit and vegetables, and bottle or pickle them. » | Julia Kollewe in Gerlingen | Monday, September 17, 2012

Lord Ashcroft Tells Coalition to 'Turn Off the Golden Taps and Stop Flooding the Developing World with Our Money'

THE DAILY TELEGRAPH: Ministers should “turn off the golden taps and stop flooding the developing world with our money”, according to a senior Conservative.

Lord Ashcroft, who was made a Government adviser in this month’s reshuffle, said Britain’s approach to aid for the developing world was “flawed and self-defeating”.

He urged new development secretary Justine Greening to avoid “spraying around taxpayers’ money” in the developing world like Tony Blair and Gordon Brown.

In strident comments, Lord Ashcroft - who has donated millions to the Conservative party - said it was “politically insane” by trying to “curry favour” with Guardian readers over the development budget.

In an open letter to Ms Greening - signed "Yours sincerely, Michael xx" - he said: “Britain’s approach to aid is flawed and self-defeating.

“So I urge you to recommend to the Prime Minister to turn off the golden taps and stop flooding the developing world with our money.” » | Christopher Hope, Senior Political Correspondent | Monday, September 17, 2012

UBS 'Rogue Trader' on Trial in UK
Kweku Adoboli was arrested last year and is charged with fraud and false accounting, for allegedly losing his bank, UBS, a cool $2.3 billion in so-called unauthorised trades. The 32-year-old Ghanaian has pleaded not guilty to the charge. On Friday the prosecution accused him of acting like a naked gambler. GFX It said "The motive was to increase his bonus, his status in the bank, his job prospects and his ego." "Like most gamblers he believed he had the magic touch." At one level this is a trial about the misdeeds of a single rogue trader and how he was able to make such a mess of things for so long. In the public's perception at least, the behaviour of banks like UBS is at the heart of the ongoing economic crisis. Al Jazeera's Sylvia Lennan reports.

Mass Protest in Spain against ‘Authoritarian’ Austerity

Forget the Recession - London Mansion On Sale for £300m

THE DAILY TELEGRAPH: It could be yours for just £300 million. Britain’s most expensive house, the former residence of the Lebanese Prime Minister, has gone on sale complete with a view of Hyde Park, bullet-proof windows, lifts and an underground car park.

The white palazzo-style building, which has 45 bedrooms, is being discreetly offered to a select group of wealthy international buyers.

A reported price tag of £300 million would smash Britain’s existing house-price record of £140 million, which was achieved on a 300 year-old house in Henley-on-Thames last year.

The 60,000 square feet house is the former residence of Rafiq Hariri, the late Prime Minister of Lebanon, and is located at 2 to 8a Rutland Gate in Knightsbridge, equidistant between Harrods and the Royal Albert Hall.

The building, which is rumoured to contain millions of pounds worth of gold leaf decoration, is on the site of the old German Consulate General’s office. It was redeveloped in the 1980s and turned into four separate flats before it was converted into one house by Mr Hariri.

The asking price shows just how far adrift the London property market is from the rest of Britain. According to Halifax, the average house in the UK costs £160,250, meaning that whoever buys the mansion would be buying the equivalent of 1,872 typical homes. » | James Hall, Consumer Affairs Editor | Thursday, September 13, 2012

Vince Cable: I Would Work with Labour to Increase Tax on Wealthy

THE SUNDAY TELEGRAPH: Vince Cable has admitted that he is of the 'centre left' as he appeared to welcome Labour overtures to work together on increasing taxes for the wealthy.

Sitting side by side with Ed Balls, the shadow chancellor, on a television studio sofa, Mr Cable laughingly dismissed as "flattery" the Labourman's call for him to become leader of the Liberal Democrats.

He said that he would be happy to work with Mr Balls on issues such as raising taxes from the better off, including the imposition of a "mansion tax" on the most expensive properties.

But the Business Secretary, who is far more popular than Nick Clegg among grass roots Liberal Democrats, denied that he had ambitions to become leader. And he insisted that he was working well with Mr Clegg and his Conservative Coalition colleagues.

Asked about his idea for a mansion tax, which Labour now supports, he said: "I was delighted that Ed Balls has signed up. I have not been embarrassed to call myself a person of the centre left. » | Rosa Prince, Online Political Editor | Sunday, September 09, 2012

Germany Should Lead or Leave – Soros
Germany needs to embrace its leadership role in Europe or leave the euro, veteran investor George Soros tells Thomson Reuters Digital Editor Chrystia Freeland.

World's Richest Woman Calls for Australian Workers Wage Cut
THE DAILY TELEGRAPH: The world's richest woman, mining magnate Gina Rinehart, has sparked a political storm by saying that Australian workers should take a wage cut to be more competitive with African workers on $2 a day.


In a rare public appearance, Gina Rinehart said in a video posted on the website of the Sydney Mining Club that Australians should not be complacent about mining investment when African workers were willing to work for $2 a day. » | Wednesday, September 05, 2012

Global Crisis Moves East as China Suffers Rapid Downturn

THE DAILY TELEGRAPH: China’s industrial output is contracting at the fastest pace since the depths of the global financial crisis, with knock-on effects spreading across the Far East.

“It just keeps getting worse,” said Alistair Thornton and Xianfang Ren from IHS Global Insight. “The government has underestimated the pace of the slowdown and is behind the curve.”

The HSBC/Markit manufacturing index for China fell to 47.6 in August, the lowest since the onset of Great Recession in late 2008. Inventories are rising. The index for new export orders fell to the lowest since March 2009. “Beijing must step up policy easing to stabilise growth,” said Hongbin Qu from HSBC.

China’s official PMI manufacturing index – weighted to big companies – also fell through the contraction line of 50, though services are holding up better.

Evidence of a hard landing over the summer is becoming clearer. Rail volumes fell 8.2pc in July from a year before. The Japanese group Komatsu said its exports of hydraulic excavators to China – a proxy gauge for Chinese construction – fell 48pc in August from a year before.

The twin effect of China’s downturn and Europe’s double-dip recession has turned into a full-blown shock for much of Asia. Hong Kong and Singapore both contracted in the second quarter and are probably in technical recession. Read on and comment » | Ambrose Evans-Pritchard | Monday, September 03, 2012