Europe’s Economy: Look Out Below, Again

It’s official: Europe has double-dipped. The 17-country euro zone has fallen into its second recession since 2008, as figures released on Nov. 15 showed gross domestic product declining 0.1 percent during the third quarter. That followed a 0.2 percent contraction during the previous three months, according to the European Union’s statistics office.

There were some unexpected bright spots. Germany and France posted 0.2 percent quarter-on-quarter growth, ahead of expectations. Even some of the region’s most troubled economies suffered relatively modest contractions, including 0.3 percent in Spain and 0.2 percent in Italy.

Overall, though, “Europe’s economic downturn has not only deepened; it’s broadened with a vengeance,” says Nicholas Spiro, managing director of Spiro Sovereign Strategy in London. Usually solid economies in such countries as Austria and the Netherlands were among those posting quarterly declines.

In some countries, even worse times could lie ahead. “Whereas austerity is starting to ease in Italy, Spain is heading for the point of maximum pain,” economist Holger Schmieding of Berenberg Bank in London wrote in a research note. Recent austerity measures in Spain “will likely lead to a more pronounced recession” during the current quarter and in early 2013, Schmieding says.

France’s 0.2 percent expansion, which followed three quarters of flat growth, “is probably the result of a temporary rebound at the European level,” says Michel Martinez, an economist at Société Générale in Paris. France “is heading to a moderate recession or at best remaining flat.”

The picture isn’t likely to improve soon, Spiro says. “We’re looking at a period of extreme weakness. This is all because of the repeated failures on the part of politicians to shore up confidence in the single currency area.”

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Jamaica to abolish slavery-era flogging law

KINGSTON, Jamaica (AP) — Jamaica is preparing to abolish a slavery-era law allowing flogging and whipping as means of punishing prisoners, the Caribbean country’s justice ministry said Thursday.

The ministry said the punishment hasn’t been ordered by a court since 2004 but the statutes remain in the island’s penal code. It was administered with strokes from a tamarind-tree switch or a cat o’nine tails, a whip made of nine, knotted cords.

Justice Minister Mark Golding says the “degrading” punishment is an anachronism which violates Jamaica’s international obligations and is preventing Prime Minister Portia Simpson Miller‘s government from ratifying the U.N. convention against torture.

“The time has come to regularize this situation by getting these colonial-era laws off our books once and for all,” Golding said in a Thursday statement.

The Cabinet has already approved repealing the flogging law and amendments to other laws in the former British colony, where plantation slavery was particularly brutal.

The announcement was welcomed by human rights activists who view the flogging law as a barbaric throwback in a nation populated mostly by the descendants of slaves.

“We don’t really see that (the flogging law) has any part in the approach of dealing with crime in a modern democracy,” said group spokeswoman Susan Goffe.

But there are no shortage of crime-weary Jamaicans who feel that authorities should not drop the old statutes but instead enforce them, arguing that thieves who steal livestock or violent criminals who harm innocent people should receive a whipping to teach them a lesson.

“The worst criminals need strong punishing or else they’ll do crimes over and over,” said Chris Drummond, a Kingston man with three school-age children. “Getting locked up is not always enough.”

The last to suffer the punishment in Jamaica was Errol Pryce, who was sentenced to four years in prison and six lashes in 1994 for stabbing his mother-in-law.

Pryce was flogged the day before being released from prison in 1997 and later complained to the U.N. Human Rights Committee, which ruled in 2004 that the form of corporal punishment was cruel, inhuman and degrading and violated his rights. Jamaican courts then stopped ordering whipping or flogging.

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Why David Geffen is getting the “American Masters” treatment

LOS ANGELES (TheWrap.com) – David Geffen is not a singer. Nor is he a movie star. Nor is he a writer.

Thus he would seem an odd subject for “American Masters,” a series devoted to artists ranging from Willa Cather to Woody Allen.

Yet series creator Susan Lacy claims that the mogul has had a profound impact on American popular culture that equals any of those figures. She pleads her case in “Inventing David Geffen,” which will be broadcast November 20 on PBS. The documentary had its premiere in Los Angeles on Tuesday night.

“He seems like a bit of an odd choice,” Lacy admitted to TheWrap. “But I have a degree in American Studies and I learned that the people with the most influence are often the ones behind the scenes.”

In Geffen, Lacy saw a figure like Alfred Stieglitz, a photographer whose lasting legacy was a series of modernist shows he held at his New York galleries that influenced visual arts in this country and brought cubism to the masses.

Some arm twisting must have been required to get the press-averse Geffen to emerge from semi-retirement to reflect on his career in movies, music and Broadway. Lacy said that part of the reason she was able to convince him to participate is that he was a fan of the series and had participated in her documentaries on figures such as Joni Mitchell.

“It wasn’t hard,” she said. “I knew from other people that he thinks my Leonard Bernstein documentary is one of the best documentaries anyone ever made. Mike Nichols told me that he makes everybody who stays with him watch it.”

In addition to Geffen, the documentary features interviews with his friends and colleagues — an A-list rolodex that includes Tom Hanks, Steven Spielberg, Elton John, Neil Young, Clive Davis, Barry Diller, and Irving Azoff. His sphere was huge, Lacy claims because his influence was tectonic.

By championing musicians such as Jackson Browne and Laura Nyro, Geffen put his own imprint on the emerging singer-songwriter movement in the 1970s. Later, Geffen managed to adapt to shifting tastes, by aligning himself with groups like Aerosmith and Guns ‘N Roses and helping to usher in the heavy metal craze. For more than 30 years, his labels – Asylum Records, Geffen Records, and DGC Records – represented the high-water mark for musicians, who clamored to get in the door.

“He had an incredible eye for talent,” Lacy said. “These people would have eventually found their way. But he helped them get there. He fixed their teeth and allowed them to write music that’s history.”

Though he made his name in music, Geffen also became a force in the theater and film businesses.

He enriched himself by producing hit musicals like “Cats” and “Dreamgirls,” and branched out into movies with memorable pictures like “Risky Business.” In 1994, he co-founded DreamWorks SKG, the studio behind Oscar-winners like “American Beauty” and “Saving Private Ryan.”

“In each decade, he has done something that has affected the culture,” Lacy said. “If I had to boil it down to one thing it would be his genius at business.”

It’s a mastery of deal-making and talent-scouting that has made him a very wealthy man, worth an estimated $ 5.5 billion. It is also a trajectory that Lacy maintains cannot be replicated in a more fractured media landscape, where mega-corporations wield disproportionate influence and are more interested in quarterly earnings than fostering rising stars.

“Even he would say that nobody could do what he did today,” Lacy said. “The times have changed so much. I asked him if he could raise $ 2 billion to start a new studio, and he said ‘absolutely not.’ And record companies, well, we know what happened to them. Behind all the conglomerates and corporations, to find someone with a genuine sensibility like David Geffen‘s would be impossible. He was unique.”

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New Global Fund head targets killer diseases with cash

WASHINGTON, Nov 15 (TrustLaw) – The Global Fund‘s new executive director, Mark Dybul, said he will move quickly to raise fresh money and release funding to combat the killer diseases AIDS, malaria and tuberculosis.

New scientific research shows that these diseases can be contained and his mission will be to achieve that in partnership with hard-hit countries, Dybul said in an interview on Thursday shortly after his appointment to head the epidemic-fighting agency based in Geneva.

“We are going to move aggressively to get money out of the door,” said Dybul, a former U.S. global AIDS coordinator. “We will be working to increase the resources of the Fund and its contributions. We will be very aggressive.”

“We have the scientific knowledge to completely control these diseases, and we want to have the resources,” Dybul added, although he did not set time frames nor financial goals.

Since its founding in 2002, the Global Fund to Fight AIDS, Tuberculosis and Malaria has approved $ 22.9 billion in funding for more than 1,000 programs in 151 countries. Its programs have helped treat 3.6 million people with AIDS, 9.3 million with anti-TB treatments and delivered 270 million insecticide-treated mosquito nets to prevent malaria, it said.

Dybul joins the Global Fund after a turbulent year for the public-private organization.

Set up a decade ago to combat the three epidemics, it was forced to halt new program funding in face of a revenue shortfall after the start of the global financial crisis. The Global Fund also faced criticism over misuse of funds, prompting its head, Michel Kazatchkine of France, to step down in January.

Its chief auditor, John Parson, was fired on Thursday after the board deemed his performance “unsatisfactory.”

Dybul, an AIDS clinician with a specialty in immunology who held leading posts under former U.S. President George W. Bush at the President’s Emergency Program for AIDS Relief and as an ambassador for AIDS, brushed aside any concern about the recent upheavals at the Fund.

“It is on a very strong forward trajectory,” he said. “It is in a very strong position and has a very strong emphasis on value for money and focus on the three killer diseases.”

He said the recent challenges demonstrate that the Fund is a “learning institution that reflects, reviews and reacts.”

The Fund’s board also on Thursday approved a new funding model, starting in 2013, that is designed to be simpler, more flexible and have greater impact in conquering the diseases.

The new system relies upon closer discussions with the recipient countries, along with other donor groups and experts, over the design of their disease-fighting programs, it said.

Funding also will focus on addressing the needs of the poorest countries with the highest number of infections, it said. Additionally, grant cycles will be flexible instead of falling in set time periods, so that they can be coordinated better with a country’s budgetary cycle, it said.

Medecins Sans Frontieres said in a news release that the first priority for the new executive director “should be making sure funding for new proposals gets out the door to accelerate much-needed treatment of HIV and drug-resistant tuberculosis, and raising the necessary funds to do so.”

Dybul said he will seek to build strong partnerships with countries in the design of comprehensive programs to control the epidemics, and work with other organizations in obtaining financing.

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MPs raise doubts over bank sales

16 November 2012 Last updated at 02:14 ET

A parliamentary committee has said the Treasury’s sale of Northern Rock in 2011 was “fortunate”, and Lloyds and RBS may not be sold “for many years”.

A Public Accounts Committee report noted that while the Rock’s sale was “well-handled”, taxpayers were still set to lose £2bn on the bank’s rescue.

MPs were not convinced that a profit would be made on the £66bn rescue of the two bigger banks any time soon.

A Treasury aide said it aims “to get the best possible value for taxpayers”.

“This government is putting right the catastrophic regulatory failings of the last decade that led to the biggest bank bailout in the world,” the Treasury aide added.

The government currently owns 40% of Lloyds, and 82% of RBS.

Lucky timing

Northern Rock was rescued in February 2008 by the previous government.

The sale of Northern Rock to Virgin Money in 2011 was carried out by the current government under time pressure, as EU state aid rules required the Treasury to dispose of its holding by 2013.

The committee said that UK Financial Investments (UKFI) – the state-owned body that manages the Treasury’s investments in the banks it rescued during the financial crisis – was lucky that Virgin was so keen to buy, given that there were only ever two bidders for the bank.

“The Treasury was fortunate that one of them had a strategic interest in purchasing a small retail bank at the end of 2011,” the committee’s report said, noting that current market conditions are less favourable than they had been at the time of the sale.

“The low level of competition does not give us confidence that the taxpayer will make a profit on the sale of RBS or Lloyds,” it added.

Continue reading the main story

September 2007 The run on Northern Rock

February 2008 Northern Rock nationalised

September 2008 Lloyds announces takeover of Halifax Bank of Scotland

October 2008 Government part-nationalises RBS and Lloyds-HBOS

January 2010 Northern Rock split into good and bad banks

December 2010 FSA clears RBS management of wrongdoing

November 2011 RBS agrees branch sale to Santander

November 2011 Northern Rock sold to Virgin Money

December 2011 Northern Rock sale to be investigated by NAO; FSA releases RBS report

September 2012 NAO releases Northern Rock report

October 2012 RBS branch sale to Santander collapses; RBS taken off Asset Protection Scheme

While the Treasury invested £1.4bn in Northern Rock shares, this was small in comparison to the £66bn invested in RBS and Lloyds.

“It seems inevitable that their ‘temporary public ownership’ will last for some time, if getting value for our investment remains the most important objective for government.”

The £2bn price tag for bailing out Northern Rock is not definite, and was drawn by the committee from a report provided to the committee by the National Audit Office (NAO) earlier this year.

The actual losses will depend on whether and how much profit UKFI is able to make from the Northern Rock assets that it did not sell to Virgin, and continues to own.

‘Lessons learnt’

Like the NAO, the committee was critical of the Treasury and UKFI – which took over ownership from the Treasury in 2010 – for being too slow to override the Rock’s management following the bank’s 2008 rescue.

“Northern Rock PLC still lost money in 2011, and its strategy should have been challenged sooner,” the report claimed.

The bank also failed to hit a £15bn government lending target during its time in public ownership, achieving only £9.1bn.

The report said that the government should have been more critical of the “optimistic” plan put forward by management for how to split the Rock up into a “good bank” that was sold to Virgin, and a “bad bank” with billions of pounds of problem mortgages that was retained in state ownership.

“The Treasury should ensure that lessons it learns from the sale are captured and can be applied to future disposals, including any sale of RBS or Lloyds.”

Margaret Hodge MP, chairman of the PAC, said the rescue of Northern Rock was made more complicated because the Treasury was unable to respond promptly to the banking crisis as “it lacked the right skills and understanding. It was slow to nationalise the bank and that made a loss difficult to avoid.

“The Treasury had spent five months trying to find a private sector buyer before giving up. After nationalisation, it then failed to effectively challenge the optimistic business plan put forward by the bank’s management to split the bank.”

She predicted that this would not be the last banking crisis, so the “Treasury must ensure it retains the right staff with the right skills to understand the risks and respond effectively.

“It needs to learn the lessons from the creation and sale of Northern Rock and make sure that these are applied in future, including to any sale of RBS and Lloyds.”

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Canada’s Carney says rate hikes “less imminent”

TORONTO (Reuters) – Interest rate hikes have become less imminent than the Bank of Canada once expected, although rates are still likely to rise, central bank Governor Mark Carney said in an interview published on Saturday.

“Over time, rates are likely to increase somewhat, but over time, so a less imminent timing relative to our expectation,” Carney said in an interview with the National Post newspaper.

Canada’s economy rebounded better than most from the global economic recession, and the Bank of Canada is the only central bank in the Group of Seven leading industrialized nations that is currently hinting at higher interest rates.

But Carney has also made clear that there will be no rate rise for a while, despite high domestic borrowing rates that he sees as a major risk to a still fragile economy.

“We’ve been very clear in terms of lines of defense in addressing financial vulnerabilities,” he said in the interview. “And the most prominent one, obviously, in Canada, is household debt.”

He said the bank was monitoring the impact of four successive government moves to tighten mortgage lending, which aimed to take the froth out of a hot housing market without causing a damaging crash in prices.

A Reuters poll published on Friday showed the majority of 20 forecasters believe the government has done enough to rein in runaway prices, preventing the type of crash that devastated the U.S. market.

The experts expect Canadian housing prices to fall 10 percent over the next several years, but they do not expect the recent property boom to end in a U.S.-style collapse.

(Reporting by Janet Guttsman; Editing by Vicki Allen)

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RIM offers free voice calls over Wi-Fi with BBM

TORONTO (AP) — BlackBerry users will be able to make free voice calls over a Wi-Fi network using the popular BBM messaging service.

Research In Motion Ltd. announced Wednesday that it’s adding the feature to BBM. Users will be able to switch back and forth from a text chat to a voice call. A split-screen option will let them talk and text at the same time.

The new feature is a free update for existing customers and comes months before RIM introduces its new BlackBerry 10 smartphones, which are seen critical to RIM’s survival.

RIM surprised analysts in September when it announced that the number of BlackBerry subscribers grew, thanks in part to emerging markets and its popular BBM service. It’s struggling in North America as customers migrate to flashier iPhones and Android phone.

RIM stopped short of offering the BBM voice feature over wireless carriers’ own cellular networks. Doing so would have potentially created more congestion on cellular data networks and deprive carriers of revenue for voice calls. With the new feature, the free calls are limited to times and places where Wi-Fi is available.

The Canadian company said the BBM voice feature is especially attractive for developing markets. Unlike regular texts, BBM messages are not charged on a per-text basis.

Although RIM is struggling in North America, the BlackBerry continues to sell well in such markets as South Africa, Nigeria and Indonesia.

The BBM service has long been a reason for BlackBerry users to not defect to other smartphones but there are rival messaging services. There are more than 60 million BBM users worldwide.

RIM said the BBM voice update is currently available for BlackBerry smartphones running the BlackBerry 6 operating system or higher, with plans for BlackBerry 5 later. RIM’s latest phones run the 7 operating system. The next version, BlackBerry 10, will come soon after a Jan. 30 launch event.

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Billy Joel, Rihanna fight Pandora over compensation

(Reuters) – Some of music’s most notable names including Billy Joel, Rihanna and Missy Elliott have signed an open letter to Pandora Media Inc opposing the online music company‘s push to change how artists are compensated.

Pandora is currently lobbying lawmakers in U.S. Congress to pass the “Internet Radio Fairness Act,” which would change regulation of how royalties are paid to artists.

A group of 125 musicians who say they are fans of Pandora argue the bill would cut by 85 percent the amount of money an artist receives when his or her songs are played over the Internet.

“Why is the company asking Congress once again to step in and gut the royalties that thousands of musicians rely upon? That’s not fair and that’s not how partners work together,” said the letter, to be published this weekend in Billboard, the influential music industry magazine.

A statement with an advance copy of the letter was released on Wednesday by musicFirst, a coalition of musicians and business people, and SoundExchange, a nonprofit organization that collects royalties set by Congress on behalf of musicians.

“Internet radio and the artists whose music is played and listened to on the Internet are indeed all in this together,” Tim Westergren, Pandora’s founder and chief strategy officer, said in a statement.

“A sustainable Internet radio industry will benefit all artists, big and small.”

FLASHPOINT

The issue of how musicians are paid for Internet streaming of their songs has been a flashpoint for Pandora.

Pandora is a mostly advertising-supported online music company, founded more than a decade ago, that streams songs through the Internet. In October, it said its share of total U.S. radio listening was almost 7 percent, up from about 4 percent during the same period last year.

Pandora’s success has been double-edged – the more customers it gains, the more money it has to pay overall for rights to stream music.

So far, that rate is set until 2015.

Pandora, along with other music services such as Clear Channel Communications, is supporting the bill on grounds that different providers, such as satellite and cable, pay different rates.

“The current law penalizes new media and is astonishingly unfair to Internet radio,” Pandora said on its website.

“We are asking for our listeners’ support to help end the discrimination against internet radio. It’s time for Congress to stop picking winners, level the playing field and establish a technology-neutral standard.”

The Internet Radio Fairness Act is a bipartisan bill sponsored by U.S. representatives Jason Chaffetz and Jared Polis along with Sen. Ron Wyden.

Shares of Pandora closed 4.6 percent lower at $ 7.31 on the New York Stock Exchange on Wednesday.

(Reporting by Jennifer Saba in New York; editing by Matthew Lewis)

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Merck KGaA lifts outlook on drugs, screen chemicals

DARMSTADT, Germany (Reuters) – Merck KGaA lifted its 2012 outlook on Thursday and beat expectations for third-quarter results as it capitalized on its strong position in the market for chemicals for flat screens.

Family-controlled Merck, which traces its roots to a 17th century pharmacy, now expects adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) this year of 2.90-2.95 billion euros ($ 3.7-$ 3.75 billion).

That is the upper half of its previous target range and compares with 2.9 billion euros expected on average by analysts.

Merck also benefited from continue price increases in the U.S. for multiple sclerosis drugs, where the company sells its established Rebif injection, and from an ongoing cost cutting program.

Third-quarter adjusted EBITDA rose 15.6 percent to 754 million euros, above a forecast for 740 million in a Reuters poll. Revenues also exceeded expectations.

Merck’s dominant position in the market for liquid crystals for flat-panel displays allows it to hold its own even as economic uncertainty puts consumers off big-ticket purchases such as pricey flat-screen TVs. Soaring tablet computer sales also help Merck.

The company is slashing costs and jobs after a number of setbacks in drugs development left it without any significant pharmaceuticals in its late-stage development pipeline.

(Reporting by Ludwig Burger)

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France avoids recession; GDP up 0.2 pct in Q3

PARIS (AP) — France‘s economy narrowly avoided a recession, growing slightly in the third quarter, according to official statistic released Thursday.

The French economy hasn’t recorded growth since the third quarter of last year and had been widely expected to start its slide into recession in the third quarter — technically defined as two consecutive quarters of negative gross domestic product. Instead, Insee, the national statistics agency, said GDP rose 0.2 percent on an annualized basis in the July-to-September period.

But the agency also revised down figures for the second quarter, saying the economy shrank 0.1 percent then. It had previously said growth was stagnant, as it had been for the previous two quarters.

Fixing France’s economy amid a European-wide crisis is President Francois Hollande‘s biggest challenge. He has promised to rein in massive government spending and reduce the deficit, largely by raising taxes.

But those measures have put a stranglehold on growth, and the country has watched unemployment tick steadily up as a raft of companies announced layoffs in recent months. The jobless rate now stands at 10.8 percent, according to European statistics.

Hollande has promised to restore the country’s competitiveness by offering a tax break to companies that kicks in next year, but many are still waiting to see how he will reform the country’s stringent labor rules. Those rules make firing difficult and thus make employers reluctant to hire, even once the economy starts growing.

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