Three people were found alive on Sunday as rescuer workers continued to search a partly submerged Italian cruise ship

 

Three people were found alive on Sunday as rescuer workers continued to search a partly submerged Italian cruise ship resting just off this small island near the Tuscan coast. Multimedia Map Map of the Area Where the Italian Cruise Ran Aground Photographs Cruise Ship Runs Aground in Italy Cruise Ship Runs Aground Connect With Us on Twitter Follow @nytimesworld for international breaking news and headlines. Enlarge This Image Enzo Russo/European Pressphoto Agency The ship's captain, Francesco Schettino, was arrested on Saturday. More Photos » Early Sunday, an Italian fire brigade found a honeymooning couple from Korea alive inside a cabin of the Costa Concordia, which was resting on its side with a gash just below the waterline and a rock stuck in the hull. A brigade spokesman, Luca Cari, said the couple had been taken to a local hospital. Later, an Italian man, who was identified in media reports as a crew member, was taken from the ship by helicopter. The man was thought to have a broken leg. At least three people were killed when the Costa Concordia, carrying 4,200 passengers and crew on a weeklong Mediterranean cruise, slammed into an undetermined object near the island Friday night as passengers for the late seating had just started dinner, tucking into appetizers of grilled mushrooms and scallops. On Sunday, media reports described rescue workers in boats circling the big ship, tapping on the hull, and listening for a response. Divers also combed the ship’s underwater cabins for those still missing, up to 41 people. Shaken survivors spoke of a mad crush to flee a sinking cruise ship off the Tuscan coast, raising questions about the crew’s preparedness, Italian authorities arrested the ship’s captain amid concerns that the megaship had steered dangerously off course. Anxious survivors, many comparing the experience to the movie “Titanic,” recounted a chaotic and terrifying scene in which some crawled through hallways to escape down perilous ladders to lifeboats, while others leapt overboard into the wintry Tyrrhenian Sea. “In a moment, everything was up in the air,” said Alessandra Grasso, 24, a passenger from Sicily. “People, chairs, glasses, food.” Ulrike Schweda, 63, from Germany, was caught in a crowd of people pushing toward a lifeboat, and slipped on the deck. “The most terrible thing was seeing children trying to get down this ladder they had put on the side of the boat,” she said. Two French citizens and a Peruvian crew member were reported dead, according to a hospital official in Grosseto, Tuscany. Divers searched until nightfall Saturday for the missing, perilously probing the 2,000 cabins for survivors while the Leviathan ship lay on its side in the water, a boulder poking through a 160-foot gash in its hull. The Italian Coast Guard said 41 people were still unaccounted for. The coast guard is also monitoring the environmental impact of the accident, but as of Sunday morning, no oil had seeped into the ocean from the ship. “We are optimistic and hope that the ship is not going to slide further down,” Cmdr. Cosimo Nicastro, a spokesman for the coast guard, told reporters. “But the weather conditions are slowly worsening, and that is a cause of concern.” There were conflicting reports about whether the ship was off course in reef-filled waters just miles from the shore or whether an electrical failure had caused the crew to lose control. Passengers spoke of faulty evacuation procedures and unprepared staff who told them nothing was wrong — until the ship began tipping over. After questioning him for several hours, the Italian police detained the ship’s captain, Francesco Schettino, and the first officer, for questioning on charges of manslaughter, failure to offer assistance and abandonment of ship, the police said. Before his detention, Captain Schettino told Italian television that the ship had hit a reef that was not on its navigation charts. Gianni Onorato, the president of the Costa cruise company, a subsidiary of Carnival Cruise lines, said the ship had been sailing its “regularly scheduled itinerary” from Civitavecchia to Savona, Italy, when it struck “a submerged rock.” He said Captain Schettino “immediately understood the severity of the situation” and “performed a maneuver intended to protect both guests and crew.” The Italian coast guard said the captain had tried to turn the ship toward port in Giglio to make an evacuation easier, but it began to tip over as it reached the port.

Fire, power failures, crime and tragic overboard deaths are common on cruise vacations

 

A luxury cruise ship Costa Concordia leans on its side after running aground the tiny Tuscan island of Giglio, Italy, 

They're often billed as the ultimate in worry-free vacations. But cruise critics say these floating hotels -- some as high as 12 storeys tall -- aren't nearly as safe as claimed.

Fire, power failures, crime and tragic overboard deaths are common on cruise vacations, said Ross Klein, a Memorial University sociologist and author of two books on the cruise industry.

The ships, which can carry more than 4,000 passengers, are as big as towns, Klein said, packed with strangers often bent on having a good time. Many passengers wrongly let their guard down.

"People should go on cruise ships with their eyes wide open, to be aware that there can be accidents." Klein told CTVNews.ca.

Last year, 22 people fell overboard on cruise ships, Klein said. Some were accidents. Others were suicides. The vast majority were fatal, said Klein, who compiles cruise accident data for his website www.cruisejunkie.com.

Fires and power failures are also common, though rarely reported in the mainstream media.

Incidents include:

• In September 2010, an explosion aboard the Cunard's Queen Mary 2 caused a power failure as it approached Barcelona, causing it to drift off the Spanish coast.
• In November 2010, a drunken passenger dropped an anchor on a cruise enroute to Tampa from Mexico.

According to data Klein collected, the risk of sexual assault is nearly 50 per cent greater on a cruise ship than on land in Canada. He used data collected by the Federal Bureau of Investigation and internal industry documents used in lawsuits between 2003 and 2005.

"I believe passengers should go on to a ship well informed," Klein said.

"The industry markets itself as . . . . one of the safest modes of commercial transport in the world. And they want passengers to believe that if they come on a cruise ship they are virtually safe."

An umbrella group for the cruise industry says it's monitoring the latest accident off the Italian coast, where three people have died and dozens are missing.

The website for the Cruise Lines International Association said the group "would like to reassure other cruise passengers that all CLIA member lines are subject to the highest safety standards around the world and according to international maritime requirements."

CTVNews.ca called the association on Saturday, but there was no answer at its Florida office.

U.S. maritime lawyer Jim Walker once represented the cruise industry but switched sides about 15 years ago. Since then, he's represented dozens of passengers and crew members in lawsuits against cruise lines.

Mr. Walker represented the family of George Smith, who vanished from a Royal Caribbean ship while on his honeymoon in 2005. His family suspected foul play and claimed the cruise ship failed to properly investigate the disappearance. His family won a US$1.3 million suit against the cruise line.

Walker also represented a 35-year-old woman who said she was sexually assaulted by a crew member on a Royal Caribbean vessel. Walker said the woman's case resulted in tough reporting rules aboard cruise ships.

Walker urged passengers to be vigilant about crime and safety.

Despite potential dangers, Klein said he loves ocean travel and has taken 30 cruises.

"I love being at sea," he said. "I like to look at the horizon." At sea, he said, "time stands still. It's a wonderful feeling."

The Italian captain of a ship that sank off the coast of Tuscany was placed under arrest after one of the most dramatic holiday cruise disasters

The Costa Concordia lies on its side after running aground off the west coast of Italy at Giglio island. Photograph: Reuters

The Italian captain of a ship that sank off the coast of Tuscany was placed under arrest after one of the most dramatic holiday cruise disasters ever seen in the Mediterranean. Three passengers died and 69 were still unaccounted for after the 114,000-tonne Costa Concordia smashed into rocks amid scenes of panic and chaos.

Local prosecutors said Francesco Schettino was being investigated for manslaughter and abandoning ship following reports his stricken vessel failed to raise a mayday alert as the disaster unfolded.

There was speculation that a power failure on board the ship could have led to it losing navigational control and crashing into the rocks. Experts said that passenger reports of a power blackout and large blast indicated the vessel could have suffered an explosion in the engine room.

As the ship came to rest half submerged on its side, yards from the coast of the island of Giglio late on Friday, anger rose among the thousands of passengers who had swum or been ferried and flown to safety over what they described as a botched evacuation by crew members who panicked.

Italian police confirmed that two French tourists and a Peruvian crew member drowned in the accident. About 30 people were reported injured, with three critically hurt.

A British embassy official said not all the Britons on board the vessel had yet been accounted for. He said consular officials had so far confirmed that "around 20" survived.

Survivors described extraordinary scenes of panic, confusion and fear as the ship tilted on its side following what sounded like a loud explosion. Kirsty Cook, one of eight British dancers working on the cruise, said she was "lucky to be alive" after using a rope ladder to climb down to a waiting rescue boat. Another dancer, Rosie Metcalf, 22, from Dorset, had to cling to a fire hose before being winched to safety by a helicopter crew.

The Costa Concordia, which was built in Italy and launched in 2006, set off from Civitavecchia on Friday for a Mediterranean cruise, carrying 3,206 passengers and 1,023 crew. As the ship slid between Giglio and the coast, passengers sitting down for their first dinner on board felt a shudder before the lights went out.

Russian ship suspected of carrying munitions to Syria appears near Turkish port

 

Authorities say a Russian ship suspected of delivering weapons to Syria has anchored off Turkey’s coast. A Foreign Ministry official said Turkish coast guard and customs officials would board the Chariot on Saturday before allowing it to dock at the port of Iskenderun. The official spoke on condition of anonymity in line with government rules. 0 Comments Weigh InCorrections? inShare The ship had made an unscheduled stop in Cyprus, technically violating an EU embargo on arms shipments to Syria. Cypriot authorities allowed it to leave Wednesday after the ship’s owners said it would not head for Syria. Turkey, citing navy intelligence, said the ship nevertheless made its way to the Syrian port of Tartus after leaving Cyprus. U.S. officials said Friday they had expressed concerns to both Russia and Cyprus.

Bacon, deli meat may raise pancreatic cancer risk

Bacon or sausage? You might want to rethink that decision. Consuming processed meat regularly may increase a person’s risk of developing pancreatic cancer, though the risk is still low, says a new study. A meta-analysis of 11 studies involving 6,643 people with pancreatic cancer suggests an elevated risk of the disease when consuming processed meat such as bacon, cold cuts and sausages. In the study, men who ate red meat also showed an elevated risk of the disease, while women did not. The authors believe this is because men generally consume more red meat than women. For every 50 grams a person adds of processed meat to their diet, the risk of pancreatic cancer increased by 19 per cent, according to the study. "When results from all studies were combined, an increase of 50 grams per day of processed meat consumption was associated with a statistically significant 19 per cent increased risk of pancreatic cancer," the authors wrote. For the study, 120 grams was deemed a serving of red meat per day, while 50 grams represented a serving of processed meat. A typical hot dog is about 45 grams. "Processed meats are usually preserved with nitrite and may also contain N-nitroso compounds," write the authors. They say these compounds can also be formed in the stomach from nitrites and from compounds found in animal products and are potent carcinogens that have been shown to induce pancreatic cancer in animals. The study was conducted by Swedish researchers at the Karolinska Institute in Stockholm and published Thursday online in the British Journal of Cancer.

Eurozone back on the brink as France has credit rating downgraded

 

Stock markets and the single currency fell sharply as Standard and Poor’s cut France’s AAA rating. The rating agency’s move triggered a backlash from European politicians and led to calls for Britain to be downgraded too. As many as eight other eurozone countries, led by Italy, were also facing downgrades that will make it more expensive for them to borrow. The move represents a further loss of confidence in the single currency and the European Union’s ability to rescue indebted eurozone members. The Treasury believes that the collapse of the euro could seriously damage the British economy and banking system, pushing the UK back into a deep recession. The agency’s move also threatens to torpedo the main European bail-out fund set up to support struggling countries such as Greece and Portugal. There are growing fears that Greece is edging closer to defaulting on its debts and being forced out of the single currency, with potentially devastating consequences. Talks between Greece and its creditors were put on hold on Friday.

Greece teeters on edge of bankruptcy as debt talks stall

 

Fears are rising that the credit ratings of several eurozone countries could soon be downgraded - prompting global markets to fall and the euro falling to a 16-month low. Analysts today said that ratings agency Standards & Poor was finally going to deliver the downgrades it had threatened for much of the 17-nation eurozone just over a month ago. It comes because of concerns of Europe's inability to get a grip on a debt crisis that has raged for around two years. And it is on the same day that Greece was revealed to once again be teetering on the edge of a catastrophic bankruptcy - as negotiations on a bond swap to slash its public debt by 100 billion euros stalled.

Cornwall shooting death men 'worked for IRA drug gang'

 

Two men killed and buried on a remote farm in Cornwall were working for an IRA gang involved in Liverpool's drugs trade, a court has heard. Boxer Brett Flournoy, from Merseyside, and David Griffiths, of Berkshire, were found dead buried in a van at Ross Stone's farm near St Austell in 2011. Murder accused Thomas Haigh, 26, told Truro Crown Court the pair worked for Irish republicans who "ran Liverpool". Mr Haigh and Mr Stone deny murder. The trial continues. 'Self-interest took over' Mr Stone, 28, who admits burying the bodies on his Sunny Corner farm at Trenance Downs, told police he had arrived back at the farm on 16 June to find the bodies of the two men lying on the ground, the jury heard. A badly beaten Mr Haigh was nearby, he said in an interview, and although Mr Haigh did not admit killing them, he told Mr Stone "Dave [Griffiths] wouldn't die". Jurors also heard that both defendants blamed the other for killing the two men, to whom the alleged killers both owed money, in Stone's case £40,000. The dead men were buried with their van on the farm near St Austell Mr Haigh - who went to hide in Barnsley, South Yorkshire, after the killings - told police that Mr Griffiths had beaten him up over a girl he had taken back to the farm. He said he had run off and that the men had still been alive when he did. Prosecuting, Paul Dunkels QC told the jury on the second day of the trial that both men's claims were lies. He said: "When arrested by the police, the alliance between these two men broke down and self-interest took over. "The murders were the result of the joint efforts of these two defendants." The burned bodies of Mr Griffiths, a father-of-three originally from Plymouth, Devon, but living in Bracknell, Berkshire; and Mr Flournoy, a father-of-two from Bebington, in Wirral, Merseyside, were found dumped in the back of a van buried on the farm in July 2011. Mr Haigh, 26, formerly of Huddersfield, West Yorkshire, and Mr Stone, both deny two counts of murder.

Alex Salmond wants Scotland to join the European Union in its own right and that means joining the euro – and leaving the pound

 

Speaking of imminent downgrades (S&P are about to pull the plug on various eurozone countries apparently), what about Scotland? George Osborne put a fundamental question yesterday about the currency of an independent Scotland. Alex Salmond wants Scotland to join the European Union in its own right and that means joining the euro – and leaving the pound. Yet he has also talked in the past about remaining in a currency union of some sort with the rump UK. There is then, at the very least, a question mark over the First Minister's intentions, which is why the Chancellor tried to put him on the spot about his plans. Here's another question that I gather the Treasury is studying with great interest, which is part and parcel of the currency issue: what would the credit rating for an independent Scotland be? The reckoning down here is that Scotland would have to apply for a rating from the various agencies, which in turn would beg some interesting questions about its credibility as a sovereign. It will be new so it won't have a record to lean on. And as the FT details today, the independence negotiations would have to resolve a number of difficult money issues specifically Scotland's share of UK debt and whether it has to take over responsibility for HMG's £129bn contingent liabilities for RBS. Scotland would be relatively small and still wealthy, but its credit rating will be in part a factor of its political credibility: the agencies might conclude that the SNP's social democrat statist model is not a reliable long term bet, and mark the new sovereign down accordingly. Now that Mr Salmond has conceded a date for a referendum, we can expect more questions like this from the Treasury about the difficult detail that must be hammered out.

Student to face US trial over TVShack website

 

student who created a website which helped people watch films and TV shows for free can be extradited to the US to face copyright infringement allegations, a court ruled today. Sheffield Hallam University undergraduate Richard O'Dwyer, 23, allegedly earned thousands of pounds through advertising on the TVShack website before it was closed down by the US authorities. He faces jail if convicted of the allegations, which were brought following a crackdown by the US Immigration and Customs Enforcement agency. His lawyer Ben Cooper has argued that the site did not store copyright material itself and merely pointed users to other sites, in the same way that Google and Yahoo operate. Mr Cooper also claimed his client would be the first British citizen to be extradited for such an offence and would effectively become a "guinea pig" for copyright law in the US. His mother Julia O'Dwyer, from Chesterfield, has described the action as "beyond belief" and the UK's extradition treaty with the US as "rotten". But District Judge Quentin Purdy ruled today at Westminster Magistrates' Court that the extradition could go ahead. Mr Cooper indicated he would appeal against the ruling. O'Dwyer, who wore a grey shirt and blue jeans, showed no emotion as the ruling was made. His mother Julia criticised Britain's extradition treaty with the US. She said after the hearing: "If they want to prosecute something they will. "There's no safeguards here for British citizens." She also claimed the District Judge did not have the "technical brains to know about the whole thing". She added: "That guy just lives and breathes extradition."

US Marines identify 'urination' troops

 

At least two of four US Marines shown in a video appearing to urinate on Taliban corpses have been identified, a Marine Corps official has told the BBC. The video, which was posted online, purports to show four US Marines standing over the bodies of several Taliban fighters, at least one of whom is covered in blood. The Marines have begun a criminal investigation and an internal inquiry. US officials and Afghan officials have condemned the video as "deplorable". The origin of the video is not known, but it was originally posted to YouTube. The BBC's Steve Kingstone says the official would not confirm the Marines' whereabouts, but news reports suggested the unit involved was based at Camp Lejeune, North Carolina - a major military base. A US Marines spokesman, Lt Col Joseph Plenzler, told the AFP news agency that "we cannot release the name of the unit at this time since the incident is being investigated."

RBS to cut 3,500 jobs in investment bank shake-up

 

The Royal Bank of Scotland (RBS) has said it is planning to cut 3,500 jobs, with most of them to happen this year. The cuts are part of a reorganisation and shrinkage of its investment bank. The losses, which will be split between its UK and international offices, come on top of 2,000 cuts announced earlier. Its "wholesale banking" business, which provides services to large clients including investment banking services, will be split into separate "markets" and "international banking" divisions. The markets division - which comprises RBS' main trading activities - will focus on the bank's traditional strengths of debt, currency and money markets, the bank said in its statement. The wholesale banking division will provide services for the bank's biggest clients. These will include corporate advisory services transferred from its investment bank - such as helping major companies borrow money by issuing bonds - as well as cash management and payments services. The bank has already shed some 30,000 employees over the last two years, 22,000 of them in the UK. "It is a disgrace that while on a daily basis, stories are emerging about the massive bonuses at the top of the bank, increasing numbers of jobs are being cut from amongst the hard working staff," said David Fleming of the Unite union. Continue reading the main story “ Start Quote For a bank that has shed 30,000 jobs over the past couple of years, a further 3,500 departures may not seem massive” Robert Peston Business editor, BBC News Read Robert's blog Markets took the statement well, although many of the details had been flagged up in advance. RBS's share price rose 6.8% in morning trading, outperforming other banks and other large companies on the FTSE 100 index. Cutting back The bank said that it planned to close or sell off other business lines, such as those dealing with shares and stock markets, as well as its business advising companies on mergers and acquisitions. It is also looking to dispose of its corporate brokerage, Hoare Govett. These business lines were ones that had been added or expanded only in recent years under the leadership of former chief executive Sir Fred Goodwin. Continue reading the main story Royal Bank of Scotland Group RBS also said in its statement that the size of the balance sheet - the total loans and investments - of its former investment banking division would be reduced by more than a quarter, from £420bn to £300bn, over three years. This will enable it to cut its borrowing from wholesale money markets - which evaporated during the 2008 financial crisis, threatening the bank's collapse - by £75bn. "The overall aim is to improve profits and reduce risks," says the BBC's business editor, Robert Peston. "Which matters to most of us, since taxpayers are sitting on losses of £26bn on the £45.5bn they invested in RBS to rescue it." However, he also notes that the business lines being disposed of were not the ones responsible for causing RBS its huge losses during and after the 2008 financial crisis. UK clients RBS said the restructuring was also designed to prepare the bank for new UK regulatory requirements for banks to ring-fence their core UK operations from their riskier investment banking activities. Continue reading the main story Crisis jargon buster Use the dropdown for easy-to-understand explanations of key financial terms: Investment bank Investment bank Investment banks provide financial services for governments, companies or extremely rich individuals. They differ from commercial banks where you have your savings or your mortgage. Traditionally investment banks provided underwriting, and financial advice on mergers and acquisitions, and how to raise money in the financial markets. The term is also commonly used to describe the more risky activities typically undertaken by such firms, including trading directly in financial markets for their own account. Glossary in full The bank's dealings with British small and medium-sized companies will accordingly be transferred away from the new international banking division, and handled via its UK banks. There was no mention of any specific downscaling of its international operations. However, there has been speculation that its operations in the Irish Republic - including Ulster Bank, which RBS bought in 2000 - and in Australia may be affected Chancellor George Osborne announced the change in strategy at the bank in December 2011. "Investment banking will continue to support RBS's corporate lending business but RBS will make further significant reductions in the investment bank, scaling back riskier activities that are heavy users of capital or funding," Mr Osborne told Parliament in December. Mr Osborne's announcement came in the wake of a report into the bank by the Financial Services Authority in December 2011 which pointed to "errors of judgement and execution" by RBS management which led to its failure in 2008. The bank is now 82%-owned by the UK government after taxpayers injected £45.5bn of new capital into RBS.

5 UK men on trial for allegedly distributing leaflets calling for gay people to be killed

 

Five men are on trial in Britain for allegedly distributing leaflets calling for gay people to be killed, charged under a new law that makes such actions a hate crime. The men allegedly gave out flyers titled “The Death Penalty” that showed a noose and said gay people would be punished. Two other leaflets were used to publicize a protest against a gay pride march in the central English city of Derby in 2010. 0 Comments Weigh InCorrections? inShare The Crown Prosecution Service said Wednesday this was the first prosecution for stirring up hatred on the grounds of sexual orientation, under the law that took effect in March 2010. It has long been illegal to incite hatred over disability, race or religion. The maximum penalty for the crime is seven years in jail. Prosecutors said Ihjaz Ali, 42, Mehboob Hussain, 45, Umar Javed, 38, Razwan Javed, 27, and Kabir Ahmed, 28, handed out leaflets near a mosque in Derby and also stuffed them into mailboxes. Prosecutor Bobbie Cheema called the leaflets “frightening and nasty.” “These five defendants were part of a small group of men who distributed horrible, threatening literature, with quotations from religious sources and with pictures on them, which were designed to stir up hatred and hostility against homosexual people,” she said.

Twitter has complained about changes made by Google to integrate its social network Google+ into search results.

 

The new feature, called Search plus Your World, will automatically push results from Google+ up the search rankings.

Tweeting on the news, Twitter's lawyer Alex Macgillivray described it as a "bad day for the internet".

Google is determined to push its social network in the face of continued rivalry with Facebook.

The current changes were about even greater personalisation, it said. It already includes personal search history in its search algorithms.

The three changes are:

• Personal Results - which enable users to find information such as Google+ photos and posts, both their own and those shared specifically with them, that only they will be able to see on their results pages
• Profiles in Search - both in autocomplete and results, users will be able to find people they are close to or might be interested in following
• People and Pages - helps users find people profiles and Google+ pages related to a specific topic or area of interest, and enable people to follow them with just a few clicks.

"Search is pretty amazing at finding that one needle in a haystack of billions of webpages, images, videos, news and much more," said Amit Singhal in the firm's official blog.

"But clearly, that isn't enough. You should also be able to find your own stuff on the web, the people you know and things they've shared with you, as well as the people you don't know but might want to... all from one search box," he added.

Twitter's general counsel Alex Macgillivray tweeted in response to the changes: "Bad day for the internet. Having been there, I can imagine the dissension @Google to search being warped this way."

Mr Macgillivray had previously been employed at Google.

Twitter expanded his point in an official statement.

"For years, people have relied on Google to deliver the most relevant results any time they wanted to find something on the internet.

"Often, they want to know more about world events and breaking news. Twitter has emerged as a vital source of this real-time information, with more than 100 million users sending 250 million tweets every day on virtually every topic. As we've seen time and time again, news breaks first on Twitter; as a result, Twitter accounts and tweets are often the most relevant results.

"We're concerned that as a result of Google's changes, finding this information will be much harder for everyone. We think that's bad for people, publishers, news organisations and Twitter users."

Google hit back at the criticisms.

''We are a bit surprised by Twitter's comments about Search plus Your World, because they chose not to renew their agreement with us last summer and since then we have observed their rel=nofollow instructions," it said in a statement.

This refers to a technical barrier which makes it difficult for Google to rank Twitter information, a spokeswoman explained.

There is also little sharing between Google and its other big rival Facebook.

Search expert John Battelle said in his blog post that social search would mean little until the two settled their differences and offered consumers what they really wanted - Facebook data integrated with Google's search.

"The unwillingness of Facebook and Google to share a public commons when it comes to the intersection of search and social is corrosive to the connective tissue of our shared culture," he said.

Europe Banks Hoarding Cash Resist Draghi Bid to Avoid Crunch

 

Banks are hoarding the European Central Bank's record 489 billion-euro ($625 billion) injection into the banking system, thwarting attempts by policy makers to avert a credit crunch in the region. Almost all of the money loaned to 523 euro-area lenders last month wound up back on deposit at the Frankfurt-based central bank instead of pouring into the financial system, ECB data show. Banks will use most of the three-year loans to meet their refinancing needs for this year and next, analysts at Morgan Stanley and Royal Bank of Scotland Group Plc estimate. “It's illusory to think that the measure will translate into credit generation,” Philippe Waechter, chief economist at Natixis Asset Management in Paris, said in an interview. “It will assuage some of the anxiety banks have regarding their liquidity needs. But they've engaged into a massive overhaul of their strategy and shrinkage of their balance sheets, which is, coupled with the deteriorating economy, not compatible with increasing credit.” Governments are urging European banks to keep lending to companies and individuals while requiring them to raise an additional 114.7 billion euros of core capital by June to weather a deepening sovereign-debt crisis. Instead of raising equity, most lenders across Europe have vowed to meet capital rules by trimming at least 950 billion euros from their balance sheets over the next two years, either by selling assets or not renewing credit lines, according to data compiled by Bloomberg. ECB Deposits That has stirred concern among policy makers that banks will cut lending and throttle growth in the euro region. Banks have been parking almost all extra liquidity from the ECB loans back at the central bank. Barclays Capital estimates firms used 296 billion euros of the Dec. 21 three-year loans to replace maturing shorter-term ECB borrowings. That left only 193 billion euros of additional money for the financial system. Overnight deposits with the ECB have jumped by about 223 billion euros since the loans to a record 486 billion euros, suggesting the central bank funds haven't so far reached customers. Banks account for about 80 percent of lending to the euro area, making them “crucial to the supply of credit,” according to recently installed ECB President Mario Draghi. By contrast, U.S. companies rely more on capital markets for financing, selling bonds to investors. Refinancing Needs The ECB lending, and a follow-up loan offering on Feb. 28, won't ease the pressure on banks to shrink, say analysts including Huw van Steenis at Morgan Stanley in London. “The ECB loans will largely be used to pre-fund 2012 and some of 2013's bank refinancing needs, but it will not stimulate lending,” Van Steenis said. They will “just stop it falling off precipitously.” Euro-area banks have more than 600 billion euros of debt maturing this year, the Bank of England said in its financial stability report last month. The first ECB loan offering should help cover about two-thirds of that amount, Goldman Sachs Group Inc. analysts say. Morgan Stanley's Van Steenis estimates banks may reduce assets by as much as 2.5 trillion euros in two years, a process known as deleveraging. The volume of loans to households and companies in the 17- nation euro area shrank in November for the second consecutive month, the ECB said on Dec. 29. Loans were still up 1.7 percent over the year-earlier period, slowing from a 2.7 percent increase in the 12 months through October. Merkel, Sarkozy When granted, loans are getting costlier for borrowers. Since July, interest margins have increased, with investment- grade borrowers in Europe paying an average of 91.6 basis points more than benchmark rates, up from 84.4 basis points during the first half of 2011, according to data compiled by Bloomberg. A basis point is one-hundredth of a percentage point. “We must avoid a credit crunch for our economies,” European Union President Herman Van Rompuy said on Jan. 9. “The recent measures by the European Central Bank on a long-term lending facility for the banks are welcome in this context.” The European Banking Authority, which oversees the region's regulators, asked banks on Dec. 8 to retain earnings, curb bonuses and raise equity to boost core capital before resorting to cuts in lending. The EBA followed both French President Nicolas Sarkozy and German Chancellor Angela Merkel in urging banks to keep lending. Sarkozy said on Oct. 27 that he had asked firms to shift “almost all” of their dividends into strengthening balance sheets and to make bonus practices “normal.” Merkel said on Oct. 9 she was “determined to do whatever necessary to recapitalize the banks to ensure credit to the economy.” ‘No Credit Crunch' Bankers have said they haven't restricted lending and that demand for credit is slowing as growth slows. “All banks I talk to keep lending to small- and medium- size enterprises and households,” Christian Clausen, president of the European Banking Federation, an industry association, said on Dec. 9. “That part of the bank will keep rolling.” There is “no credit crunch,” Frederic Oudea, chief executive officer of Societe Generale SA, France's second- biggest lender, and chairman of the French Banking Federation, said last month. “The reality is that credit is available,” he said in an interview on BFM radio on Dec. 16. Even so, companies across Europe say credit is tightening. ‘Double Punch' In France, where credit to the private sector increased by 3.7 percent in November compared with a year earlier, the majority of the country's company treasurers said they encountered “very strong tensions” in negotiating bank loans, with more than 50 percent of respondents saying the process led to more expensive terms, according to a December survey by the French Association of Corporate Treasurers. The majority of those polled said obtaining bank financing was “as difficult as at the end of 2008,” after Lehman Brothers Holdings Inc. collapsed. U.K. banks expect to toughen their criteria on loans to companies and households in the first quarter because of strains in the wholesale funding market, the Bank of England said Jan. 5in its fourth-quarter Credit Conditions Survey. Belgian credit growth slowed to 3.1 percent in the 12 months to the end of October, from 3.6 percent at the end of September, the country's central bank said on Dec. 12. In Italy, some companies with annual sales of 30 million euros to 40 million euros are charged as much as 10 percent interest on loans, Emma Marcegaglia, chief of the country's Confindustria lobby group, said in an interview on Dec. 20. Lending to businesses and consumers grew at the weakest pace in a year, the Bank of Italy said today. Draghi's Priority With the ECB's injection, “deleveraging may happen in a more orderly way, but it doesn't mean it will be painless,” said Alberto Gallo, head of European credit strategy at RBS. Banks are faced with high long-term financing costs, a deteriorating economy and difficulties raising capital, he said. “It's what I call the double punch: A combination of negative growth and banks' deleveraging will affect lending activity.” Even the ECB's Draghi, who has made it one of his priorities is to keep credit flowing into the economy, said the central bank's loan offerings may fail to achieve that goal. “Monetary policy cannot do everything, but we're trying to do our best to avoid a credit crunch that might come from a lack of funding,” Draghi said Dec. 19 at the European Parliament in Brussels. “We have to be extremely careful here, because there may be other reasons that create a credit crunch.” Draghi may be wary of the U.S. experience with multiple rounds of bond purchases. That so-called quantitative easing hasn't stimulated lending, Natixis's Waechter said. ‘Kick the Can' “Lending really picked up when the economy got better,” he said. The ECB cut its forecast for euro-area economic growth in 2012 to 0.3 percent on Dec. 8 from a September prediction of 1.3 percent. The central bank expects the economy to expand 1.3 percent next year. In the U.S., almost all categories of bank lending fell in 2009 and 2010 and didn't start improving until last year, when the Federal Reserve stopped its second wave of quantitative easing, according to data by the U.S. institution. Banks increased their holdings of Treasury and agency securities in 2009 and 2010, showing they were using the Fed's cheap money to own safe government paper. Because quantitative easing tends to improve capital markets first, the healing will be even slower in Europe given its reliance on banks for borrowing, according to Gallo.

Spanish Banks Assume High Risk to Sell Properties

 

 Spanish banks are thought to possess some €30 billion in unsold property, and to clear these properties off their books banks are willing to lend more than 100% of the value to prospective buyers. This means buyers may be able to acquire property by investing little or no capital in the transaction, while the bank assumes all the risk. Experts note that it is a policy unheard of in the rest of the world and is a sign Spanish banks believe properties have found a bottom and are prepared to start increasing in value. In some cases, it is resulting in properties being sold for half their original estimated value and being bought with money that comes entirely from the bank. For more on this continue reading the following article from Property Wire. Spanish Banks are prepared to lend over 100% on their own properties that have been repossessed, it has been revealed. They are also selling them at rock bottom prices to attract buyers so that they can reduce the amount of property on their books. According to Adam Cornwell, managing director of Feltrim International these are quality properties in desirable areas. Recent reports from a leading risk adviser say banks have around €30 billion worth of property that they can’t sell.

Ryanair has cuts its Alicante services by 50% for next year

 

Ryanair has cuts its Alicante services by 50% for next year blaming the airport for forcing it to use ‘unnecessary’ airbridges. The airline, which claims the airbridges cost it 2million euros a year in fees, has appealed to the Spanish Commercial courts over the charges which is due to be heard in early February. Ryanair refutes claims from the airport that the airbridges are a safety issue and that Ryanair’s cutbacks were already planned. It added that if the compulsory airbridge use is withdrawn or if they win the appeal, the Alicante flights, traffic and job cuts will be reversed for summer 2012. Ryanair’s Michael O’Leary said: “ AENA Alicante are now proving that inefficient airbridges and higher fees will result in the airport suffering route, traffic and job cuts. “We call again on AENA to reverse this abusive decision to force Ryanair and other airlines to use and pay for unnecessary airbridges at Alicante.” Ryanair had already cut its winter 2011/12 services at Alicante by 50%. A new base is being opened in Palma by Ryanair serving  17 new routes and sustaining up to 2,800 Balearic jobs. The new routes are Palma to Aarhus, Cork, Gothenburg, Haugesund, Kaunas, Krakow, Maastricht, Malaga, Magdeburg, Marseille, Oslo, Paris Beauvais, Poznan, Santander,Santiago, Stockholm, and Tampere. To launch the new flights, which go on sale tomorrow, Ryanair is having a seat sale from 9.99 euros for travel across European routes in late January and early February 2012.   This ends midnight on December 15th

The methane time bomb - Climate Change

 

The first evidence that millions of tons of a greenhouse gas 20 times more potent than carbon dioxide is being released into the atmosphere from beneath the Arctic seabed has been discovered by scientists. The Independent has been passed details of preliminary findings suggesting that massive deposits of sub-sea methane are bubbling to the surface as the Arctic region becomes warmer and its ice retreats. Underground stores of methane are important because scientists believe their sudden release has in the past been responsible for rapid increases in global temperatures, dramatic changes to the climate, and even the mass extinction of species. Scientists aboard a research ship that has sailed the entire length of Russia's northern coast have discovered intense concentrations of methane – sometimes at up to 100 times background levels – over several areas covering thousands of square miles of the Siberian continental shelf. In the past few days, the researchers have seen areas of sea foaming with gas bubbling up through "methane chimneys" rising from the sea floor. They believe that the sub-sea layer of permafrost, which has acted like a "lid" to prevent the gas from escaping, has melted away to allow methane to rise from underground deposits formed before the last ice age. They have warned that this is likely to be linked with the rapid warming that the region has experienced in recent years. Methane is about 20 times more powerful as a greenhouse gas than carbon dioxide and many scientists fear that its release could accelerate global warming in a giant positive feedback where more atmospheric methane causes higher temperatures, leading to further permafrost melting and the release of yet more methane. The amount of methane stored beneath the Arctic is calculated to be greater than the total amount of carbon locked up in global coal reserves so there is intense interest in the stability of these deposits as the region warms at a faster rate than other places on earth. Orjan Gustafsson of Stockholm University in Sweden, one of the leaders of the expedition, described the scale of the methane emissions in an email exchange sent from the Russian research ship Jacob Smirnitskyi. "We had a hectic finishing of the sampling programme yesterday and this past night," said Dr Gustafsson. "An extensive area of intense methane release was found. At earlier sites we had found elevated levels of dissolved methane. Yesterday, for the first time, we documented a field where the release was so intense that the methane did not have time to dissolve into the seawater but was rising as methane bubbles to the sea surface. These 'methane chimneys' were documented on echo sounder and with seismic [instruments]." At some locations, methane concentrations reached 100 times background levels. These anomalies have been seen in the East Siberian Sea and the Laptev Sea, covering several tens of thousands of square kilometres, amounting to millions of tons of methane, said Dr Gustafsson. "This may be of the same magnitude as presently estimated from the global ocean," he said. "Nobody knows how many more such areas exist on the extensive East Siberian continental shelves. "The conventional thought has been that the permafrost 'lid' on the sub-sea sediments on the Siberian shelf should cap and hold the massive reservoirs of shallow methane deposits in place. The growing evidence for release of methane in this inaccessible region may suggest that the permafrost lid is starting to get perforated and thus leak methane... The permafrost now has small holes. We have found elevated levels of methane above the water surface and even more in the water just below. It is obvious that the source is the seabed." The preliminary findings of the International Siberian Shelf Study 2008, being prepared for publication by the American Geophysical Union, are being overseen by Igor Semiletov of the Far-Eastern branch of the Russian Academy of Sciences. Since 1994, he has led about 10 expeditions in the Laptev Sea but during the 1990s he did not detect any elevated levels of methane. However, since 2003 he reported a rising number of methane "hotspots", which have now been confirmed using more sensitive instruments on board the Jacob Smirnitskyi. Dr Semiletov has suggested several possible reasons why methane is now being released from the Arctic, including the rising volume of relatively warmer water being discharged from Siberia's rivers due to the melting of the permafrost on the land. The Arctic region as a whole has seen a 4C rise in average temperatures over recent decades and a dramatic decline in the area of the Arctic Ocean covered by summer sea ice. Many scientists fear that the loss of sea ice could accelerate the warming trend because open ocean soaks up more heat from the sun than the reflective surface of an ice-covered sea.

Britain was now “outside the economic policies of the EU.”

 

 

It might even have been the day that the EU, as we have known it, ceased to exist. But for Europe’s leaders yesterday, all these unfortunate truths were at least partly concealed by making it the day for blaming Britain. “We have a very good result,” said the president of the European Parliament, Jerzy Buzek. “Twenty-six versus one.” An agreement of all 27 EU members, said France’s Nicolas Sarkozy, was impossible “thanks to our British friends.” Maybe he was just tired – it was 5am – but as he ground out the words, the French president’s lip seemed to curl. Angela Merkel, the German chancellor, told reporters: “I really don’t believe David Cameron was ever with us at the table.” In what seemed, at times, like the anti-British summit, lower-ranking figures circulated through the halls, turning up the rhetoric in the search for a scapegoat. Cameron had been “clumsy in his manoeuvring,” said one senior EU diplomat. Guy Verhofstadt, the former prime minister of Belgium, was on hand to tell us that Britain was now “outside the economic policies of the EU.” None of this is necessarily wrong. In the early hours of yesterday, by saying that he would not agree a treaty for closer eurozone “fiscal union” without safeguards for the City, Mr Cameron may indeed have brought Britain to a 50-year crossroads. But it is substantially beside the point.

Rich Egyptians weigh emigration as Islamists surge

 

For decades, Egypt's Westernised elite kept the country's growing religosity at arm's length, but a projected Islamist surge in the first post-revolution polls has driven many to think of moving abroad. Sporting the latest fashions and mingling in upmarket country clubs, Egypt's rich fear a victory for the Muslim Brotherhood and hardline Salafis in the first phase of parliamentary elections presages change ahead. "I hope they don't impose the veil and ban women from driving like in Saudi Arabia," said coquettish fifty-something Naglaa Fahmi from her gym in the leafy neighbourhood of Zamalek. In a nearby luxury hotel, Nardine -- one of Egypt's eight million Coptic Christians who are alarmed by the prospect of a new Islamist-dominated parliament -- is pondering a move aroad. "My father is seriously thinking about sending me and my brothers elsewhere because he thinks we won't have a future in the country with the Salafis," said the banker in her twenties. Ten months after a popular uprising ended the 30-year autocratic rule of Hosni Mubarak, millions of Egyptians embraced their new democratic freedoms earlier this week at the start of multi-stage parliamentary elections. The preliminary results to be published on Friday were expected to show the moderate Muslim Brotherhood as the dominant force, but with a surprisingly strong showing from the hardline Al-Nur party. Its leaders advocate the fundamentalist brand of Salafi Islam, rejecting Western culture and favouring strict segregation of the sexes and the veiling of women. They say they have been the victims of Islamophobia and sustained fear-mongering by liberals in the Egyptian media. Nevertheless, the fear that they will try to impose their values on the rest of society has driven Angie to consider leaving her comfortable Cairo life behind. "My husband recently got a job offer in Dubai. In the beginning I was hesitant, but now, with all that's happening, I'm encouraging him to take the job and I'll join him with our daughter," she said. "The Gulf has become more liberal than Egypt," she told AFP. For Ahmed Gabri, having the Islamists in power means having his freedoms restricted. "I will leave the country," said Gabri, a Muslim. "I will not stand living in a puritanical climate. Why don't they just let people live the way they want?" The next parliament will be charged with writing a new constitution and the idea of an Islamist-dominated assembly has sent shockwaves through some segments of society. Many stress the difference, however, between the different Islamist groups. "They don't scare me. We have democracy now which means we'll be able to remove them if they don't suit us," said Manar, a tall blonde in her 40s. "It's the not the Muslim Brotherhood that worries me because they want to appear in the best light, it's the Salafis that I'm concerned about," she said. Iman Ragab, a shop assistant, has resigned herself to the election's likely outcome. "This is democracy, you have to accept the results of the ballot," she said.