0 Easy Fed Softens Fiscal Policy Punch on Economy

The Federal Reserve’s aggressive easing of monetary policy is proving surprisingly effective at blunting the blow to the US economy from tighter fiscal policy, according to economists who have been scrambling to raise their growth forecasts. Economists had feared higher taxes and deep government spending cuts would stunt growth in the first quarter, but a string of strong economic data has so far proven them wrong. And they mostly blame the Fed. “Monetary policy is beginning to gain some traction here,” said Tom Higgins, global macro strategist at Standish Mellon Asset Management in Boston. According to Higgins, if it were not for the monetary stimulus, the economy would probably be facing growth of a 1 percent annual rate or less. As it is, he expects growth to come in at a 2.5 percent pace in the first quarter. The US central bank has held overnight interest rates near zero since December 2008 and has pumped about $2.5 trillion into the economy by purchasing Treasury debt and mortgage-backed bonds in a bid to foster faster growth and lower unemployment. On Wednesday, it recommitted to plans to buy $85 billion worth of bonds each month and said it would keep buying assets until it sees a significant improvement in the labor market. Those actions have helped put the economy in better shape to deal with the end of a 2 percent payroll tax cut, higher tax rates for wealthy Americans and $85 billion in across-the-board government spending cuts known as the “sequester.” The easy money stance has given a boost to interest rate sensitive sectors of the economy, such as autos and housing. The commitment to easy policy also appears to be lifting business confidence, which in turn is underpinning job growth and the stock market. Nonfarm payrolls increased 236,000 in February and the jobless rate fell to a four-year low of 7.7 percent. “The message from the data is that in the battle between fiscal drag and monetary stimulus, the Fed is winning,” said Jim O’Sullivan, chief US economist at High Frequency Economics in Valhalla, New York. Stunned by a surprisingly strong report on retail sales last week, most economists rushed to raise first-quarter growth estimates. JPMorgan pushed theirs up by an eye-catching eight-tenths of a percentage point to 2.3 percent, while Goldman Sachs increased theirs by three-tenths of a point to 2.9 percent. Economic activity expanded at a meager 0.1 percent rate in the last three months of last year, the slowest pace since the first quarter of 2011.

Made a Mistake
Economists also said they had been mistaken to believe that businesses would retrench if it became clear deep government spending cuts were going to take hold. They said they had simply been drawing on lessons learned during the acrimonious fight in 2011 to raise the government’s borrowing limit, a battle that hit confidence hard. “The chance we decided to take was for a more upfront impact from sequestration; in reality that is not what we are seeing,” said Adolfo Laurenti, deputy chief economist, Mesirow Financial in Chicago. “Businesses have taken it at a more leisurely pace.” 

Indeed, a Deloitte Growth Enterprise Services survey of about 1,000 mid-market executives this month found little evidence the spending cuts were worrying businesses. About 72 percent of respondents said sequestration would not affect their businesses and 91 percent said they had not put off hiring because of the cuts. That could be an indication of the confidence generated by the Fed’s willingness to aid the economy, economists say. Also helping the economy is the fact that banks are starting to ease lending standards and household balance sheets have improved after being ravaged by the housing market’s collapse. 

“What we have been seeing for a while is households have worked down their debt loads and they are now starting to expand their borrowing and, across the board, bank lending is increasing,” said Steve Cunningham, head of research at the American Institute for Economic Research in Great Barrington, Massachusetts. “So monetary policy is becoming effective in that respect.” Fed data this month showed household debt in the fourth quarter grew at its fastest pace since early 2008, while a measure of the burden of carrying debt sank to a record low. 

In addition, consumer credit has increased solidly from last year through January of this year and banks in January reported stronger loan demand and easier credit standards. Still, the economy is not out of the woods by any means. Part of the expected bounce back in growth this quarter will come from a buildup in business inventories, which means second quarter growth could fall short of the January-March rate. 

As a result of the economy’s firmer underlying strength, many analysts now estimate government budget cuts could shave off about 0.3 percentage point from GDP this year, half of what was predicted by the nonpartisan Congressional Budget Office. “The drag from sequestration is probably a little bit smaller than we thought a month ago,” said Mesirow Financial’s Laurenti. “We have a better economy that is in a better position to absorb a negative shock.”

Reuters
source : the jakarta globe

0 France's Sarkozy Charged in Probe of Illegal Party Funding

Former president Nicolas Sarkozy has been charged with taking financial advantage of France's richest woman, as part of a probe into illegal party funding that could shatter his hopes of a political comeback. His lawyers said they would appeal against the decision to formally investigate Sarkozy over allegations he took advantage of elderly L'Oreal heiress Liliane Bettencourt when she was weakened by poor health. 

He was unexpectedly summoned on Thursday to the Bordeaux offices of Jean-Michel Gentil, the judge in charge of the case, for face-to-face encounters with at least four former members of Bettencourt's staff. The surprise confrontation came over claims he had accepted envelopes stuffed with cash from the world's richest woman to fund his 2007 election campaign. Gentil was seeking to establish how many times Sarkozy had visited Bettencourt during his successful campaign. Sarkozy, 58, has always maintained that he visited Bettencourt's residence only once during the campaign, to meet her late husband. 

Members of the multi-billionaire's staff have, however, contradicted his version of events. Sarkozy's lawyer Thierry Herzog lambasted the decision to pursue his client as "legally incoherent and unfair". He said he would immediately initiate proceedings to have the charges dropped. Back in November, Gentil and two other examining magistrates spent 12 hours questioning Sarkozy. They decided not to formally charge him then but to continue investigating the allegations against him. 

France's legal system has nothing that exactly matches the charges or indictments brought in English, or US courts; but an investigating judge's decision to place someone under judicial investigation is the closest equivalent. Bettencourt is now 90. Medical experts say her mental capacity began to deteriorate from the autumn of 2006. The allegation is that Sarkozy obtained significant amounts of money from her, breaching electoral spending limits and taking advantage of a person weakened by ill health. 

Bettencourt's former accountant, Claire Thibout, told police in 2010 she had handed envelopes filled with cash to Bettencourt's right-hand man, Patrice de Maistre, on the understanding it was to be passed on to Sarkozy's campaign treasurer, Eric Woerth. Woerth has already been charged in the affair. Investigators suspect up to four million euros ($5.2 million) of Bettencourt's cash subsequently made its way into the coffers of Sarkozy's UMP party. Sarkozy lost immunity from prosecution when he was defeated in the 2012 presidential election by Socialist Francois Hollande. 

French judges have already successfully pursued Sarkozy's predecessor as president, Jacques Chirac, who was convicted in 2011 on corruption charges related to his time as mayor of Paris. Chirac, excused from attending his trial because of ill health, received a two-year suspended prison term. Since losing to Hollande, Sarkozy has concentrated on making money on the international conference circuit, but he has repeatedly hinted that he is considering another tilt at the presidency in 2017. 

Earlier this month he told Valeurs Actuelles magazine that his sense of duty to his country could see him return to the political arena. During his presidency he won international acclaim as the principal architect of the 2011 NATO campaign that ousted Libyan dictator Moamer Kadhafi. But since losing office he has had to contend with a string of allegations relating to his five years in power and various electoral campaigns he has been involved in. 

As well as the Bettencourt case, he faces probes into alleged cronyism in the awarding of contracts for opinion polls; an illegal police investigation into journalists; and alleged kickbacks on a Pakistani arms deal used to finance the right in 1995, when Sarkozy was budget minister. He has always denied any wrongdoing and remains popular with right-wing activists despite being regarded as a divisive figure among the swing voters who tend to decide French elections. 

Anyone convicted of exploiting a person's weakened mental state can be punished by up to three years in jail, fined up to 375,000 euros ($484,000), and banned from holding public office for up to five years. Sarkozy's troubles come just two days after France's budget minister Jerome Cahuzac resigned Tuesday, as prosecutors announced a full criminal inquiry into allegations that he had an undeclared bank account in Switzerland. Edwy Plenel, co-founder of the Mediapart news website, which first ran the allegations against Cahuzac, told AFP: "This week shows the usefulness of independent journalism, which is very much in the public interest." Mediapart has also taken a leading role covering the Bettencourt affair.

Agence France-Presse
source : the jakarta globe

0 Southeast Asia Human Rights 'Stagnating': US Officials

US officials voiced concern on Thursday about human rights in fast-growing Southeast Asian nations, pointing to a lack of progress in many places and a worsening situation in some. As the United States (US) pursues its rebalance toward Asia, it is also paying greater attention to human rights in many countries such as Cambodia, Myanmar and Vietnam, State Department officials told lawmakers. "Human rights is one of the more difficult issues we raise with our partners, but we must raise them," Acting Assistant Secretary for East Asian Affairs Joseph Yun told a Senate Foreign Relations subcommittee. 

In November, Southeast Asian leaders endorsed a controversial human rights pact, hailing it as a landmark accord to help protect some 600 million people. But critics said it had left too many loopholes for Asean, which groups a diverse range of political systems ranging from authoritarian regimes in Laos and Vietnam to freewheeling democracies such as the Philippines. "While the substance of declaration on human rights is not what we would wish, I would say that Southeast Asians doing it is an important fact," Yun insisted. 

"They have never agreed among all of them... whether they ought to have common human rights goals," he said, admitting there was still a long way to go. In Vietnam, for example, "we've been disappointed in recent years to see backsliding, particularly on freedom of expression issues," said Deputy Assistant Secretary for Human Rights and Democracy Dan Baer. He cited concerns about the prosecutions of people for speaking out on the Internet, adding there had been "some progress in religious freedom issues in Vietnam a few years ago, and that, too, seems to have stagnated." 

Things had not improved in Cambodia either, while in Laos, the disappearance of activist Sombath Somphone in December "had a chilling effect on the broader civil society" because he had not been viewed "as a particularly radical guy". Both men highlighted that it was also important to keep an eye on the role of the military in Southeast Asian nations, particularly in Myanmar, also known as Burma, which was under military rule for six decades. "We're seeing far less military intervention than we ever did, which is very, very good news," Yun told the senators. 

"But we still have situations - the prime example being Burma - where 25 percent of their legislature is appointed by the military," he said, adding that "it's not a sustainable, long-term situation." Baer said military-to-military relationships were a good way of setting an example in the region. "There's no easy recipe for persuading a bunch of guys who have had a lot of power and gotten a lot of money for a long time to give that up," Baer said. But he referred to a human rights dialogue held in October attended by US Army Pacific commander Lieutenant General Francis Wiercinski. 

Having "a guy with three stars on his shoulders deliver that message, it was certainly more powerful than had it come from me, but even more powerful than had it come from any civilian".

Agence France-Presse
source : the jakarta globe

0 Football: After Boateng, Italy Looks to Long Fight with Racism

It took a defiant gesture to reignite the debate on one of Italian sport's biggest demons, but the fight to rid football of racism in Serie A could be just beginning. On Friday Kevin-Prince Boateng, a German-born Ghanaian who plays for Serie A giants AC Milan, will hold talks with FIFA president Sepp Blatter. However football tactics or Ghana's recent showing at the Africa Cup of Nations are likely to give way to discussion of one of the scourges of the modern game. 

In a January friendly against Pro Patria, Boateng and two other black teammates suffered racist abuse from a small group of fans of the side from Busto Arsizio outside Milan. Boateng took offence and walked off the pitch, followed by his entire team. It was seen as a pivotal moment and following other, unrelated incidents this season the Italian federation (FIGC) has pledged to take a firmer stance on racism. "As a federation we are totally committed to (tackling) these issues," the FIGC's director general Antonello Valentini told Radio Anch'io Sport midweek. 

What that will amount to remains to be seen, but what is certain is that racism in Italy and elsewhere is firmly back in the spotlight. At a recent Inter-Milan derby Milan striker Mario Balotelli - born in Palermo to Ghanaian parents who gave him up for adoption, and who now plays for Italy - was subjected to monkey noises and inflatable bananas. Inter, Balotelli's former club and one created because its founding members wanted to welcome foreign players as well as Italians, were fined 50,000 euros by Italian league authorities. Last week Inter fans subjected Tottenham's Togo striker Emmanuel Adebayor to monkey chants during a recent Europa League clash. 

They are now facing sanctions by UEFA, European football's governing body which earlier this season fined Lazio after its fans racially abused fans of Tottenham, which has close ties to the Jewish community, and brandished "Free Palestine" banners at a Europa League tie in Rome. In Italy, some would argue the terraces are theatres of expression for society's ills. In the 1980s the rise of the Lega Nord political party - which pitted rich northerners against their poorer, more rustic cousins from the south - drove a bigger wedge into the north--south divide. 

To the tune of Italian classic 'O sole mio', Roma fans used to sing: "I have only one dream, Milan in flames." Milan's fans, referring to the influx of southerners to the northern industrial city, retorted: "Milan in flames? And where will you work?" Immigration - which began late, in the 1980s and 1990s, compared to Britain and France - changed the landscape. Although north-south, regional and inter-city rivalries still prevail, sections of the terraces at some clubs - where politically-motivated hardcore 'ultra' fans often call the shots - began targeting black or Jewish players. 

At AC Milan Dutch great Ruud Gullit was infamously subjected to 'bu-bu' chants while in 2000 France midfielder Patrick Vieira suffered racist abuse on the field from Serbian midfielder Sinisa Mihajlovic while playing for Arsenal against Lazio in the Champions League. Italy, however, has also witnessed the creation of anti-racism groups and outporings of support for black or non-white players who have been subjected to racism. When, during the 2000-2001 season Serie B (second division) side Treviso were threatened with relegation some of the club's fans began abusing their own striker, Nigerian Akeem Omolade. 

In solidarity, Treviso's players took to the pitch at their next home game with their faces painted black. It is likely to take more to change attitudes, but the times may be about to change and clubs, it seems, are beginning to act. After repeated fines this season for 'discriminatory abuse' by fans, Juventus coach Antonio Conte recently hit out at the "idiots" among the Bianconeri support. Juve director general Beppe Marotta, announcing an anti-racism drive, admitted, however: "We know that football can't do much on its own, it requires a change of culture and education." 

Boateng meets Blatter 24 hours after the Ghanaian gave an anti-racism speech at the UN (United Nations) in Geneva, where he later watched Italy take on Brazil in a friendly. "Racism doesn't go away. If we don't confront it, it will spread," Boateng told delegates. It could take a decision by Blatter to add much-needed momentum. Reacting to racism in Russian football this season, Blatter admitted it may take sanctions ranging from points deduction or even demotion to get the message through. "Without serious sanctions nothing will ever change," said the head of world football.

Agence France-Presse
source : the jakarta globe

0 Hospitality Panel Names Best Hotels in Indonesia

A panel of hospitality industry leaders and consultants has revealed the nine best hotels in the country under the inaugural Hospitality Investment World Indonesia Hotel Awards competition. The awards were grouped under three main categories and the winners were decided by a panel that evaluated 61 nominations, a statement from the organizers obtained in Jakarta on Friday said. In the hotel brands category, Accor was named best global hotel chain, Santika Indonesia Hotels & Resorts won best local hotel chain, Harris Hotel took home best mid-range hotel chain and best economy hotel chain went to Fave Hotel. 

In the individual property category, the St. Regis Bali Resort was declared the best luxury hotel, Alila Villas Soori was named best boutique hotel, Pullman Jakarta Central Park won best business hotel and W Retreat & Spa Bali earned the title of best resort hotel. The Tugu Hotels Group won the HIW culture award. The competition was conducted in conjunction with the 2nd Hospitality Investment World Indonesia 2013 conference in Jakarta earlier this week. 

The panel of judges for this year included Bill Barnett, managing director of C9 Hotelworks; Wiryanti Sukamdani, chairman of the Indonesia Hotel & Restaurant Association; Mimi Hudoyo, editor at Travel Trade Media; James Stuart, managing partner of The Brand Company; and Horwath, director of Rio Kondo. The conference, held with the support of the Ministry of Tourism and Creative Economy, brought together more than 200 hotel operators, owners and industry experts in the Indonesia hospitality market.

source : the jakarta globe