Monday, September 12, 2011
Floods chaos worsens in Pakistan
More than 200 people have died and millions remain affected after two weeks of flooding in Pakistan's southern Sindh province, officials say.
The situation is worsening each day as water levels are rising because of poor drainage, the head of Pakistan's disaster management body said.
The UN has begun relief work but more rain has been forecast for the area.
Meanwhile, in India's eastern Orissa state more than one million have been displaced and 16 killed in floods.
About 2,600 villages have been submerged across 19 districts. The army and navy have been called in to help as many villagers are still stranded and dependent on food drops from helicopters.'Huge' crop losses
Heavy monsoon rains have been battering South Asia for days but southern Pakistan has borne the brunt of the bad weather in recent weeks.
Almost one million houses there have been destroyed or damaged and floods have affected nearly 4.2m acres of land, the UN says.
The BBC's Syed Shoaib Hasan in Karachi says that the rain is heaping misery on the hundreds of thousands living out in the open. Many people remain stranded on high ground and rooftops surrounded by flood waters, our correspondent says.
The United Nations Children's Fund, Unicef, said up to 2.5 million children had been affected.
One official said children and families, many of them still recovering from last year's devastating floods, are in urgent need of help before the situation worsens.
More rain has been forecast for the coming days.
"The situation in Sindh is already serious and there will be more flooding and more problems because of these rains," Arif Mehmood, a meteorology official, is quoted as saying by the Reuters news agency.
In other developments:
Officials in Badin district are said to have issued a warning to people to vacate their homes and breaches in several canals have forced evacuations in Mirpurkhas town
After Pakistan's leaders appealed for international help, China pledged $4.7m (£2.96) for urgent humanitarian assistance
Pakistan's disaster management authority said it was working to quantify what it called the "huge" losses in cash crops such as sugar cane and cotton
Officials in Orissa, India, said at least 61,000 people had been evacuated to safety and relief and rescue operations had begun.
Several rivers, including the Mahanadi, are overflowing and flood waters have severed a number of key road links.
Some areas had been cut off due to breaches in river banks and embankments and helicopters were the only way to bring food and water to people stranded there, Mr Mohapatra said.
Orissa's Chief Minister Naveen Patnaik said that the authorities were taking all measures to bring aid to those affected, adding that the state might seek help from central government.
Officials said the situation was expected to get better soon as rains had stopped and the water level in the Mahanadi and other rivers had begun to recede.
Pakistan's disaster management authority said it was working to quantify what it called the "huge" losses in cash crops such as sugar cane and cotton
Officials in Orissa, India, said at least 61,000 people had been evacuated to safety and relief and rescue operations had begun.
Several rivers, including the Mahanadi, are overflowing and flood waters have severed a number of key road links.
Some areas had been cut off due to breaches in river banks and embankments and helicopters were the only way to bring food and water to people stranded there, Mr Mohapatra said.
Orissa's Chief Minister Naveen Patnaik said that the authorities were taking all measures to bring aid to those affected, adding that the state might seek help from central government.
Officials said the situation was expected to get better soon as rains had stopped and the water level in the Mahanadi and other rivers had begun to recede.
Turkey: Israel's raid on Gaza flotilla was 'cause for war'
Turkish Prime Minister Tayyip Erdogan saw "cause for war" with Israel last year after a deadly raid on a Turkish ship headed for Gaza, according to a transcript of a recent interview.
State news agency Anatolia released late on Sunday what it said was an original Turkish-language transcript of an interview Erdogan gave to Al Jazeera television last week. It included elements not broadcast as well as original wording for sensitive comments that had been transmitted only in Arabic translation.
Among previously unpublished elements, Erdogan said Israel's deadly raid last year on the Gaza-bound flotilla would have justified going to war: "The attack that took place in international waters did not comply with any international law. In fact, it was cause for war. However, befitting Turkey's greatness, we decided to act with patience," he said.
The transcript in Turkish from Anatolian, apparently provided by Erdogan's office, also gave the following account of the prime minister's response to a question on what Turkey would do to ensure free passage for its ships in the Mediterranean.
"Right now, without a doubt, the primary duty of Turkish navy ships is to protect its own ships," Erdogan said.
"This is the first step. And we have humanitarian aid that we want to carry there. This humanitarian aid will not be attacked any more, as it was the case with Mavi Marmara."
Turkey has downgraded diplomatic ties and halted defense-related trade after Israel's confirmation last week that it would not apologize for the raid on the Mavi Marmara in May 2010 in which nine Turks were killed.
Turkey and Israel had tried to mend fences before the publication of a UN report two weeks ago, which deemed the blockade of the Gaza Strip a legal means to stem the flow of arms to Palestinians.
Israel has said it will continue the blockade and that it wants to ease tensions with its former ally.
The prospect of a showdown at sea with Turkey, a NATO power and fellow ally of the United States, rattled Israelis already on edge over political upheaval in the Arab world and Iran's nuclear program. Washington has appealed for restraint.
Erdogan, seeking to expand Turkey's regional influence, travels to Cairo on Monday as part of a tour of three Arab countries likely to be scrutinized by Israel, whose once warm ties with both Muslim states have been shaken.
Stock market sell-off continues as eurozone fears grow
Global stock markets continued a sell-off triggered last week on heightened worries of a Greek debt default that could hurt the global economy.
European shares follow Asia lower, with the FTSE 100 sliding 122 point - or 2.4pc - to 5091.67, France's CAC tumbling 4.4pc, and Germany's DAX losing 3.1pc. Markets in Italy, Spain and Athens fell 3.2pc, 3.7pc and 3.4pc respectively.
US stock index futures pointed to Wall Street opening sharply lower on fears over a downgrade for French banks over their exposure to Greece where the risk of a debt default rose again after Germany hardened its stance on resuces.
Deutsche Bank and BNP Paribas fell about 10pc while Societe Generale shed 8pc after it said it was accelerating plans to raise over €4bn. In Britain bank shares fell after the Vickers report recommended lenders separate their retail and investment banking arms.
Worries of a rift between German and the rest of the European Central Bank increased on Friday after the surprise resignation from the central bank of Juergen Stark, a key member and harsh critic of its bond buying policy.
Debt-laden Greece highlighted its need for the next tranche of money from the earlier €110bn bailout, when it said it has the cash to operate until next month.
The comments by Filippos Sachinidis, the Greek deputy finance minister, confirm recent reports the country had cash for only a few more weeks, despite Greek Prime Minister George Papandreou insistance over the weekend that his country would not default.
"We have definitely manoeuvring space within October," Mr Sachinidis said in an interview on television channel Mega, responding to questions how much longer the government will be able to pay wages and pensions.
"We are trying to make sure the state can continue to operate without problems," he said.
Earlier, Japan's benchmark Nikkei hit a 28-month low, closing down 2.3pc - its lowest closing level since April 2009. Japan's powerhouse export sector was hit hard by the ongoing strength of the Japanese currency, which makes products more expensive overseas.
The weekend resignation of Japan's new trade minister, Yoshio Hachiro, after just eight days in office also unnerved the Tokyo market.
The Hang Seng shed 4.2pc while Australia's S&P/ASX 200 plunged 3.7pc. Mainland China shares were closed for a national holiday.
"The political theatre playing out in Europe continues to drive investors towards the exits with policymakers adopting an increasingly tough line with respect to Greece as bailout fatigue in northern Europe starts to manifest itself alongside austerity fatigue in southern Europe," said Michael Hewson, market analyst at CMC Markets.
Europe's debt crisis has been one of the main reasons behind the turmoil in financial markets over the past few weeks, though concerns over the global economic recovery have contributed, too.
There is a raft of economic data out this week, particularly from the US, and the hope is that many indicators will recover from the battering they took last month when concerns over a possible US default hung heavily on sentiment.
The Telegraph
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The comments by Filippos Sachinidis, the Greek deputy finance minister, confirm recent reports the country had cash for only a few more weeks, despite Greek Prime Minister George Papandreou insistance over the weekend that his country would not default.
"We have definitely manoeuvring space within October," Mr Sachinidis said in an interview on television channel Mega, responding to questions how much longer the government will be able to pay wages and pensions.
"We are trying to make sure the state can continue to operate without problems," he said.
Earlier, Japan's benchmark Nikkei hit a 28-month low, closing down 2.3pc - its lowest closing level since April 2009. Japan's powerhouse export sector was hit hard by the ongoing strength of the Japanese currency, which makes products more expensive overseas.
The weekend resignation of Japan's new trade minister, Yoshio Hachiro, after just eight days in office also unnerved the Tokyo market.
The Hang Seng shed 4.2pc while Australia's S&P/ASX 200 plunged 3.7pc. Mainland China shares were closed for a national holiday.
"The political theatre playing out in Europe continues to drive investors towards the exits with policymakers adopting an increasingly tough line with respect to Greece as bailout fatigue in northern Europe starts to manifest itself alongside austerity fatigue in southern Europe," said Michael Hewson, market analyst at CMC Markets.
Europe's debt crisis has been one of the main reasons behind the turmoil in financial markets over the past few weeks, though concerns over the global economic recovery have contributed, too.
There is a raft of economic data out this week, particularly from the US, and the hope is that many indicators will recover from the battering they took last month when concerns over a possible US default hung heavily on sentiment.
The Telegraph
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UBS boss says some banks may need state help - report
(Reuters) - Some banks may have to get help from the state as plunging share prices could make it difficult to raise capital, UBS (UBSN.VX) chief executive Oswald Gruebel told Swiss newspaper Sonntag in an interview published on Sunday.
Gruebel said his comment did not apply to the top two Swiss banks as Credit Suisse (CSGN.VX) and UBS were now less likely, compared with 2008, to be affected by European banks that found themselves in difficulty given that interbank trading was no longer as important.
Gruebel said future returns from investment banking were unlikely to be 20 percent and above but around 10 percent, adding this also applied to the big players on Wall Street.
UBS itself had to be rescued by the state in 2008 after massive losses on toxic assets.
Gruebel criticised the Swiss National Bank's recent move to set an exchange rate cap on the Swiss franc at 1.20 euros.
"We, as a small country with the franc, can't dictate an exchange rate against the euro. That is impossible in the long term. Despite this, I hope the effect that has been reached is sustainable," he said.
Separately, Credit Suisse chairman Urs Rohner, interviewed by NZZ am Sonntag, welcomed the SNB move to cap the franc.
"The franc was massively overvalued, as the actual purchasing power of the euro is estimated at about 1.35 francs to 1.40 francs," Rohner was quoted as saying.
Credit Suisse analysts expect the euro to rise to 1.25 francs in the next three months and to 1.30 francs in the next 12 months, Rohner said.
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German minister raises ‘orderly default’ for Greece
Philipp Roesler, Germany’s economy minister, said an “orderly default” for Greece could no longer be ruled out and branded the country’s deficit-reduction measures “insufficient”.
The warning is likely to spook financial markets further and comes despite Greece yesterday announcing a fresh €2bn (£1.7bn) of budget cuts and the introduction of a country-wide real estate tax.
Evangelos Venizelos, the finance minister, said the cuts and tax measure were necessary to allow Greece to meet obligations demanded by the European Union and IMF in exchange for bail-out funds.
Writing in the Die Welt newspaper, Mr Roesler said: “To stabilise the euro, we must not take anything off the table in the short run. That includes as a worst-case scenario an orderly default for Greece if the necessary instruments for it are available.”
He said such a default would mean “re-establishing the affected state’s ability to function, perhaps with a temporary restriction of its sovereign rights”.
Mr Roesler’s comments come as Germany’s Der Spiegel magazine said finance minister Wolfgang Schaeuble had ordered preparations be made for a Greek bankruptcy. The report claimed the German government is preparing for two eventualities under that scenario – Greece staying in the euro or the country exiting and reintroducing the drachma. Despite the speculation, the European Commission said it was sending a team to Athens “in the next few days” tasked with finalising the payment of a new tranche of loans for Greece by the end of the month.
EU economy commissioner Olli Rehn said the team – which represents the troika of the Commission, the European Central Bank and the IMF – would “provide technical support to the Greek authorities”. The previous team was pulled out of Athens earlier this month because of a lack of progress by the Greek government in reducing its deficit.
Mr Rehn on Sunday praised Greece’s new cuts, saying they would “go a long way to meeting the fiscal targets” for 2010 and 2011. “Greece needs to meet the agreed fiscal targets and implement the agreed structural reforms to fulfil the conditionality and ensure funding from its partners,” he said.
G7 finance ministers late on Friday vowed to “take all necessary actions to ensure the resilience of banking systems and financial markets”. However, underlining the difficulties facing German authorities, a survey showed 53pc of Germans oppose further aid for Greece and would not save the country from default should it fail to fulfil loan criteria.
Report of $273.2 Billion EU Bank Hole Misleading: Lagarde
International Monetary Fund (IMF) chief Christine Lagarde said on Saturday that reports of a draft IMF document showing a $273.2 billlion shortfall in European banks' capital were misleading and the lender was still finalizing its study.
"There has been misreporting about the 200 billion euros, this number is tentative," Lagarde told a news conference after G7 and G8 finance talks in the southern French city of Marseille.
"This is not a stress test that the IMF conducts nor is it the global capital need for European banking institutions, that it is not, and we are currently in discussions with our European partners to assess the global methodology until we reach a tentative draft. It will be published before the end of September."
CNBC
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German Finance Minister Prepares for Possible Greek Bankruptcy
German Finance Minister Wolfgang Schäuble, who is reportedly doubtful that the country can be saved from bankruptcy, is preparing for the possibility of Greek insolvency. Officials in his ministry are currently reviewing scenarios for handling such a situation, exploring what it might mean for the rest of the euro zone. Under the first scenario for a Greek bankruptcy, the country would remain in the euro zone. Under the other, Athens would abandon the common currency and reintroduce the drachma.
Bankruptcy Could Create Credit Crunch
One of these key instruments would be credit lines provided to countries like Spain or Italy if investors stop lending them money after a Greek bankruptcy. If banks were forced to write off the billions in Greek government bonds on their books, they could become reliant on billions in rescue fund aid in numerous euro-zone countries. Both developments are to be expected in a Greek insolvency, regardless of whether the country exits the euro or not.
Volker Bouffier, the governor of the state of Hesse, which is home to Germany's financial capital Frankfurt, is a member of Chancellor Angela Merkel's conservative Christian Democratic Union (CDU) party, as is Schäuble. Bouffier is now urging that the possibility for countries to leave the euro zone be created quickly. Current European Union treaties provide no provisions for a country to abandon the currency.
"If the savings and reform efforts of the Greek government aren't successful, then we need to ask the question of whether we need new rules to make it possible for a euro country to leave the currency union," Bouffier told SPIEGEL.
Read the full story on Monday on SPIEGEL ONLINE International.
dsl/SPIEGEL
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