Geithner Says Deep Spending Cuts Would Hurt Economy

U.S. Treasury Secretary Timothy F. Geithner said spending cuts in the Obama administration’s fiscal 2013 budget plan should be phased in gradually to protect the economic recovery. Bloomberg's Peter Cook reports on Bloomberg Television's "InBusiness With Margaret Brennan." Bloomberg

Greece on the brink of eurozone exit

The relationship between Greece and the eurozone has hit a new low.

Greece is in turmoil — its people irate and its economy buckling under austerity. Eurozone powers, meanwhile, have lost patience with its failed economic reforms.

Severing monetary ties between the two was once written off as mutually disastrous and highly unlikely. Consensus held that indefinitely bailing out Greece would be preferable to an eviction.

It’s time to revisit that assumption, some influential politicians are now saying, adding to a growing refrain.

“There is a distinct chance that Greece is ultimately going to have to leave the eurozone,” said Craig Alexander, chief economist at Toronto-Dominion Bank. “The global financial system should be able to cope with that.”

The campaign to improve Greece’s fiscal situation and reduce its debt has had little success.

Its economy shrank by an annualized rate of 7% in the fourth quarter of 2011, the country’s statistics service said on Tuesday.

The day before, the Greek parliament approved another round of austerity to secure another bailout from the European Union and the International Monetary Fund.

The forces of austerity and recession have become locked in a perpetuating cycle, Mr. Alexander said.

Greece is a prime example of a country forced to “pursue austerity too quickly,” he said.

This week’s €3.3-billion in wage, pension and job cuts, however, failed to satisfy eurozone leaders, who insist the Greeks identify another €325-million in budget cuts to close the 2012 fiscal gap.

“Furthermore, I did not yet receive the required political assurances from the leaders of the Greek coalition parties on the implementation of the program,” said Eurogroup President Jean-Claude Juncker Tuesday after cancelling a meeting of the region’s finance ministers.

The IMF and EU want Greece to provide a full accounting of its budget reforms before approving a second bailout of €130-billion, as well as a €100-billion writedown of Greek debt.

The latest austerity vote, however, was more than enough to set off the Greek people.

“The social explosion will come one way or another, there is nothing they can do about it any more,” said trade union leader Ilias Iliopoulos after violence spread across Athens.


Now in its fifth year of recession, Greece’s unemployment rate hit 21% in November, while half of young Greeks are jobless.

Businesses close down daily across the country, some drugs are in short supply and some civil servants have seen their salaries halved.

The country’s recession could become one of the most severe of modern times, said Uri Dadush, an economist with the Carnegie Endowment in Washington.

“On the current path – which is not sustainable in my view – we may very well see Greek GDP go down 25-30%, which would be historically unprecedented. It’s a disastrous crisis for them,” said Mr. Dadush, a former senior World Bank official.

All to little effect. Greece has irritated its financiers by delaying implementation of austerity commitments. Meanwhile, they have to relieve their fiscal pressures.

“It’s a fine line to walk between a survivable economic environment and the austerity that’s so desperately needed to pull Greece back onside,” said Eric Lascelles, chief economist at RBC Global Asset Management. “But tragically, I don’t think there’s much option here. You could completely wipe out Greek debt and the government would still be spending way more than it’s taking in.”

That intractable fiscal problem has some questioning whether Greece is destined for bankruptcy and an exit from the euro.

“It might be something which would allow Greece also to get a new start … to create an economy that can create jobs,” Luxembourg Finance Minister Luc Frieden said on Monday in Washington.

While not the preferred scenario, the impact on the eurozone would be “less important than a year ago,” he said.

German Finance Minister Wolfgang Schaeuble shared that sentiment, telling Germany’s public broadcaster on Monday: “We are better prepared than we were two years ago.”

And while there may ultimately be some benefit to Greece of defaulting, leaving the currency bloc and devaluing its currency, the upfront cost would be very steep — one that Greek politicians have refused to contemplate.

“A disorderly default would set the country on a disastrous adventure,” Greek Prime Minister Lucas Papademos told parliament this week. “It would create conditions of uncontrolled economic chaos and social explosion.”

Financial Post

Iran loads first domestically made nuclear fuel

Iran has staged an elaborate ceremony to unveil new developments in its nuclear programme.

Tehran says it has used domestically-made nuclear fuel in a reactor for the first time, and also unveiled more efficient enrichment centrifuges.

State television showed President Ahmadinejad inspecting the rods as they were loaded into a reactor.

Western countries fear Iran wants to make nuclear weapons; Tehran says it only wants to produce its own energy.

The government unveiled the "new generation" of faster, more efficient uranium enrichment centrifuges at its Natanz facility in the centre of the country.

The head of Iran's Atomic Energy Organisation, Fereydoon Abbasi Davani, said they were three times more efficient than their existing capacity.

President Ahmadinejad was wearing a white coat at the research reactor in Tehran, and was also shown attending the ceremony to mark what he has called the great achievements in the nuclear sphere.

He said last week that his country would never halt its programme to enrich uranium.Home-grown industry

In January the International Atomic Energy Agency (IAEA) confirmed that Iran had started the production of uranium enriched up to 20% at its Qom plant.

A deal to provide fuel for the reactor from abroad collapsed two years ago - at which point Iran decided to make the fuel itself.

One central point links these developments, says the BBC's Iran correspondent James Reynolds: Iran is determined to show that it can master nuclear technology on its own, and that international sanctions against its nuclear programme will make no difference.

The US and the European Union have recently imposed new sanctions targeting Iranian oil sales as part of a drive to increase international pressure on Tehran over its nuclear programme.

Talks between Iran and six world powers - the US, UK, France, Germany, Russia and China - on the nuclear programme collapsed a year ago and show little sign of resuming.

BBC

Female Passengers Say They Were Targeted for TSA Body Scanners

TSA agents in Dallas singled out female passengers to undergo screening in a body scanner, according to complaints filed by several women who said they felt the screeners intentionally targeted them to view their bodies.

One woman who flew out of Dallas-Ft. Worth International Airport several months ago said a female agent sent her through a body scanner three times after the agent commented on her “cute” body.

“She says to me, ‘Do you play tennis?’ And I said, ‘Why?’‘You just have such a cute figure,’” Ellen Terrell recalled to CBS News in Dallas.

Terrell said the female agent appeared to be acting on a request from male agents who were in a separate room viewing the scans and who apparently asked the agent to send Terrell back through the scanner twice because the scan was blurry.

After the third scan, Terrell said the agent seemed frustrated with her co-workers in the screening room. “She’s talking into her microphone and she says, ‘Guys, it is not blurry, I’m letting her go,’” Terrell said.

Terrell, who was traveling with her husband at the time, told the TV station, “I feel like I was totally exposed. They wanted a nice good look.”

As CBS noted in its story, when TSA agents pat down a female traveler who opts out of a scanner, only female agents are allowed to touch the female passenger. But the TSA allows male agents to view the images of female passengers.

Texas State Representative Lon Burnam of Fort Worth told CBS that this was not the first time he’d heard such complaints.

So the local CBS station filed a records request to obtain all of the complaints filed by passengers and found a pattern among the 500 complaints the TSA released. The names of the complainants were redacted, so CBS wasn’t able to contact them for further details, but they included several complaints from women who noted that the agents were singling out women for screening. One woman wrote in her complaint that she felt “targeted by the TSA employee to go through the see-you-naked machine because I am a semi-attractive female.”

Another woman wrote that “the screener appeared to enjoy the process of picking someone rather than doing true random screening. I felt this was inappropriate. A woman behind me was also ‘randomly selected.’”

One woman wrote that after she went into the scanner, “I saw [the male agent] going to the private room where x-rays are, to speak to the guy [in] that room.”

A complainant indicated that “When I looked around, I saw that there were only women that were ‘told’ to go through this machine. There were no men.”

When asked about the complaints, the TSA released a statement to CBS saying that scanners at the Dallas-Ft. Worth airport, as well as at the Love Field airport, had been upgraded so that they now showed only a generic body outline, rather than a detailed image.

“All of our millimeter wave technology units including those in Dallas have been upgraded with additional privacy enhancements that no longer display passenger-specific images,” the TSA said in a statement. “To further ensure passenger privacy and anonymity, a privacy filter was applied to blur all images.”

Threat Level

Moody’s Cuts European Sovereigns

Moody’s Investors Service cut the debt ratings of six European countries including Italy, Spain and Portugal and revised its outlook on the U.K.’s and France’s top Aaa ratings to “negative,” citing Europe’s debt crisis.

Spain was downgraded to A3 from A1 with a negative outlook, Italy was downgraded to A3 from A2 with a negative outlook and Portugal was downgraded to Ba3 from Ba2 with a negative outlook, Moody’s said. It also reduced the ratings of Slovakia, Slovenia and Malta.

“The uncertainty over the euro area’s prospects for institutional reform of its fiscal and economic framework” and the resources that will be made available to deal with the crisis, are among the main drivers of Moody’s action, the ratings company said.

The euro slipped 0.2 percent to $1.3154, and the pound weakened 0.3 percent to $1.5723.

Standard & Poor’s took away France’s and Austria’s top credit ratings last month in a string of downgrades. Investors poured money into the government bonds of nations such as France and Austria even after the countries lost their AAA ratings at Standard & Poor’s last month.

Moody’s also lowered its outlook on Austria’s Aaa rating today to negative outlook. Malta’s rating was downgraded to A3 from A2 and given a negative outlook, and Slovakia and Slovenia were both downgraded to A2 from A1 and given negative outlooks.

‘Weak’ Prospects

“Europe’s increasingly weak macroeconomic prospects, which threaten the implementation of domestic austerity programs and the structural reforms that are needed to promote competitiveness,” are also factors, Moody’s said in a statement. These factors will continue to affect market confidence, “which is likely to remain fragile, with a high potential for further shocks to funding conditions for stressed sovereigns and banks.”

French and Austrian securities beat AAA rated company debt since the two nations were deprived of the highest ranking at S&P on Jan. 13. U.S. Treasuries returned three times as much as AAA corporate bonds since the world’s biggest economy was cut by one rank in August.

Bloomberg

Europe economy: Recession hits Italy and Netherlands

Two of the eurozone's biggest economies have fallen into recession, according to the latest economic figures.

Italy and the Netherlands both saw their economies shrink by 0.7% in the fourth quarter, the second consecutive quarter of economic contraction.

Germany had its first negative quarter since 2009 with a decline of 0.2%, compared with the previous quarter.

But in France there was surprise growth of 0.2% at the end of last year, attributed to healthy export growth.

Overall the 17 nations that make up the eurozone saw economic activity shrink 0.3% in the fourth quarter. By comparison the United States reported growth of 0.7%.

The eurozone has not slipped into recession as it reported growth of 0.1% in the third quarter.'Better than feared'

For 2011 as a whole, the French economy grew by 1.7% and Germany 3%.

Europe's debt crisis has already pushed Greece, Portugal and Belgium into recession, defined by two consecutive quarters of contraction.

Economists forecast that Germany is likely to avoid that scenario and say the latest growth figures could have been worse.

"This is better than feared after retail sales and industrial production turned out badly in December. The decline is due to the euro crisis. It caused a drastic loss in confidence among companies and consumers." said Christian Schulz, an economist at Berenberg Bank.

"Action from the ECB and the government has restored confidence. There is hope that we will emerge quickly from the economic dip. We expect growth again in the second quarter at the latest, provided that the euro crisis remains under control." he said.

The French growth figures were better than forecast, with many analysts having expected the economy to have contracted in the fourth quarter.

"Each of the three main components of the economy - foreign trade, household consumption and investment - had a positive contribution in the last quarter of 2011." said Finance Minister Francois Baroin in a statement.

At the time the agency blamed Europe's debt crisis and the failure of Europe's leaders to tackle the region's problems.

European growth rates
	4th quarter	3rd quarter	2011
Eurozone	- 0.3%	0.1%	1.5%
Germany	- 0.2%	0.6%	3.0%
France	0.2%	0.3%	1.7%
Italy	- 0.7%	- 0.2%	0.4%
Austria	- 0.1%	0.2%	1.2%
Netherlands	- 0.7%	- 0.4%	1.3%

Money printing, central banking scammers should be locked in prison

U.S. carrier crosses Hormuz amid rising Gulf tensions

(Reuters) - A U.S. aircraft carrier strike group sailed through the Strait of Hormuz Tuesday more than a month after Iran warned a different carrier -- USS John C. Stennis -- not to return to the Gulf as Iranian navy boats sailed by.

Iran has threatened to close the Strait of Hormuz, used for a third of the world's seaborne oil trade, if Western moves to ban Iranian crude exports cripple its energy sector.

Tuesday aircraft carrier USS Abraham Lincoln -- part of the Bahrain-based U.S. Fifth Fleet -- sailed through the strait of Hormuz with the Cape St George destroyer cruising behind.

"If you listen to the (Iranian) rhetoric ... you might think that there are some tensions," Admiral Troy Shoemaker, commander of the carrier strike group nine, told Reuters.

"We obviously pay attention to that as we go through but I think we are conducting the transit as part of our normal business ... Our intention is to keep it professional and routine."

Iran is at loggerheads with the West over its disputed uranium enrichment program. It says its nuclear program is for generating electricity.

The United States, like other Western countries, says it is prepared to talk to Iran but only if Tehran agrees to discuss halting its enrichment of uranium. Western officials say Iran has been asking for talks "without conditions" as a stalling tactic while refusing to put its nuclear program on the table.

The commander of U.S. naval forces in the Gulf region said Sunday Iran had built up its naval forces in the Gulf and prepared boats that could be used in suicide attacks, but the U.S. Navy could prevent it from blocking the Strait of Hormuz.

Military experts say the U.S. Navy's Fifth Fleet patrolling the Gulf - which always has at least one giant supercarrier accompanied by scores of jets and a fleet of frigates and destroyers - is overwhelmingly more powerful than Iran's navy.

Iran Vows ‘Important’ Nuclear Announcement Within Days

Iranian President Mahmoud Ahmadinejad said on Saturday that Tehran would soon reveal “major” progress in its disputed nuclear program.

“Iran will announce in the next few days some very important and major nuclear achievements,” Ahmadinejad said at a rally attended by tens of thousands of people to mark the 33rd anniversary of the 1979 Islamic revolution.

Ahmadinejad’s appearance at the Freedom Square rally was met by sustained cheers from demonstrators holding portraits of Iran’s supreme leader, Ayatollah Ali Khamenei, and placards that read “Down With USA” and “Down With Israel.”

The rally, which took place at the foot of the snowy Alborz mountains, was also attended by Ismail Haniya, the head of the Islamist group Hamas in the Gaza strip. A military helicopter swooped low over the crowd to scatter confetti after Ahmadinejad’s arrival.

Ahmadinejad was speaking amid increasing tensions over Iran’s nuclear program, which Western countries and Israel suspect is aimed at the creation of atomic weapons. Iran says the program is designed solely for the production of civilian energy.

The United States and European countries have recently tightened sanctions against Iran and the European Union will ban Iranian oil imports by July.

Speculation has also been growing in recent weeks that Israel may launch an attack against Iran to counter what it describes as a major threat to its national security.

The United States has also refused to rule out force. The U.S. Defense Secretary Leon Panetta was reported as saying earlier this month there was a strong possibility Israel could strike between April and June this year.

Iran has warned it will respond militarily to any attack. It has also threatened to block the Strait of Hormuz, a vital Gulf shipping route. Iranian Foreign Minister Ali Akbar Salehi told state television on Friday that Iran was “prepared” for the “worst case” scenario.

“The Islamic Republic of Iran takes these threats seriously and we are prepared in every respect and have plans for the worst-case scenarios,” Salehi said, as reported by Iran’s English-language Press TV website.

Ahmadinejad was defiant on Saturday, warning the West that it would never force Iran to succumb to pressure.

“Study our history, our culture,” he said. “I tell you openly, the Iranian nation will never give in to the language of force.

“The West and Israel think only of their own interests… but they must know their time will come,” he said.

Members of Iran’s elite Revolutionary Guard pumped their fists in the air after Ahmadinejad’s comments.

Ahmadinejad also reiterated that Tehran was open to a revival of international talks on its nuclear program, but said that the West must “respect Iran’s rights.”

“We have always been prepared to hold talks in a framework of equality ad mutual respect,” he added.

© RIA Novosti.

Peaceful Nuclear Energy or Nuclear Weapons?

Iran says it has an inalienable right to nuclear energy and has refused to discuss uranium enrichment. Western powers say there is no point to talks without a discussion of the issue.

Sanctions are already biting in Iran, with prices for basic food stuffs having doubled in recent weeks. But shopkeepers were unwilling to go on record about inflation.

“I don’t need any problems,” one store owner said. “Our government has not mentioned the price increases and I might say the wrong thing.”

Commodities traders said this week that Iran was engaging in barter trade, using gold or oil for food, to get around payments problems in international banks closed by sanctions.

The demonstrators at Saturday’s rally, many of whom had been bussed in for the event, appeared ready to make sacrifices for the sake of Iran’s nuclear rights.

“I will become a nuclear scientists,” read a placard worn by one small girl. “No more negotiations!” read another placard held by a teenager.

Ahmadinejad denied on Saturday that sanctions were having a major effect, saying the economy was in good shape.

Revolution Day saw clashes between police and opposition protesters in 2009 but there were no reports of disturbances Saturday. Email services on the eve and day of the rally were down across Tehran.

The rally came just weeks before parliamentary elections, the first major polls in Iran since the disputed 2009 presidential vote at which Ahmadinejad secured a second term.

Opposition figures claim the vote was rigged and eight months of protests ensued before a government crackdown finally put an end to the demonstrations.

 RIA Novosti

Scientists Print Cheap RFID Tags On Paper

A way to print Radio Frequency Identification (RFID) chips right onto paper has been discovered by a team of scientists from University of Montpellier.

The technique uses a thermal evaporation process to deposit of thin aluminium coil antennas on sheets of paper which can later be used to create packaging or printed material. Researchers claim that this works out to be cheaper than any other method of  producing RFID tags, allowing the technology to replace both barcodes and QR codes.

Circuits everywhere

RFID tags are an essential component of modern shopping and logistics and are found in everything from DVD cases to casino chips and even passports. They are used to prevent shoplifting, track pets and, if you live in London, your Oyster card has one at its core.

The tags can both store information and provide a way to track the item to which the tag is attached. Unlike barcodes, they use radio signals, which can be detected over a short range, without a visual contact between the tag and the reader device.

So-called “passive” RFID tags, using NFC (near-field communications) do not need a power source. The reader sends a signal, which induces a current in the tag, that is used to power a radio transmitter, sending a signal back to the reader.

Even passive, NFC-based RFID tags are relatively expensive when compared to barcodes, because they contain some electronics instead of just a printed image, so their use is not as widespread. The ability to produce tags at a fraction of the present cost, using a printing technique could change that.

According to the article published in International Journal of Radio Frequency Identification Technology and Applications, the thermal evaporation process makes the RFID tag cheaper, as it requires less metal than conventional designs. The scientists involved said using aluminium might reduce the costs of tagging with an RFID chip by as much as 80 percent.

Aluminium is a lot less expensive than copper or silver, which are used in some types of RFID tag. This is good news for inventory users operating millions of RFID tags in their systems.

“Prototypes are functional and easily detected by the reader; the next step is to optimize the design for each family of RFID chips,” said Camille Ramade, spokeswoman for the research team. ”This will significantly improve performance while maintaining the same low-cost technology on paper.”

Tech Week Europe