Browsing all articles tagged with finance

Record Unemployment Low Inflation Highlight Europe’s Pain

Unemployment has reached a new high in the euro zone and inflation remains well beneath the European Central Bank’s target, pacing pressure on EU leaders and the ECB for action to stimulate the bloc’s sickly economy.

Joblessness in the 17 nation currency area climbed to 12.2 percent in April, EU statistics office Eurostat stated on Friday spoting a new record since the data series began in 1995.

With the euro zone in its greatest recession since its creation in 1999, consumer price inflation was far lower the ECB’s target of just below 2 percent, coming in at 1.4 percent in May slightly higher then April’s 1.2 percent rate.

That augment may quieten concerns regarding deflation, however the deepening unemployment crisis is a threat to the social fabric of the euro zone. Almost two-thirds of young Greeks are not capable to find work exemplifying southern Europe’s lost generation.

Policymakers and economists including Germany’s finance minister Wolfgang Schaeuble have stated the greatest menace to the unity of the euro zone is now social collapse from the crisis, rather than market-driven factors.

In France, Europe’s second biggest economy, the number of jobless rose to a record in April while in Italy the unemployment rate hit its highest level in at least 36 years, with 40 percent of young people out of work.

Thousands of demonstrators from the anti-capitalist Blockupy movement cut off access to the ECB in Frankfurt on Friday to protest against policymakers handling of Europe’s debt crisis.

Some economists suppose the ECB, which meets on June 6 will have to go beyond an additional interest rate cut and consider a US style money printing program to breathe life into the economy.

Nick Matthews, a senior economist at Nomura International in London said we do not expect a strong recovery in the euro zone. It puts pressure on the ECB to deliver even more conventional and non conventional measures.


Tax Officials Cite Momentum, Challenges in Tax Revamp

Two US policymakers from opposed ends of the political spectrum on Friday stated thrust is building for a top-to-bottom revamp of the tax code, however the largest question is whether there is political will to get it done.

Mark Prater, a long-time Republican Senate tax counsel and Mark Mazur, assistant secretary for tax policy at the Treasury Department, cited major policy proposals and two years of public hearings and private meetings that have set the foundation for the first rewrite of the code since 1986.

Mazur, who is Treasury Secretary Jack Lew’s top policy aide on tax issues, said this year the stars are aligned for tax reform in a way they haven’t been, he and Prater spoke at a legal conference in Washington, at the moment it is just a matter of political will.

The two top tax writing lawmakers expect to push legislation through Congress this year to lower most tax rates and simplify the code that many Americans regard as far too complex.

They may have more political liberty to write a bill as Senate Finance Committee Chairman Max Baucus, a Democrat, is retiring following this term and House of Representatives Ways and Means Committee Chairman Dave Camp a Republican is term-limited as chairman.

President Barack Obama says he backs tax reform, while some have said it does not appear to be high on his agenda.

Mazur accepted there are tons of obstacles, including the divide between the parties on whether the tax reforms should produce more revenue. Democrats generally favor doing this as Republicans do not.

Prater, a tax policy aide to Senator Orrin Hatch the senior Finance Committee Republican, agreed energy is building. One advantage he quoted is the January 1 fiscal deal that lifts taxes on Americans making more than $400,000 a year and also established a budget baseline both parties agree on.

Prater said that the playing field is a lot clearer concerning where we are starting from.

He said on the question of whether a tax renovate should lift revenue, that to me is actually a political question that comes down to what the other pieces of the picture are.


Alaska Lawmakers Slash Oil Taxes Hope to Spur Output

Alaska official on Sunday gave final approval to a bill cutting state oil production taxes in a change supporters stated was needed to enhanced deteriorating output from aging fields but which critics say will severely damage the state’s finances.

The new system permitted by the Republican dominated legislature does away with a methodology that boost tax rates as oil prices climb, a centerpiece of the aggressive tax legislation championed by ex- governor Sarah Palin.

Alaska will compel a base rate of 35 percent on oil companies net profits in the state, swaping a 25 percent base rate that augmented by 0.4 percentage points for every $1 over a net wellhead price of $30.

Although the old tax system produced billions of dollars in surpluses for the state treasury, it meant Alaska’s tax rate topped 50 percent when oil prices were high. Palin’s successor, Governor Sean Parnell  said the cut would set the stage for future growth as the state tries to reverse decades of dropping oil output.

Parnell said in a statement we are indicating to the world that Alaska is back ready to compete, and ready to supply additional energy once again.

According to state Department of Revenue statistics Oil production, from Alaska’s North Slope peaked in 1988 at over 2 million barrels per day led by the Prudhoe Bay field which averaged 1.6 million bpd that year. Production in 2012 averaged 579,400 bpd, with Prudhoe Bay production losing to 265,200 bpd.

The tax change was supported by the three major North Slope oil producers, Conoco Phillips, Exxon Mobil Corp and BP Plc. The companies argued that Alaska’s current tax system is disciplinary and makes the state less attractive than other regions, such as Alberta and North Dakota.

Republicans stated the changes would ultimately coax additional oil into the aged Trans Alaska Pipeline. However minority Democrats railed against it, with Senator Bill Wielechowski saying it handed over billions of dollars, with no sequence attached.


Euro zone finance ministers Back 10 billion Euro Cyprus Bailout

Euro zone finance ministers backed a 10 billion euro bailout for Cyprus on Friday and the European Commission stated it would try to assist the island’s economy grow again with enhanced use of EU structural funds.

The ministerial support opens the way for numerous euro zone countries, including Finland and Germany to seek approval for the three year bailout in national parliaments, so that loan agreement with Nicosia can be signed by April 24.

The first tranche of the credit 9 billion of which will come from the euro zone and 1 billion from the International Monetary Fund will flow to Nicosia in mid-May.

The euro zone loans will have an average maturity of 15 years and highest maturity of 20 years.

The euro zone ministers said in a statement, The Euro group consider that the necessary elements are now in place to launch the relevant national procedures required for the formal support of the ESM financial assistance capability agreement for an amount of up to 10 billion euro’s, subject to IMF’s contribution.

To wrap its financing requirements over three years, Cyprus itself will have to come up with 13 billion euro’s of its own, with the mass of that sum coming from the closure of its Laiki bank and the reform of the Bank of Cyprus.

Olli Rehn told a news in conference that the amount that Cyprus would require to contribute on its own had been estimated a month ago at about 7 billion however the two sums were not directly alike, EU Economic and Monetary Affairs Commissioner.

If you seem at these two figures of 17 billion and the 23 billion for program financing, they are not strictly comparable as the construction of the first and second, or final package are different.


Gold Dropped As Cyprus Nears Bailout Arrangement

Gold dropped during the Monday’s trading session, because Cyprus reached a bailout plan with international lenders awaiting approval from euro zone finance ministers, consider on outlook for the safe haven of yellow metal.

The US dollar dropped 0.6 percent verses a basket of currencies on weakening safe haven demand, which gave some support to dollar denominated commodities including precious metal.

EU sources said that the European Union and Cyprus’s president the have decided the outlines of a rescue deal that would observe the formation of a bad bank and good bank and include the closing down of Cyprus’s second greatest lender.

Investors lift their net long positions in US gold by 63 percent to 70,193 contracts in the week to March 19, climbed up from a more than five year low of 39,631 contracts strike in early March.

Spot gold knock down 0.2 percent to $1,605.16 per ounce by 0005 GMT.

US gold was down $1.40 to $1,604.70.

Holdings of SPDR Gold Trust, the world’s largest gold backed exchange traded fund were remains same on the day at 1,221.26 tonnes on March 22, down 11.736 tonnes in the twelfth week of consecutive turn down.

Gold future for April delivery chop down $7.70, or 0.5%, to settle at $1,606.10 per ounce on the Comex division of the New York Mercantile Exchange.