Wednesday, August 10, 2011
Sun Unleashes Largest Solar Flare in Years
An extremely powerful solar flare, the largest in over four years, rocked the sun early Tuesday (Aug. 9), but is unlikely to wreak any serious havoc here on Earth, scientists say.
"It was a big flare," said Joe Kunches, a space scientist with the National Oceanic and Atmospheric Administration (NOAA)'s Space Weather Prediction Center. "We lucked out because the site of the eruption at the sun was not facing the Earth, so we will probably feel no ill effects."
Today's solar flare began at 3:48 a.m. EDT (0748 GMT), and was rated a class X6.9 on the three-class scale scientists use to measure the strength of solar flares. The strongest type of solar eruption is class X, while class C represents the weakest and class M flares are medium-strength events
Space.com
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Religious violence on the rise
“Over the three-year period studied, incidents of either government or social harassment were reported against Christians in 130 countries (66 per cent) and against Muslims in 117 countries (59 per cent),” said the Pew Research Centre's Forum on Religion and Public Life study.
In 2009, governments in 101 nations, more than half the globe, used at least some measure of force against religious groups. A year earlier only 91 nations had done so, the report said.
As of 2009, more than 2.2 billion people, or nearly a third of the world's population of 6.9 billion, lived in countries where religious restrictions had risen substantially since 2006, the study said.
In regional terms, the Middle East and North Africa had the highest proportion of countries in which government-imposed restrictions hampered people's freedom to practice their faith.
Egypt, under now-deposed leader Hosni Mubarak, stood out, earning itself a ranking in the top five per cent of all countries in 2009 for government-imposed restrictions such as a long-standing ban on the Muslim Brotherhood, and for social hostilities based on religion, including attacks against Christians.
Researchers at Pew, led by senior fellow Brian Grim, combed over 18 publicly available sources of information including reports by the State Department, the United Nations, the Council of the European Union, and several rights groups to score each country on how tolerant it was of different religions.
Egypt topped the list of countries with very high government restrictions on religion, ahead of (in order) Iran, Saudi Arabia, Uzbekistan, China, the Maldives, Malaysia, Burma, Eritrea and Indonesia.
The country with the highest rate of religious-linked social hostilities was Iraq, followed by India, Pakistan, Afghanistan, Somalia, Indonesia, Nigeria, Bangladesh, Israel and Egypt.
Although no European countries made it into the top 10 of either list, five of the 10 countries in the world that saw a substantial increase in religion-related social hostilities were in Europe - Britain, Bulgaria, Denmark, Russia and Sweden.
And government restrictions on religion increased substantially in two European countries, France and Serbia.
In France, President Nicolas Sarkozy said in a major speech on national identity in 2009 that the Muslim head-to-toe covering, the burka, had no place in French society, and lawmakers began discussing whether women should be allowed to wear it.
The Serbian government, meanwhile, refused to legally register evangelical Protestant groups and other minority religions, including the Jehovah's Witnesses, which deprived them of the right to air programs on public media.
Religion-related terrorist violence was included under social hostilities, and terrorist groups with ties to religion were found to be active in more than a third of the 198 countries included in the study.
In Russia, the number of casualties - people who were either killed, wounded, kidnapped, displaced or had their property destroyed - from religion-linked terror attacks more than doubled in the two years ending in 2009, compared to the two-year period ending in 2008.
Other examples of social hostilities given in the report were the August 2008 terrorist attack in Xinjiang province, attributed by the authorities in Beijing to the East Turkestan Islamic Movement, and riots in overwhelmingly Buddhist Tibet in 2008, which pitted ethnic Tibetans against Han Chinese.
AFP
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Putin ready to pump cash into Russian market
Prime Minister Vladimir Putin on Tuesday said his government was ready to pump liquidity into the Russian market after a US debt downgrade hit domestic stocks and took nearly five percent off the ruble.
"We in Russia believe that we must keep careful track of liquidity," Putin said in his first comments on a market slide that has erased a year of stock gains and renewed concerns about the country's dependence on the global price of oil.
"The finance ministry and the central bank are monitoring the situation and if necessary will use various channels to add liquidity to the market," said Putin.
He provided no details about the nature of the possible interventions and neither the finance ministry nor the central bank issued an immediate explanation.
But Putin said the finance ministry had placed 40 billion rubles ($1.35 billion) on the Moscow market on Tuesday and was primed to offer more soon.
Moscow's main MICEX index moved into positive territory after Putin's comments and ended the day down a fraction at 1,497.81 after erasing a loss of more than five percent.
The smaller RTS exchange clawed back an eight percent morning decline to finish 2.9 percent lower.
Putin -- Russia's effective leader who may return to the Kremlin in presidential elections next year -- had earlier accused the United States of acting as a "parasite" by accumulating debts that threaten the global financial system.
Yet Russia remains particularly vulnerable to global risk aversion because its economy relies heavily on revenues from oil and gas exports while its own market is still too nascent to sustain independent growth.
Renaissance Capital said a $15 per barrel drop in oil can crimp Russia's GDP growth by 1.2 percent, and more bad news came on Tuesday when the OPEC group of petroleum exporting countries lowered its demand forecast for this year and next.
Putin hinted of the alarm spreading in government by holding an unannounced meeting with the head of Russia's number two bank VTB and getting a more detailed account of how the crisis could impact Russia's financial sector.
"We feel that this is a problem that we will be able to handle," VTB chief Alexei Kostin told Putin in televised remarks.
"We are ready to withstand this much better than we were two years ago," Kostin said.
The stock slide has been accompanied by an accelerating depreciation of the Russian ruble and predictions that the central bank may have to intervene to stave off a currency collapse that badly hurt consumers in 2008-2009.
The ruble dropped about 2.7 percent against both the dollar and the euro to cap a miserable two weeks in which it has lost nearly 15 percent of its value.
Putin's comments suggest that the central bank will intervene to interrupt this slide should it go on.
But some analysts agreed with Kostin and noted that Russian businesses had learned from mistakes of the past by keeping their foreign currency debts to a minimum and relying on the local bond market for help.
"To a large extent, the significant demand for hard currency on the Russian local market in autumn 2008 can be explained by the high level of Russian companies' dollar-denominated debts," VTB Capital said in a research note.
"Since then we have seen a de-leveraging process, and most corporate borrowers have recently preferred the domestic bond market as a cheaper alternative to external borrowing."
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European financial crisis: Germany shows signs of slowdown
Germany’s robust economy is showing signs of a slowdown, raising fears that the linchpin holding together Europe’s fragile financial health could be weakening.
On Tuesday, the country revealed that its exports in June rose by only 3.1 percent, compared with a 20.1 percent increase in May, marking the smallest increase in 16 months. A few days earlier, an index of German manufacturing activity dropped from 54.6 in June to 52 in July — the lowest level since October 2009, marking the third consecutive month of declines.
“The fact that [the German economy is] showing signs of faltering and sources of domestic demand aren’t manifesting itself — people are worried,” said Tu Packard, a senior analyst for Moody’s Analytics.
Germany has built its economic strength on exports to China and other developing countries. As the global slowdown reduces demand in those economies, Germany could pay the price.
“They’ve managed to protect themselves so far, but what happens when the crisis hits China’s economy? China depends on the U.S.,” said Henry Farrell, a political science professor at George Washington University.
And if Germany’s domestic growth declines at the same time that its exports slow, the double whammy will be felt across the eurozone, which relies on German economic strength to bolster troubled members such as Greece and Portugal.
Markets have begun bracing for any German stumble. On Tuesday, for instance, the price of Germany’s credit-default swaps — a type of insurance against financial risk — exceeded those of the United Kingdom for the first time since January 2008. And although many leading European stocks rebounded on Tuesday after days of record drops, the German DAX declined by 0.1 percent.
The worse the economic outlook for Germany, the more difficult it may be for the German Parliament to agree to provide critical financial support to European Union countries in crisis. German Chancellor Angela Merkel has struggled to balance the need to contain the escalating debt crisis across Europe with tremendous resistance from German politicians and taxpayers who resent bailing out distressed countries they think have acted irresponsibly.
So far, Germany’s conflicted position has slowed efforts by the European Central Bank to address the region’s financial crisis. European market watchers are modestly hopeful that the ECB’s recent move to buy Spanish and Italian bonds could help prevent the contagion of debt problems from spreading.
Both Merkel and French President Nicolas Sarkozy, who has faced similar political resistance at home, publicly affirmed their support for the bond purchase. “France and Germany are confident that the ECB analysis will provide the appropriate basis for secondary-market interventions as it will help determine the case when financial stability of the eurozone as a whole is at risk,” they said in a joint statement this week.
Washington Post
Germany to propose unelected 'stability council' for EU
Germany has proposed the creation of a new EU 'overseer' that would crack the whip and impose sanctions on countries that do not adhere to rigid budget discipline and pro-business labour policies.
The country's economy minister, Philipp Roesler, on Tuesday (10 August) told reporters that the bloc should create a new EU institution, a 'stability council', of unelected supervisors that would ensure member states that stick to budget temperance and limit debt and keep in check debt growth.
This council should be given the power to slap sanctions on countries to ensure they cut their deficits and monitor use of financial assistance. The plans would also require that a German-style 'debt brake' be written into national constitutions.
But the new body would also be empowered to carry out 'competitiveness tests' amongst eurozone states to see if labour market policies are sufficiently competitive. The tests would also assess the innovation climate.
"If you fail them, there should be consequences," he said, speaking to reporters in Berlin.
The stability council would be independent of voters so as to avoid “political pressure” and could impose sanctions automatically.
Roesler said that Germany would be bringing the proposal to the next meeting of EU finance ministers.
However, it appears that the minister, head of the free-market-liberal Free Democrats, has not cleared the ideas with his Christian Democrat coalition partners.
"This is an opinion of the ministry and not a government position," the Financial Times Deutschland reported government officials as saying.
The Free Democrats are struggling in the polls and the radical proposals could be read as an attempt to shore up the party's base.
Separately, Greece's finance minister, Evangelos Venizelos, called on states to work quickly to implement the 21st July agreement between eurozone leaders that extends the power of EU bailout funds.
On Tuesday, he said that action must be taken swiftly to hold back a global crisis, according to a statement from the finance ministry following a conversation between the minister and top EU officials including the head of the Eurogroup of states, the EU economy commissioner, and the director of the Institute of International Finance, (IIF) bank lobby group.
EUOBSERVER
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Stock markets fall again as bank shares tumble
European and US stock markets have suffered more large falls, led by steep declines in banking shares.
In nervous trading, the focus turned to France, where the French government denied it would follow the US and lose its top-grade AAA credit rating.
Societe Generale bank, whose shares fell up to 20%, was also forced to deny it was under financial pressure.
France's Cac share index ended down 5.5%. The UK's FTSE lost 3%, and Wall Street's Dow Jones had fallen 3.3%.
The FTSE fell by 158 points to 5,007, taking £41bn off the value of the index. It has now lost almost 15% in the last nine trading sessions.
Italy's FTSE MIB was down 6.7%.
Shares in Societe Generale ended 14.7% lower.
UK banking shares were also hit, with Barclays down 8.7%, Royal Bank of Scotland 7.3%, and HSBC 5.3%.
"The banks have all got exposure of some degree or another to sovereign debts," said David Buik, of BGC Partners.
"And none of the banks are going to get away scot-free. There are going to be writedowns."
BBC
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S&P downgrades Fannie and Freddie, farm lenders and bank debt backed by US government
WASHINGTON — Standard & Poor’s Ratings Services on Monday downgraded the credit ratings of Fannie Mae and Freddie Mac and other entities linked to long-term U.S. debt.
S&P also lowered the ratings for: farm lenders; long-term U.S. government-backed debt issued by 32 banks and credit unions; and three major clearinghouses, which are used to execute trades of stocks, bonds and options.
All the downgrades were from AAA to AA+, reflecting the same downgrade S&P made of long-term U.S. government debt on Friday.
The downgrade of the mortgage giants Fannie and Freddie reflected their “direct reliance” on the U.S. government, S&P said.
The U.S. government rescued the two mortgage giants in September 2008 and has funded them since the financial crisis. Fannie and Freddie own or guarantee about half of all U.S. mortgages and nearly all new mortgages. So if the U.S. government can’t pay its bills, neither can Fannie and Freddie.
It’s unclear how the lower credit rating would affect consumers. The downgrade applied only to corporate bonds, not the mortgage-backed securities that Fannie and Freddie issue.
Banks could adopt tougher lending standards for homebuyers, if they felt there was a greater risk because of the downgrade. But it is unlikely to affect mortgage rates, which are already near record lows. Investors are shifting more money out of the stock market and into Treasury bonds, which has forced yields lower. Mortgage rates tend to track the yield on Treasurys.
The downgrade to the long-term U.S. government debt, which was announced late Friday, sent stocks tumbling Monday. The Dow Jones industrial average closed 634 points lower for the day, or 5.5 percent. The S&P 500 stock index closed down nearly 6.7 percent.
The lower ratings for Fannie and Freddie contributed to the sell-off, analysts said. Fannie and Freddie stocks are almost worthless — neither trade on major exchanges. Still, both declined Monday. Fannie fell a nickel to 25 cents per share. Freddie dropped six cents to 27 cents per share.
Freddie Mac said in its quarterly earnings report Monday that the lower rating could reduce the supply of mortgages, adversely affecting home prices and leading to additional defaults on home loans it guarantees. Fannie Mae said in a filing Monday to the Securities and Exchange Commission that it “cannot predict the ultimate impact” of the downgrade.
Edward DeMarco, chief of the Federal Housing Finance Agency that oversees Fannie and Freddie, said the entities will meet their financial obligations because the government will continue to fund them.
Anika Khan, a housing economist at Wells Fargo, doubts the downgrade will have much impact on the housing market. Sales are already low and there are few potential buyers. Low mortgage rates and home prices have done little to change that.
“It’s likely that once the storm passes, you’ll get an increase in mortgage rates because of this, but it won’t be significant. Housing is already depressed,” Khan said.
Ten of the country’s 12 Federal Home Loan Banks also were downgraded from AAA to AA+. The banks of Chicago and Seattle had already been downgraded earlier to AA+.
S&P also downgraded four clearinghouses: National Securities Clearing Corp., Fixed Income Clearing Corp. Depository Trust Co., and Options Clearing Corp
Clearinghouses perform crucial tasks for the markets. They connect sellers and buyers and ensure that both parties hand over the money or investments that they promised.
Unlike Fannie and Freddie, clearinghouses don’t have explicit backing from the U.S. government.
S&P said it downgraded clearinghouses because their revenue is tied to U.S. trading activity, which would slow considerably if the economy soured. Such downgrades are routine when S&P downgrades the host nation’s debt.
The downgrade of long-term U.S. debt affects the banking and lending industries because many interest rates are pegged to Treasury yields. In addition, many companies use the securities as collateral that they would surrender if their trades lost value.
The clearinghouses said the downgrade would not change how they value securities used as collateral.
“The fundamental strengths of our company are the same today as they were prior to this recent revision,” said The Depository Trust & Clearing Corp., which owns National Securities Clearing Corp., Fixed Income Clearing Corp. and Depository Trust Co.
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That 1937 Feeling All Over Again
U.S. Federal Reserve Chairman Ben Bernanke, an expert on the Great Depression, once promised that the central bank would never repeat its 1937 mistake of rushing to tighten monetary policy too soon and prolonging an economic slump.
He has been true to his word, keeping interest rates near zero since late 2008 and more than tripling the size of the Fed's balance sheet to $2.85 trillion. But cutbacks in government spending may end up having a similarly chilling effect on the economy, and there is little Bernanke can do to counter that.
Back in 1937, the U.S. economy had been growing rapidly for three years, thanks in large part to government programs aimed at ending the deep recession that began in 1929.
Then the central bank clamped down hard on lending, and federal government spending dropped 10 percent. The economy contracted again in 1938. The jobless rate soared.
"Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again," Bernanke said back in 2002 at a conference honoring legendary economist Milton Friedman's 90th birthday.
Bernanke convenes the Fed's next policy-setting meeting on Tuesday, facing growing concern that the United States may be slipping into another recession while Europe staggers toward a deeper debt crisis. Standard & Poor's decision on Friday to lower the U.S. credit rating adds yet another element of uncertainty.
His options are limited.
Nigel Gault, chief U.S. economist at IHS Global Insight, said the Fed could promise to keep interest rates near zero or its balance sheet swollen for even longer than investors anticipate. Or it could buy even more U.S. government debt.
"It is hard to see any of these options as 'game changers,'" Gault said. "The Fed would be doing them not because it could be sure they would make a huge difference, but because it would feel the need to do something."
Gault put the odds of another recession at 40 percent.
However, Friday's U.S. employment figures soothed recession fears, showing the economy created 117,000 jobs in July. That was up from a revised 46,000 in June and prior months payrolls were revised up slightly. The unemployment rate slipped to 9.1 percent but mostly because workers dropped out of the labor force.
"While I do not think this sounds the all-clear signal, it does quell some of the conversation that the U.S. is falling back into a recession," said Tom Porcelli, chief U.S. economist at RBC Capital Markets in New York.
"Having said that, there are still plenty of headwinds, like Europe. I am also very encouraged to see the upward revisions to the previous months. This report pulls us back from the ledge a little bit."
Hitting a Pothole
Full employment is one of the Fed's prescribed goals, and it is clearly falling short. Government spending cuts are making matters worse. Friday's employment report showed a net loss of 37,000 government jobs last month.
State and local governments with balanced budget rules had little choice but to cut jobs in order to make ends meet. The federal government has no such restriction, but its spending outside of defense fell at a 7.3 percent annual rate in the second quarter, crimping economic growth.
Michael Feroli, an economist with JPMorgan in New York, said he had held out some hope that Congress would approve some form of additional fiscal support in the coming months, but the debt ceiling fight showed lawmakers dead set against that.
"It now looks likely that growth could hit a pothole early next year," Feroli said.
He cut his growth forecast for the first half of 2012 to 2.0 percent from 2.5 percent. At that sluggish pace, the jobless rate won't fall much below 9.0 percent, keeping the Fed on hold until at least the middle of 2013, Feroli said.
Without fiscal help, the Fed will be under greater pressure to find some other way to lift growth. Another round of government bond purchases would no doubt elicit wails of protest from emerging markets, which contend that the Fed's easy money spills into their economies, driving up inflation.
China, whose $1.16 trillion in Treasury holdings are second only to the Fed's, has not been shy about expressing its concern over the state of U.S. public finances and the dollar's slide.
Yang Jiechi, China's foreign minister, said on Friday that Washington should enact "responsible monetary policies" to ensure global economic stability, a thinly veiled reference to
the Fed's bond-buying programs.
China releases its monthly economic data this week. The figures are expected to show double-digit gains in industrial output and retail sales, suggesting the country's economic growth remains robust.
Strong growth in China has helped to lift the rest of Asia, outside of Japan, which is still hurting from the March earthquake and tsunami. But all bets are off if conditions worsen significantly in the United States.
"Our view is that the region can 'decouple' from modest slowdowns, and we think the ongoing slowdown qualifies as modest," said TJ Bond, emerging Asia economist at Bank of America-Merrill Lynch in Hong Kong.
"We would start to worry if the U.S. tipped over into recession."
CNBC
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UK riots: Trouble erupts in English cities
1 day ago
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Sporadic violence has broken out in several cities around England, although London remained largely quiet with a heavy police presence on the streets.
With 16,000 police officers deployed in London, the streets remained calm after three previous nights of rioting.
But there was unrest in Manchester, Salford, Liverpool, Wolverhampton, Nottingham, Leicester and Birmingham with shops being looted and set alight.
The PM is recalling Parliament over Monday night's "sickening scenes".
Forty seven people have been arrested so far over trouble in Manchester and Salford where crowds of youths have set fire to buildings and cars while 87 have been arrested over disorder which has broken out across the West Midlands.
In other developments:
Greater Manchester Police Assistant Chief Constable Garry Shewansaid his force had faced "extraordinary levels of violence from groups of criminals intent on committing widespread disorder"on Tuesday
Some 23 people have been charged in the West Midlands with a total of 229 arrests following sporadic disorder in Wolverhampton, while youths have smashed shop windows and set cars alight in nearby West Bromwich
Some 23 people have been charged in the West Midlands with a total of 229 arrests following sporadic disorder in Wolverhampton, while youths have smashed shop windows and set cars alight in nearby West Bromwich
In Birmingham, riot police have surrounded the Mailbox, the city's high-end shopping centre, following the disturbances seen in the area on Monday night. Some 500 officers are on duty in the centre on Tuesday evening
Canning Circus police station in central Nottingham was firebombed by a male gang on Tuesday evening
In Liverpool, Merseyside Police have arrested 46 people in relation to disorder in the city
National Express coaches have suspended services to Wolverhampton, Birmingham and Manchester where people are instead being dropped off in either Manchester Airport, Oldham or Stockport
Metropolitan Police have arrested 685 people and charged 105 in connection with the violence in the capital, including a 21-year-old man who was arrested on suspicion of arson with intent to endanger life following a fire which took hold of the Reeves Furniture store in Croydon on Monday night
A 26-year-old man found shot in a car in Croydon, amid rioting in the south London town, has died in hospital
Canning Circus police station in central Nottingham was firebombed by a male gang on Tuesday evening
In Liverpool, Merseyside Police have arrested 46 people in relation to disorder in the city
National Express coaches have suspended services to Wolverhampton, Birmingham and Manchester where people are instead being dropped off in either Manchester Airport, Oldham or Stockport
Metropolitan Police have arrested 685 people and charged 105 in connection with the violence in the capital, including a 21-year-old man who was arrested on suspicion of arson with intent to endanger life following a fire which took hold of the Reeves Furniture store in Croydon on Monday night
A 26-year-old man found shot in a car in Croydon, amid rioting in the south London town, has died in hospital
Meanwhile, two 18-year-olds were arrested in Folkestone, Kent,and a 16-year-old boy in Glasgow was charged with breach of the peace while another man, aged 18, has been arrested. All relate to allegations of inciting violence through internet social networking sites
The Independent Police Complaints Commission (IPCC) said on Tuesday that ballistic tests presented "no evidence" that a handgun found at the scene where Mr Duggan was killed had been fired at officers
Salford MP Hazel Blears said local police had assured her that officers' shifts had been extended and that "every effort" was being made to get all available police on the streets.
She also told the BBC that the "wall-to-wall" coverage of the violence may have encouraged more lawlessness.Wounded officers
Some 111 Met officers have suffered injuries including serious head and eye wounds, cuts and fractured bones after being attacked by rioters wielding bottles, planks, bricks and even driving cars at them. Five police dogs have also been hurt.
BBC
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The Independent Police Complaints Commission (IPCC) said on Tuesday that ballistic tests presented "no evidence" that a handgun found at the scene where Mr Duggan was killed had been fired at officers
Salford MP Hazel Blears said local police had assured her that officers' shifts had been extended and that "every effort" was being made to get all available police on the streets.
She also told the BBC that the "wall-to-wall" coverage of the violence may have encouraged more lawlessness.Wounded officers
Some 111 Met officers have suffered injuries including serious head and eye wounds, cuts and fractured bones after being attacked by rioters wielding bottles, planks, bricks and even driving cars at them. Five police dogs have also been hurt.
BBC
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http://www.bbc.co.uk/news/uk-england-london-14460554
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