Comments »Washington (CNN) — Federal health officials on Thursday are unveiling a $54 million national media campaign to get smokers to quit and prevent anyone else, especially children, from starting.
The campaign, called “Tips From Former Smokers,” is intended to educate Americans about the dangers of smoking through the stories and graphic pictures of ex-smokers who have suffered severe health consequences of tobacco use.
The former smokers profiled have suffered ailments such as stroke-related paralysis, limb amputation, lung removal and heart attack. One breathes through a stoma, a surgically created hole in the neck through which a person who has undergone larynx or voice box surgery can breathe.
“Hundreds of thousands of lives are lost each year due to smoking, and for every person who dies, 20 more Americans live with an illness caused by smoking,” Health and Human Services Secretary Kathleen Sebelius said in a statement.
“We cannot afford to continue watching the human and economic toll from tobacco rob our communities of parents and grandparents, aunts and uncles, friends and co-workers. We are committed to doing everything we can to help smokers quit and prevent young people from starting in the first place.”
The ads are the brainchild of the Centers for Disease Control and Prevention’s Office on Smoking and Health. The agency says smoking remains the country’s leading cause of disease and preventable death, resulting in more than 443,000 fatalities annually. More than 8 million Americans live with a smoking-related illness or conditions, according to the disease agency.
Monthly Archives: March 2012
Oil-less Syrians continue to get massacred – shame
Comments »(CNN) — International officials in a Syrian-led mission will attempt to gauge humanitarian conditions across the turbulent nation this weekend as world powers push for open entree to provide much-needed relief.
This comes as the Syrian conflict enters its second year, with President Bashar al-Assad’s fierce crackdown against anti-government enclaves showing no signs of ending. More than 8,000 civilians have been killed during the conflict, the United Nations says, but opposition activists said the overall toll is more than 9,000, mostly civilians.
The numbers have exceeded 9,700 and are “fast approaching 10,000,” said Rafif Jouejati, spokeswoman for the Local Coordination Committees of Syria, an opposition activist network.
Valerie Amos, U.N. under-secretary-general for humanitarian affairs, said Thursday the government will lead a mission to the provinces of Homs, Hama, Tartous, Latakia, Aleppo, Deir Ezzor, Rif Damashq and Daraa. U.N. and Organization of Islamic Cooperation officials will accompany the mission, she said.
“It is increasingly vital that humanitarian organizations have unhindered access to identify urgent needs and provide emergency care and basic supplies,” she said in a written statement. “There is no time to waste.”
Dimon wants employees on sidelines for “Muppetgate”
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Comments »The embarrassing tongue-lashing Goldman Sachs (GS: 122.68, +2.31, +1.92%) received this week from a former employee in the Op-Ed pages of The New York Times seemingly presents a unique opportunity for the Wall Street firm’s rivals.
Yet bankers at JPMorgan Chase (JPM: 44.72, +1.14, +2.62%) have been warned not to seize upon so-called Muppetgate, which erupted after a former Goldman employee resigned and bashed Goldman as a “toxic” place to work full of self-interested people.
According to Reuters, JPMorgan CEO Jamie Dimon warned employees in an internal memo not to try to take advantage of the “alleged” issues raised by the Op-Ed written by Greg Smith.
“I want to be clear that I don’t want anyone here to seek advantage from a competitor’s alleged issues or hearsay — ever. It’s not the way we do business,” Dimon wrote in the memo, the news service reported.
The Dimon memo, which urged workers to focus on the company’s own standards, greeted Asian employees as they arrived for work Thursday morning and was later forwarded to wider parts of the business, Reuters reported.
Karzai continues to stab US in the back
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Comments »The United States encountered mounting challenges to its presence in Afghanistan Thursday, as Afghan President Hamid Karzai urged the U.S. to pull back to military bases and the Taliban announced they were suspending tentative peace talks.
The developments come after two incidents strained relations between the two countries — the inadvertent burning of Korans on a U.S. base, and most recently a shooting spree that left 16 Afghan civilians dead. Afghan lawmakers expressed outrage after the U.S. soldier suspected in that massacre was flown out of the country to Kuwait.
By Thursday, both Karzai and the Taliban were lashing out at American negotiators, all while Defense Secretary Leon Panetta was visiting the country.
Karzai, in a meeting with Panetta, asked the U.S. to withdraw from Afghan villages and stay on bases, saying, “Afghan security forces have the ability to keep the security in rural areas and in villages on their own.”
He also urged the U.S. to let Afghan forces take the lead for countrywide security in 2013, a year ahead of schedule.
Shortly afterward, the Taliban announced they were breaking away from talks with the U.S. because the U.S. “turned back on its promises.” One concession the Taliban were looking to extract out of peace talks was the release of prisoners from Guantanamo Bay.
The statement said the Taliban would suspend talks “until the Americans clarify their stance on the issues concerned and until they show willingness in carrying out their promises instead of wasting time.”
DOW Has Its Best Rally Since July of 2010
It seems like everyday there is a new record broken. Not in any fashion displaying gusto or strength.
The wall of worry continues to be scaled by markets yet again in nonsensical trading.
Today though we did get good manufacturing numbers along with less than expected initial claims. Europe and their problems are in the rear view mirror and Apple can lead the NASDAQ 100 every day….accounting for 34% of this years NASDAQ gains.
Life is full of unexpected events and the markets seem to be one of those head scratches.
When ever this pig stops flying we will most certainly skip the stairs and hop on the express elevator down.
DOW UP 55
NASDAQ UP 16
S&P UP 8
GOLD UP $16 @$1658
OIL DOWN $0.17 @ $105.37
[youtube:http://www.youtube.com/watch?v=EqPK88PA8aE 450 300] Comments »Obama’s energy policy attacked from all sides
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Comments »As the Obama administration tries to respond to rising gas prices by touting an all-of-the-above strategy for energy independence, its own alternative energy initiatives are getting slammed from both sides.
The administration for the past six months has been under fire for blowing through nearly $530 million on Solyndra, the solar panel firm that filed for bankruptcy last September. A new government report now finds the loan program that funded Solyndra continues to suffer from management problems.
The administration was also just hit with a lawsuit from the gas companies’ trade association over a biofuels mandate that dates back to the George W. Bush administration — one which the industry says is unworkable.
Meanwhile, companies that are trying to secure government funding for fuel-efficient vehicles in the wake of Solyndra say the fallout from that controversy has led to a bureaucratic freeze at the Department of Energy and prevented their firms from getting any money.
Several companies applying for loans for their vehicle projects have abandoned that process in recent weeks.
The frustration was encapsulated in a letter sent by Bright Automotive to the department in late February, just days before the firm withdrew its loan application and started to close down shop.
“Unfortunately, irrationality and petty politics have paralyzed your agency at a time America needs you most. One cannot score if one does not shoot,” the executives of the now-defunct company wrote to Energy Secretary Steven Chu.
Mike Donoughe, chief operating officer with Bright, told FoxNews.com that Energy Department officials told them repeatedly they were under a directive to never put the department through another Solyndra.
“Those were their sort of marching orders,” Donoughe said of the department officials his firm dealt with. He said officials are so wound up they “do nothing. And they’re good at that.”
Bernanke’s speech on community banking
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Comments »I’m glad to have the chance to speak again to the Independent Community Bankers of America, even if it’s by way of prerecorded remarks. This will be the first time in quite a few years that I haven’t been with you in person, but, as you may know, the Federal Open Market Committee met just yesterday in Washington, so I am unable to join you in Nashville. I have very much enjoyed attending these annual ICBA get-togethers, especially since I get the chance to hear directly from you about what’s happening in your local economies and in community banking more generally. It’s a tradition I hope to reestablish in the future.
The Role of Community Banks in a Challenging Economy
Community banks remain a critical component of our financial system and our economy. They help keep their local economies vibrant and growing by taking on and managing the risks of local lending, which larger banks may be unwilling or unable to do. They often respond with greater agility to lending requests than their national competitors because of their detailed knowledge of the needs of their customers and their close ties to the communities they serve.As you well know, however, community banks are also facing difficult challenges. Their close ties to local economies are, on balance, a source of strength, but a drawback of those ties is that the fortunes of communities and their banks tend to rise and fall together. Another concern for community banks is the narrowing of the range of their profitable lending activities: Because larger banks have used their scale to gain a pricing advantage in volume-driven businesses such as consumer lending, community banks have tended to specialize in other areas, such as loans secured by commercial real estate. That said, I know that community banks are continuing to look for ways to prudently diversify their revenue sources.
Like larger banks, community banks are also being affected by the state of the national economy. Despite some recent signs of improvement, the recovery has been frustratingly slow, constraining opportunities for profitable lending. And, as I will discuss momentarily, actual and prospective changes in the regulatory landscape have also raised concerns among community bankers.
The good news is that, for the most part, community banks appear to be meeting their challenges. Profits of smaller banks were considerably higher in 2011 than in the previous year, nonperforming assets were lower, provisions for loan losses fell appreciably, and capital ratios improved.
ROVE: Obama Campaign Having Trouble Fund-Raising
via wsj.com
By KARL ROVE
Last July, President Obama’s campaign announced that it had raised an average of $29 million in each of the previous three months for itself and the Democratic National Committee (DNC). I was only mildly impressed. After all, that was well below the $50 million a month needed to reach the campaign’s goal of a $1 billion war chest for the 2012 race.
Seven months later, I’m even less impressed. Through January, the president has raised an average of $24 million a month for his campaign and the DNC. Next week, the Obama campaign will release its February numbers, but the president is on track to be hundreds of millions of dollars shy of his original goal.
It’s not for lack of trying. Mr. Obama has already attended 103 fund-raisers, roughly one every three days since he kicked off his campaign last April (twice his predecessor’s pace).
The president faces other fund-raising challenges. For one, there are only so many times any candidate can go to New York or Hollywood or San Francisco for a $1 million fund-raiser. Team Obama is running through its easy money venues quickly.
For another, many of Mr. Obama’s 2008 donors are reluctant to give again. The Obama campaign itself reported that fewer than 7% of 2008 donors renewed their support in the first quarter of his re-election campaign. That’s about one-quarter to one-third of a typical renewal rate: In the first quarter of the Bush re-election campaign, for example, about 20% of the donors renewed their support.
There are other troubling signs. Team Obama’s email appeals don’t ask for $10, $15, $25 or $50 donations as they did in 2008, but generally for $3. Nor are the appeals mostly about issues; many are lotteries. Give three bucks and your name will be put in a drawing for a private dinner with the president and first lady.
This is clever marketing, but it suggests the campaign has found that only a low price point with a big benefit can overcome donor resistance among people who contributed via mail or the Internet in 2008. It also points to higher-than-expected solicitation costs and lower-than-expected fund-raising returns.
AFP/Getty ImagesPresident Obama at a Democratic fundraiser at ABC Kitchen in New York on March 1.
The final financial challenge facing Mr. Obama’s campaign is how fast it is burning through the cash it is raising. Compare the 2012 Obama re-election campaign with the 2004 Bush re-election campaign. Mr. Obama’s campaign spent 25% of what it raised in the second quarter of 2011, while Mr. Bush’s campaign spent only 9% in the second quarter of 2003. In the third quarter it was 46% for Obama versus 26% for Bush; for the fourth quarter it was 57% versus 40%. In January 2012 the Obama campaign spent 158% of what it raised, while the Bush campaign spent 60% in January 2004.
At the end of January, Team Obama had $91.7 million in cash in its coffers and those of the DNC. At the same point in 2004, the Bush campaign and Republican National Committee had $122 million in cash combined.
The Obama campaign’s high burn rate doesn’t come from large television buys, phone banks or mail programs that could be immediately stopped. It appears to result instead from huge fixed costs for a big staff and higher-than-expected fund-raising outlays. These are much tougher to unwind or delay. Left unaltered, they generally lead to even more frantic efforts to both raise money and stop other spending.
This perhaps explains why the White House told congressional Democrats last week not to expect a single dime for their campaign efforts from the Democratic National Committee this year. All the DNC’s funds will be needed for the president’s re-election.
His campaign’s financial situation also may explain why Mr. Obama has embraced Super PACs after decrying them as a “threat to democracy” in the midterm elections. The president was quick to criticize Rush Limbaugh’s crude comments about contraception advocate Sandra Fluke. But he refused to condemn his Super PAC’s acceptance of a million-dollar donation from Bill Maher, who routinely attacks Republican women such as Sarah Palin and Michele Bachmann in vulgar and sexually charged terms.
That virtually all Republicans and many independents consider Mr. Obama a failure is obvious. But many Democrats are disappointed with him, too. The president’s difficulty in raising campaign cash is evidence of this. He is working a lot harder than he thought he would to raise a lot less than he had hoped.
Mr. Rove, the former senior adviser and deputy chief of staff to President George W. Bush, is the author of “Courage and Consequence” (Threshold Editions, 2010)
Comments »American Institute for Economic Research: Get Ready… Inflation May Run Away…As High as 15%
“(MoneyWatch) Americans are likely to get smacked by an unwelcome blast from the past — run-away inflation — in the not-too-distant future thanks to economic policies that are aimed at helping the economy today, says Steven Cunningham, director of research and education at the American Institute for Economic Research (AIER), a non-partisan economic think tank.
While this inflation won’t strike overnight — it’s likely at least a year away — some economists believe it will be double-digit and uncontrollable when it does hit.
“We may not see any real inflation for two years – or even three or four. But when it comes, it’s going to come fast and rampant,” agrees Lance Roberts, chief economist for StreetTalk Advisors in Houston.
The reason: To boost today’s lackluster economy and encourage companies to hire, the Federal Reserve has been pumping money into the economic system, which is building up in bank reserves. Banks are still reluctant to lend, so that money is not yet being lent out and spent at historically normal rates. But eventually it will be. At that point, it’s likely to boost American buying power by about 40% from today’s levels, which is a precursor to run-away inflation.
The Federal Reserve is not blind to the risk, of course. The agency has already come up with a host of unconventional ways to try to drain money out of the banking system to stem inflation. But AIER estimates that, at best, the agency will be able to drain about 25% of these reserves from the system. Using that scenario, the non-partisan economic research organization estimates future inflation at 15%. Roberts doesn’t attempt to predict a rate, but calls the Fed’s notion that it can head-off inflation “far fetched.”
The good news is that inflation is still far enough away that this expectation is not yet baked into market prices for either stocks or bonds. That means you have time to take steps now that will put you in a position to reduce your personal inflation rate and potentially profit from the rising interest rates that inflation brings. What should you do?
Borrow long: About one-third of the typical family budget is dedicated to keeping a roof over your head. That means you can reduce your personal inflation rate by one-third by locking in a 30-year fixed-rate mortgage. With good credit, conforming loans (those under $417,000) currently cost between 3.5% and 4% annually. That translates to monthly payments of just over $450 per $100,000 borrowed. Never borrow more than you can pay back, of course. But stretch out any loan this cheap for as long as you can.
Slash variables: If you have a home equity loan that “floats” above prime rate, pay it off. Also pay off credit card debts and any other variable-interest loans that you can. If and when inflation rises, so will interest rates, making borrowing far more costly in the future. In 1980, for example, prime rate – the rate banks charge their best customers – hit a high of 21.5%. You do not want to get caught with a variable-rate loan that costs more every month, making it increasingly difficult to pay off.
Build reserves: If you need to finance a business, buy a house or a car in an inflationary environment, you can be in a world of hurt. The best way to mitigate that risk is to build cash reserves now so you’ll improve your ability to pay cash, if necessary, later. Cash reserves are also likely to yield more in an inflationary world, so if you don’t end up needing the money for purchases, you’re likely to be able to invest it in relatively safe securities at historically high rates of return.
Buy commodities & REITS: Holding a portion of your investments in commodities, like oil and agriculture products, and Real Estate Investment Trusts that generate much of their income from rents that are likely to rise with inflation, can help your investment portfolio keep pace with the rate of inflation. Of course, commodities and REITs should only make up a small portion of your portfolio — somewhere between 5% and 20% of your long-term assets. And, ideally, you want these assets to be widely diversified, so its best to invest through mutual funds and exchange traded funds, such as Vanguard’s REIT ETF or Power Shares Commodity Index ETF.
Invest in well-capitalized companies: While inflation can make it harder to finance business, a number of companies have been paying off their debts and building up huge hordes of cash reserves — the same smart strategy that can work for you. Apple, for example, has roughly $100 billion in cash; Microsoft is sitting on a stockpile worth more than $50 billion. Assuming that these companies produce unique products that people will pay for, even when prices rise, they should prove to be great investments for the coming decades.
Go green: One of the areas where inflation hits the hardest is at the grocery store, where the cost of everything from meat to vegetables is likely to rise. If you’ve got a backyard, think about defraying your grocery expenses with a garden. One fruit tree can keep you in oranges or plums all season and provide the makings for preserves for the rest of the year. Squashes, and root crops, like potatoes and carrots, are also easy to grow and many reseed themselves when you compost.”
Comments »SEC: Fund Managers Defrauded Facebook Investors
“(MoneyWatch) Facebook has yet to go public, but it is already a breeding ground for securities fraud. The SEC late Wednesday filed charges against two money managers for misleading investors eager to buy stock in the social networking company ahead of Facebook’s highly anticipated IPO later this year.
The SEC alleges that the fund managers raised a total more than $70 million from investors to acquire shares of Facebook, Twitter, and other technology companies before they go public. In a related move to clean up the growing market for shares in popular social media firms, securities regulators also accused an online service called SharesPost that matches buyers and sellers of pre-IPO stock of operating without registering as a broker-dealer, as required by law.
2 managers of private-share funds charged by SEC
SEC complaint against Frank Mazzola
Facebook IPO, interesting fact since the SEC filing
SEC official say the secondary market for shares in pre-IPO companies is growing and poses a risk even to sophisticated investors. “While we applaud innovation in the capital markets, new platforms and products must obey the rules and ensure the basic fairness and disclosure that are the hallmarks of sound financial regulation,” said Robert Khuzami, director of the SEC’s enforcement division, in a statement.
The SEC alleged that money manager Frank Mazzola and his firms, Felix Investments and Facie Libre Management, created two funds to invest in Facebook and other high-profile tech companies. But the firms engaged in “improper self-dealing” by collecting higher commissions than what they had disclosed in marketing materials aimed at investors seeking to purchase Facebook stock, according to the agency. SEC officials said that improperly raised the price of shares in the social network.
Mazzola and his investment firms also are accused of deceiving investors in funds that had been created to buy stock in pre-IPO companies. One investor was falsely told that a fund set up Mazzola’s firms had acquired stock in Zynga (ZNGA), a well-known social gaming company that went public in December. The firms also allegedly made false claims about the financial performance of Twitter to attract investors to a fund set up to buy stock in the micro-blogging startup before it goes public…”
Comments »Scholastic, $SCHL, Pops 13% on Hunger Games
NEW YORK (CNNMoney) — Shares of publisher Scholastic Corp. spiked on Thursday, fueled by strong sales of its Hunger Games series ahead of the film version’s release next week.
Scholastic (SCHL) released its quarterly results on Thursday morning, its $467 million in revenue marking a 22% increase from the same period a year prior. Excluding one-time charges, the company posted a loss of four cents a share, an improvement on its 64-cent-per-share loss a year ago.
Comments »Infographic: Separating Truth and Spin on Taxes
China Increases U.S. Treasury Holding for the First Time in Six Months
“Foreign demand for U.S. Treasury debt rose to a record high in January. China, the largest buyer of Treasury debt, increased its holdings for the first time in six months.
Total foreign holdings rose 0.9 percent in January to $5.05 trillion, the sixth consecutive monthly increase, the Treasury Department reported Thursday.
China boosted its holdings 0.7 percent to $1.16 trillion. Japan, the second-largest buyer of Treasury debt, increased its holdings 2 percent to a record $1.08 trillion.
U.S. government debt is considered one of the safest investments. Demand for it has increased as Europe’s debt problems have intensified.
The demand has remained strong despite the first-ever downgrade of the government’s credit rating last August. Standard & Poor’s lowered its rating on long-term Treasury debt one notch from AAA to AA-plus following a prolonged debate in Congress over increasing the nation’s borrowing limit.
The nation’s borrowing needs will remain high based on projections of future deficits….”
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Meredith Whitney: ‘Tidal Wave’ of Muni-Bond Defaults Still Coming
A “tidal wave” of defaults in the municipal bond market is still building and will eventually hit the United States, says Wall Street analyst Meredith Whitney.
Many U.S. cities, towns and municipalities are insolvent but are treading along similar to how Greece did for years before officially defaulting.
In late 2010, Whitney told 60 Minutes that municipal defaults could run up into the hundreds of billions of dollars although that hasn’t happened. Maybe not officially, but insolvency is a deepening problem, and defaults are still on the way.
“You have Stockton (Calif.) that is on the brink of bankruptcy. You have five cities, including Detroit, which is on the brink of insolvency. It’s fascinating, because there’s been so much back-room political maneuvering to keep these cities from going bust,” Whitney tells CNBC, pointing out how California is trying to pass legislation to prevent municipalities from declaring bankruptcy.
“So there’s been every effort on the part of the states to prevent this tidal wave of defaults, which is going to happen sooner or later. It’s happening at an accelerating pace.”
Taxes are rising, social services are being cut and fiscal shortfalls will keep widening.
“They’re not called technical defaults. It took how long for Greece to become a technical default, so they’re insolvent, they’re not paying their bills,” says the founder of the Meredith Whitney Advisory Group.
“You’re either willing to see it or you’ll shut your eyes, and if people want to tell me, ‘Oh, I was wrong,’ because this hasn’t played out, stay tuned.”
Comments »Goldman Closes Out Russell Position Just s They Recommend Buy to the Muppets
Spanish Housing Taking Another Dip in the ‘Tirlet’
The crash in home prices in Spain is re-accelerating. Bloomberg data shows the drop in Q4 as the third worst drop YoY ever and the fastest rate since September 2009 taking prices back to March 2005 levels. As WSJ reports, Spanish banks hold more than EUR400 billion worth of loans to the construction and real-estate sector, back by collateral that is now losing value at almost record paces. Is it any wonder that the banks are seeking state-guaranteed debt issuance (as no-one will touch them directly) as “the outlook remains bleak, with the demand for housing expected to shrink throughout 2012 with debt-laden households struggling to cope with a devastated labor market and limited access to credit.” Perhaps today’s disappointing Spanish auction (weak demand) is the first reality-seeking canary in the LTRO-enthused coalmine of Spanish and Italian self-dealing as the real-money vigilantes start to bet actively against Spain in favor of Italy (which trades tight of Spain for the first time this week since August). Spanish banks need more cowbell LTRO (but what collateral is there left) to fund more support for their local govvies.
Spanish housing (and unemployment) is re-accelerating to the weak side again…
and markets are not missing that point as Italy now trades inside of Spain again having hugely outperformed post LTRO, but more critically, Spain is now widening (as opposed to not tightening as much)…
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Millionaire Madam Sets the Bar of Fear High As She Readies to Make a Deal
Schools Will Be Able Not to Serve Pink Slime
“WASHINGTON (AP) — The Agriculture Department says that starting next fall, schools can stop feeding students a common ammonia-treated ground beef filler dubbed “pink slime” by critics.
The department says it will give school systems a choice of beef patties made with the lean finely textured filler, or less lean bulkground beef without it.
Concern about the ammonia-treated filler exploded last week as a social media topic. The Agriculture Department says the filler is safe. But it says it wants to be responsive to schools that want a choice.
The low-cost filler is heated and processed so most of the fat is removed before it is compressed into blocks for use in ground meat. It is exposed to a “puff of ammonia hydroxide gas” to kill bacteria.”
Comments »China Halts 10 More Airbus Orders Over Carbon Tax Nonsense
“PARIS (Reuters) – China has suspended the purchase of 10 moreAirbus jets, two people familiar with the matter said on Thursday, raising the stakes in a potentially damaging trade row overEuropean Union airline emissions charges.
The move to delay the purchase of extra A330 planes brings to $14 billion the value of European aircraft caught up in tensions over the EU’s Emissions Trading Scheme, which has angered countries including China, India and the United States.
It comes amid urgent efforts to find a solution to the row, which airlines fear could provoke an aviation trade war capable of causing travel disruption and hitting air traffic rights.
Earlier this week, European planemaker Airbus said China had blocked the purchase of 35 long-haul A330s and 10 Airbus A380 superjumbos worth a total of $12 billion.
Airbus did not name the airlines involved, but industry sources said the A380s were earmarked forHong Kong Airlines, 46-percent owned by HNA Group, the parent of Hainan Airlines <600221.SS>.
The row is over a cap-and-trade scheme which could levy charges for carbon emissions for flights in and out of Europe.
Foreign governments say the EU is exceeding its legal jurisdiction by charging for an entire flight, as opposed to just the part covering European airspace….”
Comments »IMF Approves a 28 Billion Euro Loan to Greece
“The International Monetary Fund approved a 28 billion-euro ($36.6 billion) loan for Greece as part of a second bailout with the euro area that requires more austerity and steps up controls over the country’s spending.
The Washington-based IMF said 1.65 billion euros will be immediately available under the new arrangement. The four-year loan announced today follows an earlier program that was cancelled, leaving 9.7 billion euros that was never disbursed.
Greece completed the world’s largest-ever sovereign-debt restructuring and had to agree to deeper spending cuts to obtain the new public funds. Global risks posed by the European crisis diminished after euro area members this week approved a second bailout for Greece.
While the conditions attached to the loan may prove hard to meet amid a fifth year of recession and upcoming elections, European officials are counting on the 130 billion-euro package to buy some time to insulate the rest of the region from the debt crisis, said Domenico Lombardi, a senior fellow at the Brookings Institution in Washington.
“The main function of this agreement is to contain the crisis for the next few months in order to provide a more stable environment for Italy and Spain to carry out their adjustments and therefore stabilize the euro area as a whole” said Lombardi, a former IMF board official.
The agreement, formally approved by euro countries yesterday, caps months of negotiations over a second package after an initial rescue in 2010 failed to halt the debt turmoil.”
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