U.S. Housing Starts Up 22.7% in November

  According to a report from the Wall Street Journal,U.S. housing starts rose 22.7% from October to a seasonally adjusted annual rate of 1,091,000 in November, the Commerce Department said Wednesday. That was higher than the 952,000 forecast by economists and brought the average pace of starts for the past three months to 951,000.

Details of the report showed broad strength for housing. Starts for single-family homes, a bigger and more stable segment of the market, also rose to their highest level in nearly six years.

November building permits, an indicator of future construction, fell slightly to the still-elevated level of 1,007,000. Permits had jumped 6.7% in October.

Details of the report showed broad strength for housing. Starts for single-family homes, a bigger and more stable segment of the market, also rose to their highest level in nearly six years.

November building permits, an indicator of future construction, fell slightly to the still-elevated level of 1,007,000. Permits had jumped 6.7% in October.

The report showed home building returning to the brisk pace seen early this year, before the sector's recovery took a hit from rising interest rates. Builders broke ground on an average 869,000 homes between June and August.

"The recovery trend has resumed," said Alan Levenson, chief economist at T. Rowe Price Associates.

That is good news for the wider economy, which benefits from a stronger housing sector through job creation and demand for a broad array of building materials and household goods. The data prompted several upgrades to estimates of economic growth in the final three months of the year. Barclays raised its forecast to 2.3% from 2.2%, while Morgan Stanley upped its estimate to 2% from 1.9%.

The uptick in housing could also reassure Federal Reserve officials that the recovery is gaining strength as they conclude a two-day meeting Wednesday, where they'll decide whether to start reining in their $85 billion-a-month bond-buying program. They have said they could do so in the "coming months."

Board of Governors of the Federal Reserve System Press Release

Press Release

Release Date: December 18, 2013

For immediate release

Information received since the Federal Open Market Committee met in October indicates that economic activity is expanding at a moderate pace. Labor market conditions have shown further improvement; the unemployment rate has declined but remains elevated. Household spending and business fixed investment advanced, while the recovery in the housing sector slowed somewhat in recent months. Fiscal policy is restraining economic growth, although the extent of restraint may be diminishing. Inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will pick up from its recent pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee sees the risks to the outlook for the economy and the labor market as having become more nearly balanced. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, and it is monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term.
Taking into account the extent of federal fiscal retrenchment since the inception of its current asset purchase program, the Committee sees the improvement in economic activity and labor market conditions over that period as consistent with growing underlying strength in the broader economy. In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions, the Committee decided to modestly reduce the pace of its asset purchases. Beginning in January, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $35 billion per month rather than $40 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $40 billion per month rather than $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee's sizable and still-increasing holdings of longer-term securities should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee's dual mandate.
The Committee will closely monitor incoming information on economic and financial developments in coming months and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. If incoming information broadly supports the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings. However, asset purchases are not on a preset course, and the Committee's decisions about their pace will remain contingent on the Committee's outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases.
To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. The Committee also reaffirmed its expectation that the current exceptionally low target range for the federal funds rate of 0 to 1/4 percent will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. The Committee now anticipates, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate well past the time that the unemployment rate declines below 6-1/2 percent, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Charles L. Evans; Esther L. George; Jerome H. Powell; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was Eric S. Rosengren, who believes that, with the unemployment rate still elevated and the inflation rate well below the target, changes in the purchase program are premature until incoming data more clearly indicate that economic growth is likely to be sustained above its potential rate.

Fed raises forecast of US GDP growth at a range between 2.8% to 3.2% in 2014

 The Federal Reserve on Wednesday slightly raised its forecast for how fast the U.S. will grow in 2014 and the central bank also expects the unemployment rate to fall a bit quicker than it previously estimated. The latest quarterly forecast by the Fed pegs U.S. growth at a range of 2.8% to 3.2% in 2014. That's a bit stronger than its previous estimate of 2.9% to 3.1%. The Fed also predicts unemployment will range from 6.3% to 6.6% in 2014 and 5.8% to 6.1% in 2015. By 2016, unemployment should drop below 6%. Inflation as measured by the PCE index, meanwhile, could range from 1.4% to 1.6% in 2014, down from the Fed's prior forecast of 1.3% to 1.8%. The PCE index is on track to rise about 1% in 2013.

Source: Marketwatch

FED TO CUT US$ 10 billion monthly from its previous US$85 billion bond buying program

 U.S. stocks rallied after the Federal Reserve announced that it would begin slowing down the pace of bond purchases, known as quantitative easing. The Fed policymakers voted to cut $10 billion a month from its $85 billion bond-buying program, starting in January.
The Federal Open Market Committee in a statement on its policy decision, said “In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions, the Committee decided to modestly reduce the pace of its asset purchases.”

Low Inflation Tests World's Central Banks

   According to a report from the Wall Street Journal,"inflation is slowing across the developed world despite ultralow interest rates and unprecedented money-printing campaigns, posing a dilemma for the Federal Reserve and other major central banks as they plot their next policy moves".

''U.S. consumer prices rose just 1.2% in November from a year earlier, according to Labor Department data released Tuesday. The subdued price data came as the Fed opened a two-day policy meeting at which the fate of its $85 billion-a-month bond-buying program—an effort to hold down long-term interest rates and drive up the value of homes, stocks and other assets—is a central focus.

Meanwhile, annual inflation in the euro zone was 0.9% in November, the European Union's statistics office said Tuesday. And central banks in Sweden and Hungary cut interest rates, the latest efforts elsewhere in Europe to boost struggling economies as inflation remains low.

The downward pressure on prices presents a conundrum for policy makers across advanced economies: Should they respond with even easier monetary policy or dismiss it as a temporary development?

Central bankers worry about inflation falling too low because it raises the risk of deflation, or generally falling prices, a phenomenon that is difficult to combat through monetary policy. Some economists believe weak or falling prices can lead consumers to delay major purchases, exacerbating an economic slowdown. Even without deflation, very low inflation can be a sign of weak demand that weighs on wages, corporate profits and growth.

"We're in a world where there's still a tremendous amount of economic slack," said Joseph Lupton, a global economist at J.P. Morgan Chase. "A return to growth is not a return to health. There's a long way to go here, which is why central banks in places like the U.S., U.K. and Japan are trying to get inflation up."

Inflation in both advanced and emerging economies picked up in the early stages of the economic recovery, eventually straddling central banks' inflation targets closely enough that many policy makers were charting an exit from their extraordinary monetary policies. But persistently weak demand in recent years has pushed inflation back into uncomfortably subdued territory".

PERU : The Amazon Pacaya Samiria National Reserve Part II

 From July through December water levels in the rivers decrease considerably reducing the sizes of rivers and lagoons and concentrating wildlife dependent on these habitats. Although it makes river travel up the smaller tributaries difficult, if not sometimes impossible, the chances of spotting certain species of aquatic wildlife is increased (otters, paiche). From January through June most of the area is flooded by water, with the highest level reached during March and April. This is the period of blooms and fruit production (which draws in the primates and many more) and allows small skiffs to enter a complex network of rivers, channels and hidden lagoons.

Throughout the year, many species of primates can be found near the riverbanks and overhead in the canopy, and the bird species to be seen year-round are varied, numerous and a thrill for all. A constant presence also is the pink and gray dolphins that have come to symbolize the Amazon basin waterways.

PERU : The Amazon Pacaya Samiria National Reserve Part I

The Pacaya–Samiria National Reserve is one of the largest protected areas in Peru with an area of more than 2 million hectares . It is also the largest protected seasonal flooded forest in South America. The reserve is made up of three hydrographical basins: the Samiria River drainage, the Pacaya River drainage and the Yanayacu-Pucate drainage. 
Delimited by two big rivers, the reserve is bordered by the Marañon River to the north and the Ucayali River in the South. At the junction of these two mighty rivers, the easternmost corner of the reserve, the Amazon River is born and begins its journey starting at 340 feet (104 meters) above sea level for another 1,926 miles (3,100 km) to the Atlantic Ocean.

Renowned for its biodiversity and with new species coming to light daily, up to now the reserve has been found to harbor over 500 species of birds (which makes up almost 64% of the total birds recorded for Peru and includes five of the eight species of macaw and the primitive-looking hoatzin), 132 species of mammals (this includes the pink and gray river dolphins, several monkey species and giant river otters), 240 species of reptiles (including the giant anaconda and black caiman), 58 species of amphibians, 259 species of fish (includes the famous giant “paiche” and armored catfish) and well over 1,200 species of plants with more being described every day, many of medicinal significance.

The Pacaya-Samiria Reserve is characterized by a tropical wet climate with temperatures which range from 20 C (68 F) to 33 C (91 F) and a yearly rainfall of around 2000-3000 mm (80 – 120 inches), with slightly higher chances of rain showers in the first half of the year.

BP makes first major Gulf of Mexico oil discovery since Deepwater Horizon

BP has reported a "significant oil discovery" in the Gulf of Mexico, its first major find since the deadly rig explosion that triggered the worst environmental disaster in US history.

The company said it had hit oil at depths close to 9,150 metres (30,000ft) at its Gila prospect in the Gulf of Mexico, about 300 miles south-west of New Orleans.

The announcement marks the first big oil discovery since US regulators lifted a five-month ban on deep-water drilling in 2010 after the Macondo well blowout; it follows two finds in the Gulf in 2006 and 2009.

The discovery, whose commercial potential remains unclear, came as BP revealed a $1bn (£650m) write-off from its Pitanga well off the coast of Brazil, which never yielded the lucrative fossil fuels the company had hoped for. The oil company admitted it would not recover the $850m it paid to buy the Pitanga well, nor a further $230m spent on developing it.

BP said 2013 had been its most successful year for oil exploration for almost a decade: it had investigated 15 wells, making seven potentially commercial discoveries.

The company expects  to spend around $4bn a year exploring and drilling new wells in the Gulf of Mexico over the next decade, a figure roughly equivalent to the sum it has set aside for clean-up costs, fines and compensation related to the disaster, which killed 11 people and released 4m barrels of oil into the sea. The final bill will not become clear until a US court judgment next year.

BP, which employs 2,300 people in the Gulf of Mexico, had seven wells in 2012, up from five in 2011, a further sign of the drilling revival in the region since the spill. While fracking and cheap gas have captured public attention, big oil companies have been moving back to the Gulf, building new rigs. A record 807 oil permits for the Gulf were issued in the first nine months of this year, up 14% on 2012, according to Bloomberg.

Source:  theguardian

U.S. Housing Starts Up 22.7% in November

New-home construction surged in November to its highest level in nearly six years, the latest sign of renewed momentum in the sector's recovery.

U.S. housing starts rose 22.7% from October to a seasonally adjusted annual rate of 1,091,000, the Commerce Department said Wednesday. That was higher than the 952,000 forecast by economists and brought the average pace of starts for the last three months to 951,000.

Details of the report showed underlying strength in the sector in November. The sharp rise in home starts was primarily driven by a 21% jump in single-family homes, a bigger and more stable segment of the market.

November building permits, an indicator of future construction, fell slightly to the still-elevated level of 1,007,000. Permits had jumped 6.7% in October.

The data showed construction returning to the brisk pace seen early this year, before the sector's recovery took a hit from rising interest rates. Builders broke ground on an average 869,000 homes between June and August.

From: WSJ

California Presses On With Water Project

   According to a report from the Wall Street Journal,a contentious project to divert water supplied to Southern California past an ecologically sensitive river delta moved a step closer to fruition Monday, as state and federal officials unveiled a draft final environmental analysis.

Under the $25 billion plan, which is backed by Gov. Jerry Brown, two 30-mile-long tunnels would bypass the Sacramento-San Joaquin Delta in Northern California. The area often serves as a choke point for water destined for more than 20 million people and farmland in semiarid parts of Southern California and the Central Valley because of pumping restrictions to protect endangered smelt and other fish.

In a nod to environmental concerns, the plan would also create a program to help restore the ecology of the delta, the largest estuary on the West Coast.

At stake is the reliability of one of the largest water-delivery systems in the U.S., whose customers are now vulnerable to shortfalls triggered by drought and the environmental bottlenecks in the delta. Farmers in the Central Valley's Westlands Water District, for example, this year had federally controlled water shipments cut to 20% of their contracted allocation during a drought that is entering its third year. Urban water districts also have been put on notice to expect sharp cutbacks of state-provided water next year, barring an unusually wet winter.

But the so-called Bay Delta Conservation Plan, which has been seven years in the planning, still faces intense opposition, including from environmental groups and farmers in the affected area. No amount of restoration work will offset the disruption of constructing what would become one of the largest infrastructure projects in California history, said Barbara Barrigan-Parrilla, executive director of Restore the Delta, a coalition of groups that oppose the project.

"The physical construction of the tunnels would turn the delta into a war zone," Ms. Barrigan-Parrilla said. She also believes there would be other unintended consequences from having water bypass the delta, a farming and wetlands area of some 700,000 acres about 70 miles east of San Francisco.

Meanwhile, even some supporters of the project remain wary of its cost. The estimated $16 billion price of the tunnel project would come from water districts south of the delta, but officials of some of those agencies are concerned because a detailed financial plan hasn't been released. The remaining $9 billion would go toward the delta restoration program.

U.S.; New Mortgages to Get Pricier Next Year,upon regulations to Fannie and Freddie.

   According to report from the Wall Street Journal,the mortgage giants Fannie Mae and Freddy Mac, said late Monday that, at the direction of their regulator, they will charge higher fees on loans to borrowers who don't make large down payments or don't have high credit scores—a group that represents a large share of home buyers. Such fees are typically passed along to borrowers, resulting in higher mortgage rates.

Fannie and Freddie, which currently back about two-thirds of new mortgages, don't directly make mortgages but instead buy them from lenders. The changes are aimed at leveling the playing field between the government-owned companies and private providers of capital, who are mostly out of the mortgage market now. Fannie and Freddie were bailed out by the government during the financial crisis but are now highly profitable.

The Federal Housing Finance Agency last week signaled the fee increases but didn't provide details. The agency's move came one day before the Senate voted to confirm Rep. Mel Watt (D., N.C.) as its director. It isn't clear whether Mr. Watt, who hasn't yet been sworn in, weighed in on the changes. An FHFA spokeswoman declined to comment on any discussions with Mr. Watt, who also declined to comment.

Mr. Watt will face heavy pressure by consumer groups and the real-estate industry to reverse course, industry officials said Tuesday. "There will be significant opposition very quickly once people understand what is actually being implemented," said Martin Eakes, chief executive of the Center for Responsible Lending in Durham, N.C., a consumer-advocacy nonprofit.

The changes take effect in March but will be phased in by lenders earlier.

California's Bullet Train Derailment

  The California's high-speed rail authority, hopes to bulldoze a growing list of legal and financial obstacles to break ground on its $70 billion bullet train early next year.

Sacramento County Superior Court Judge Michael Kenny ruled last month that the rail authority had failed to satisfy several procedural requirements of the 2008 ballot measure that authorized $10 billion in state bonds to build the 500-mile train from Anaheim to San Francisco. He also prohibited the state from spending state bond money until the authority complies.

Rail authority chairman Dan Richard dismissed these failures as mere carelessness. The authority must only go "back and put more information on the record," he says. "Nothing in those rulings changes our ability to move forward."

But the lapses are serious and deliberate. The authority didn't obtain required environmental clearances for 270 miles of track. And it didn't produce a financial plan identifying its funding sources for the first 300-mile segment from Merced to the San Fernando Valley, which is projected to cost $31 billion.

Private investors won't put up a dime, and the feds have provided a mere $3.25 billion in grants, which require a dollar-for-dollar state match. California has so far tapped about $600 million in stimulus funds for pre-construction work and this spring will have to put up $823 million to get more federal cash. It's not clear where the authority plans to get this money since state bonds are off limits due to the judge's ruling.

Only two options exist. The Obama Administration could eliminate its state-match requirement. Or the legislature could appropriate revenues from the state general fund. Both are politically perilous for Democrats.

Source:  WSJ

Al Jazeera weighs bid for stake in $1 billion Turkish pay-TV company

Qatari-backed broadcaster Al Jazeera is considering a bid for a majority stake in Turkish pay-TV company Digiturk to boost its soccer offering ahead of the 2022 World Cup finals in Qatar, banking sources familiar with the plans said on Wednesday.

A number of potential buyers have shown an interest in Digiturk since a 53-percent stake in the company was seized by Turkey's Savings Deposit Insurance Fund (TMSF) from Cukurova Holding in May because of the conglomerate's debts to the state agency.

Al Jazeera's interest stems from Digiturk's $321 million-a-year deal for exclusive rights to Turkey's Super League championship, one of the sources said.

"It's really the football rights that differentiates Digiturk from others, and the Qataris are keen to get that access," the source said. "Otherwise, it does not make any sense for them to look at a business in a country where the local language is so dominant."

Digiturk has a market capitalization of $1 billion and about $500 million of debt, two of the sources said, giving it an enterprise value of about $1.5 billion.

Al Jazeera, which operates under the patronage of the emir of Qatar and his family, has appointed Barclays Capital to assist with its bid, the sources added.

Source: Reuters

Draft pollution law seeks to tackle lethal European air

EU policymakers on Wednesday unveiled a draft law to tackle air pollution, which every year is linked to 400,000 premature deaths in Europe and costs of tens of billions of euros.

The proposals include new limits on emissions from power plants and industry, as well as measures to make member states comply with existing rules on limiting pollutants associated with asthma, cardiovascular disease and cancer.

So far, many member states are failing to enforce existing EU air quality standards, even though the rules are less rigorous than those set by the World Health Organization.

"Air pollution is still an invisible killer and it prevents many people from living a fully active life," Environment Commissioner Janez Potocnik said in a statement.

Environmental campaigners say the European Commission, the EU executive, is not being bold enough in tackling a problem linked to more untimely deaths than road accidents, as well as countless sick days and impaired quality of life.

The Commission has said the eventual aim is to raise standards to WHO levels, but it has to balance costs to industry with benefits in fragile economic times.

It puts the direct costs to society, including damage to crops and buildings, from air pollution at around 23 billion euros ($31.6 billion) per year.

The health benefits alone of the proposals will save society 40 billion euros per year, 12 times the cost of pollution abatement, which is expected to reach 3.4 billion euros per year in 2030, the Commission said.

Source: Reuters

Swiss Re says insurers' catastrophe bill halves despite rise in deaths

 The cost to insurers of catastrophes almost halved to some $44 billion this year, despite a doubling in deaths caused by events such as Typhoon Haiyan, Swiss Re (SRENH.VX) said on Wednesday.

Haiyan was the event causing the highest loss of life this year, resulting in the death of more than 7,000 from some of the strongest winds ever recorded when it struck the Philippines in November.

But Swiss Re noted the bill for insurers was likely to be low because few of those affected had cover.

The company said the total loss of life in 2013 from disasters rose to around 25,000 from 14,000 a year earlier. Yet the cost of damage dropped to $130 billion from $196 billion, while insured losses - the cost to insurers from claims - was estimated at $44 billion, down from $81 billion.

Events such as the flooding in eastern Europe during June - the second-most expensive fresh-water flood event on the insurer's records - caused most of the financial impact, particularly in terms of the insured loss.

Damage from the European floods is estimated to have reached $18 billion, with insured losses at around $4 billion.

Source: Reuters

Asian markets Closed up.

Asian markets settled in the blue on Wednesday with shares in Tokyo rising on the back of strong exports while the Hang Seng closed broadly higher ahead of the US Federal Reserve's decision.

The benchmark Nikkei 225 index closed up 309 points or 2.02% at 15,587 while the broader Topix settled up 18 points at 1,250. The Hang Seng added 74 points or 0.32% at 23,143. 

Investors cheered government data that said Japan's exports rose more than expected. The nation's exports rose for a ninth consecutive month in November, as the weaker yen drove strong demand for car shipments to the US and China.

Exports surged 18.4% last month, a touch above most estimates but down slightly from the 18.6% increase in October, data from the Ministry of Finance showed.

Sentiment was also boosted by expectations that Prime Minister Shinzo Abe will outline a new growth strategy on Thursday.

Stocks on the move included Toyota Motor, which rose 1.6%, Renesas bulked up 2.1% while TDK climbed 3.3%. 

Real estate stocks were in demand with shares of Mitsubishi Estate increasing 3.5% while Sumitomo Realty & Development advanced 2% in Tokyo. 

In Hong Kong, financial and property stocks spearheaded gains on Wednesday. Bank of Communications rose 1% as did insurance firm China Life. 

China Overseas added 0.22% and China Resource Land increased 0.81%.

Source; Livecharts

German data lifts European shares as Fed decision looms

Financial markets were cautious on Wednesday as investors waited to see if the Federal Reserve might announce it is trimming its massive stimulus programme.

European shares tiptoed higher, helped by a strong German business sentiment survey, but it was little more than fine tuning ahead of the Fed's statement. Moves in the dollar and benchmark U.S. and European government bonds were also tight. The debate over when the Fed will begin to halt the flow of cheap dollars has dominated trading worldwide for months amid worries it could trigger a turbulent reaction from investors who have become all too used to the support.

A majority of economists polled by Reuters expect the Fed to wait until March before it starts the process, but recent encouraging data from the U.S. and other parts of the world have raised the odds of a move in January, if not now.

"Probably the strongest encouragement for tapering to begin this evening is the stability in financial markets," said Derek Halpenny, European head of global markets research at Bank of Tokyo-Mitsubishi UFJ.

"Our hunch is that a taper announcement may well encourage a year-end rally in global equity markets as an element of policy uncertainty is cleared," he said, adding the dollar should also do well against the yen.

Another Japanese trade deficit and expectations that Prime Minister Shinzo Abe could hint at fresh stimulus in a speech later was already tugging at the yen.

There was also no shortage of European distractions to fill the wait for the Fed.

Euro zone watchers had details thrashed out overnight on the bloc's new bank rescue mechanism to pick through, while German Ifo data showed business morale in Europe's biggest economy hit its highest level this month since April 2012, a sign that economic growth could accelerate next year.

Bank of England meeting minutes due at 0930 GMT were also on tap.

The pan-regional FTSE urofirst 300 extended gains to 0.8 percent after the German data. London's FTSE, Paris's CAC 40 and Frankfurt's Dax all made ground although the moves only reversed Tuesday's falls.

The euro was steady at $1.3767, having risen 0.2 percent in the previous two sessions. The common currency touched a six-week high of $1.3811 on December 11.

Source: reuters

Ukrainian president under pressure over Russian bailout

 Ukraine's president faced calls to resign on Wednesday over a $15-billion bailout from Russia which the opposition and protesters said had sold the country out to its former Soviet masters in Moscow.

Tens of thousands of protesters gathered in Kiev on Tuesday after President Viktor Yanukovich secured financial assistance and a gas price discount at talks with President Vladimir Putin, and several hundred spent the night in the freezing cold.

Opposition leaders have called for mass rallies over the holiday season on the central square occupied for weeks by protesters, who have pitched tents behind tall barricades.

"He has given up Ukraine's national interests, given up independence," Vitaly Klitschko, an opposition leader and heavyweight boxing champion, told the crowd on Tuesday.

Ukraine needs money to cover an external funding gap of $17 billion next year - almost the level of the central bank's depleted currency reserves - and avoid defaulting on its debts.

Underlining the depth of the problem, Russian Finance Minister  said Moscow would buy $3 billion worth of Ukrainian Eurobonds as early as the end of this week, marking the first instalment in debt purchases to total $15 billion.

However, the United States warned Kiev the deal would not satisfy the protesters and German Chancellor Angela Merkel said ties with Russia should not prevent Kiev from looking West.

"At the moment it seems to be an either-or proposition. ... We need to put an end to this," Merkel told ARD TV. "A bidding competition won't solve the problem."

Russian FM  Sergei Lavrov told parliament on Wednesday that the West was continuing to put "overt pressure" on Ukraine.

Putin wants to bring Ukraine's big, mineral-rich market into a Eurasian Union he plans to build with Kazakhstan, Belarus and other ex-Soviet republics to match the economic might of the United States and China. Without Ukraine, it looks much weaker.

"This is a rescue. Without that money, Ukraine would have defaulted some time before the middle of next year," said Chris Weafer, senior partner with consultancy Macro-Advisory.

One analyst, Lilit Gevorgyan of IHS Global Insight, described the assistance as a "bandage but no remedy" for an economy that is heavily dependent on steel and agriculture and has struggled to modernise since the end of the communist era.

Yanukovich has been seeking the best possible deal for his country of 46 million but has been criticised in the West after police used force against the protests in the heart of Kiev.

Moscow, accused by European officials of bullying Kiev into dropping the EU deal last

 month with the threat of economic retaliation, now has great financial leverage over Ukraine,

If it withdraws its money and alters the gas price, it could pull the plug on its neighbour. Putin appeared to stress this by saying the agreements on the gas price was temporary.

Source:  Reuters

Merkel urges EU treaty change in first speech of new term

In the first speech of her third term, German Chancellor Angela Merkel urged European partners to tackle flaws in their currency union by ceding control over economic policy and making politically sensitive changes to the bloc's treaty.

Speaking in the Bundestag lower house of parliament a day after her new "grand coalition" government was sworn in, Merkel said progress in countries like Ireland and Spain showed Europe was overcoming the financial crisis that nearly tore it apart.

But she said it was too early to declare victory, describing the 17-member bloc that shares the euro currency as an unfinished project that could not afford to rest on its laurels.

"I know that pushing through treaty changes in the member states can be difficult, but if you want more Europe, you have to be prepared to develop it further," Merkel said.

"In a world that is constantly changing, we can't stand there and say that at some point we agreed the Lisbon Treaty and there's no need to change it again. This won't work."

Germany wants closer coordination of economic policy to complement the bloc's single monetary policy and will push at a summit of EU leaders this week for members to agree binding contracts with the European Commission that would oblige them to take certain economic reform steps.

At the same time, it is pushing for changes to the Lisbon Treaty to allow for greater European control over policy, a move that is highly controversial in other members, including neighbour France, where Merkel will travel later on Wednesday to meet with French President Francois Hollande.

France is one of a number of countries, including Italy and Spain, that are pressing Berlin for more "solidarity" in Europe to combat the economic distress, particularly in the bloc's southern periphery, that has sent unemployment soaring.

"We have a situation in Europe where Germany is often accused of blocking certain things. This is not true," Merkel said.

Source; Reuters

EU regulators launch in-depth probe into German green law

The European Commission said on Wednesday it would open a full investigation into Germany's management of renewable energy subsidies, a decision which could lead to higher costs for heavy industry and unsettle investors in green fuel.

It said in a statement it had concerns that some aspects of the German renewable energy law, which exempts heavy industry from green surcharges, were unfair.

The Commission, the EU executive, had been expected to announce the enquiry after it sent a letter to the German government spelling out its concerns discounts to industry were unfair.

Source; Reuters

China needs Western help for nuclear export ambitions

China's investment in Britain's 16 billion pound Hinkley Point project is its first foray into Europe's nuclear power market and a marker of its global ambitions, but its firms will depend on foreign partners if they are to fulfil them.

China General Nuclear Power Group (CGN) and China National Nuclear Corporation (CNNC) plan to take a combined 30-40 percent stake in a consortium led by French utility EDF to build French-designed EPR reactors in southwest England.

China has the world's largest nuclear building programme at home and hopes to leverage this into a nuclear export industry.

While China has already built reactors for its ally Pakistan, Hinkley Point is its first nuclear project in a developed country, and Beijing hopes the UK credentials will help promote its two nuclear giants on the global stage.

But industry analysts say gaps in the Chinese supply chain, fears of political interference and inexperience in the economics of nuclear power mean the firms will struggle to go it alone.

"They are very ambitious, but whether they will be welcomed overseas is another question," said Li Ning, a nuclear power specialist and dean of the School of Energy Research at China's Xiamen University.

In Britain, for example, political discussions behind closed doors about Chinese nuclear involvement concluded the public would not accept Chinese companies owning majority stakes in new plants and that initial participation should be capped at 49 percent, a source familiar with the discussions said.

China's massive domestic nuclear new-build programme is one of the few bright spots in the global nuclear industry following the 2011 Fukushima disaster, which prompted several countries including Japan, Germany, Switzerland, Italy and Belgium to close or phase out their nuclear programmes.

After a post-Fukushima suspension lasting a year and a half, Beijing restarted its programme late in 2012 and aims to bring capacity up from 12.57 gigawatts now to 58 GW by the end of 2020. Nearly 30 GW of new capacity is under construction in China, more than 40 percent of the world's total new-build.

Source: Reuters

WSJ: The Putin Crony Rescue Fund

   According to a report from the Wall Street Journal,"so now we know what Russian President Vladimir Putin is willing to pay to keep Ukraine a loyal subject: $15 billion in cash, $2 billion in annual discounts on Russian natural gas, and other goodies. Empire rebuilding isn't cheap".

That's the package Mr. Putin announced on Tuesday, standing next to Ukraine's beleaguered President Viktor Yanukovych at the Kremlin. The Ukrainian faces popular demands to move his country toward Europe and overhaul the country's politics, and the billions are intended to ease Kiev's financial crunch and defuse a four-week-old protest movement.

This carrot strategy is a change for Mr. Putin, who in the summer imposed trade sanctions on Ukraine to make Mr. Yanukovych resist signing an "association" accord with the European Union. He dropped the EU treaty, but Ukraine erupted. The Russian is now tapping one-sixth of a domestic "rainy day" fund to buy $15 billion in Ukrainian bonds, which technically breaks Russian law against investment in non-creditworthy debt. At the stroke of a pen, he also ordered state-run Gazprom  to give Ukraine a one-third discount on natural gas purchases. It's good to be the king.

Mr. Yanukovych's risky bet is that with the Russian rescue he can ride out the political crisis until an election scheduled for 2015. It's risky for Mr. Putin too. Mr. Yanukovych has lost his legitimacy to rule, and a more enlightened leader would seek a deal with the opposition that leads to early elections.

The U.S., which has public influence in Ukraine, could respond by considering sanctions on the Yanukovych government and its allies if it tries to keep power through repression. This message could be as powerful as the Kremlin's checkbook.

China's Muscle-Flexing and Asian Regional Harmony

John Bolton calls the "peaceful rise" of China a fantasy, citing its expanding military budget as evidence for another more plausible theory, at least in his mind—a menacing rise to power. However, he misses the intensely human element in his analysis. It might benefit us all to remember an old German proverb from a century ago, "Speak loudly and brandish a big gun." Berlin neither wanted a war at first, nor to set up a German hegemony, but instead desired to sit at her rightful place among the European powers—to be heard as anyone else. Regarding the defense zone, Xi Jinping said he wanted to "treat neighbors with friendship and as partners," with a strong blue-water navy as a necessary means to this end. These were precisely the aims of Germany in the early 20th century. If Berlin's neighbors wouldn't behold her legitimacy with appropriate respect, then she would scare them into recognizing it, or in the words of Friedrich von Bernhardi, Europe would give Germany "that high esteem which is due them . . . and has hitherto been withheld from them." Interestingly, Mr. Bolton proposes containing China with "something akin to an alliance system," a strategy that ironically unraveled and doomed Europe. Wouldn't China cry einkreisung (encirclement), just as the Germans did, and accelerate its military plans with yet greater vigor, bearing us down the path of pre-World War I Europe to even darker tragedy?

Preston J. Juarez

From the Wall Street Journal

Trust-building needed to cut Gordian Knot of China-U.S. military ties

 The Cannikin Law, by which the capacity of a barrel is determined by the shortest stave, also governs China-U.S. relations.

The near-collision between Chinese and U.S. warships in the South China Sea lately shows that trust deficit and absence of military coordination have become a weak link in promoting ties between Beijing and Washington.

On Dec. 5, U.S. missile cruiser Cowpens, despite warnings from China's aircraft carrier task group, broke into the Chinese navy's drilling waters in the South China Sea, and almost collided with a Chinese warship nearby.

In fact, even before the navy training, Chinese maritime authorities have posted a navigation notice on its website, and the U.S. warship, which should have had the knowledge of what the Chinese were doing there, intentionally carried on with its surveillance of China's Liaoning aircraft carrier and triggered the confrontation.

For years, whether it was in the pile of guesswork congressional reports or in the fanfare talks of some China-bashing U.S. politicians, Beijing's military development has been portrayed as a threat to regional stability.

Comparing to the two countries' manifold economic and trade cooperation mechanisms, their military dialogue platforms, now still mainly confined to exchange visits by military leaders and joint exercises, tend to be rather limited both in scope and in ability to deliver tangible results.

The current fragile military links are the most vulnerable part of the two countries' overall relationship, which will definitely hinder their efforts to materialize the building-up of a new model of major country relations in the long-run.

To cut that Gordian Knot, the two countries should set up effective channels at all levels for timely communications on important military moves, so as to avoid miscalculations and even a skirmish.

Washington has to understand that Beijing has the right to grow its national defense capacity in accordance with its own legitimate demands to protect national interests.

China has also assured the world repeatedly that it will use its power in a peaceful and responsible way. Therefore, demagogues should stop making a fuss over China's military development that is purely defensive in nature.

In an interdependent world as what it is, neither China nor the United States can exist without relating to the other. Being well aware of the deficiencies of their bilateral ties, it is time for Beijing and Washington to work together to patch up the short staves of the cask and be trustworthy friends to each other.

Source: Xinhua

Treasures of the Aegan