Monday, 17 September, 2012

NEW YORK

AGENCIES

Brent crude oil rose to a four-monthpeak, the S&P 500 neared a five-year highand European shares rose to their highestlevels in 14 months.

The Fed on Thursday said it wouldpump $40 billion into the economy eachmonth until the jobs market shows sus-tained improvement. The aggressive ac-tion enhanced what was an alreadyupbeat mood in financial markets sincethe European Central Bank announcedplans to cut the borrowing costs of strug-gling euro zone members.

“Markets had expected more quanti-tative easing, but they hadn’t expectedBernanke and the Fed to be as aggressiveas they were,” said Jeffrey Given, seniormanaging director and senior portfoliomanager at John hancock Asset Manage-ment in Boston.

Fed Chairman Ben Bernanke on

Thursday cited the dire stateof the U.S. labor market, say-ing it remains a “grave con-cern.”

“The Fed made itsound as if evenafter the economyrecovers, interestrates will remainlow. More people aremoving into risky assetsbecause Ben is not going topull the punch bowl away,”Given said.

On Wall Street, stocks fin-ished higher, with cyclicalsand financials leading theway. An index of U.S. housingshares, aided by the Fed’splan to buy mortgage-backed securities, rose 2.7percent.

The Dow Jones indus-trial average .DJI rose

53.51 points, or 0.40 percent, to end at13,593.37. The Standard & Poor’s 500Index .SPX climbed 5.78 points, or 0.40percent, to 1,465.77. The Nasdaq Com-posite Index .IXIC jumped 28.12 points,or 0.89 percent, to 3,183.95.

Brian Jacobsen, chief portfolio strate-gist at Wells Fargo Funds Management,LLC in Menomonee Falls, Wisconsin,said the Fed’s balance sheet could expandby 11 to 12 percent by the end of the year,monetary accommodation that could“translate into a move up in the S&P 500stock index to the 1,505 area.”

In bond markets, yields on 10-yearItalian government bonds fell below 5percent for the first time since late Marchas the Fed’s announcement added mo-mentum to a rally dating from late July.

In contrast, the benchmark 10-yearU.S. Treasury note price fell 1-9/32, itsyield rising to 1.87 percent from 1.73 per-cent late on Thursday as investors exitedsafe-haven debt in search of higher re-turns in riskier assets.

“A lot of good news out of Eu-rope had already caused risk

markets to rally goinginto the Fed meeting

so the Fed’s open-ended plan to buy

mortgage-backed se-curities, its intent tokeep rates low untilmid-2015, and itsstrategy to keep

monetary policy highlystimulative - even if the

economy accelerated - wasa pretty potent combina-tion and threw fuel on therally,” said Robert Tipp,chief investment strate-gist for Prudential FixedIncome, with $330 bil-

lion in assets undermanagement.

Euro zone finance

ministers met in Cyprus on Friday, hop-ing to build on progress the bloc hasmade this month following plans an-nounced by ECB President Mario Draghiand a German court’s green light thisweek for the euro zone’s ESM bailoutfund.

European equities surged, with thepan-European FTSEurofirst 300 index.FTEU3 rising 1.25 percent to 1,120.15.The MSCI index of global stocks.MIWD00000PUS jumped 1.6 percent to340.03, near its highest level since Au-gust last year.DOLLAR WEAKNESS: The dollarindex .DXY fell 0.5 percent to near four-month lows at 78.903.

The dollar’s broad decline left theeuro at a four-month high above$1.31, the latest in a string of tech-nical and psychological levels ithas cut through this week.

“With Europe getting theiract together (at least tem-porarily), the Fed floodingthe market with cash, andChina talking (about) stim-ulatory infrastructureprojects, the threelargest influences ofmarket dynamicscould be creating abull market for atleast the nearterm,” said NealGilbert, currencystrategist atGFT Forex.

B r e n tcrude oilrose 79cents to$116.67 a barrel by1735 GMT after reaching afour-month peak of $117.95.The global North Sea benchmarkwas on track to end the week up morethan 2 percent.

U.S. crude rose 68 cents to $98.99 abarrel after hitting a four-month high of$100.42. It was on track to close the weekup 3 percent.

Base metals also rallied. Aluminum,copper, lead and zinc all jumped between3 and 5 percent on hopes the Fed’s movewould bolster global demand for manu-facturing and building materials.

Gold hit a 6-1/2-month high, puttingit on course for a fourth straight week ofgains and extending Thursday’s 2 percentrise. Spot gold stood at $1.771.06 anounce at 1822 GMT. <GOL/>

German bond yields hit an 11-weekhigh on Friday as low-risk governmentbonds sold off after the Fed stimulusmoves. The yield on 10-year Italianbonds fell below 5 percent for the first

time since March 26 and wasdown 4 basis points on the

day at 4.99 percent.E q u i v a l e n tSpanish yieldsstood at 5.82

percent.

NEW YORK

AGENCIES

ThE group, which popularizedthe phrase “We are the 99 per-cent,” will attempt to surroundthe New York Stock Exchangeand disrupt morning rush hour

in the financial district, according to amovement spokeswoman.

Monday’s protests will cap a weekend ofOccupy Wall Street seminars, music anddemonstrations in New York, said LinneaPaton, 24, an OWS spokeswoman. Demon-strations are also planned in other U.S.cities, other OWS organizers said.

The grassroots movement caught theworld by surprise last fall with a sponta-neous encampment in lower Manhattanthat soon spread to cities across NorthAmerica and Europe. Occupy Wall Streetbriefly revived a long-dormant spirit of U.S.social activism, and drew enduring atten-tion to economic injustice.CONCERT, “SIT-INS” PLANNED: Butthe movement’s colorful cast of theatricaldemonstrators struggled through last winterto sustain the momentum that first drew at-tention to its patchwork of economic griev-ances - including corporate malfeasance onWall Street, crippling student debt and aggres-sive bank foreclosures on American homes.

On Sunday, organizers will provide livemusic, including a Foley Square concert fea-

turing Tom Morello, guitarist for the rockband Rage Against the Machine.

At 7 a.m. Monday, some protesters willtry to surround the NYSE, while others willengage in a loosely choreographed series of“sit-ins” at intersections throughout the fi-nancial district, according to OWS’s web-site. The tactics are designed to undermineNew York police efforts to contain protest-ers on the narrow, winding streets of the fi-nancial district.

Last year’s demonstrations featured thespectacle of activists breaking into suddendashes down one narrow street or another,pursued by visibly frustrated police and tel-evision reporters tripping down cobblestonestreets. Sound permits for Sunday’s eventshave been secured, Paton said, but OWS hasnot sought permits for Monday’s protests -which last fall led to mass arrests andclashes between police and protesters. Oc-cupy Wall Street maintains about $50,000in its bail fund, several organizers said.

NYPD READY FOR CONFRONTA-TIONS: Chief New York Police Departmentspokesman Paul Brown confirmed that noOWS demonstration permit applicationswere submitted, but said police will be pre-pared for demonstrations.

“We accommodate peaceful protestsand make arrests for unlawful activity,” hesaid. Brown said that based on previous ex-perience with OWS, the NYPD expects that“a relatively small group of self-describedanarchists will attempt unlawful activityand try to instigate confrontations with po-lice by others while attempting to escape ar-rest themselves ... we expect mostdemonstrators to be peaceful.”

New York police have made a total of1,852 Occupy arrests as of September 12,2012, according to Manhattan District At-torney Cyrus Vance’s office, including thearrest of 700 protesters who spilled into theroadway while marching across the Brook-lyn Bridge last October.

On Friday, Twitter was ordered by aNew York judge to turn over the tweets ofone of the protesters arrested on the bridge.That case has emerged as a closely watchedcourt fight over law enforcement access tousers’ social media content. Six weeks afterthe Brooklyn Bridge arrests, citing publichealth concerns, New York authorities en-tered the Manhattan OWS camp and dis-bursed protesters. The movement has neverregained its initial momentum.

Fed stimulusplan spurs riskrally; dollar slips

Occupy Wall Streetplans to surround NYSEto mark anniversary

The Federal Reserve’s aggressive new plan tospark the US economy boosted risk assets,sending global stocks to a 13-month high anddriving the dollar to a more than four-monthlow against the euro.

Occupy Wall Street marks its first anniversary today and in a bid to rejuvenate a movementthat has failed to sustain momentum after sparking a national conversation about economicinequality last fall, activists plan once again to descend on New York’s financial district

China GDP growth seen 7.7-7.8%in 2012 : govt researcher

BEIJING

AGENCIES

Fan Jianping, chief economist at the State Information Centre, aprominent government think tank, said China’s economy would grow 7.6-7.8 percent in the July-September period from a year earlier, staying flator picking up from the second quarter’s 7.6 percent. Analysts forecast in aReuters poll that China would slow further in the third quarter but regainsome momentum late in the year as the impact of earlier policy easingfully kicks in. Still, even if activity rebounds modestly in the fourthquarter, it would drag full-year economic growth to below 8 percent, alevel not seen since 1999. The pace of growth this year would be above thegovernment’s target of 7.5 percent, but policymakers are facing a dilemmadue to concerns about property inflation, Fan was quoted by the officialXinhua new agency as saying. “It will be a little difficult to strike a balancethis time around,” Fan said. China has not unveiled any large-scale newgovernment stimulus this year, despite mounting evidence the economyneeds more prodding to regain momentum, as policymakers fret that asurge in prices could stoke social unrest at a politically sensitive timeahead of a tricky leadership transition. In the absence of any stimuluspackage, Beijing has fast-tracked some infrastructure projects andinjected cash into the economy via central bank’s open market operations.

Two more years please!Greece needs two-year extension on fiscal pledges: PM

ATHENS

AFP

Greece needs a two-year extension from its international creditors to meetfiscal pledges, and a liquidity boost from the European Central Bank, saidPrime Minister Antonis Samaras. In a Washington Post interviewappearing in Greece on Saturday, Samaras said the recession-hit countrywas determined to adopt a new austerity package worth 11.7 billion euros($15 billion) to avoid leaving the eurozone. But he said the programmeshould apply over four years instead of the currently agreed timeframe oftwo years — his most specific extension request in weeks. “Instead of the11.7-billion-euro package taking place over two years, it would be best if itwere to take place over four years,” the prime minister said. “We aretalking about an extension to 2016,” he said. Samaras had asked for a two-year extension prior to his election in June, but had since made moregeneral requests for “breathing space” in meetings with EU leaders overthe last month. Eurozone and IMF leaders meeting in Nicosia on Fridayalso conceded that Greece needed more time to meet agreed targets underits international bailout. “Clearly timing is an issue worth consideration,”IMF managing director Christine Lagarde told a news conference.

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Monday, 17 September, 2012

Business

REIHAN SALAM

ThIS coming Monday, Sept. 17, is thefirst anniversary of the day when pro-testers gathered in Lower Manhattan’s

Zuccotti Park under the banner of Occupy WallStreet. The occupation was first dreamed up byKalle Lasn and Micah White, the close collabo-rators behind Adbusters, a slickly produced,high-art magazine that uses the tools of com-mercial culture to make the case against capi-talism. having decided that America needed anuprising akin to those that had shattered au-thoritarian governments across North Africa,Lasn and White chose a date, created an arrest-ing image emblazoned with the Occupy WallStreet slogan, reached out to potential collabo-rators and then watched as their creation seizedthe imagination of millions of Americans.

One year on, the encampments that hadsprung up in Lower Manhattan and in cities,college campuses and foreclosed homes acrossthe country have for the most part been aban-doned. And so at least some observers are in-clined to think, or to hope, that the Occupymovement has been of little consequence. Thatwould be a mistake. Occupy’s enduring signif-icance lies not in the fact that some small num-ber of direct actions continue under its banner,or that activists have made plans to commem-orate “S17” in a series of new protests. Rather,Occupy succeeded in expanding the boundariesof our political conversation, creating new pos-sibilities for the American left.

As our slow-motion economic crisis grindson, it is worth asking: how might these possibil-ities be realized? For some, Occupy was a liber-ating experience of collective effervescence andof being one with a crowd. As one friend put it, it

was “the unspeakable joy of taking to the streets,taking spaces, exploring new relations and envi-ronments” that resonated most. For others, itcreated a new sense of cross-class solidarity. Je-remy Kessler, a legal historian who covered theOccupy movement for the leftist literary journalN + 1 and the New Republic, senses that it has al-ready shaped the political consciousness ofyounger left-liberals. “There is more skepticismtowards the elite liberal consensus,” and so, “forinstance, there is more support for the Chicagoteachers union and more wariness towards anti-union reformers.” Ideological battle lines have inthis sense grown sharper. Yet it is still not clearwhere Occupy, and the left, will go next.

Perhaps the most politically fruitful pathfor the American left would be to go back to thefuture – to draw on the lessons of the Populistsof the William Jennings Bryan era, who soughtto unite farmers and industrial workers againstthe stranglehold of Eastern capital. Back then,the Populists failed, as the interests of indus-trial workers were more closely tied to theirbosses than to those of highly indebted small-holders living in the prairies. Now, however,millions of middle-income households struggleunder the burden of underwater mortgages.

In the latest issue of the Nation, DavidGraeber, the anarchist anthropologist consid-ered an intellectual leading light of the Occupymovement, argues that the “financialization” ofthe economy should be understood as “anenormous engine of debt extraction,” throughwhich the 1 percent extracts wealth from the 99percent. Rather than champion specific poli-cies designed to reduce the burden of debt,Graeber calls for a campaign of mass resistancedevoted to delegitimizing what he calls “Mafiacapitalism.” While Graeber’s language is brac-

ing, and it will undoubtedly appeal to at leastsome radicals who hope to keep the spirit ofOccupy alive, it is not obvious that his idea ofmass resistance can build a mass movement.

But might a softer version of Graeberismsucceed? As the Georgetown University histo-rian Michael Kazin argues in The Populist Per-suasion, American populist movements havetraditionally pitted the producing majorityagainst a parasitic elite. That is one reason why“We Are the 99 Percent,” the slogan coined byGraeber and his allies, has proved so resonant:It invokes older American political traditions.

And the case for placing debt at the heart ofour politics is stronger than you might think. Asthe heterodox economic thinkers , householddebt has climbed from 50 percent of GDP in 1980to 100 percent just before the financial crisis. Yetaccording to Mason and Jayadev, this sharp in-crease does not primarily reflect an increase inborrowing. had interest rates, growth and infla-tion remained the same in the three decades fol-lowing 1980 as they had in the three decadespreceding 1980, household debt levels wouldhave actually decreased. One of the central prob-lems, Mason and Jayadev argue, is that inflationlevels decreased faster than households could de-crease their borrowing levels. Back in 2009,Christopher hayes, author of The Twilight of theElites and host of MSNBC’s Up with Chrishayes,” was essential to addressing America’seconomic woes. While this argument seems verytechnocratic, it has the virtue of speaking directlyto the challenge of household debt. The indicatesthat real median household income in the UnitedStates has fallen to levels last seen in 1995. In-come inequality, meanwhile, has increased.

Courtesy: Reuters

How the Occupy movement may yet lead America

EUROPE has been in a financialcrisis since 2007. When the bank-ruptcy of Lehman Brothers en-dangered the credit of financialinstitutions, private credit was re-

placed by the credit of the state, revealing anunrecognized flaw in the euro. By transferringtheir right to print money to the European Cen-tral Bank (ECB), member countries exposedthemselves to the risk of default, like ThirdWorld countries heavily indebted in a foreigncurrency. Commercial banks loaded withweaker countries’ government bonds becamepotentially insolvent.

There is a parallel between the ongoingeuro crisis and the international banking crisisof 1982. Back then, the International MonetaryFund saved the global banking system by lend-ing just enough money to heavily indebtedcountries; default was avoided, but at the costof a lasting depression. Latin America suffereda lost decade. Germany is playing the samerole today as the IMF did then. The setting dif-fers, but the effect is the same. Creditors areshifting the entire burden of adjustment on tothe debtor countries and avoiding their ownresponsibility.

The euro crisis is a complex mixture ofbanking and sovereign-debt problems, as wellas divergences in economic performance thathave given rise to balance-of-payments imbal-ances within the eurozone. The authorities didnot understand the complexity of the crisis, letalone see a solution. So they tried to buy time.

Usually, that works. Financial panics subside,and the authorities realize a profit on their inter-vention. But not this time, because the financialproblems were combined with a process of polit-ical disintegration. When the European Unionwas created, it was the embodiment of an opensociety – a voluntary association of equal statesthat surrendered part of their sovereignty for thecommon good. The euro crisis is now turning theEU into something fundamentally different, di-viding member countries into two classes – cred-itors and debtors – with the creditors in charge.

As the strongest creditor country, Germanyhas emerged as the hegemon. Debtor countriespay substantial risk premiums for financing theirgovernment debt. This is reflected in their cost offinancing in general. To make matters worse, theBundesbank remains committed to an outmodedmonetary doctrine rooted in Germany’s trau-matic experience with inflation. As a result, it rec-ognizes only inflation as a threat to stability, andignores deflation, which is the real threat today.

Moreover, Germany’s insistence on austerity fordebtor countries can easily become counterpro-ductive by increasing the debt ratio as GDP falls.

There is a real danger that a two-tier Europewill become permanent. Both human and finan-cial resources will be attracted to the center,leaving the periphery permanently depressed.But the periphery is seething with discontent.Europe’s tragedy is not the result of an evil plot,but stems, rather, from a lack of coherent poli-cies. As in ancient Greek tragedies, misconcep-tions and a sheer lack of understanding havehad unintended but fateful consequences.

Germany, as the largest creditor country, isin charge, but refuses to take on additional lia-bilities; as a result, every opportunity to resolvethe crisis has been missed. The crisis spreadfrom Greece to other deficit countries, eventuallycalling into question the euro’s very survival.Since a breakup of the euro would cause im-mense damage, Germany always does the mini-mum necessary to hold it together. Mostrecently, German Chancellor Angela Merkel hasbacked ECB President Mario Draghi, leavingBundesbank President Jens Weidmann isolated.This will enable the ECB to put a lid on the bor-rowing costs of countries that submit to an aus-terity program under the supervision of theTroika (the IMF, the ECB, and the EuropeanCommission). That will save the euro, but it isalso a step toward the permanent division of Eu-rope into debtors and creditors.

The debtors are bound to reject a two-tierEurope sooner or later. If the euro breaks up indisarray, the common market and the EU willbe destroyed, leaving Europe worse off than itwas when the effort to unite it began, owing toa legacy of mutual mistrust and hostility. Thelater the breakup, the worse the ultimate out-come. So it is time to consider alternatives thatuntil recently would have been inconceivable.

In my judgment, the best course of action isto persuade Germany to choose between eitherleading the creation of a political union with gen-uine burden-sharing, or leaving the euro. Sinceall of the accumulated debt is denominated ineuros, it makes all the difference who remains incharge of the monetary union.If Germany left,the euro would depreciate. Debtor countrieswould regain their competitiveness; their debtwould diminish in real terms; and, with the ECBunder their control, the threat of default woulddisappear and their borrowing costs would fall tolevels comparable to that in the United Kingdom.

Courtesy: Project Syndicate

Wi-tribe family expands through‘Circle of Friends’ISLAMABAD: As a lifestyle of independence and innova-tion, wi-tribe introduced offers that change lives and bringexciting ways of thinking; ideas that bring people under onetribe - wi-tribe. With a reputation that precedes its accom-plishment as the #1 in customer care and quality broadbandservice, wi-tribe introduced “Circle of Friends”, an additionthat makes the experience more enjoyable.

Lahore High Court dismisses allpetitions against PTCLISLAMABAD: The Lahore high Court has dismissed threedifferent petitions against Pakistan TelecommunicationsCompany Limited (PTCL) Voluntary Severance Scheme(VSS). Out of these, two petitions were filed by Lines StaffUnion while a third petition was filled by an ex-employeeRana Muhammad hassan. The petitioners requested thecourt to halt the VSS as well as internal transfers and post-ings of PTCL. The court dismissed the request for immedi-ate halting of transfers and postings, adjourning the case tillthe 24 of October. Previously, similar petitions were alsolodged in Islamabad and Sindh high Courts as well asNIRC, but all the courts declined to issue stay orders for thepetitions filed against PTCL.

NDU delegation briefed on water,power sectors

LAHORE: A delegation comprising participants of the Na-tional Security and War Course 2012-13 of National DefenceUniversity (NDU), Islamabad headed by Major GeneralJaved Iqbal today visited WAPDA house and attended brief-ings on water and power sectors.

Dhaani – New designer in town

ISLAMABAD: Islamabad, Once considered devoid of anyfashion activity of its own has generally relied upon design-ers from Lahore and Karachi to cater to the fashion needsof its inhabitants. Recently, a new brand by the name ofdhaani has taken the city by storm. Currently being stockedat Melange and soon to be available at multiple sale points,dhaani embodies the celebration of being a woman.Dhaani’s design philosophy is simple, elegant and trendy. Itoffers an original color palette and flexible design and hassomething for everyone.

Bramerz Pakistan launches ‘Olaround’ LAHORE: Bramerz Pakistan, in association with Googleand Ufone, hosted a preview event to demonstrate and intro-duce the first online, location-based loyalty service called“Olaround” that runs on mobile devices in Pakistan. Bramerz- a Google certified digital agency, developed the service,which is in the form of a mobile App called “Olaround”. Itgeo-maps connected merchants, providing all relevant infor-mation, including proximity with the user.

A unique and innovative conceptLAHORE: The Mother, Baby and Child fair was arranged bythe Central & Northern Punjab Women Chamber of Com-merce and Industry in Lahore, and this was the first time everthat an event based on the concept of promoting mothers, ba-bies and children was held. This event showcases services andproducts which cater to the needs of mothers and babies.

CORPORATE CORNER

State Bank of Pakistan, Deputy Governor, Kazi AbdulMuktadir presenting the 6th Pakistan SMEConference plaque to Business Support Fund Ministryof Finance, GOP CEO Mr. Saquib Mohyuddin, Chairmanof the Conference, Menin Rodrigues, can also be seenin the picture.

Senior Minister of Commerce, Makhdoom Amin Fahim is seen unveiling the ‘Faceof Expo Pakistan’ with S.M. Muneer, TDAP, Chief Executive, Tahir Raza Naqvi, andConsul General Turkey Murat Onart.

Fashion FairLAHORE: Fashion Fair is the firstevent being conducted by the multi-brand store Fashion Avenue located atVogue Towers on M.M. Alam Road. Thissoon-to-be-launched multi-designerstore is a state-of-the-art retail storedesigned by renowned architecturalfirm Architects Inc. The store, which isgearing up for an exciting launch in midOctober, has an extensive PR and mar-keting calendar lined up for the year.

WhY GErmaNYShOuld lEadOr lEavE

Ukraine leader sees

EU deal soon, but

EU disagreesYALTA

AGENCIES

Ukrainian President Viktor Yanukovich saidon Friday he thought it would be possible toseal a strategic deal with the EuropeanUnion after a parliamentary election nextmonth, but EU officials said the case of YuliaTymoshenko was still a problem. hosting aconference, Yanukovich argued that aparliamentary election on Oct. 28 wouldshow Ukraine’s commitment to democracyas he tried to play down the impact of thecase of Tymoshenko, the country’s mainopposition leader, who was jailed for sevenyears last year on abuse of office charges.But an EU delegation that includedSwedish Foreign Minister Carl Bildt saidafter meeting Yanukovich that “the issueof selective justice” - meaningTymoshenko’s prosecution - had to besettled before relations could move to anew level. A statement issued by the EUdelegation also expressed regret thatTymoshenko and a political ally, YuriLutsenko, who has also been jailed, hadbeen prevented from running in theelection because of trials “which did notrespect international standards”.

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