Economic Calendar

Sunday, December 4, 2011

Italian Cabinet Said Likely to Approve $32 Billion Austerity Package Today

By Chiara Vasarri - Dec 4, 2011 7:09 PM GMT+0700

The Italian cabinet may approve budget cuts and tax increases valued at 24 billion euros ($32 billion) as soon as today to shore up the country’s finances, two people with knowledge of the matter said.

A cabinet meeting is likely to be held as soon as this afternoon to approve austerity cuts and measures to boost growth, the people said, declining to be named because the plan is not public yet.

Italian Prime Minister Mario Monti, sworn in on Nov. 16. after Silvio Berlusconi resigned amid the deepening debt crisis, is under pressure to reassure markets as a selloff of the country’s bonds sent borrowing costs surging last month past the 7 percent threshold that led Greece, Ireland and Portugal to seek aid. Monti hasn’t yet disclosed details of the budget plan.

The budget plan will probably include an increase of the main income tax on the highest income bracket, new taxes on boats and other luxury goods and an overhaul of the pension system that will delay early retirement, the people said.

The government will also try to align the retirement age for women with that of men by 2018, the people said, adding that Monti also plans to re-introduce the so-called ICI tax on main properties to bring in at least 3.5 billion euros a year.

The Ansa newswire yesterday reported that the Italian cabinet may meet today.

Bonds Rally

Italian 10-year bonds last week rallied for the first week in eight as optimism that France and Germany are aligned on measures to stem the euro-area debt crisis boosted demand for the region’s higher-yielding assets.

Italian 10-year yields fell 58 basis points over the week to 6.68 percent, narrowing the yield difference over similar- maturity German bunds by 45 basis points to 4.55 percentage points.

Monti has met with representatives of the main political parties to build support as his government is scheduled to present the package to both chambers on Dec. 5.

“Medicine is always bitter, but sometimes it’s necessary to prevent the patient from dying,” Pierferdinando Casini, head of the Union of Centrists party, said yesterday after meeting with Monti.

The measures the new government plans to take are “severe” and necessary to “make Italy better,” the leader of Berlusconi’s People of Liberty party, Angelino Alfano, said yesterday after the talks. “Monti has been called in precisely to take decisions which are far from easy, and we are aware of this,” he said.

The government’s proposals are ‘indigestible,” and “we are ready to counter the wrong decisions” that will be made, Susanna Camusso, head of Italy’s biggest union, CGIL, said yesterday.

To contact the reporter on this story: Chiara Vasarri in Rome at cvasarri@bloomberg.net

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net




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Monti’s Cabinet Likely to Approve $32 Billion Italian Austerity Plan Today

By Chiara Vasarri - Dec 4, 2011 9:38 PM GMT+0700

The Italian cabinet may approve today new budget cuts and tax increases valued at 24 billion euros ($32 billion) to shore up the country’s finances.

A cabinet meeting will be held at 4 p.m. in Rome to approve the package, according to a statement by the office of Italian Prime Minister Mario Monti.

Monti, sworn in on Nov. 16. after Silvio Berlusconi resigned amid the deepening debt crisis, is under pressure to reassure markets as a selloff of the country’s bonds sent borrowing costs surging last month past the 7 percent threshold that led Greece, Ireland and Portugal to seek aid. Monti hasn’t yet disclosed details of the budget plan.

The budget plan will probably include an increase of the main income tax on the highest income bracket, new taxes on boats and other luxury goods and an overhaul of the pension system that will delay early retirement, two people with knowledge of the matter said today. They declined to be named because the plan is not public yet.

The government will also try to align the retirement age for women with that of men by 2018, the people said, adding that Monti also plans to re-introduce the so-called ICI tax on main properties to bring in at least 3.5 billion euros a year.

Monti also plans spending cuts to regions and other local administrations amounting to 5 billion euros while an immediate increase of the value-added tax has been ruled out, one of the people said. An additional 4 billion euros in savings could come from welfare system measures and automatic cuts to tax breaks approved by Berlusconi’s government, one of the people said.

Bonds Rally

Italian 10-year bonds last week rallied for the first week in eight as optimism that France and Germany are aligned on measures to stem the euro-area debt crisis boosted demand for the region’s higher-yielding assets.

Italian 10-year yields fell 58 basis points over the week to 6.68 percent, narrowing the yield difference over similar- maturity German bunds by 45 basis points to 4.55 percentage points.

Monti has met with representatives of the main political parties to build support as his government is scheduled to present the package to both chambers on Dec. 5.

Bitter Medicine

“Medicine is always bitter, but sometimes it’s necessary to prevent the patient from dying,” Pierferdinando Casini, head of the Union of Centrists party, said yesterday after meeting with Monti.

The measures the new government plans to take are “severe” and necessary to “make Italy better,” the leader of Berlusconi’s People of Liberty party, Angelino Alfano, said yesterday after the talks. “Monti has been called in precisely to take decisions which are far from easy, and we are aware of this,” he said.

The government’s proposals are ‘indigestible,” and “we are ready to counter the wrong decisions” that will be made, Susanna Camusso, head of Italy’s biggest union, CGIL, said yesterday.

To contact the reporter on this story: Chiara Vasarri in Rome at cvasarri@bloomberg.net

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net




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China Sets Conditions for Binding Climate Deal

By Ewa Krukowska - Dec 4, 2011 8:45 PM GMT+0700

China set out its conditions for adopting a binding post-2020 greenhouse-gas commitment as part of a global deal, demanding an extension of current pledges by industrialized countries under the Kyoto Protocol beyond 2012.

Developing nations should be allowed to stick to voluntary targets to limit pollution until a legally-binding treaty that could take effect after 2020, Xie Zhenhua, the head of the Chinese delegation to the United Nations climate talks, said after he arrived in Durban, South Africa, for the second week of the conference. China’s consent for the shift to mandatory goals also hinges on climate aid from richer countries and a review of actions taken by 2015, he said.

“If all the conditions are met, we’re open to the process,” Xie told a briefing today. “For the new framework after 2020, we must continue the Kyoto Protocol, there must be a second commitment period. If there’s no second commitment period it’s not meaningful for us to talk about new framework. This is the first condition.”

Envoys from 190 countries at United Nations global warming talks this week in Durban are working to develop further action on climate after the Kyoto Protocol’s limits on emissions expire next year. Kyoto imposed targets on industrial nations, leaving developing ones, including China, with voluntary measures.

Kyoto Pact

The U.S. never ratified Kyoto. Japan, Russia and Canada are refusing to sign up to further commitments under Kyoto. The European Union says it will only extend the pact if all other nations agree to a “road map” pointing toward a new treaty that would regulate emissions from both industrial and developing countries.

“The convention and the Kyoto Protocol are both legally binding, and now it’s time for us to see whether countries honor their commitments,” Xie said. “The problem we are facing now is whether we have implemented documents that we already had consensus on. If we fail to implement the commitments we have already agreed on, how can we build political trust among countries?”

China and other developing nations made non-binding pledges to reduce emissions at the UN talks in Cancun last year, where developed nations also made pledges that are voluntary. Su said it’s too early to say whether China would accept legally binding commitments after 2020.

‘First Time’

“That’s the first time that their conditions have been set so clearly,” said Wendel Trio, director of Climate Action Network Europe, a green lobby group. “Despite some reports that China may be softening its stance, Xie’s line was as hard as ever. That may be strong language before the high-level part, but for now it’s difficult to expect a compromise on the post-2012 framework.”

Other Chinese conditions include the start of a climate fund in Durban, fulfilment of a promise by developed nations to provide aid to poorer countries, transparency in actions to fight global warming, as well as accepting differing responsibilities for rich and poorer nations, said Xie, who’s vice chairman of the National Development and Reform Commission.

At the UN talks in Copenhagen two years ago, countries agreed to set up a fund to channel up to $100 billion a year by 2020 to help poorer countries adapt to the effects of climate change. They also promised $30 billion in so-called “fast- start” finance over the three years to 2012.

The high-level segment of the talks begins on Tuesday, when ministers and some heads of state arrive in Durban. UN climate chief Christiana Figueres said she was happy with the progress made by negotiators to date.

“Their task is to narrow the range of options to give clear political choices to the ministers on Tuesday,” she told reporters today.

To contact the reporter on this story: Ewa Krukowska in Brussels at ekrukowska@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net



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Gingrich Surges in Iowa Poll as Cain Exits

By John McCormick - Dec 4, 2011 12:00 PM GMT+0700

Former U.S. House Speaker Newt Gingrich of Georgia holds a lead in a poll released yesterday in Iowa, where the first Republican presidential nomination votes will be cast a month from now.

Gingrich has the support of 25 percent of likely caucus participants in the latest Iowa Poll from the Des Moines Register newspaper. U.S. Representative Ron Paul of Texas was next, with 18 percent, followed by former Massachusetts Governor Mitt Romney at 16 percent. Sixty percent of poll participants said they could change their minds, while 11 percent said they’re undecided before the Jan. 3 caucuses.

“What Romney has going for him is that neither Gingrich or Paul have dealt with much scrutiny,” said J. Ann Selzer, president of West Des Moines-based Selzer & Co., which conducted the Register’s poll. “This is still anyone’s game.”

Gingrich has the potential to increase his support in Iowa, the newspaper said in its report. More respondents choose him as their second choice than any other candidate.

U.S. Representative Michele Bachmann of Minnesota recorded support from 8 percent, the same showing as Herman Cain, the former chief executive of Godfather’s Pizza Inc. who yesterday dropped out of the race.

Texas Governor Rick Perry has work to do in Iowa if he wants to regain his standing in the race, the poll shows. He has support from 6 percent of likely caucus-goers.

Santorum, Huntsman

Former Senator Rick Santorum of Pennsylvania, who has spent more time in Iowa than any other candidate, also stood at 6 percent. And former Utah Governor Jon Huntsman Jr., who isn’t actively competing in Iowa, was backed by 2 percent.

The survey of 401 likely Republican caucus participants was conducted Nov. 27-30 and has a margin of error of plus or minus 4.9 percentage points.

A Bloomberg News poll in Iowa done Nov. 10-12 by the same polling company used by the Register showed Gingrich, Paul and Romney in a dead heat with Cain, all at around 20 percent.

In the latest poll, Cain’s support had fallen to 8 percent even before he announced he would be ending his campaign because of what he said was excessive media attention to allegations of improper sexual conduct on his part.

Cain’s exit could further benefit Gingrich. Among Cain’s backers in the Bloomberg poll, Gingrich was the second choice of 28 percent, followed by Perry at 23 percent. Romney and Paul were each the second choice of 14 percent of Cain supporters.

Gingrich Opens Office

Gingrich, 68, opened his first campaign office in Iowa on Nov. 30, the last major candidate to do so.

Romney, 64, has also ramped up his efforts in Iowa in recent weeks, after taking a below-the-radar approach to the state for much of the year, as he sought to manage expectations.

One of Romney’s highest-profile surrogates, New Jersey Governor Chris Christie, is set to visit Iowa on Dec. 7, roughly a week after his campaign started television advertising there.

Romney yesterday also picked up the endorsement of the Sioux City Journal, a newspaper that circulates in northwest Iowa, a heavily Republican area.

In his 2008 presidential bid, after an all-out effort to win the caucuses, Romney finished second behind former Arkansas Governor Mike Huckabee. Social conservatives who dominate the Republican caucuses balked at Romney’s past support of abortion rights and a Massachusetts health-care law he signed. His caucus loss helped derail his candidacy.

This election season, those conservatives have yet to rally around a contender, creating the prospect that they could divide their support among all the other candidates and create an opening for Romney.

To contact the reporter on this story: John McCormick in Chicago at jmccormick16@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net




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Rio Expects Commodity Price Swings as Markets Consider Economic Prospects

By Angus Whitley - Dec 4, 2011 8:00 PM GMT+0700

Rio Tinto Group (RIO), the world’s third- largest mining company, said metal prices will fluctuate further as markets weigh economic prospects for next year amid concern Europe’s debt crisis will derail a global recovery.

“We should expect more of these gyrations of all of our prices as we move forward to 2012,” Tom Albanese, chief executive officer of the London-based company, said yesterday on the Australian Broadcasting Corp.’s “Inside Business” program. “The markets are trying to react and anticipate to what they think the economy is going to look like next year.”

Commodities are set for a “difficult environment” in 2012, according to UBS AG, citing a possible dissolution of the European Union and a “hard landing” in China, the biggest raw- materials consumer. The worsening debt crisis in Europe has prompted a slump in equities and commodities, including iron ore and copper prices, and cuts to global growth forecasts.

“The entire market is very skittish and that’s reflected in equities and commodities,” said Colin Whitehead, a Sydney- based analyst at equity researcher Fat Prophets. “We’re in a volatile world and the main one for Rio is iron ore. How things play out in the U.S. and Europe is a large part of it.”

Rio has dropped 25 percent this year in London trading, cutting the company’s market value to 67 billion pounds ($105 billion). The benchmark FTSE 100 index has lost 5.9 percent in the same period.

Metal Slump

Metal prices in London have slumped 17 percent this half, while iron ore prices have rebounded after tumbling 31 percent in October to below $120 a metric ton, the biggest loss since at least 2008. A slowing global economy and stronger dollar will limit potential for gains by commodities next year, Morgan Stanley said last month.

“I don’t think this volatility is going to go away,” Albanese told “Inside Business.” The company will have to run a business with large capital projects in an “environment, which is realistically going to have higher levels of volatility than we would have assumed a couple of years ago,” he said.

The International Monetary Fund will probably lower its global growth forecasts next month as the European debt crisis rocks financial markets and slows output, a spokesman said last week. The IMF in September cut its forecast for global growth to 4 percent this year and the same amount for 2012. Still, the S&P 500 has rebounded more than 13 percent from its 2011 low on Oct. 3 after improving U.S. economic data.

Iron Ore Expansion

Rio last week said it expects to increase capital spending 17 percent next year and raised its iron ore expansion target, bolstered by the company’s confidence in long-term demand. Iron- ore usage in China, the biggest buyer of the steelmaking ingredient, will double by 2020 from 2008, according to Rio.

Increased costs of building and expanding iron ore mines made it harder for rivals to enter the industry, Albanese said in the interview. Iron ore prices won’t drop below $120 a ton next year, Vale SA, the world’s largest exporter said last month.

Rio’s iron ore operations in Australia’s Pilbara region are “designed to operate well and stay profitable in the $120 range,” Albanese said. “The floor price will be progressively dropping” as large expansions are developed in the next several years, he said.

“The one thing I am concerned about is that our cost pressures in the Pilbara, our cost pressures in Australia, are quite a bit higher than anywhere else in the world,” he said.

More Output

The company boosted its production expansion capacity target for its Australian operations by 20 million tons a year to 353 million tons and set a longer-term target of 450 million tons.

“We would like that business to go to 450 or more, but all the other pieces have to be in place,” he said.

Rio is set to win a bidding war for Canadian uranium producer Hathor Exploration Ltd. after Cameco Corp. said last week it won’t raise its hostile bid a second time to surpass a C$654 million ($647 million) friendly offer from Rio.

Concern that demand for nuclear power will slow has increased since March 11, when an earthquake and tsunami wrecked Tokyo Electric Power Co.’s Fukushima Dai-Ichi power station. That triggered the worst atomic disaster since Chernobyl in 1986 and prompted some nations to put nuclear plans on hold.

Hathor, which controls the Roughrider uranium deposit, will become a “significant” producer in coming years, Albanese said, though he ruled out such a contribution in the “near term.”

“In the post-2020 period there will be a strong need for uranium for that nuclear sector,” Albanese said. “What we’re going to see increasingly in the next several years is that the Chinese will continue to take a bigger and bigger part of the global nuclear picture and they’re going to need the uranium.”

To contact the reporter on this story: Angus Whitley in Sydney at awhitley1@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net




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China Rejects U.S. Ruling on Solar Imports

By Bloomberg News - Dec 4, 2011 9:06 AM GMT+0700

China said a preliminary ruling by a U.S. trade panel that imports of Chinese solar panels are harming the domestic industry shows the country’s “inclination to trade protectionism.”

The U.S. International Trade Commission on Dec. 2 took the first step toward imposing added tariffs on Chinese solar imports, voting unanimously in Washington on a petition by Bonn- based SolarWorld AG (SWV) that called for antidumping and countervailing duties. The commission will now hold a full investigation.

“The ruling was made without sufficient evidence showing U.S. solar panel industry has been harmed,” China’s Ministry of Commerce said in a statement on its website yesterday. The decision was taken “regardless of defense opinions from Chinese firms, as well as opposition from the U.S. domestic industries and other stakeholders, which prominently shows the U.S.’s strong inclination to trade protectionism and for which China is deeply concerned.”

The Chinese government uses cash grants, raw-materials discounts, preferential loans, tax incentives and currency manipulation to boost exports of solar cells, according to SolarWorld’s Oct. 19 complaint to the ITC and the U.S. Commerce Department. SolarWorld, a maker of solar modules, is seeking duties to offset the practices.

The ITC is examining possible economic harm to SolarWorld from Chinese imports, while the department determines the penalty for Chinese companies that illegally dump products.

The department may decide on preliminary remedies as early as Jan. 12.

Tariffs may raise the cost of modules by 10 percent, Aaron Chew, a senior analyst at New York-based Maxim Group LLC, said in a Dec. 2 research note.

Trade Remedy

“The United States should avoid abusing trade remedies which will affect bilateral trade and mutually beneficial cooperation between China and U.S. enterprises in the new energy sector,” the Chinese Commerce Ministry said in its statement.

China exported $3.5 billion of solar goods, including solar cells, to North America last year, according to the China Chamber of Commerce for Import & Export of Machinery and Electronic Products. North America is China’s third-biggest solar export market, following Europe and Asia in 2010, accounting for about 11 percent of China’s global solar exports.

Unfair Competition

Democratic lawmakers wrote a letter on Dec. 2 to President Barack Obama urging an investigation into the Chinese imports, which they say don’t fairly compete with domestic products.

Imports of Chinese solar products have more than quadrupled from 2008 to 2010, lawmakers said in the letter. Chinese imports control half the market, benefiting from government-provided loans, cheap land, tax breaks and an undervalued currency, the lawmakers, including Senator Ron Wyden, an Oregon Democrat, and Representative Edward Markey, a Massachusetts Democrat, said.

SolarWorld and six other companies that haven’t been publicly identified have requested tariffs of 100 percent, saying Chinese solar manufacturers benefit from unfair government support.

The U.S. group asked the federal government to slap duties on more than $1 billion of Chinese imports.

China’s Commerce Ministry said on Nov. 25 that it would begin its own investigation into American state support for renewable energy and would consider the stimulus programs of the states of Washington, Massachusetts, Ohio and California, and two others in New Jersey.

Renewable Energy

Representatives of Chinese companies told the commission Nov. 8 that tariffs sought by U.S. competitors would make it more difficult to expand the use of renewable energy. China and the U.S. are among nations encouraging use of alternative energy sources, driving costs down across the board, so it would be unfair to penalize China, they told the panel.

SolarWorld said Sept. 2 that it was cutting almost 200 jobs at its facility in Camarillo, California. Solyndra LLC, a California maker of solar panels that received $535 million in U.S. loan guarantees, blamed cheap Chinese imports for its collapse. Solyndra filed for bankruptcy on Sept. 6.

“There’s a serious concern going forward with the current situation,” Gordon Brinser, the president of SolarWorld’s U.S. unit, said in a Dec. 1 interview before the ruling. “SolarWorld is a strong company, but others in the industry are struggling.”

Objective Analysis

The Commerce Ministry said yesterday it hopes the “U.S. side will objectively analyze the reason why some of U.S. solar panel firms lack competitiveness”.

Attorneys for Suntech Power Holdings Co. Ltd. and Trina Solar Ltd. (TSL), two of the biggest China-based makers of crystalline silicon panels, told the trade commission Nov. 8 that added tariffs would increase the cost of solar panels, which would then be passed on to the consumer.

Chinese solar manufacturers have said they may shift manufacturing to other countries to avoid tariffs if they’re imposed.

Executives at four of China’s biggest solar-panel makers have said they don’t receive special treatment from the Chinese government and that they pay higher interest rates for loans than U.S. or European competitors.

SolarWorld has said that China’s rapid growth in solar products is possible only with government support as it seeks to push out U.S. competitors by selling products for less than cost.

“If they continue at the rate they are going, it’s not a sustainable situation,” Brinser said.

Chinese Credit

China provided $30 billion in credit to its biggest solar manufacturers last year, about 20 times the amount provided by the U.S., Jonathan Silver, executive director of the Energy Department’s loan program, told a congressional panel Sept. 14. Silver resigned on Oct. 6.

First Solar Inc. (FSLR), based in Tempe, Arizona, and SunPower Corp., based in San Jose, California, may benefit from higher sales prices stemming from the tariffs, Ahmar Zaman, an analyst at Minneapolis-based Piper Jaffray Companies Inc., wrote in a Dec. 1 research note.

First Solar isn’t involved in the ITC case, spokeswoman Melanie Friedman wrote in an e-mail Dec. 2. SunPower is neutral, Chief Executive Officer Thomas Werner said in a Nov. 30 presentation at the Baird Clean Technology Conference.

To contact Bloomberg News staff for this story: Zheng Lifei in Beijing at lzheng32@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net




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Russians May Hand Putin Election Setback

By Ilya Arkhipov - Dec 4, 2011 8:36 PM GMT+0700

Russians may hand Prime Minister Vladimir Putin his first electoral setback in a parliamentary vote today as discontent spreads over the government’s shortcomings in curbing corruption and jumpstarting wage growth.

Putin’s United Russia party may win about 53 percent of the vote, compared with 64 percent in 2007, according to two opinion polls released Nov. 25. The Communists, Liberal Democrats and the Just Russia party may also win seats. Voting started at midnight Moscow time on the Pacific coast, eight time zones from the capital. Exit polls will be released after 9 p.m. in Moscow with unofficial results due early tomorrow.

Support for United Russia may decline from one nationwide poll to the next for the first time since the party created to back then-President Putin was founded 10 years ago. United Russia’s backing is eroding as stalling wage growth and the government’s failure to curtail corruption repel voters.

“Dissatisfaction with the level of wages and a distrust of power as venal and detached from people are directly affecting United Russia’s approval rating,” said Grigoriy Kertman, the chief analyst for the Public Opinion Foundation, also known by its Russian acronym, FOM.

By 3 p.m. Moscow time, 41.9 percent of eligible Russians had turned out to vote, “roughly in line” with the same time during the last election four years ago, Stanislav Vavilov, a deputy chairman of the Central Election Commission, said in comments broadcast on state television.

‘Good Result’

Putin, 59, said he expects a “good result for United Russia” after casting his vote at a polling station in the southwest of the Russian capital.

The premier, who is seeking to return to the Kremlin in March elections, warned last week against “smashing” the parliament’s unity and the danger of duplicating the political paralysis afflicting Europe and the U.S.

Putin would get 31 percent in a presidential election, compared with 8 percent for Communist leader Gennady Zyuganov and 7 percent for President Dmitry Medvedev, according to a Nov. 18-21 Levada Center poll. A third were undecided.

‘No One to Vote For’

“There is no one to vote for other than the Communist party,” Alexander Rodionov, 23, a specialist in information technologies, said at a polling station in southwest Moscow. “I don’t like the slowness when it comes to taking major decisions in the country. Corrupt officials are not being punished, divvying up assets in the country continues. There are some changes, but not how I would have liked.”

During Putin’s first two terms as president, he worked to centralize power and increase state ownership of the country’s biggest companies. Buffeted by a booming global economy, Russia’s economic growth averaged 7 percent a year during his 2000-2008 tenure.

Gross domestic product of the world’s biggest energy exporter will rise 4.1 percent this year after a 4 percent increase last year, the government estimates. Putin is seeking annual growth of between 6 percent and 7 percent to turn the economy into one of the world’s five largest.

Real wages increased an average of 15 percent a year between 2000 and 2008, according to data compiled by Bloomberg. Including declines for much of 2009, growth has averaged 1.5 percent since.

Russia’s ranking among the world’s most corrupt nations fell to the lowest level since 2007, the year before Medvedev came to office, according to Transparency International.

Pakistan, Cameroon, Niger

Russia was the 143rd of 182 countries surveyed in Transparency International’s 2011 Corruption Perceptions Index, an improvement on its 154th place last year. Even with the better ranking, Russia remains the world’s most corrupt major economy, with higher levels of graft than in Pakistan, Cameroon and Niger.

United Russia is set to lose its two-thirds majority, which allows the party to unilaterally change the constitution. The new parliament may also have to contend with the perception of election improprieties.

The websites of a vote-monitoring group Golos and liberal media outlets including online news portal Slon.ru and the Moscow-based magazine The New Times were shut down by hackers, said Alexei Venediktov, editor-in-chief of the Ekho Moskvy radio station, whose website was unavailable for at least eight hours today.

‘Being Coordinated’

“The strength of these simultaneous attacks on several websites is such that it becomes crystal clear they are being coordinated,” Venediktov said in a telephone interview from Moscow today. “We are faced with a coordinated attack on those who are trying to speak about electoral violations. It would have been nearly impossible without some participation from the government.”

Almost half of Russians expect the outcome of the vote to be manipulated by the authorities, according to a Levada center poll. International observers condemned the previous polls in 2007 as undemocratic.

The three largest opposition parties said this week their candidates and activists have been harassed, while authorities have seized campaign materials and distributed false literature. Putin’s spokesman, Dmitry Peskov, and the premier’s party denied the accusations.

Abuses and Irregularities

Venediktov said the radio station received about 500 reports of election abuses and irregularities as of 2 p.m. in Moscow, compared with about 40 during 2007 elections.

Opposition groups including the Communists, Yabloko and the Liberal Democratic Party are publishing reports of administrative abuses during the conduct of the vote on their websites. United Russia also accused representatives of the opposition of “massive violations.”

The Interior Ministry opened three criminal probes and 216 administrative cases into infractions of the electoral law over the past 24 hours, state-run television channel Rossiya 24 reported.

The Communists have 16.7 percent support, followed by the nationalist Liberal Democratic Party with 11.6 percent and 10 percent backing for Just Russia, which campaigns for more social spending, according to VTsIOM forecasts.

‘Oligarchic Capitalism’

The Yabloko party, which campaigns against what it calls “oligarchic capitalism,” may gain one or two seats, Lilit Gevorgyan, a London-based analyst at IHS Global Insight, said in an e-mailed note on Dec. 2. Parties that get 5 percent are awarded one mandate, capturing 6 percent yields two, clearing 7 percent results in proportional representation.

United Russia was identified as “the party of swindlers and thieves,” a term coined by activist shareholder Alexey Navalny, by 36 percent of respondents, while 45 percent disagree with that view, according to a separate Levada poll.

“People really perceive it as the party of bureaucracy and that works as more of a minus, than a plus”, Kertman said in a Dec. 2 telephone interview. “Its popularity depends on the popularity of bureaucrats, which is now the main object for discontent.”

To contact the reporter on this story: Ilya Arkhipov in Moscow at iarkhipov@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net




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Apple Loses Bid for Court Order in Effort to Block Samsung Galaxy Sales

By Joel Rosenblatt and Edvard Pettersson - Dec 4, 2011 1:03 AM GMT+0700
Enlarge image Samsung's Galaxy Nexus Smartphone

A member of the media examines the Samsung Electronics Co. Galaxy Nexus smartphone, running Google Inc.'s Ice Cream Sandwich Android operating, system in Hong Kong. Photographer: Jerome Favre/Bloomberg

Dec. 2 (Bloomberg) -- Apple Inc. won a one-week extension of a ban on Samsung Electronics Co.'s sales of its latest tablet computer in Australia, delaying pre-Christmas sales, in a battle that began in April in the U.S. and spread to four continents. Linzie Janis reports on Bloomberg Television's "First Look." (Source: Bloomberg)

Apple Inc. (AAPL) lost a request for a court order in its bid to block sales of Samsung Electronics Co.’s 4G smartphone and Galaxy Tab 10.1 tablet computer, according to a ruling that was posted on a court docket and then removed.

The iPad maker, in its lawsuit filed in federal court in San Jose, California, sought an order blocking Samsung from selling its Galaxy line of mobile devices products in the U.S. based on claims they violate Apple patents. The lawsuit is part of a legal battle between the companies being fought in 10 countries.

Samsung said in an e-mailed statement that the ruling confirms its long-held view that Apple’s arguments lack merit.

“In particular, the court has recognized that Samsung has raised substantial questions about the validity of certain of Apple’s design patents,” according to the statement. “We are confident that we can demonstrate the distinctiveness of Samsung’s mobile devices when the case goes to trial next year.”

The two companies have filed at least 30 lawsuits against each other, according to Samsung. The conflict began in April, when Apple filed the San Jose lawsuit claiming the Suwon, South Korean company’s Galaxy devices copied the iPhone and iPad.

‘Blatant Copying’

“It’s no coincidence that Samsung’s latest products look a lot like the iPhone and iPad, from the shape of the hardware to the user interface and even the packaging,” Kristin Huguet, a spokeswoman for for Cupertino, California-based Apple, said today in an e-mail. “This kind of blatant copying is wrong and, as we’ve said many times before, we need to protect Apple’s intellectual property when companies steal our ideas.”

According to the court docket in San Jose, the ruling, which was posted temporarily in error late yesterday, was later filed under seal.

The suits between the companies are made more complex by the their relationship: Samsung is the second-largest component supplier for Apple and gets about 7.6 percent of its total revenue from selling memory chips, displays and other components for the iPhone and iPad, according to Bloomberg data.

The case is Apple Inc. v. Samsung Electronics Co. (005930), 11-01846, U.S. District Court, Northern District of California (San Jose).

To contact the reporters on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net; Edvard Pettersson in Los Angeles at epettersson@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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Brookfield Intends to Give CWCapital an Offer for Stuyvesant Town by April

By David M. Levitt - Dec 4, 2011 7:25 AM GMT+0700
Brookfield Asset Management Inc (BAM/A). aims to have an offer by April, in partnership with tenants, to buy Stuyvesant Town and Peter Cooper Village in New York City from the special servicer that controls the complex, an executive of the firm said.

The Toronto-based investment firm expects to have a sense of how receptive CWCapital Asset Management LLC, which represents holders of about $3 billion of debt on Manhattan’s biggest apartment complex, well before then, Barry Blattman, Brookfield senior managing director, told hundreds of tenants today at a meeting of their association. The meeting was the first with residents since the association announced its alliance with Brookfield on Nov. 30.

“Our arrangements are such that we are shooting to make a bid to CW before April,” Blattman said. “But I’m hoping we can have an active dialogue with them between now and then.”

The tenants association has been working on buying the 80- acre complex since owners Tishman Speyer Properties LP and BlackRock Inc. (BLK) defaulted in January of 2010. The group aims to convert most of its more than 11,000 units to condominiums, while retaining its historical affordability to middle-class residents and satisfying CWCapital’s debt holders.

Brookfield and the association plan to offer tenants three options: buy their units at a higher insider price with no restrictions on reselling, a lower price with restrictions, or remain as tenants of Brookfield. The plan depends on a large majority choosing to buy their units. They hope to attract government subsidies to help keep the rental units affordable.

Buyers, Stability

Meredith Kane, an attorney with Paul Weiss Rifkind Wharton & Garrison LLP who has been working with the association on its bid, said buyers at the higher price would face a “flip tax” that would fall over time to preserve community stability.

City Councilman Daniel Garodnick, a lifelong Stuyvesant Town and Peter Cooper Village resident who has been working with tenants on the offer, warned attendees against competitors who hope “to tempt you with a juicy offer.” He specifically denounced a rival group, Guterman-Westwood Partners LLC, which sent letters yesterday to tenants saying they would be better off with their plan to make the complex into a cooperative instead of a condominium.

“They claim they are making you the offer of a lifetime, and that the tenants association didn’t want you to know about it,” he said. “They’re like the ads on late night TV -- extremely misleading and designed to sow mistrust and doubt.”

Stores, Parking Spaces

Guterman principal Gerald Guterman, reached at his home by telephone, said his group is planning to charge residents the $3 billion to pay off CW’s debt holders, plus another $100 million to $200 million to cover closing costs -- essentially selling the complex to them at cost. His group plans to make its profit from the complex’s stores and parking spaces, he said.

Tenants would pay under his plan no more than what they paid in rent in 2005, before some rents were raised under conditions that were later ruled improper by state courts, he said. He said he planned to follow his letter by setting up a website where tenants can ask questions about his alternative.

“I’m committed to pay $3 billion and it’s real money,” Guterman said. “The No. 1 one responsibility of CW is to its bondholders.”

To contact the reporter on this story: David M. Levitt in New York at dlevitt@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net




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Overseas Investors Cut Korean Bond, Stock Holdings in November

By Jiyeun Lee - Dec 4, 2011 10:00 AM GMT+0700

Global funds pulled money from South Korea’s local-currency bonds and stocks last month, after boosting their holdings in October, according to data released today by the financial regulator.

The amount of fixed-income securities owned by overseas investors fell by 336.9 billion won ($299 million) to 86.7 trillion won, the biggest drop since January, the Financial Supervisory Service said in an e-mailed statement today.

Funds based in Thailand were the biggest sellers, cutting holdings by 446 billion won, the regulator said. U.S. investors cut ownership by 373.3 billion won, the first month since July that they were net sellers. Malaysian investors were the biggest buyers with holdings increasing by 450 billion won, while Australian funds boosted ownership by 188 billion won, FSS data showed. Funds in Malaysia and China have been net investors every month this year, according to the regulator.

Overseas investors sold 3.2 trillion won more of the nation’s stocks than they bought in November, FSS data showed. Funds based in the U.K. were the biggest sellers, followed by those in Switzerland and the U.S., it said. Holdings were cut as investment banks in Europe sold shares to realize profit and reduce risks, the FSS said.

The won weakened 2.8 percent against the dollar in November, after gaining 6.1 percent the previous month, according to data compiled by Bloomberg. The nation’s benchmark three-year bond yield fell 13 basis points to 3.38 percent and the Kospi (KOSPI) Index of shares lost 3.2 percent, Korea Exchange Inc. prices show. A basis point is 0.01 percentage point.

To contact the reporter on this story: Jiyeun Lee in Seoul at jlee1029@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net





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SAP to Buy SuccessFactors for $3.4 Billion

By Ragnhild Kjetland - Dec 4, 2011 5:26 AM GMT+0700

SAP AG (SAP), the largest maker of business-management software, agreed to buy SuccessFactors Inc. for $3.4 billion in cash to keep pace with archrival Oracle Corp. in the cloud-computing market.

SAP will purchase San Mateo, California-based SuccessFactors, which makes software used to manage employee performance, for $40 per share. That's 52 percent more than the closing price in New York trading on Dec. 2, Walldorf, Germany-based SAP said in an e-mailed statement today.

SAP is promoting cloud computing, which lets clients rent software delivered over the Web rather than install it on their own machines, as a safe way to outsource data centers and reduce the need for hardware. The deal comes six weeks after Oracle agreed to buy RightNow Technologies Inc. for $1.5 billion.

“This is a much-needed move by SAP,” Ray Wang, head of San Francisco-based Constellation Research, said in a phone interview. “What SAP had in human resources -- basic transactional software such as payroll -- was good enough for the old era. In the new era, performance reviews and talent management will be important.”

SuccessFactors (SFSF) was founded in 2001 and has more than 3,500 customers with more than 15 million subscribers in 168 countries, according to its website. The U.S. company is predicted to have $502 million in revenue in 2013, up from $332 million this year, according to analysts in a Bloomberg survey.

‘Marvelous Addition’

“We saw Oracle buy RightNow Technologies just a couple of weeks ago at 5.5 times that company’s next year revenue and SAP is going to pay almost 8 times 2012 revenue, said Brendan Barnicle,” an analyst at Pacific Crest Securities in Portland, Oregon. “But these guys are growing much faster than other people in software on demand, this is a marvelous addition for SAP.”

SAP co-Chief Executive Officer Bill McDermott said on a conference call today that the SuccessFactors deal will help SAP achieve its goal of exceeding 20 billion euros in sales in 2015. SuccessFactors founder Lars Dalgaard will join SAP’s board and head the company’s cloud business.

The deal will “slightly” dilute earnings per share in 2012 before adding to profit in subsequent years, the company said. SAP will still be able to reach a 35 percent profit margin by 2015, even as Chief Financial Officer Werner Brandt said that companies that sell software that is accessed over the Internet have a lower margin than other software.

Getting Bolder

McDermott said the “scale” SuccessFactors brings to SAP’s cloud offering will help it maintain the 2015 margin target. The German company expects to complete the transaction in the first quarter of next year.

The SuccessFactors deal shows that SAP co-CEOs McDermott and Jim Hagemann Snabe, who took the helm in February last year, don’t have the same reluctance as the German company’s last two CEOs, Leo Apotheker and Henning Kagermann, to expand through acquisitions.

While Oracle Corp. (ORCL) has spent more than $42 billion on takeovers since the beginning of 2005, SAP had only made only two large acquisitions in its 39-year history before SuccessFactors: Sybase, a maker of mobile-device applications, for $5.8 billion in May last year and business-intelligence company Business Objects for 4.8 billion euros in 2007.

Software Prices

SAP paid a premium of 56 percent for Sybase and 20 percent for Business Objects, based on a 20-day average share price of the target before the purchase was announced, Bloomberg data show. Over the past five years, the average premium paid for 56 North American software targets valued at more than $500 million was 24 percent, the data show.

“The price is high,” said Frank Niemann, a consultant at Pierre Audoin Consultants in Munich. “On the other hand, SAP would not be able to build such a solution with such a success in a reasonable period of time.”

The global market for cloud services may surge to $148.8 billion in 2014 from $68.3 billion in 2010, according to researcher Gartner Inc.

SAP shares have gained 17 percent this year in Frankfurt trading, valuing the company at 54.9 billion euros. SuccessFactors has lost 9.4 percent, giving the company a market capitalization of $2.2 billion.

SAP’s Strategy

SAP has added three categories since May 2010: mobile- computing software; Hana real-time analytics technology; and Business ByDesign, software that can be accessed over the Internet. The three made up 10 percent of third-quarter sales, Snabe said on Nov. 17, adding that SAP aims to add product categories to accelerate sales growth.

“We need to make sure we are the leaders in the categories in which we play, and we need to, once every one and a half years or so, add a new category,” Snabe said at the time. “We bet a lot of SAP on one category for many years.”

The purchase of SuccessFactors will be funded from SAP’s existing cash and a 1 billion-euro loan facility, the company said, adding that the SuccessFactors board of directors has unanimously approved the transaction. SAP said it expects the transaction to be completed in the first quarter of 2012.

JPMorgan Chase & Co. is advising SAP and Morgan Stanley is advising SuccessFactors.

Other big makers of cloud software include Salesforce.com Inc. and companies such as Amazon.com Inc. (AMZN) and Dell Inc. (DELL) operate servers on which the on-demand software runs.

“This is a direct message to Oracle and Salesforce, that SAP is clearly not going to be left behind in the cloud,” Gartner Inc. analyst Donald Feinberg said by telephone. “Organic growth is becoming increasingly difficult for companies like SAP, Oracle, IBM and this is definitely a major push in that direction.”

To contact the reporter on this story: Ragnhild Kjetland in Frankfurt at rkjetland@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net




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Biggest Polluters Join in Opposing EU Road Map

By Kim Chipman and Alex Morales - Dec 4, 2011 7:00 AM GMT+0700

The world’s three biggest polluters joined in opposing a European Union proposal for talks aimed at drawing up a new climate treaty, dimming the chances of extending the Kyoto Protocol limiting greenhouse gases.

J.M. Mauskar, the Indian government official leading his nation’s delegation at United Nations climate talks, rejected the EU plan as a “quid-pro-quo.” The EU said it would agree to extend Kyoto’s restrictions only if all nations made promises to cut fossil fuel burning.

“Our objective in these negotiations is not to launch a process for a new climate treaty,” Mauskar told reporters at the talks yesterday in Durban, South Africa. “This is not what these current negotiations are about.”

India, along with the U.S. and China are united in opposing the EU’s timeline to a new deal. The 27-nation bloc that’s done the most to limit carbon dioxide fumes since Kyoto was signed in 1997, said it wouldn’t agree to more limits unless a treaty is signed by 2015 and in force by 2020.

The opposing positions may torpedo the chance of a deal on Dec. 9 when two weeks of talks in Durban finish. The EU has called its “road map” proposal a “red line” issue.

As hundreds of protesters demanding action on global warming marched down to Durban’s beach-front promenade, the UN released two documents spanning 143 pages that chart possible measures nations will take to boost flows of climate aid, step up efforts to cut greenhouse gases, share emissions-cutting technology and protect forests.

Cancun to Durban

The text is almost five times as long as the agreements from last year’s meeting in Cancun, Mexico. It must be streamlined by the senior ministers, 10 heads of state and two princes who join the discussions on Dec. 6.

“It’s a hundred and something pages,” Selwin Hart, an envoy from Barbados, said in an interview in Durban. “We know what the areas of disagreement are, and quite frankly we need a much shorter text that will allow for clear decision-making.”

The document includes paragraphs calling for the end of war and weapons production, the start of an international climate court of justice to hold developed countries to account for their pledges and a respect for the rights of “mother Earth.” One clause calls for climate aid equivalent to “the budget that developed countries spend on defense, security and warfare.”

The text includes four short options spanning half a page that address one of the thorniest topics: the legal nature of any future agreement.

‘Incomplete’

“It’s an incomplete text,” said Alden Meyer, a Washington-based director of policy at the Union of Concerned Scientists. “In some areas it has everyone’s ideas in there. In others there’s not enough detail, like on the legal form where there’s four bullets.”

Heads of state will attend from 10 countries including Ethiopia, Gabon, and Nauru. EU Climate Commissioner Connie Hedegaard and Todd Stern from the U.S. State Department will lead their delegations.

The document includes proposed conclusions from the Long Term Cooperative Action track of the UN climate talks, a process that envisions a treaty outside the Kyoto structure. Many provisions in the text depend on the future of the Kyoto Protocol, the subject of a separate track of discussions.

‘Deeply Concerned’

“We are deeply concerned that there has been hardly any progress on achieving the key objective of our negotiations, that is to announce the second commitment period and its targets,” said Mauskar from India, referring to post-2012 Kyoto targets.

Chinese lead negotiator Su Wei, Brazilian chief envoy Andre Correa do Lago, and Grenadian envoy Dessima Williams, who speaks for 42 island and low-lying nations, have all said new Kyoto targets are the key ingredients of any outcome in Durban.

Japan, Russia and Canada all reject new commitments under Kyoto because it covers less than a third of global emissions. The U.S. never ratified the deal, and developing countries including India and China don’t have binding targets.

Those three countries are now the “biggest barriers” to the road map proposal, EU lead negotiator Artur Runge-Metzger said in a Dec. 1 interview. The 27-nation bloc has done the most to limit carbon-dioxide fumes under Kyoto and previously has been among the most flexible at the talks.

U.S. Position

Stern says the U.S. isn’t willing to begin dialogue on a new legally binding treaty until major developing countries such as China and India agree first to take on actions equivalent to those of the industrialized nations. U.S. negotiator Jonathan Pershing said on Dec. 2 there is “strong resistance” from some “major emerging economies” on the EU’s proposal, and “in that context, the U.S. also would not be prepared to undertake legally-binding obligations.”

Chinese envoy Su Wei earlier this week said the EU proposal was “shifting the goal posts” away from an agreement in 2007 where the UN talks set out plans to extend Kyoto.

Su told environmentalists on Dec. 1 that China may agree to cap its greenhouse-gas emissions after 2020, confirming an earlier China Daily report, according to Meyer at the UCS. Earlier in the week Su brushed aside a report from an Indian news service suggesting the same thing.

“There’s this large picture effort to try to shift the focus from post-2012 to post 2020,” Meyer said. “There’s no sweet spot in the middle at this point.”

22 Chapters

The paper spans 22 chapters and includes a pledge made two years ago by developed countries to raise climate aid to $100 billion a year by 2020. Envoys are debating the makeup of a fund that will channel an unspecified portion of the aid. A 40-member committee spent nine months drafting rules to govern the pool of money, and negotiators are now consulting about the document after Saudi Arabia, the U.S. and Venezuela objected.

“It’s clear that there’s a lot of work left over the next week,” Jake Schmidt, international climate policy director at the New York-based Natural Resources Defense Council, said in an interview in Durban. “The really big decisions are still in the hands of ministers.”

Other chapters identify measures to protect forests, and a system to enhance the transparency of the measurement and reporting of greenhouse gas emissions by developing countries.

The document, described by its author, U.S. delegate Dan Reifsnyder as a “work in progress,” includes options that need to be narrowed down. In the section on a “shared vision” for future efforts to cut greenhouse gases, there are various options that would require developed countries to cut emissions by 30 percent, 40 percent, 45 percent, 50 percent or more than 50 percent by 2020.

“We don’t like it,” Venezuelan negotiator Claudia Salerno said in an interview. “That’s how it’s supposed to be. He also requested us to take the weekend to read it slowly, reflect on it and make the balance and not make the same mistakes we make all the time which is to react quickly and to create a fuss.”

To contact the reporter on this story: Kim Chipman in Durban, South Africa at kchipman@bloomberg.net; Alex Morales in Durban, South Africa via amorales2@bloomberg.net.

To contact the editor responsible for this story: Reed Landberg via landberg@bloomberg.net.




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Goldman’s Forst to Leave; Lane Promoted

By Christine Harper - Dec 4, 2011 12:36 AM GMT+0700

Edward C. Forst, co-head of the investment management division at Goldman Sachs Group Inc. (GS), will leave at the end of the year and cede his role to Eric S. Lane, according to internal memos obtained by Bloomberg News.

Forst, 50, who first joined Goldman Sachs in 1994, is the third member of the New York-based bank’s management committee to resign since the beginning of November, after Kevin W. Kennedy, who ran the business in Latin America, and Yusuf A. Alireza, co-head of the Asia-Pacific business outside Japan.

Goldman Sachs Chairman and Chief Executive Officer Lloyd C. Blankfein has said that building the investment management division, which oversees private equity and hedge funds and also handles money for wealthy individuals, is a priority for the firm. Timothy O’Neill, who has served as a co-head of the unit since 2008, will remain in the role alongside Lane, the memos said.

Lane, who joined Goldman Sachs in 1996 and was promoted to partner in 2002, is a longtime employee of the investment management division, known as IMD. In that sense he represents a change from recent leaders of the business, including Forst, O’Neill and former managers such as Marc A. Spilker and Peter S. Kraus, who were transferred from positions in trading or investment banking.

Leader, Clients

“As a long-tenured leader in IMD, Eric has demonstrated dedication to our clients and a deep understanding of markets,” Blankfein and Gary D. Cohn, Goldman Sachs’s president and chief operating officer, said in one of the memos to staff yesterday. “His extensive experience in the division positions him well to lead IMD with Tim.”

Andrea Raphael, a spokeswoman for Goldman Sachs in New York, confirmed the memos’ contents and declined to comment further. The New York Times wrote about the changes yesterday.

Forst, who worked at Bankers Trust before joining Goldman Sachs, started his Goldman Sachs career in capital markets and later held senior roles in the equities and fixed-income, currencies and commodities, or FICC, trading divisions.

He became co-head of investment management in 2007 and then left the firm in 2008 for a role at Harvard University. A year later, he returned to Goldman Sachs as the firm’s senior strategy officer and in 2010 returned to his current role at the investment management division.

To contact the reporters on this story: Christine Harper in New York at charper@bloomberg.net.

To contact the editor responsible for this story: Sylvia Wier at swier@bloomberg.net




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Latin America Forms Bloc Without U.S., Canada

By Daniel Cancel and Charlie Devereux - Dec 4, 2011 10:33 AM GMT+0700

Latin American and Caribbean countries signed the “declaration of Caracas” today in Venezuela to formalize the creation of the Community of Latin American and Caribbean States, an economic and political bloc that excludes the U.S. and Canada.

Leaders and officials from 33 countries approved the declaration that pledges to improve ties in the region.

The Celac, as it is known, which Venezuelan President Hugo Chavez says fulfills the dreams of Simon Bolivar and other liberators in the hemisphere, will seek to boost regional trade and integration and may create an international reserve fund to protect its members against the global economic crisis.

“We’re laying the foundation stone for integration,” said Chavez, who postponed the same summit in Venezuela by five months after undergoing surgery to remove a cancerous tumor. “Only unity will make us free.”

While leaders from countries critical of the U.S.’s foreign policy, including Cuba, Nicaragua and Venezuela, have said they expect the Celac to replace the Washington-based Organization of American States, other members from Mexico to Chile see it as a complementary organization.

Caribbean, Latin America

“This is in our interest, not against the OAS or Iberoamerican Summit, this is integration between Latin America and the Caribbean,” said Juan Manuel Santos, the president of Colombia. “I laud the meeting as a step in the right direction for Latin America.”

While the U.S. refrained from commenting, Chinese President Hu Jintao sent Chavez a letter congratulating the region for the creation of the group.

“I’d like to send my warmest congratulations,” the letter said, according to an e-mail from Venezuela’s Foreign Ministry. “China is always looking to approach its ties with Latin America and the Caribbean from a strategic perspective and is willing to deepen dialogue, exchanges and cooperation.”

Chile will assume the presidency of the group during its first year and the next summit will be held in Santiago at the end of 2012.

Presidents from Costa Rica, El Salvador, Guayana and Peru were unable to attend the Celac meetings.

To contact the reporter on this story: Daniel Cancel in Caracas at dcancel@bloomberg.net Charlie Devereux in Caracas at cdevereux3@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net




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Herman Cain Ends Bid for GOP Nomination

By Margaret Newkirk and Julie Hirschfeld Davis - Dec 4, 2011 3:44 AM GMT+0700

Herman Cain ended his campaign today for the Republican nomination for president in 2012, blaming media attention to allegations of improper sexual conduct.

“I am suspending my presidential campaign,” the 65-year- old former chief executive of Godfather’s Pizza Inc. said outside campaign headquarters in Atlanta. While maintaining innocence, Cain said he made “mistakes in my life.”

“As false accusations continued, they have sidetracked and distracted my ability to present solutions to the American people,” said Cain.

Cain led some surveys in October, slipping to third place in a Nov. 22 national poll released by Hamden, Connecticut-based Quinnipiac University as former House Speaker Newt Gingrich rose to take the lead. Cain returned home to Atlanta yesterday for his first face-to-face talk with his wife since the accusation of an extramarital affair surfaced Nov. 28.

“I am at peace with my God,” he said. “I am at peace with my wife, and she is at peace with me. And I am at peace with my family and I am at peace with myself.”

Gingrich Boost

Cain’s exit narrows a Republican nominating contest that has seen various contenders rise in national polls and, in most cases, quickly fade. Gingrich, of Georgia, has had the most recent surge of support. Bloomberg News polls show he attracts more support from Cain’s backers in the early voting states of Iowa and New Hampshire than any other candidate.

Cain’s departure may hinder former Massachusetts Governor Mitt Romney by eliminating a competitor for the backing of social conservatives who regard him as too moderate on issues such as abortion.

“The main beneficiary is the individual looking like the conservative challenger to Romney, and that’s Gingrich,” said Republican strategist Greg Mueller, who is unaffiliated in the nomination race. “What Romney wants is as many people in the field as possible to diminish any kind of conservative challenger surge, which is what we’re seeing now. The more conservatives go as a majority to a candidate, the more of a problem it is for Romney.”

Cain said he planned to endorse another candidate, and vowed to remain a part of public life.

Cain’s Plan B

“I am not going to be silenced and I’m not going away.” Running for president had been “Plan A,” he said. “Plan B” will be to “continue to be a voice for the people.”

Gingrich issued a statement today saying Cain “will continue to be a powerful voice in the conservative movement for years to come.” Former Utah Governor Jon Huntsman, who is also seeking the Republican nomination, said Cain “offered a unique and valuable voice to the debate over how to reform our country’s uncompetitive tax code and turn around the economy.”

Cain, with roots as a minister, radio host and food-company executive, built his bid around his personality -- he trademarked the phrase “The Hermanator Experience” -- and policy proposals such as his “9-9-9” tax plan. The initiative would have scrapped the current system and replace it with 9 percent business and income taxes and a 9 percent national sales tax.

Republican rivals focused on voters and activists in the early voting states of Iowa, New Hampshire and South Carolina. Cain traveled, promoting his book “This Is Herman Cain!,” in states that have little initial influence on the nominating race because their contests are later in the process. These included his native Tennessee, Ohio, Texas and Wisconsin.

Accusations against Cain started to surface in late October from four women who said he harassed them sexually in the 1990s when he was head of the National Restaurant Association. Ginger White, an Atlanta woman, later announced she had had an extramarital affair with Cain for more than 13 years.

White, who acknowledged having financial difficulties, said she had accepted gifts of money from Cain, adding, “This was not sex for cash.”

To contact the reporter on this story: Margaret Newkirk in Atlanta at mnewkirk@bloomberg.net Julie Hirschfeld Davis in Washington at jdavis159@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net




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