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What the Iron Lady wants Angela Merkel heads into tomorrow's crucial EU summit with demands her colleagues probably won't accept. Thus, a stalemate that could yet again leave the Old World with no solution to its debt crisis.
The German chancellor has been a driving force in this two-year-old saga, trying to impose her discipline on a divided Europe. That's not to suggest it's a bad thing, just that her repeated use of nein sets the stage for another lame outcome in Brussels.
"It is highly unlikely that Merkel will get her way - the most likely outcome is more muddling through," said CMC Markets analyst Michael Hewson.
As The New York Times puts it today, Ms. Merkel will be praised if the euro zone is saved, but damned should the currency union collapse, with the fallout felt around the world.
Ms. Merkel has had her way so far, leading a charge that has meant sweeping and harsh austerity measures among the weaker nations and standing firm against calls for a eurobond and for the European Central Bank to be more than she wants it to be.
Ms. Merkel and her partner in this effort, France's Nicolas Sarkozy, are now pushing for treaty changes for the entire EU, or at the very least the 17-member monetary union and any other country that wants to join in. Their plan would see offending countries penalized for exceeding a 3 per cent deficit-to-GDP mark.
"Alongside the single currency, a strong economic pillar is indispensable, building on enhanced governance to foster fiscal discipline as well as stronger growth and enhanced competitiveness," they said in a letter to EC president Herman Van Rompuy.
And here's a key line in their letter, one that goes to the heart of a nation's sovereignty: "A sequence of interventions of increasing intensity into euro area member states' rights should be allowed as a focused response to continued infringement. Steps and sanctions proposed or recommended by the commission should be adopted by the council unless a qualified majority of the euro area nember states decides otherwise."
Until today, investors had been upbeat in the run-up to the summit, believing the EU leaders will actually make inroads at the two-day meeting. Reports yesterday also suggested that officials were looking at the idea of running two bailout mechanisms at the same time, though Germany ruled that out today. That took some of the steam out of the rally.
A German official also scaled back expectations for the summit.
"We don’t know the name of the German official whose comments have torpedoed this morning’s rally, but he has certainly provided a nasty shock to markets," said Yusuf Heusen, sales trader at IG Index in London.
"Essentially, this anonymous official has ruled out the idea that the euro zone can get away with enforcing budget discipline via minor changes to legislation, which had been mooted by president Van Rompuy," he said.
"Instead, Germany have insisted on a full-blown treaty change, which opens up a whole Pandora's Box of problems, not the least of which is getting new treaties past national parliaments without triggering referenda. In addition, the official said that Berlin was less optimistic about making real progress this Friday than it had been a week ago."
Observers have already warned against expecting too much from this summit, and some like Ms. Merkel's steadfast refusal to give way.
"What has markets lacking conviction is that Europe is at it again, as the cycle of dubious and largely already attempted proposals being tossed up only to be shot down by Germany extends into the day before the start of the latest EU Summit," said Derek Holt of Scotia Capital.
"That said, I frankly like some aspects of Germany’s steadfast refusal to seek solutions oriented toward fixing debt problems by compounding more of it on to the root problem and kicking the can down the road U.S.-style."
Separately today, banks gobbled up more than $50-billion (U.S.) from the European Central Bank under the lower costs unveiled last week by several major central banks. That's well above what markets had expected, observers noted, as 34 banks took advantage compared to just four last month.
"Some would view it as negative that so many banks need to turn to the central bank for [U.S. dollar]funding (at what is still a penal price relative to interbank rates) but we already know that European banks are stressed," said currency strategist Elsa Lignos of RBC in London.
"The fact that banks are now accessing less penal [U.S. dollar]funding from the ECB (and have the collateral to do so) is a positive step," she added.
At the same time, Germany pulled off a successful debt auction.
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- France, Germany vow 'powerful' summit deal, Geithner presses
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- Follow our Market Blog
Harris had minority support Canada's Magna International Inc. says its chairman, the former Ontario premier Mike Harris, got only a minority of shareholder support for his re-election at the company’s annual meeting earlier this year.
The company has for the first time disclosed the result of voting at its annual meeting in May, which shows strong opposition to the re-election of Mr. Harris and two other directors who served on a special committee that oversaw a controversial 2010 deal to buy out the dual-class voting shares held by Magna founder Frank Stronach for more than $865-million (U.S.).
The minority support for the re-election of the three members of Magna’s special committee suggests many shareholders were indeed concerned about the terms of the deal, even though they ultimately voted in favour of it, The Globe and Mail's Janet McFarland reports.
Cenovus sees production boost Canada's Cenovus Energy Inc. expects a 21-per-cent boost in oil production next year as it hikes its spending by about 23 per cent.
Cenovus, formed from a breakup of Encana Corp. , said today it plans to spend between $3.1-billion and $3.4-billion. Oil production will rise "significantly," it added, as its Christina Lake oil sands operation more than doubles its average volumes amid an expansion, which will be followed by another expansion expected to begin producing at the end of the year.
Cenovus expects cash flow to be between $2.9-billion and $3.5-billion in 2012, comparable to this year. WHile operating cash flow from refining and natural gas will be lower, it will rise largely because of higher volume and better prices.
“We’ve once again set ambitious milestones to measure our progress this coming year which, based on our track record, shareholders can be confident we’ll strive to achieve,” said chief executive officer Brian Ferguson. “We’ve already been able to move forward some of the timelines established in our long range plan and we have every intention of continuing to meet or exceed the commitments we’ve made.”
RIM must change OS name Research In Motion Ltd. can't seem to catch a break.
Stung by bad news over the past week or so, RIM has now been forced to change the name of its next operating system from BBX after a U.S. federal court barried it from using the name at its Asian developer conference because it infringed on another company's copyright.
The company said via an official Twitter account that it will now call the operation system "BlackBerry 10," The Globe and Mail's Iain Marlow reports.
Analysts see the release of that software to be a make-or-break moment for the tech giant, as it tries to steady declining market share around the world and release compelling devices that can better compete with sleek devices running Google Inc.'s Android operating system.
Officials urge asset sales Senior officials at Transport Canada recommend the department consider scaling back and divesting some assets in this era of restraint.
A briefing document to Transport Minister Denis Lebel, obtained by Bloomberg News under access-to-information, doesn't say what assets might be sold, but that the department should study its programs and make "tough choices and trade-offs."
Mr. Lebel's ministry is reponsible for 11 Crown corporations, 17 port authorities, 21 airport authorities, and other entities. Ottawa, of course, is looking to slash costs.
“Increasing financial constraints on governments at all levels combined with new and emerging demands on Canada’s transportation system mean the era of TC being ‘all things to all people’ has passed,” the briefing note says, according to Bloomberg.
This isn't your average document, as the news agency reports. Included are self-penned biographies of senior officials that probably go a bit further than what you'd find in standard corporate memos.
For example, Bloomberg reports, Deputy Minister Yaprak Baltacioglu is described as "an avid cook and working with her will result in weight gain. The assistant deputy minister of program operations at Infrastructure Canada "enjoys the sound of his own voice and is an above average dancer," and an official in the deputy minister's officer likes working there because of "its proximity to Holt Renfrew."
As for the deputy minister's acting executive director, the biography says one of her favourite sports is beach volleyball, and "in her younger days, she was quite the beach babe."
A spokesman for the department told Bloomberg they thought they'd "lighten his day" by outlining to Mr. Lebel just who he's working with. (Well, why not. I wonder if I should try that with my bosses. I could tell them what a hunk I was 35 years ago.)
What to do with a bonus A new survey illustrates just how cautious people are in these uncertain times.
Asked what they'd do with a corporate year-end bonus of $5,000, almost 42 per cent of respondents to the Captivate Network survey said they would spend some on themselves and others, and save the rest. Notable is that almost 24 per cent said they would save the entire amount, up from 20.5 per cent in a similar poll a year earlier.
Just 2.3 per cent said they would spend it all on themselves, while 9.4 per cent would spend some on themselves, and the rest on others.
Then there are the generous types, the 10.8 per cent who would spend on other people and save the rest, and the less-generous folks, the 11.7 per cent who would spend some on themselves and bank the rest.
Asked what they actually did get last year, almost 63 per cent received a bonus or gift, and more than 37 per cent got nothing. Among those lucky ones, more than 76 per cent received a bonus, 14 per cent a gift from the company and almost 37 per cent a gift from their boss or supervisor.
There are some other interesting tidbits, as well, in Captivate's Office Pulse survey of North American professionals, notably on the practice of re-gifting.
Almost 4 per cent said they re-gift all the time, and 30 per cent occasionally. Twenty-four per cent said they have never done it, but would certainly think about, and more than 17 per cent they won't ever do it. And almost 25 per cent said they do it only when "absolutely necessary."
(I'm not sure whether that last one means they absolutely couldn't find anything else, and were desperate, or they had something they absolutely had to get rid of.)
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In Economy Lab David Rosenberg: As I put together my annual lookahead for clients, I felt certain about only one thing, that the global economy is going to endure a significant amount of debt “deleveraging” as we move through 2012.
In International Business Multinationals like Procter & Gamble tend to take one look at China and see 2.6 billion armpits in need of deodorant. Wannabe multinationals actually inside China are apt to take a more rounded view, The Financial Times reports.
In Globe Careers While written content shapes the first impression, the vibes we give off in person make a lasting impression, Deborah L. Jacobs of Forbes.com writes.
In Personal FInance Old age always seems a long way off, but saving for it needs to begin long before.
From today's Report on Business