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The 'Merkozy Smirk'? Amid all the hand-wringing over Europe, there’s some controversy today over a supposed smile shared by Germany’s Angela Merkel and France’s Nicolas Sarkozy over their Italian counterpart Silvio Berlusconi.
Dubbed the “Merkozy smirk”– many have taken to calling the German and French leaders Merkozy because they’re the two major players in the euro saga – British and Italian newspapers are reporting on the seeming slight to the Italian prime minister at a news conference yesterday when they were asked about Italy.
Mr. Berlusconi has called an emergency cabinet meeting for today after EU leaders pushed Italy to get its house in order as they move in on a solution to the euro zone debt crisis. Mr. Berlusconi is seen by some as not having done enough, though, to be fair, he does have other issues on his hands. Indeed, he stayed away from a court appearance today.
Still, the idea that Italy is somehow similar to Greece was deemed offensive.
"It was not nice, for an Italian, to be present yesterday at the news conference in Brussels held jointly by Merkel and Sarkozy," the Italian daily paper Corriere della Sera said, according to a Reuters translation.
La Repubblica also slammed the supposed smirk, according to reports, while others suggested it was revenge after some reports of a joke made once by Berlusconi about Ms. Merkel.
“Italy has great economic power but Italy also has a very high overall debt level," Ms. Merkel told reporters in Brussels yesterday. "And that was to be taken down in the coming years in a credible way.”
Even his enemies rallied to Mr. Berlusconi’s defence, united in the perceived slight. As in, we can pick on him, but you can't.
"No one is authorized to ridicule Italy, even after Berlusconi's obvious and embarrassing delays in tackling the crisis," said Pier Ferdinando Casini, the head of the opposition UDC party.
Mr. Berlusconi fired back today, saying no one's in a position to preach and that no one should worry about Italy's debt. I seem to recall Greece's prime minister also reassuring markets over the country's debt.
“No one in the EU can nominate themselves commissioner and speak in the name of elected governments,” he said. “No one can give lessons to EU partners.”
Italy plays an increasingly important role in all this, and is under pressure to bring in reforms such as changing the pension system, given the attempts to stop the debt crisis from spreading and the plans to beef up the euro zone bailout fund, which is known as the EFSF.
" If the crisis intensifies for Italy, then the EFSF would be quickly overwhelmed," said Derek Holt and Karen Cordes Woods of Scotia Capital.
EU moves closer Watching developments in the euro zone is like reading a whodunnit that runs 500 pages too long but nonetheless leaves you hanging at the end of each chapter.
As The Globe and Mail’s Eric Reguly reports today, Europe’s leaders are closing in on a plan to ease their prolonged debt crisis, discussing a sweeping proposal to recapitalize euro zone banks to the tune of some €100-billion, boost the heft of the region's bailout fund, and strike a deal with private holders of Greek debt to take a bigger haircut in a restructuring, something in the area of 50 per cent compared to an initial goal of 21 per cent.
As always where the 17-member monetary union is concerned, it will take another summit to agree to all this, later this week.
“Though details of the Grand Plan remain elusive, it is clear that an agreement is in the making, with discussions hitting the right notes,” said Sue Trinh, senior currency strategist at RBC in Hong Kong.
“Decision day is Wednesday, when we will get the crucial details on how the EFSF resources will be deployed, how Greece’s debt restructuring will be structured, and how much further capital European banks will need.”
France and Germany had been at odds over with the rescue fund could be financed by the European Central Bank – France wanted that, Germany was opposed – though it appears that will not now happen.
One of the things to also come out of the summit was a kick in the pants to Italy’s Prime Minister Silvio Berlusconi. Europe’s leaders want him to give more thought to reform measures, and he has called a Cabinet meeting for today.
Shares of Greek banks fell sharply today given the amount of government debt the institutions hold.
The divergence of Europe, China Fresh economic readings today highlight the divergence between the economies of Europe and China.
Purchasing managers indexes from Markit show a hit to both the manufacturing and services sectors in the euro zone, dipping further below the 50 point that separates contraction from expansion. The so-called flash reading showed the euro zone PMI slipped to 47.2 in October from 49.1.
In China, though, the manufacturing PMI from HSBC/Markit climbed to 51.1 from 49.9.
“The rebound in the flash manufacturing PMI estimate for October from HSBC/Markit supports our view that China’s economy has at least been stabilizing,” said Qinwei Wang, China economist at Capital Economics in London.
“However, production is unlikely to pick up strongly in the near term amid weak conditions in the other major economies.”
Canada an easy place to do business Canada scores exceptionally well in an annual World Bank study on red tape.
The country ranks 13th in the look at business regulations by the World Bank and its International Financial Corp. arm, and is lauded particularly in the area of starting up a business. Canada actually slipped one notch, to 13th spot overall, but is still among the top countries of 183 listed.
Ranking ahead of Canada are Singapore, Hong Kong, New Zealand, the U.S., Denmark, Norway, Britain, South Korea, Iceland, Ireland, Finland and Saudi Arabia.
Those at the bottom of the list include a handful of African countries and Venezuela. The winner of the bottom spot is Chad, which got knocked off the second-to-last position that it held last year by the Central African Republic.
Overall in the world, things are getting better, according to the report, notably in Sub-Saharan Africa, where both starting a business and doing business have become easier. Around the world, 125 governments brought in 245 reforms.
"Starting a business is a leap of faith under any circumstances," the report said.
"For the poor, starting a business or finding a job is an important way out of poverty. In most parts of the world small and medium-size businesses are often the main job creators. Yet entrepreneurs in developing economies tend to encounter greater obstacles than their counterparts in high-income economies."
Canada holds the No. 3 spot for how easy it is to start a business, and its representatives are now advising countries "as diverse as" Peru and Indonesia, the report said. Still, it found some trouble spots where Canada is concerned.
"Its ranking is three on both starting a business and resolving insolvency, and five on protecting investors. But its ranking is only 59 on enforcing contracts, 42 on trading across borders and 156 on getting electricity."
It noted, too, that Canada made paying taxes easier and less costly by cutting corporate rates and harmonizing sales taxes. The information is good up to June 1, so it didn't catch up with the rejection of the HST in British Columbia in August.
The World Bank isn't the first to note Canada's business-friendly environment, or the HST, for that matter. Early this month, Forbes ranked Canada top in the world for doing business, also missing the death of the HST in B.C.
(Don't take this to mean that I have a problem with the decision of B.C. voters. I'm just pointing out the studies.)
Despite the fact that it ranks at the bottom of the World Bank report, even lowly Chad "made starting a business easier by eliminating the requirement for a medical certificate and by replacing the requirement for a copy of the founders’ criminal records with one for a sworn declaration at the time of the company’s registration."
There were also some global setbacks, including rising fees and taxes. Among the dumber things:
"In Albania dealing with construction permits became more difficult because the main authority in charge of issuing building permits has not met since April 2009."
"Bangladesh made getting electricity more difficult by imposing a moratorium on new electricity connections from April 2010 to March 2011 because of an electricity supply shortage. This moratorium has led to long delays for customers and has increased the time to obtain an electricity connection."
"In Guyana transferring property became slower because of a lack of personnel at the deed registry."
"Access to credit using movable property in Tajikistan became more complicated because the movable collateral registry stopped its operations in January 2011."
Barbie, meet Barney Barbie’s about to get some new friends.
Mattel Inc. announced today that it has struck a $680-million (U.S.) cash deal to acquire HIT Entertainment from a consortium of investors.
HIT is more in the pre-school area, boasting such brands as Barney (the dinosaur), Thomas & Friends (the tank engines), Bob the Builder and Angelina Ballerina.
Mattel already offers major toy lines such as Barbie, Hot Wheels and American Girl.
Vatican urges reform The Vatican today added its voice to the growing calls for financial reform.
The Roman Catholic Church wants a global governing body and something akin to a central world bank, saying that the economic and financial troubles of the world demands that people “examine in depth the principles and the cultural and moral values at the basis of social coexistence.
Today’s 18-page treatise from the Vatican also slams what it calls the “idolatry of the market.”
"In fact, the crisis has revealed behaviours like selfishness, collective greed and hoarding of goods on a great scale," the document says, according to The Associated Press. (I kind of think this has been going on for centuries, and it didn’t take the crisis to tell us that.)
Here’s the key passage: "In economic and financial matters, the most significant difficulties come from the lack of an effective set of structures that can guarantee, in addition to a system of governance, a system of government for the economy and international finance."
What to watch for this week Bank of Canada Governor Mark Carney takes centre stage, first with the central bank's policy announcement on tomorrow and then with the release of its monetary policy report Wednesday.
"The Bank of Canada won’t surprise markets at its policy meeting that day, shrugging off upside surprises to core inflation and holding rates at a stimulative 1 per cent, pointing to external uncertainty and sluggish growth," said Emanuella Enenajor of CIBC World Markets. "The MPR release (Wed) should add more colour to the BoC’s cautious outlook, likely to include downgrades to prior growth forecasts."
The U.S. Commerce Department reports Thursday on how the economy performed in the third quarter. Economists believe the report will show America's gross domestic product expanded at an annual pace of 2.3 per cent, bouncing back from the 1.3 per cent of the second quarter and the 0.4 per cent of the first.
"A pickup in personal consumption, an acceleration in business capital spending and a rebound in the auto industry likely more than offset further cutbacks in municipal government spending to pull the U.S. economy away from the recession edge in Q3," said senior economist Sal Guatieri of BMO Nesbitt Burns.
Several major U.S. companies report quarterly results, but Canadian earnings really kick into high gear with the likes of Canadian National Railway Co., Canadian Pacific Railway Ltd., Goldcorp Inc., Rogers Communications Inc., Methanex Corp., Barrick Gold Corp., Teck Resources Ltd., Maple Leaf Foods Inc., Nexen Inc., Potash Corp. of Saskatchewan, and TransAlta Corp. Among major international companies, Amazon.com Inc., BP PLC, Deutsche Bank AG, UBS AG, Boeing Co., Ford Motor Co., Visa Inc., Colgate-Palmolive Co., Daimler AG, Procter & Gamble Co. and Royal Dutch Shell PLC report.
- Global turmoil threatens Canadian earnings
- Falling copper points to global pain
- Railways go nimble in a changing freight business
- See our calendar
China moves on leaks China is cracking down on leaks of economic data.
According to reports today from Beijing, China has jailed two people for giving out information on key indicators. One was a researcher with the country’s central bank, the other an official with the statistics agency.
Queen feels chill The Queen is feeling the chill of high energy prices.
According to The Financial Times, while her income is flat, fuel bills have climbed by 20 per cent. The newspaper calculates that the bill for her palaces should come in at about 8.2 per cent of income this year, which puts her almost in the area of what's known as fuel poverty, when you pay at least 10 per cent of yearly income to cover the cost of keeping your home warm.
Citing a draughty castle, the newspaper says there are signs in Buckingham Palace to switch off lights, which the Queen herself also does.
- Silvercorp says audit backs firm's integrity
- Obama to promote new rules to help housing woes
- Cigna to buy Medicare's HealthSpring for $3.8-billion
- WikiLeaks suspends publication due to financial woes
- ATS says talks to spin off solar unit ended
- Oracle offers $1.5-billion for cloud firm RightNow
In Economy Lab Let’s suppose that the government decides to increase personal income tax rates on high earners. Stephen Gordon examines what happens next.
In International Business Netflix is set to launch its online TV and movies subscription service in Britain and Ireland early next year, The Financial Times reports.
In Globe Careers When two companies come together in a merger or acquisition, they often don’t come together, Harvey Schachter writes.
In Personal Finance The ongoing "Occupy" protest has the power to move share prices as consumers focus more on a company’s sustainability initiatives.
From today's Report on Business
- Barrie McKenna: All farmers are equal, but some are more equal than others
- Brian Milner: Equity markets and the European debt circus
- At the Top: Didier Michaud-Daniel
- Tempers flare off the ice in Jets-Shaw spat