GENEVA, SWITZERLAND – Tens of thousands of students protested in Montreal, Canada this week against a planned increase in tuition fees at Quebec universities, announced by the liberal government lead by Prime Minister Jean Charest. The city has seen daily marches since Monday 19 March.
Quebec’s tuition fees, which are by far the lowest in Canada, will increase by C$325 a year, for a five-year period, in order to improve university funding and reduce the province’s debt. Fees will thus rise to C$3,793 in 2017 from their current level at C$2,415.
While many students from other provinces as well as from overseas have been attracted to the province by the low tuition rates, administrators have long claimed that the universities are underfunded, and they welcome the hikes.
Daniel Zizian, head of the Conference of Rectors and Principals of Quebec Universities told The Canadian Press, “We can’t think that Quebec universities can continue to offer a quality education in the long term with a $600 million shortfall year after year.”
An 1978 agreement between Quebec and France allows French students to benefit from the same low tuition as Canadians. There are currently over 8,000 French students in the province.
Links to other sources: CBC, Montreal Openfile, The Globe and Mail
Greeks bonds out as collateral
GENEVA, SWITZERLAND – Portugal will get the nice euros 14 billion of the 78bn allotted to it as part of a european bailout package. The country’s spending cuts and ability to stay on target for reducing its debt were reviewed by a team that visited Monday, from the three agencies providing the funding, the European Union, the European Central Bank and the IMF.
ECB also announced that it will not accept Greek bonds as collateral for loans; the refusal to accept Greek debt for borrowing is upsetting others in the financial world who say it will make it even more difficult for Greece to climb out of its financial mess.
Presentation by Philippe Coutaz, Chief Economist of Compagnie Bancaire Helvetique discussing and comparing the economic events of the past with those of today’s current market. Registration and pre-payment to signup@ifma-net.ch no later than 2 December.
Location: Swissotel Metropole, Geneva
Link out: http://www.ifma-net.ch
Date: 6 Dec 2011
Start time: 12:00
End time: 14:00
©2011 Chappatte, distributed by Globe Cartoon. More cartoons on Chappatte’s web site. Geneva-based Patrick Chappatte works for the International Herald Tribune, for Geneva newspaper Le Temps, and for NZZ am Sonntag. All cartoons reproduced with permission.
GENEVA, SWITZERLAND – Bond markets were nervous Monday as Greece scurried to put in place a 100-day emergency coalition government that will push through a bailout plan before money runs out. Governments in the eurozone rushed to placate the traders as Italy’s borrowing reached its highest-ever point, raising new fears about its financial stability.
Reuters reports that Lucas Papademos appears to be the front-runner to lead the coalition government, which would be in place until new elections in February. He is a former vice-chairman of the European Central Bank.
Italian Prime Minister Silvio Berlusconi is calling for a confidence vote, vigorously denying he is planning to resign. Italy’scost of borrowing reached its highest ever level Monday, with AP noting that “if the cost of borrowing rises too much, Italy might not be able to refinance its debt. Italy is the euro zone’s third-largest economy and is too big be bailed out by Europe’s financial rescue fund.”
Links to other sites: BBC, Economist, Miami Herald/AP
GENEVA, SWITZERLAND – Standard and Poor’s downgraded Italy’s sovereign debt Tuesday 20 September by one notch to A/A-1, and it maintained its “negative” outlook. The move came as a surprise to markets, which expected Moody’s to downgrade Italy first, according to CNBC, but it has said it will wait a month to decide.
The S&P move had an immediate impact on the euro, which fell in trading. S&P remarked in its statement that it believes Italy’s National Reform Plan will have little influence on improving the country’s economic performance.
Prime Minister Silvio Berlusconi lashed out at the rating agency, saying that its assessments seemed “more dictated by newspaper stories than by reality”, according to Aljazeera.
On average, young people in Switzerland owe CHF468 for subscriptions to mobile phones and Internet
GENEVA, SWITZERLAND – Swiss aged 18-25 are more prone to get into debt in e-commerce, telecommunications and health than people aged 32 and up, says the European-based credit management and services company Intrum Justitia in its 2011 Radar study.
On average, young people in Switzerland owe CHF468 for subscriptions to mobile phones and Internet. People aged 32 and up however, have more health bills.
The study shows that men get more into debt than young women, and that young francophones/romandes carry the most debt of all Swiss youth. The study also shows young people living in cities are about 10% more prone to get into debt that those living in rural areas.
Paying off debts is often a slow process. Only 53% of young debtors have paid their debts after five years.
According to Intrum Justitia, around 25 percent of all companies that go out of business in Europe do so because “they either get paid late or not at all.”
GENEVA, SWITZERLAND – The new US ambassador to China, Gary Locke, told reporters at his first press conference in Beijing Sunday 14 August that the US is committed to “getting our fiscal house in order”, in response to Chinese criticism in recent days of what official media have called the American “addiction to borrowing”. China reportedly held $1.16 trillion in US debt, government securities, at the end of May, more than any other country. The criticism followed the downgrading of US credit by rating agency Moodie’s earlier this month.
Locke is a third-generation Chinese-American, whose family emigrated from Hong Kong, with roots in southern Guangdong province. He became the first US state governor of Chinese descent in 1996, re-elected to the post in 2000. He has most recently served as US secretary of commerce. He speaks fluent Cantonese.
He and his wife and three children arrived in Beijing 11 August.
Links to other sites: Economic Times of India, New York Times, Politico, Xinhua
GENEVA, SWITZERLAND – US President Barack Obama told congressional leaders Monday 11 July that they will have to meet for daily talks to resolve the impasse over the US budget, as he pushes for a long-term agreement with Republicans that would raise the national debt ceiling. The budget has already overshot the ceiling of $14.3 trillion and the US is currently running an annual budget deficit of $1.5t.
Republicans are unhappy with Obama’s call for tax increases and his fellow Democrats are unhappy with his insistence on cutting social welfare programmes. But Obama told reporters in Washington Monday that he won’t back off on his demand for a longer term deal rather than a quick fix to the ceiling issue before 2 August. If the budget is not passed by then, the day the budget runs out, the US will risk defaulting on its debt.
Meanwhile, as the budget debate heats up, 15 states in the Midwest are under heat wave advisories, meaning temperatures are expected to rise above 105F (41C), coupled with high humidity in some areas, such as Kansas City and St Louis, Missouri. CNN cites specialists who recommend that people avoid caffeine and alcohol in these areas.
Links to other sites: BBC, CNN, Washington Post
photo: Xavier Haepe / wikipedia (flickr.com/people/vier)
Geneva, Switzerland (GenevaLunch) – The European Union’s frayed edges were showing Tuesday 26 April as governments and their citizens absorbed the newly published figures for sovereign debt and deficits, some worse than expected, while Italy and France called for reforms of Schengen rules in the face of massive immigration from North Africa.
Eurostat, the statistical office for the European Union, published 2010 figures for the euro area and the 27-member area, showing the five countries with the largest deficits (budget spending outstripping revenues) in terms of percentages of GDP (gross domestic product) to be: Ireland (32.4%), Greece (10.5%), the United Kingdom (10.4%), Spain (9.2%) and Portugal (9.1%). Greece had agreed not to let its deficit go deeper than 9 percent, the BBC points out.
Deficits on the whole decreased in 2010 compared to 2009 while debt and GDP increased, says Eurostat.
Five countries above 90%, debt ratio to GDP
Government debt (amount owed long-term by the government) declined as a whole but the debt ratio to GDP remained at significantly high levels for several countries.
“Fourteen Member States had government debt ratios higher than 60% of GDP in 2010: Greece (142.8%), Italy (119.0%), Belgium (96.8%), Ireland (96.2%), Portugal (93.0%), Germany (83.2%), France (81.7%), Hungary (80.2%), the United Kingdom (80.0%), Austria (72.3%), Malta (68.0%), the Netherlands (62.7%), Cyprus (60.8%) and Spain (60.1%).”
US, Swiss debt ratio compared to European ratios
The US debt, by comparison, is about 97 percent of GDP, a fact emphasized by the warning issued by S&P’s 18 April on the federal debt.
Switzerland’s federal debt was about 20 percent of GDP in early 2010, and with communal and cantonal debt added in, it stood at about 40 percent, well below the G20 average (closer to 100) and the average of most of Europe. Reuters, in December 2010, reported that Bern “expects Switzerland’s overall public debt to fall to around 37 percent of gross domestic product according to international standards next year [2011], less then half of the rate predicted by the OECD for the euro zone.”
Government spending decreased in 2010 in the two zones as a whole, while revenues were essentially static: “Government expenditure in the euro area was equivalent to 50.4% of GDP and government revenue to 44.4%. The figures for the EU27 were 50.3% and 44.0% respectively. In both zones, the government expenditure ratio decreased between 2009 and 2010, while the government revenue ratio remained almost unchanged.”
British military spending data questioned
Two countries prompted “reservations”, Romania and Great Britain, the latter for concerns over its reporting of military spending: “Eurostat is expressing a reservation on the quality of the data reported by the United Kingdom, due to uncertainties on the time of recording of military expenditure. The United Kingdom does not record military expenditure on a delivery basis, as required by the relevant Eurostat Decision of 9 March 2006.”
EU figures compared to Switzerland, USA
The warning by S&P’s 18 April on the US federal debt underscored it’s
Schengen rules don’t fit current situation, France and Italy argue
France and Italy, which have been at odds over how to handle large numbers of North Africans flowing across Europe’s southern borders, joined forces Tuesday on the occasion of a French-Italian summit. Leaders Nicolas Sarkozy and Silvio Berlusconi have jointly sent off a letter to Brussels, they said, underscoring their commitment to the Schengen agreement on the free movement of people but insisting that the agreement needs to be reformed.
They did not specify what this would involve, but they cited the exceptional circumstances caused by events in North Africa, according to Le Monde (Fr).
Complete table, by country, from Eurostat
The Greek dilemma, Economist, 26 April 2011
Ireland’s political parties are slowly working through the issues that will face a new coalition government, even as recounts from are underway in some areas, notably Galway West. The Irish Times reports that “Fine Gael leader Enda Kenny and Labour Party leader Eamon Gilmore will meet again this morning to continue talks on the formation of a coalition government”, noting that “while the positions of the two parties are similar in a number of policy areas, there are major differences between them over key issues such as the reduction of public sector debt; the ratio between tax and cuts; water charges; property tax; indirect taxes and public sector reform.”
The Irish general election Friday 25 February saw a crushing defeat for ruling Fianna Fáil party over the disastrous performance of the economy and the country’s crippling debt.
Links to other sites: CS Monitor, Financial Times, International Business Times
City also celebrating western Lausanne urban development award
Lausanne, December 2010: city reduces its debt but will continue investment programme
Lausanne, Switzerland (GenevaLunch) – Lausanne handed its taxpayers good news Wednesday 19 January, saying it will reduce the city’s debt by CHF25 million in 2010, after a reduction of CHF2 million in 2009.
The city, which has grown by 6,500 inhabitants since 2007, has invested more than CHF600m in the past four years for what it calls “modernization and efforts to increase its attractiveness”.
The city’s mayor, Daniel Brélaz, has come in for heavy criticism for the size of the debt and 24 Heures (Fr) points out that some investments planned for 2010 were not carried out in order to reduce the debt, possibly in time to woo voters before coming elections.
The debt reduction covers 1.1 percent of the city’s CHF2.3 billion debt, which has grown by CHF44.55m in the past four years and which includes a CHF141 million increase to cover recapitalization of the city’s pension fund for municipal workers.
More housing on the books as international population boosts city’s size
Lausanne at dusk, December 2010
The local government says it plans to continue its investment programme, pointing to the debt reduction as a positive sign that city finances are under control, even if the debt remains substantial.
It points out in its statement about the payoff that the city’s assets are greater than its debt.
One part of the current investment programme is increasing housing by 3,000 homes. Future investment projects call for an additional 5,000 homes by 2020 to ease the tight housing market.
The European economy will grow by 1 percent in 2010 and the 16–country Eurozone economy by 0.9 percent, according to new forecasts released by the European Commission Wednesday 5 May. The figures are higher than previous forecasts and show that Europe is recovering, Olli Rehn, finance commissioner told a press conference in Brussels. Rehn, in addressing problems of individual European countries, said that Britain’s new government must focus on reducing its high budget deficit and the national debt. He encouraged Ireland to increase its austerity measures, while nevertheless agreeing with Irish Finance Minister Brian Lenihan that Ireland’s economy is over the worst.
Links to other sites: Business Week, Irish Times, Xinhua
Solar energy projects in Spain are being downsized and two major companies are holding off on plans to go public or sign new investment deals, as the country moves to reduce its energy liabilities. Solar energy is heavily subsidized, although most of that is passed directly on to customers. The Greek public debt crisis has Spain, along with other countries including Ireland and Portugal, worried about their own level of public debt and future liabilities. Standard & Poor’s cut its credit rating 28 April. Spain, with long hours of sunlight, has one of Europe’s most developed solar energy programmes.
Links to other sites: Bloomberg, New York Times, wikipedia
Portugal nervous as it watches Greek debacle
Prices of shares throughout Asia and Europe slid Wednesday 28 April as investors became nervous about the impact on Europe of Greece’s financial situation. The rate of borrowing for Greece rose to its highest level in 14 years Tuesday while the country’s finance minister said it could no longer afford to borrow, and the US ratings agency Standard & Poor’s downgraded Green bonds to junk status. Portugul, which was also downgraded, is closely watching the Greek situation. The president of the European Council, Herman Van Rompuy, insisted Wednesday that Greece will not be restructuring its debt.
Links to other sites: Bloomberg, Financial Times, MSNBC, Times, UK
Country should be able to avoid becoming first euro zone default
Greek Finance Minister George Papaconstantinou said after weekend talks with the IMF (International Monetary Fund) and other European countries, which he described as having gone well, that Greece should receive funds in May, in time to avoid defaulting on its loans. The country faces a 19 May deadline for payments. The amount of the full bailout package is not yet known but it appears likely that it will be larger than the figure of 45 billion mentioned before Greece formally applied for aid Friday 23 April.
Asian stocks rose strongly on the news, as worries diminished over the impact of Greece’s situation on global economic growth.
Links to other sites: Bloomberg, Financial Times, Reuters, UK
The IMF (International Monetary Fund) said Friday 26 March that it is watching developments in Greece closely, after the euro zone countries agreed to provide Greece with loans, with help from the IMF. But IMF and European Union (EU) rules covering loans are not aligned and the situation may force the IMF to reconsider its position. The euro zone decision does not provide immediate relief to Greece, but can be activated “only once Greece is shut out of debt markets and not until eurozone stability is threatened,” the Telegraph reports, and few of the players seem happy with the EU decision, which creates uncertainty even while it appears on the surface to aid Greece.
Nyon, Switzerland (GenevaLunch) - Half of the debt owed by European football clubs is owed by British clubs, the Nyon-based European football association Uefa is expected to say in an upcoming report, The European Club Footballing Landscape. A copy of the report has been seen by the Guardian, the newspaper writes in a lengthy article that looks at football club budgets. It says that “When it publishes the report in the coming weeks, Uefa will present it as authoritative evidence of the need for its Financial Fair Play rules, agreed in principle by the major clubs and leagues, which will require clubs to break even financially from 2012-13.”
Tax revenues were down by €7.7 billion, or 19 percent, in Ireland for 2009, Department of Finance figures published Tuesday 5 January show. The drop in revenue combined with a €4b government bailout of Anglo Irish Bank pushed the national debit €11.9 billion higher.
Ireland’s high debt and the problems of Iceland, still trying to recover from the collapse of its economy a year ago, are likely to add to Eurozone woes in 2010, argues Ralph Atkins in the Financial Times.
Links to other sites: Financial Times, Irish Times
Spanish air carrier Iberia and British company British Air (BA) have ended 16 months of negotiations with an agreement to merge as equal partners, but the deal is far from done. The new company would be tax resident in Spain, but the head office would be in Britain. BA’s pension plan debt of £2.66 billion, exactly equal to the value of the company, must be brought under control or Iberia could still back out of the deal, according to the terms of the agreement. Iberia Friday morning 13 November posted a nine-month pre-tax and interest operating loss of €331 million, higher than analysts expected, for a net loss of €181m during the period. The new airline, which does not yet have a name (TopCo is being used temporarily), would be Europe’s third largest, after Lufthansa and Air France-KLM.
Links to other sites: El Pais (Spa), Financial Times, London Stock Exchange news, Times, UK
The one-third of China’s recent university graduates who are still without jobs are less likely to find themselves offered credit cards, as the impact is starting to be felt of a mid-July government order to banks to more strictly control personal credit. China Citic Bank told China Daily at the end of July that only 30 percent of applications were being approved, less than half the number a few months ago. “In a notice sent to Chinese commercial lenders in mid-July, the China Banking Regulatory Commission, or CBRC, the country’s top banking watchdog, ordered banks to tighten credit card issuance practices and carefully appraise credit ratings before issuing cards to applicants.” The country at the end of June reported a quarterly 133 percent increase in outstanding credit card payments that were more than six months overdue, compared to Q2 in 2008. China is traditionally a cash society with a strong tendency to save, and therefore with little experience of managing personal debt: despite concerns about payment problems China still has only 0.11 credit cards per person, compared to 4.39 in the US and 0.96 in Brazil, according to Xinhua. China Daily, Reuters
Zimbabwe will receive $22 million from the World Bank, the first money from the bank since 2000, but it falls far short of the $8.5 billion economically-strapped Zimbabwe has been seeking. The World Bank calls it a first step, saying it will see how the country deals with debt reduction, reports the BBC. Background, World Bank
Lausanne, Switzerland (GenevaLunch) - Canton Vaud, alarmed by the growing number of citizens whose household budgets are deteriorating badly, is setting up a debt hotline for people drowning in debt.
Two-thirds of British universities are pushing for an increase in annual fees that could raise them by £4,000-20,000. Fee structures are up for government review this year. Students currently pay maximum fees of £3,500 a year. The National Union of Students argues that if fees rise to even £7,000 students will face a debt of £32,000 on graduation. Higher Education Minister David Lammy warns that “There is an important debate to be had now, which is about how we maintain the world class status of our higher education sector.”
The Financial Times reports that “More than half the profits from some of the UK’s biggest recent private equity deals were generated by high levels of debt, while less than a fifth came from operational improvements at the underlying companies,” based on a new report on the performance of private equity portfolio companies that was issued under pressure from the government.
