REPORT: Greece's economy will be locked down with capital controls if it can't find a deal by the weekend | ||
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A report in Germany's Sueddeutsche Zeitung newspaper on Monday evening says European governments are ready to push for capital controls in Greece if there's no deal this week. That would mean a severe lockdown on flows of cash similar to the ones brought in for Cyprus in 2013— Strict limits on the amount that could be withdrawn from banks, taken abroad physically or passed between international accounts. The move would slam the brakes on outflows of money streaming out of Greek banks, but would also make it more difficult for the country to recover economically and remain a functioning member of the eurozone. Capital controls are easy to bring in, and hard to get out of. Other European countries can't make that move on their own — there's no institutional procedure for the rest of Europe locking down an individual member state. Greece would have to pass its own law agreeing to the move. The controls would reportedly be brought in if there's no progress by the time of Thursday's Eurogroup meeting of finance ministers. Greece's last €7.2 billion ($8.07 billion, £5.19 billion) bailout tranche is still in limbo, with the country and its creditors unable to reach an agreement on what reforms it should undertake to access the money. Athens needs that cash to make payments to the International Monetary Fund (IMF) on June 30, and the European Central Bank (ECB) on June 20. Even before the Eurogroup meeting, Greece will have a crucial decision made for it — the ECB will decide tomorrow whether to raise the ceiling for the country's emergency liquidity assistance (ELA), the banking system's last lifeline. With money flooding out of Greek banks, the government will almost certainly want the ceiling raised. Here's how bank deposits look:
Bloomberg's Lorcan Roche Kelly flagged up this message from the ECB to Cyprus in 2013, the point at which it refused to keep raising the ELA ceiling, saying that more funding "could only be considered if an EU/IMF programme is in place that would ensure the solvency of the concerned banks." A similar message to Athens could force Greece's hand, and hurry either a deal or the implementation of capital controls. But Greek finance minister Yanis Varoufakis reportedly told Germany's BILD tabloid that Athens has nothing to present at the Eurogroup on Thursday, when Europe's finance ministers gather again. A statement from Prime Minister Alexis Tsipras accusing the institutions lending to Greece of pillaging the country with austerity measures was released on Monday, making it clear that Greek negotiators have moved as far towards a deal as they intend to. Unless some urgent crisis drives the two sides back to the table, a deal this week looks very unlikely now. Join the conversation about this story »  | ||
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Toyota wins controversial investor vote on new shares | ||
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Tokyo (AFP) - Toyota won approval Tuesday for a controversial new stock sale that it defended as a way to lure stable, long-term investors, overcoming stiff opposition from some institutional shareholders overseas. The world's biggest automaker said 75 percent of shareholders voted in favour of the plan that would see it sell up to 50 million of the new shares, which must be held for five years and would not be publicly traded. Largely restricted to Japanese investors, the new "Model AA" shares carry voting rights and are to be priced at a 20 percent premium on Toyota's common shares, which closed at 8,395 yen ($68) in Tokyo. Dividends paid on the new shares would rise from 0.5 percent to 2.5 percent by the end of the five-year holding period when investors could convert them to common shares or Toyota would repurchase them, it said. Toyota, which booked a record $18 billion profit in its latest fiscal year, said the share structure would lure longer-term investors and help it fund expensive research work, particularly on next-generation technology such as fuel cell cars. The vote comes weeks after Japan formally adopted a corporate governance code that was hailed as ushering in a new era of transparency for investors. US-based advisory Institutional Shareholder Services (ISS) warned that the new shares would reduce investor influence over management decisions. "It is difficult to escape the impression that the company wants to increase stable and silent investors by replacing common shareholders with Model AA shareholders," it added. The California State Teachers’ Retirement System, which said it would vote against the idea, said it was "not in the best interests of all Toyota common stock shareowners -- particularly foreign shareowners". We do "not believe that the creation of a dual class of common stock aligns with the 'one share, one vote' principle," it said. “Toyota’s Model AA Class Shares would be unlisted and offered only in Japan, thus hindering investors outside of Japan from participating."
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Nestle is destroying £32 million worth of its most popular noodles | ||
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Swiss multinational food company Nestle revealed that it will destroy more than £32 million ($50 million) worth of its popular Maggi noodles in India after the country's food safety regulator said the products were "unsafe and hazardous." Nestle, which claims 80% of the Indian instant noodles market since it arrived with the Maggi brand in 1983, said in a statement that the noodles are safe and is challenging the ban. Nestle said it will remove the noodles from India's shelves in the meantime while a BBC report said it was destroying the produce. "There will be additional costs to take into account, for example bringing stock from the market, transporting the stock to the destruction points, destruction cost etc. The final figure will have to be confirmed at a later date," said Nestle in a statement, as reported by the BBC. On June 5, India's Food Safety and Standards Authority of India (FSSAI) imposed the ban on Nestle's Maggi noodles after it allegedly found higher-than-allowed levels of lead in some packets. Nestle said that the ban "raised issues of interpretation" in India's food safety laws and is challenging the decision in the Mumbai high court. Nestle also requested to see the results of the laboratory tests. Nestle's global chief executive Paul Bulcke promised to return Maggi to store shelves soon. Join the conversation about this story » NOW WATCH: Forget the Apple Watch — here's the new watch everyone on Wall Street wants  | ||
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Second thoughts: Is a tiny addition in time too much? | ||
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Paris (AFP) - Question: When is a minute not a minute? The answer: At 2359 Greenwich Mean Time (GMT) on June 30, when the world will experience a minute that will last 61 seconds. The reason for the weird event is something called the leap second. That's when timekeepers adjust high-precision clocks so that they are in sync with Earth's rotation, which is affected by the gravitational tug of the Sun and the Moon. Few of the planet's 7.25 billion people are likely to be aware of the change... and even fewer will have set plans for how they will spend the extra moment. But for horologists, the additional second is a big deal, and there is a wrangle as to whether it is vital or should be scrapped. "There is a downside," admits Daniel Gambis, director of the Service of the Rotation of the Earth -- the poetically named branch of the International Earth Rotation and Reference Systems Service (IERS), in charge of saying when the second should be added. To be clear, the leap second is not something that needs to be added to that old clock on your mantlepiece. Instead, its importance is for super-duper timepieces, especially those using the frequency of atoms as their tick-tock mechanism. At the top of the atomic-clock range are "optical lattices" using strontium atoms, the latest example of which, unveiled in April, is accurate to 15 billion years -- longer than the Universe has existed. Outside the lab, caesium and rubidium clocks are the workhorses of Global Positioning System (GPS) satellites, which have to send syncronised signals so that sat-nav receivers can triangulate their position on Earth. On Earth, big-data computers may be less manic than atomic clocks but still need highly precise internal timers. The Internet, for instance, sends data around the world in tiny packets that are then stitched together in micro-seconds. Some algorithms in financial trading count on gaining a tiny slice of a second over rivals to make a profit. There have been 25 occasions since 1971 when the leap second was added in an effort to simplify Coordinated Universal Time (UTC), the official monicker for GMT.
- Time to go? -
But over the last 15 years, a debate has intensified about whether the change should be made, given the hassle. "The argument of critics is that it's become more and more difficult to manage these days, as so much equipment has internal clocks," says Roland Lehoucq of France's Atomic Energy Commission (CEA). "The problem is synchronisation between computers. They do sort things out, but sometimes it can take several days." The last modification, on June 30, 2012, was disruptive for many Internet servers -- the online reservation system for the Australian airline Qantas "went down for several hours," says Gambis. "It's time to get rid of the leap second. It causes complications and bugs," argues Sebastien Bize, a specialist in atomic clocks at the SYRTE Laboratory -- it means Time-Space Reference System -- at the Paris Observatory. Gambis defends the change on the grounds of principle. "Should Man be the servant of technology? Or should technology be the servant of Man?" he asks rhetorically. After all, if the world got rid of the leap second, time as counted by mankind would no longer be coupled to the exact rotation of the planet it lives on. "That would mean in 2000 years, there would be an hour's difference between UTC and the time it takes for the Earth to complete one complete turn," notes Gambis. "It would mean that, on a scale of tens of thousands of years, people will be having their breakfast at two o'clock in the morning."
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10 things you need to know in markets today | ||
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Good morning! Here's what you need to know in markets today. HSBC and JP Morgan may relocate parts of their operations to Luxembourg. HSBC and JPMorgan are in talks to relocate parts of their businesses to Luxembourg from the UK as they weigh the possibility of a British exit from the European Union, the Times reported. Greece wants to make no more concessions. According to Bloomberg, Greece plans to make no extra proposals to the Eurogroup, the gathering of eurozone finance ministers on Thursday, sticking to the take it or leave it line laid out by Prime Minister Alexis Tsipras on Monday. Honda is recalling nearly 1.4 million cars. Honda said on Monday that it will recall 1.39 million Accord and Civic model sedans with potentially faulty front passenger-side air bags made by Japan's Takata Corp. This will bring to about 2.3 million the number of Honda cars with front passenger-side air bags made by Takata that have been recalled, the automaker said. UK inflation is coming. At 9:30 a.m. UK time (4:30 a.m. New York), figures from the Office for National Statistics are expected to show that the UK left a brief bout of deflation in April and recorded consumer price growth on 0.1% in the year to May. Belgium is taking Facebook to court. According to the Wall Street Journal, Belgium's data watchdog will sue the behemoth social network over its privacy practices, the latest pressure on a US tech firm in Europe. Singapore says the US needs its trade deal to be taken seriously in Asia. Singapore's Foreign Minister K. Shanmugam said on Monday it was vital that the United States be able to pass the Trans-Pacific Partnership (TPP) trade agreement if it wanted to stay engaged with the Asia Pacific region and be taken seriously there. Asian stocks are sinking. China's Shanghai composite is down by 1.99%, followed south by Hong Kong's Hang Seng, which is down 0.68%, and Japan's Nikkei, down 0.54%. Jeb Bush announced he's running for US president, and made some big economic promises. In his announcement speech on Monday, Bush said his goal was an economy that grows at 4% per year and said creates 19 million jobs during his time as president. China is trying a policy twist to spark lending again. In a bid to reverse the trend of credit flowing towards stocks, policy insiders say the People's Bank of China (PBOC) is now likely to act to push down longer bond yields and mop up excess short-term funds - a manoeuvre that runs the risk of creating a credit crunch in the money market if overdone. Russia lashed out at the US after suggestions that heavy military equipment be stationed in eastern Europe. "If heavy U.S. military equipment, including tanks, artillery batteries and other equipment really does turn up in countries in eastern Europe and the Baltics, that will be the most aggressive step by the Pentagon and NATO since the Cold War," Russian defence ministry official General Yuri Yakubov said. Join the conversation about this story » NOW WATCH: 'The Little Prince' trailer looks better than anything Pixar has made in years  | ||
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