Senate currency bill 'dangerous'

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5 October 2011 Last updated at 05:12 GMT House Speaker Boehner has said taking action against China's currency peg is beyond the scope of Congress A top US Republican has criticised a Senate bill that could penalise China for alleged currency undervaluation.

The Senate voted on Monday by 79-19 to debate legislation that could make it easier to impose penalties against US trade partners.

House of Representatives Speaker John Boehner said it was "pretty dangerous" for Congress to tell other countries how to run their monetary policy.

Beijing said it "firmly opposed" the measure.

The bill would give the US government the power to add tariffs to goods imported from countries deemed to be undervaluing their currencies to boost exports.

The proposed law does not mention China by name, but many US politicians accused China of subsidising exports by holding down the value of the yuan, costing US jobs.

'Unfair trade practices'

Analysts expressed concern that the bill could damage relations with China, which is the biggest holder of US debt, at a time when the American economy is still fragile.

Continue reading the main story Use the dropdown for easy-to-understand explanations of key financial terms:AAA-rating GO The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is miniscule.And Mr Boehner said: "This is well beyond what Congress ought to be doing, and while I've got concerns about how the Chinese have dealt with their currency, I'm not sure this is the way to fix it."

But he came under attack from Democrats over his opposition to the Senate bill, which has bipartisan support in Congress.

"For some inexplicable reason, the Republican leadership in the House is siding with the Chinese government. This is not the time to go soft on Beijing," said Democratic Senator Charles Schumer.

Democratic Senate Majority Leader Harry Reid meanwhile said: "We can't ignore blatant, unfair trade practices that put American workers at a disadvantage."

At the same time, Federal Reserve Chairman Ben Bernanke said that China's yuan policy hindered a more balanced growth path.

Unhappy China

Beijing has expressed "regret" over the measure. Chinese foreign ministry spokesman Ma Zhaoxu said it "seriously interferes with Sino-US trade ties".

"The yuan exchange rate is not the main reason for the Sino-US trade imbalance," said the Chinese central bank, the People's Bank of China.

Analysts have argued that the Chinese currency could be undervalued by as much as 20-40% in relation to the US dollar.

The effect of such a policy would make Chinese goods cheaper in the US, and US goods more expensive in China.

White House spokesman Jay Carney said the Obama administration was still reviewing the currency bill.

The Senate could vote on the bill later in the week.

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Germany approves EU bailout fund

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29 September 2011 Last updated at 16:40 GMT Chancellor Merkel achieved her majority after intense lobbying Germany's parliament has voted by a large majority in favour of supporting a more powerful fund to bail-out troubled Eurozone economies.

Chancellor Angela Merkel received strong support despite criticism of the plan from some of her ruling coalition.

Many Germans are against committing more money to prop up struggling eurozone members such as Greece.

There are protests in Athens where international inspectors have held talks on further bailout funds.

The measure is expected to pass in Germany's upper house of parliament, where it will be put to a vote on Friday.

In the Bundestag, 523 deputies approved the bill to support the expansion of the European Financial Stability Facility (EFSF) - 85 voted against and three abstained in the 620-seat chamber. Nine members were not present.

Dissidents

Some members of Mrs Merkel's coalition had vowed to vote against the bill.

But in the end, 315 deputies voted in favour, meaning that Mrs Merkel did not have to rely on opposition support to get the measure passed.

The outcome of the vote was not in question, however, as the main opposition parties, the SPD and the Greens, indicated they would support the expansion of the fund.

Before the vote, there was intense lobbying by Mrs Merkel's Christian Democrats (CDU) and their coalition allies to pressure the handful of dissidents to get in line.

Continue reading the main story Stephen Evans BBC News, Berlin

Chancellor Merkel got her majority more easily than she might have expected. Fifteen members from parties in her coalition government voted against her, not enough to make her have to rely on the opposition.

The main opposition party, the Social Democrats, supported the government.

As one of its MPs put it in the debate: "We will vote with you because Europe needs this vote. Don't rely on us next time."

In the end, 523 MPs voted with the government and 85 against, including the left group.

Chancellor Merkel emerges not quite unscathed but not as a dramatically weakened leader either.

A reliance on this support would have cast into doubt her ability to get forthcoming votes on both a further bailout for Greece and a permanent successor to the EFSF through the Bundestag.

"The broad majority in parliament clearly shows Germany is committed to the euro and to protecting our currency," said Hermann Groehe, the number two in Ms Merkel's Christian Democrats (CDU) party.

But Frank Schaeffler of the Free Democrats party - a junior coalition member - argued that bailout measures have made Greece's economic situation deteriorate.

"Despite all arguments, the first bailout did not make the situation for Greece better, but worse," Mr Schaeffler said, according to the AP news agency.

"Expanding the fund will make the situation even worse."

Athens blockade

All 17 countries that use the euro must ratify the commitment made in July to expand the powers of the EFSF and boost its bailout guarantees from 440bn euros (￡383bn) to 780bn euros.

So far, 10 have approved the measure.

As Europe's largest economy, Germany's commitment to the fund would rise from 123bn euros to 211bn.

That bigger fund is already being dismissed as inadequate in the light of the worsening Greek crisis and the threat of it spreading to other economies.

The former President of European Commission Romano Prodi said the German public will come round to supporting the deal

Inspectors from the "troika" of international creditors supporting Greece - the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) - returned to Athens on Thursday to decide if the government has done enough to warrant another 8bn euros (￡6.9bn) of loans.

"The climate was positive and creative after the tough measures that were decided," Greece's finance ministry said in a statement.

Public workers blocked entrances to a number of ministries in Athens, protesting against the deep austerity measures the government has imposed as a condition of the bailout.

"Take your bailout and leave," shouted protesters outside the finance ministry, Reuters news agency reported. They said they wanted to prevent Finance Minister Evangelos Venizelos from meeting the troika officials.

Taxi drivers, hospital workers and other public sector staff were also due to strike on Thursday, angered by the announcement of new austerity measures including pension cuts and a new property tax.

Without the new loans - laid out under the terms of a bailout agreed last year - Greece will soon run out of money.

New taxes have been approved and deeper spending cuts have been promised, but some decisions have been delayed and privatisation is running behind schedule says the BBC's Chris Morris in Athens.

Many people believe that austerity measures are pushing Greece's crippled economy deeper into recession and strangling any chance of growth.

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AUDIO: Greek government 'must stop fooling around'

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A senior German politician in Angela Merkel's coalition has said that Greece should leave the euro.

Former Greek finance minister, Stefanos Manos tells us why the Greek government should get tougher ahead of today's meeting of Europe's finance ministers.

Get in touch with Today via email , Twitter or Facebook or text us on 84844.

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Kodak denies any bankruptcy plans

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2 October 2011 Last updated at 10:09 GMT Kodak is one of the best-known and most iconic brands in photography Eastman Kodak has said it has "no intention of filing for bankruptcy".

The struggling US camera and printing group's comments came after it confirmed it had hired a law firm well-known for handling bankruptcy protection cases, Jones Day.

Kodak said it was "not unusual for a company in transformation to explore all options".

Shares in the firm fell 54% on Friday as fears persist about its future. It has not made a profit since 2007.

Kodak, synonymous with film photography for more than 100 years, has struggled to adapt to the digital age.

Last week it announced plans to borrow $160m (￡103m) for "general corporate purposes".

Kodak is now continuing to explore a sale of its digital imaging patents, worth an estimated $2bn.

Mark Kaufman, an analyst at Rafferty Capital Markets, said: "I don't believe bankruptcy is inevitable.

"This is a pretty valuable portfolio, they should get a good price.

"They need to get this [sale] out of the way. They need to sell this portfolio, raise some type of cash."

The company currently has a market value of $210m. This compares with $31bn at its height in February 1997.

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VIDEO: Business Lessons from Minnesota

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30 September 2011 Last updated at 11:01 GMT Help

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VIDEO: Eurozone troubles worry Australia

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4 October 2011 Last updated at 01:21 GMT Help

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UK's AAA rating confirmed by S&P

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3 October 2011 Last updated at 13:23 GMT The news from S&P is likely to be welcomed by Chancellor George Osborne Ratings agency Standard & Poor's has confirmed the UK's AAA credit rating.

S&P said that despite sluggish growth, the UK's "diversified" economy and "flexible" fiscal and monetary policy would enable it to weather a slowdown.

The news will be welcomed by Chancellor George Osborne, who on Monday told the Conservative Party conference that he would not change economic course.

S&P said its AAA rating could be re-evaluated if the government weakened its resolve to reduce public debt.

An AAA rating is the highest possible. Any downgrade would raise Britain's borrowing costs, and also provide ammunition for the coalition government's opponents.

'Lacklustre' Continue reading the main story

The official assumption that the private sector will quickly step in to replace the withdrawal of public spending may prove optimistic, especially given weakening external demand”

End Quote S&P In an announcement, S&P said it had "affirmed its AAA long-term and A-1+ short-term sovereign credit ratings on the UK. The outlook remains stable."

It said the decision reflected the country's "wealthy and diversified economy, fiscal and monetary policy flexibility, and relatively adaptable product and labour markets".

S&P added: "In addition, we view the UK as having deep capital markets with strong demand for long-dated gilts by domestic institutional investors.

"There is also demand from non-residents for sterling-denominated UK government debt, which provides some diversification to the UK's investor base."

The agency said, however, that the UK's recovery has been "lacklustre".

It added: "The official assumption that the private sector will quickly step in to replace the withdrawal of public spending may prove optimistic, especially given weakening external demand."

The decision to hold the UK's rating comes just over a month after S&P shocked the markets with its first ever downgrade of US debt, cutting it from AAA to AA plus.

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