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Portugal's government wants to trim corporate tax

Written By Unknown on Selasa, 15 Oktober 2013 | 00.24

LISBON, Portugal — Bailed-out Portugal's government wants approval from Parliament to trim the corporate tax rate to 23 percent from 25 percent next year as a way of generating economic growth.

Portugal is expected to weather a third straight year of recession this year. Unemployment is at 16.5 percent and forecast to rise.

Austerity measures being enacted as part of a 78 billion euro ($106 billion) financial rescue in 2011 have choked private spending and corporate investment.

The secretary of state for tax, Paulo Nuncio, announced Monday plans for a gradual reduction of corporate tax, reaching a rate of between 17 and 19 percent by 2016.

He said the measure, which is part of the government's 2014 budget proposal to be debated by lawmakers, aims to attract more foreign investment and create jobs.


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3 US economists win Nobel for work on asset prices

STOCKHOLM — Three American professors won the Nobel prize for economics Monday for shedding light on how stock, bond and house prices move over time— work that's changed how people around the world invest.

Two of the winners — Eugene Fama, 74, and Lars Peter Hansen, 60 — teach at the University of Chicago. The third, Robert Shiller, 67, is a professor at Yale University and is well-known as a creator of the well-known Case-Shiller index of home prices.

The three economists were honored for separate research that collectively expanded the understanding of asset prices.

Beginning in the 1960s, Fama showed that prices change so quickly and efficiently to reflect new information that investors can't outperform markets in the short term. This was a breakthrough that helped popularize index funds, which invest in broad market categories instead of trying to pick individual winners.

Two decades later, Shiller reached a separate conclusion: That over the long run, markets can often be irrational, subject to booms and busts and the whims of human behavior. The Royal Swedish Academy of Sciences noted that the two men's findings "might seem both surprising and contradictory."

Hansen developed a statistical method to test theories of asset pricing.

The three economists shared the $1.2 million prize, the last of this year's Nobel awards to be announced.

"Their methods have shaped subsequent research in the field and their findings have been highly influential both academically and practically," the academy said.

Monday morning, Hansen said he received a phone call from Sweden while on his way to the gym. He said he wasn't sure how he'll celebrate but said he was "still working on taking a deep breath."

Shiller, famous for having warned against the bubbles in technology stocks and housing that burst over the past two decades, said he responded with disbelief when he received a phone call about the Nobel.

"People told me they thought I might win," Shiller told The Associated Press. "I discounted it. Probably hundreds have been told that."

Of the three winners, Fama was the first to expand the knowledge of how asset prices move. His work helped revolutionize investing by illustrating how hard it was to predict the movement of individual stock prices in the short run. It was a finding that spurred wider acceptance of index funds as an investment tool.

Shiller showed that in the long run, stock and bond markets tend to behave more irrationally than economic fundamentals would suggest. That encouraged the creation of institutional investors, such as hedge funds, that take bets on market trends.

In the late 1990s, Shiller argued that the stock market was overvalued.

"And lo and behold, he was proven right" when the dot-com bubble burst in 2000, said Nobel committee secretary Peter Englund.

"He also predicted for a long time that the housing market was overvalued, and again he was proven right," Englund said. The U.S. housing market suffered a crash in 2007 that helped fuel the global financial crisis.

Englund said he believes the three laureates agree on the findings for which they were awarded, even though Fama and Shiller have different "interpretations of the real world."

"It's no secret that for Eugene Fama, the sort of null hypothesis is that markets work well and he is willing to believe that until he is proven otherwise, whereas for Robert Shiller, I think his null hypothesis is that there are periods of excessive optimism and pessimism," Englund said.

The Case-Shiller index, a leading measure of U.S. residential real estate prices, was developed by Shiller and Karl Case, a Wellesley College economist.

In the 1980s, Hansen developed a statistical method to better assess theories such as those of Fama and Shiller.

"These are three very different kinds of people, and the thing that unites them all is asset pricing," says David Warsh, who tracks academic economists on his Economic Principals blog.

Fama said his work came at a time when computers were starting to be used by statisticians and economists. Many of them were studying stock prices because they were the most easily available data.

On Monday morning, Fama was preparing to teach his first class as a Nobel laureate. Asked whether his students would get any break, he said: "We'll see, but they're going to get an exam tomorrow anyway. They paid their money; they're going to get the full pill."

Shiller noted that if regulated properly, global finance is "at the core of our civilization."

"It seems to some people, it's selfish and money-grubbing," he said. "It doesn't really have to be that way. The financial crisis we've been through is traumatic, but we're learning from it."

For example, he said many students from other countries are able to study in the United States because of financial aid made possible by investments. He also noted that the Consumer Financial Protection Bureau, established as a result of the recession, is holding finance to higher standards.

Americans have dominated the Nobel in economics in recent years. The last time there was no American among the winners was 1999.

The Nobel prizes in medicine, chemistry, physics, literature and peace were created by Swedish industrialist Alfred Nobel in 1895. Sweden's central bank added the economics prize in 1968 as a memorial to Nobel.

This year's Nobel science prizes awarded ground-breaking research on how molecules move around inside a cell, particle physics and computer modeling of chemical reactions. Canadian short-story writer Alice Munro won the Nobel Prize in literature and the Organization for the Prohibition of Chemical Weapons was awarded the Nobel Peace Prize.

All awards will be presented to the winners amid royal pageantry on Dec. 10, the anniversary of Nobel's death in 1896.

___

Associated Press writers Stephen Singer in Hartford, Conn., Paul Wiseman in Washington and Don Babwin and Ashley Heher in Chicago, contributed to this report.


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Obama: Without deal 'good chance of default'

WASHINGTON — President Barack Obama is sounding an optimistic note saying there has been progress in the Senate toward resolving a standoff over the nation's debt and the partial government shutdown. But he cautions that if Republicans don't cooperate, "we stand a good chance of defaulting."

Obama's remarks came as the Senate's Republican and Democratic leaders were holding talks in hope of finding an agreement. Obama invited the bipartisan leadership of the House and Senate to the White House Monday afternoon.

"There has been some progress on the Senate side, with Republicans recognizing it's not tenable, it's not smart, it's not good for the American people to let America default," he said while visiting a Washington D.C., charity that has retained furloughed government workers as volunteers. "We'll see this afternoon whether this progress is real."

The charity food kitchen, Martha's Table, is also offering assistance to federal employees who are not being paid and need emergency aid.

The visit comes at the start of the third week of the shutdown and just three days before the Treasury says Congress must increase the nation's borrowing limit or risk a government default.

"There are going to be differences between the parties," Obama said. "There are going to be differences in terms of budget priorities. But we don't need to inflict pain on the American people, or risk the possibility of America's full faith and credit being damaged just because one side is not getting its way."

The leaders scheduled to attend the White House meeting are Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell, House Speaker John Boehner and House Minority Leader Nancy Pelosi. Vice President Joe Biden is also scheduled to attend.

The last meeting between Obama and the congressional leaders was Oct. 2.

The White House says Obama will reiterate his desire for Congress to pass bills to reopen the government and raise the debt ceiling. The White House also says he will make clear that he "will not pay ransom" for lawmakers taking those steps.


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Spaniards sue German firm over thalidomide

MADRID — Some 200 Spaniards born with severe defects after their mothers used the drug thalidomide during their pregnancies decades ago took the drug's German producer to court Monday to seek 204 million euros ($277 million) in compensation.

Thalidomide was a sedative prescribed between 1950 and 1960 to combat morning sickness. Thousands of children whose mothers took the drug were born with abnormally short limbs and in some cases without any arms, legs or hips. The birth defects were reported in Europe, Australia, Canada and Japan.

Some victims have won compensation cases against drug producer Gruenenthal Group's distributors in other countries, but the German company has long refused to agree to settlements. It officially apologized to victims in 2012.

Ignacio Martinez, lawyer for The Spanish Association of Thalidomide Victims, which represents some 200 alleged victims born between 1960 and 1965, told the court in Madrid that the drug's prospectus gave no warning of side effects.

When thalidomide was pulled off the market, no campaign was carried out to explain to doctors and patients its potential effects on fetuses, he said. Martinez also argued that the German company kept distributing the notorious drug in Spain six months after it was taken off the market in other countries.

Gruenenthal's lawyers rejected the compensation demand, saying the case had exceeded the statute of limitations. The German firm's representative in Spain, Guillermo Castillo, also insisted that thalidomide was withdrawn from the country in December 1961, as it was elsewhere in Europe.

The court further heard that Gruenenthal offered a total 120,000 euros in compensation to Spanish victims some years ago — an offer that was rejected.

More than 30 Spaniards bearing the effects of the drug attended the one-day trial.

"Us being alive is the best evidence, because many (victims) have already died," said Matilde Roman, 52, whose right arm was severely deformed at birth. "My mother took thalidomide, but she was illiterate and nobody explained to her the damage of this medication."

The amount being demanded as compensation is based on multiplying 20,000 euros by the level of disability per plaintiff, which is measured in percentage points. A ruling in the case is expected within a month.


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High court weighs Mich. ban on affirmative action

WASHINGTON — After the Supreme Court ruled a decade ago that race could be a factor in college admissions in a Michigan case, affirmative action opponents persuaded the state's voters to outlaw any consideration of race.

Now, the high court is weighing whether that change to Michigan's constitution is itself discriminatory.

It is a proposition that even the lawyer for civil rights groups in favor of affirmative action acknowledges a tough sell, at first glance.

"How can a provision that is designed to end discrimination in fact discriminate?" said Mark Rosenbaum of the American Civil Liberties Union. Yet that is the difficult argument Rosenbaum will make on Tuesday to a court that has grown more skeptical about taking race into account in education since its Michigan decision in 2003.

A victory for Rosenbaum's side would imperil similar voter-approved initiatives that banned affirmative action in education in California and Washington state. A few other states have adopted laws or issued executive orders to bar race-conscious admissions policies.

Black and Latino enrollment at the University of Michigan has dropped since the ban took effect. At California's top public universities, African-Americans are a smaller share of incoming freshmen, while Latino enrollment is up slightly, but far below the state's growth in the percentage of Latino high school graduates.

The case is the court's second involving affirmative action in as many years. In June, the justices ordered lower courts to take another look at the University of Texas admissions plan in a ruling that could make it harder for public colleges to justify any use of race in admissions.

For Michigan Attorney General Bill Schuette, whose office is defending the measure known as Proposal 2, the case is simple.

"We are saying no preferences. We're not discriminating. We're saying equal treatment," Schuette said.

But the federal appeals court in Cincinnati that ruled on the dispute concluded that the matter was not that straightforward.

The issue, according to the 6th U.S. Circuit Court of Appeals, was not affirmative action, but the way in which its opponents went about trying to bar it.

That is why the ACLU's Rosenbaum said, "This is a case about means, not about ends. It is not about whether a state can choose not to have" affirmative action.

In its 8-7 decision, the appeals court said the provision runs afoul of the Equal Protection Clause of the U.S. Constitution's 14th Amendment because it presents an extraordinary burden to affirmative action supporters who would have to mount their own long, expensive campaign to repeal the constitutional provision.

That burden "undermines the Equal Protection Clause's guarantee that all citizens ought to have equal access to the tools of political change," Judge R. Guy Cole Jr. wrote for the majority on the appeals court.

The governing boards at the University of Michigan, Michigan State University and other public colleges set admissions policies at the schools, which included the use of affirmative action before the amendment passed.

Other groups seeking changes in admissions still could lobby the policymakers at the schools. Only proponents of affirmative action would have to change the constitution, the appeals court said.

The appeals court vote broke along party lines, and there were other oddities. Two Republican-appointed judges sat out the case because of their ties to Michigan schools. One judge in the majority, Martha Craig Daughtrey, is a senior judge and typically would not be allowed to take part in the full appeals court hearing. But she sat on the original three-judge panel that heard the case.

Civil rights and education experts who are not involved in the case at the high court said they expect the justices to overturn the 6th Circuit ruling.

Harvard University Law School professor Tomiko Brown-Nagin said five of the Supreme Court justices "are skeptical of race-conscious affirmative action" and could be expected to side with Michigan. Those justices are Chief Justice John Roberts, Samuel Alito, Anthony Kennedy, Antonin Scalia and Clarence Thomas.

But Brown-Nagin said impact of such a ruling would be muted because "affirmative action already is on life support."

Peter Kirsanow, a Republican member of the U.S. Commission on Civil Rights and an opponent of racial preferences, was more blunt. "I would eat a copy of the 14th Amendment if in fact the court upholds the 6th Circuit's decision," Kirsanow said.

Justice Elena Kagan will not take part in the Michigan case, just as she excused herself from last term's case about the University of Texas admissions program. Kagan worked on the cases while serving in the Justice Department before she joined the court.

The case is Schuette v. Coalition to Defend Affirmative Action, 12-682.

___

Follow Mark Sherman on Twitter at: http://www.twitter.com/shermancourt


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EU weighs options for common bank bailout fund

LUXEMBOURG — Eurozone finance ministers on Monday sought ways to create a common fund to restructure or bail out troubled banks, an effort to keep financial problems in one country from endangering the entire 17-nation currency zone.

The ministers' discussions in Luxembourg were still in early stages, not least because of resistance from Germany and other countries that have paid the bulk of Europe's rescue programs.

The fund would complete Europe's planned banking union and help restore market confidence, but Berlin and others capitals have concerns about its legal basis and fear their taxpayers will be stuck with bills to clean up messy banks in weaker European economies.

Jeroen Dijsselbloem, who chairs the meetings of the Eurogroup of finance ministers, said Monday's discussions were meant to make progress on technical details, but not yet to reach an overall agreement.

Before the fund can become operational, European countries aim to set up a new banking authority with the power to restructure or unwind bust banks. That is expected to happen once the European Central Bank — in its new role as supervisor for the bloc's biggest banks — will have analyzed all balance sheets to identify possible capital shortfalls by late next year.

Separately, the officials also took stock of the reforms progress made in countries like Greece, Ireland, Portugal and Spain, which have received multibillion bailouts by their European partners and the International Monetary Fund.

Greece, which has been granted 240 billion euros ($325 billion) in emergency loans, again topped the agenda concerns over a projected financing shortfall of up to 6 billion euros ($8.1 billion) next year, according to ECB executive board member Joerg Asmussen.

"We must find a way to close this financing gap," Asmussen insisted.

Asmussen ruled out an idea floated by Greek Finance Minister Yannis Stournaras, who in an interview published Monday suggested the shortfalls could be covered by rolling over Greek bonds held by Europe's banks and other lenders.

"There is absolutely no way that it can be done in a roll-over of bonds ... which results in monetary financing," Asmussen insisted.

___

Follow Juergen Baetz on Twitter at http://www.twitter.com/jbaetz


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Markets steady as debt ceiling deadline looms

LONDON — Three days from a deadline to increase the U.S. debt ceiling, investors remain focused on developments in Washington. Most think a deal will be reached in time and stock markets were holding up Monday.

The U.S. has to increase the amount of debt it can carry by Oct. 17 or face a possible default on its debt, a scenario that could derail the U.S. economic recovery and roil international markets.

Negotiations between Republicans and Democrats over the weekend failed to reach a conclusion either on the raising of the debt ceiling or the partial shutdown of the U.S. government, which has now entered a third week.

Despite the possible nightmare scenario of a U.S. debt default, markets have proven more resilient than many analysts had expected.

"Like the fiscal cliff in 2012 and the last debt ceiling scare in 2011, the view remains that it will all work out, eventually," said Michael Ingram, market strategist at BGC Partners. "They are probably right of course, but it still feels that equity markets have been approaching this issue with unusual complacency."

In Europe, Germany's DAX closed flat at 8,723.81 while the CAC-40 in France rose 0.1 percent to 4,222.96. The FTSE 100 index of leading British shares ended 0.3 percent higher at 6,507.65.

In the U.S., the Dow Jones industrial average was down 0.2 percent at 15,211 while the broader S&P 500 index fell the same rate to 1,700.

Despite the public holiday, developments in Washington remain the focus of attention in financial markets, with Senate leaders from both sides set for further discussions. Democratic Majority Leader Harry Reid and Republican Minority Leader Mitch McConnell spoke by phone Sunday but failed to agree on a deal to raise the nation's borrowing authority above the $16.7 trillion debt limit.

Earlier, trading in Asia was muted, with markets in Tokyo and Hong Kong closed for holidays.

Outside of those major financial centers, China's Shanghai Composite Index rose 0.4 percent to 2,237.77 while South Korea's Kospi was off 0.2 percent at 2,020.27. Australia's S&P/ASX 200 shed 0.4 percent to 5,207.90.

Trading was also subdued in other financial markets. In currencies, the euro was up 0.2 percent at $1.3577 while the dollar was steady at 98.24 yen. In the oil markets, a price of benchmark New York crude was down 21 cents at $101.81 a barrel.


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Maine blueberry crop expected to be above average

PORTLAND, Maine — Maine's wild blueberry fields for the most part escaped widespread damage from a harmful new fruit fly during the summer harvest, resulting in what is expected to be an above-average crop.

Before the harvest began in early August, growers were bracing for the tiny spotted drosophila (pronounced droh-SOF'-uh-luh), a native of Asia that arrived in the U.S. five years ago and poses a threat to fruit growers.

But in the end, the fly didn't cause as many problems as expected, said David Yarborough, a blueberry specialist for the University of Maine Cooperative Extension. Many growers applied pesticides this summer earlier than usual in response to a traditional fruit fly, which might have kept down the numbers of the Asian fruit fly, he said.

"It didn't appear to be as large an issue as anticipated, although it's still in the background and we have to be wary of it because given the right conditions, it can exploit rapidly," Yarborough said.

Wild blueberries are native to North America and grow naturally in Maine and eastern Canada, the only places that grow them for commercial sale. They are different from cultivated berries, which are larger, grow on high bushes and are commercially grown in about a dozen states and British Columbia.

This year's harvest in Maine, which has about 60,000 acres of blueberries, had been projected to be about average at 86 million pounds or so.

But based on conversations with growers, Yarborough is expecting the final tally to be closer to 90 million pounds. If it reaches that level, it would be the third-best crop on record behind 2000 (110.6 million pounds) and 2012 (91.1 million pounds).

The U.S. Department of Agriculture will release the official harvest numbers in January.

Yarborough said the harvest in Maine's mid-coast area was below average. But growers in eastern Maine, who account for the majority of the harvest, had a good season.

With the threat of the spotted drosophila and poor pollination conditions in the spring, growers' expectations weren't high, said Homer Woodward, vice president of operations for Jasper Wyman & Sons, a wild blueberry company based in Milbridge. By the end of the harvest, most were pleased.

"I've heard that some other processors and growers had really good yields, and some were just OK, but overall we did better than we were expecting to do," he said.

The Canadian harvest was down, Yarborough said, primarily because of a poor crop in Quebec. And prices appeared to hold stable, he said, according to industry price reports.

"If you can have a decent crop with a stable price, what more can you ask," he said.


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Senate Dem leader: 'We're getting closer' to deal

WASHINGTON — Senate Majority Leader Harry Reid says he's getting closer to a deal with Republican leader Mitch McConnell that would increase the nation's borrowing authority and end the 2-week-old government shutdown.

Reid made the comments to reporters on Monday after emerging from a meeting with McConnell that lasted just over a half hour.

Reid said they would continue to work on it and hoped to have something to present to President Barack Obama at a White House meeting Monday afternoon.


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SF-area transit strike averted _ at least for day

OAKLAND, Calif. — San Francisco Bay Area rapid trains are running Monday morning after the transit agency and two of its largest unions agreed to extend contract talks over the weekend to avoid a strike.

Bay Area Rapid Transit leaders and representatives of the ATU Local 1555 and the SEIU Local 1021 are scheduled to talk again at 10:30 a.m. Monday. Tense negotiations ended around 3 a.m. after the unions gave a 24-hour reprieve from a planned midnight Sunday strike.

"We are not going to go on strike because the public deserves to have a riding system that works. We will give the (transit agency) one more day to get it together," said Antonette Bryant, leader of Amalgamated Transit Union Local 1555, one of the two unions in talks with BART.

The 11th-hour announcement came after weekend-long talks to avert a second commute-crippling strike in less than three months.

BART workers went on strike for nearly five days in July and were set to do so again Friday when a cooling-off period ordered by Gov. Jerry Brown ended, but they agreed to negotiate through the weekend. Traffic on the transit system was light Monday morning because of strike fears and the Columbus Day holiday.

Bryant complained that BART presented a last, final offer Sunday afternoon just as the parties came close to reaching a full agreement.

The executive director of the other union involved in the talks, Service Employees International Union Local 1021, said the parties made progress on pay, pension and health care benefits but were still at odds on issues related to work rules.

BART General Manager Grace Crunican said the "last best and final offer" presented to the unions Sunday is $7 million higher than the one presented Friday and includes a raise of 3 percent a year. She said the unions have two weeks from Sunday to accept the deal before it is taken off the table.

"We are open to any ideas over those two weeks that they may have, we will try and keep that conversation open," she said in a statement. "It is time to bring this to a close. The Bay Area is tired of going to bed at night and not knowing if BART will be open or not."

Nearly 370,000 riders take BART every weekday, and its 104 miles of track make it the nation's fifth-largest commuter rail system.

In a sign of how seriously another shutdown is looming over the region, state lawmakers from the Bay Area and Lt. Gov. Gavin Newsom dropped by the talks Sunday to encourage the two sides to reach a resolution.

Newsom, a former San Francisco mayor, told reporters he believed a deal was close.

"It would be preposterous for both sides at this stage when you're getting this close to put, at risk, your reputation and the economy of the entire region," he said.

Sticking points in the 6-month-old negotiations include salaries and workers' contributions to their health and pension plans. BART workers currently pay $92 a month for health care and contribute nothing toward their pensions — generous benefits BART management is seeking to curtail.

The unions, which represent 2,375 mechanics, custodians, station agents, train operators and clerical workers, want a raise of nearly 12 percent over three years, while BART has proposed a 10 percent increase over four years. Workers from the two unions now average about $71,000 in base salary and $11,000 in overtime annually, BART said.

Labor leaders were also pressing demands to make stations safer, such as better lighting in tunnels, bulletproof glass in agents' booths and improved restroom access.


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