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News : International Last Updated: Jun 25, 2014 - 11:41 AM


Wednesday Newspaper Review - Irish Business News and International Stories - - June 25, 2014
By Finfacts Team
Jun 25, 2014 - 9:20 AM

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The Irish Independent

THE Government could take in up to €500m this year from the programme to sell state assets including parts of the ESB and Bord Gais, according to the European Commission.

That compares to €110m that was built into the Budget, the Brussels-based body said.

But in its first post-bailout progress report, the Commission said it has been given no guidance to date on how much of the cash will be used to pay off debt, despite an agreement by the Government to split the cash with lenders.
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"There has been no indication what proceeds from the sale of state assets would be used for debt reduction, a commitment under the former EU-IMF programme," the report said.

Bord Gáis's energy division and parts of the ESB are among the so-called "family silver" state assets put up for sale as part of the deal with the troika.

THE broadband landscape in Ireland is changing very quickly, as the latest figures from the Irish telecoms regulator show. The rise of Sky has disrupted a large chunk of the market, while regional wireless broadband operators are starting to struggle. Here is what has happened and why.

1. Sky has grabbed 6pc of the Irish fixed broadband market in under 12 months.

The satellite operator has taken market share off everyone bar UPC, but is hitting Eircom hardest. This is not surprising, as the service runs over Eircom telephone lines, making it an easy replacement option. Sky has well over 500,000 television subscribers. This figure far exceeds UPC's 330,000 digital television customers, although UPC's network footprint is smaller than Sky's. With this kind of market impact, Sky should logically be contemplating a mobile operation here. But the company has not yet announced any intention to go down this road.
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2. 'Wireless' and satellite broadband operators are getting squeezed out.

In small towns and villages, the only broadband operator available is often one that mounts equipment on your roof and operates on 'line of sight' with a mast somewhere in the vicinity. Where even this service isn't available, a satellite option – stick a satellite in your garden or on your roof – is sometimes used. Those players are starting to fade, probably because Eircom is slowly improving its rural network.

Medtronic chief executive Omar Ishrak has been busy laying on the PR in the company's home state of Minnesota as the firm seeks to push its planned $43bn (€31.6bn) acquisition of Covidien over the line.

Covidien is a US firm with its tax base in Ireland. Medtronic will move the enlarged group's tax base to Ireland, helping it to save millions of dollars a year. It's the latest move by a US business to lower its tax bill by basing itself in Ireland.

Obviously the heat has been getting to Mr Ishrak, who felt compelled (or, at least his media gurus did) to write the newspaper piece.
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"Some people have misinterpreted the recent announcement that we are acquiring an Irish company and declaring our principal executives' offices in that country to mean that we are leaving Minnesota," he wrote in the 'Minneapolis Star Tribune'.

"Nothing could be further from the truth. The Medtronic operating headquarters where I go to work every day will stay right where it is in Fridley."

He added: "The Covidien deal expands our mission, but job growth and innovation will continue here."

The Irish Times

A budget adjustment of just €800 million would be enough to hit next year’s deficit target of 3 per cent, the Nevin Economic Research Institute has said.

In its latest quarterly outlook, the trade union-backed think tank said improving economic conditions would enable the Government to implement budgetary cuts of less than the previously-predicted €2 billion.

This contradicts the independent Fiscal Advisory Council, as well as the IMF and the European Commission, all of which have urged the Government to stick to the €2 billion target.

The institute warned that another tough budgetary consolidation risked depressing domestic demand even further, which would delay economic recovery.

Not far from the London offices of the Financial Times was the Marshalsea prison where debtors were sent. In the 18th century, more than half of London’s prisoners were incarcerated for undischarged debt. The moral hazard Taliban of the day insisted that such harsh penalties were necessary. Then, in 1869, imprisonment for debt was abolished and bankruptcy introduced. Both economy and society survived.

Things sometimes go wrong. Sometimes due to bad luck and sometimes irresponsibility. But society needs a way to allow people to start over again. This is why we have bankruptcy. Indeed, we allow the most important private actors in our economies – companies – to enjoy limited liability. This lets shareholders walk away from their companies’ debts unscathed. That idea, too, was condemned as a licence for irresponsibility when introduced. Limited liability does bring problems, notably in highly leveraged businesses (such as banking). The ease with which US corporations can walk away from their creditors is breathtaking. But this is better than unlimited liability.

On the face of it, the idea that Eircom might once again list on the stock market seems ridiculous. In recent months, it has appointed a clatter of corporate advisers to advise it on its strategic options. Top of the list appears to be flotation, with reports it is planning a dual listing in Dublin and London in September with a view to raising €1 billion, which would be used to pay down its debt.

Just two years ago Eircom was banjaxed financially after Singapore-based investment group STT decided there were greener fields to plough elsewhere and walked away from its modest equity investment to leave the company’s bondholders, who were owed €4.08 billion, to decide its fate.

The Central Bank has asked the High Court to strike out legal claims against it which could make it liable for hundreds of million of euro in losses. The claim relates to the regulator’s allegedly approving the alleged unlawful delegation to former Irish Nationwide chief executive Michael Fingleton of the powers of the building society’s board.

John Stanley Purcell is one of four former directors of Irish Nationwide (INBS) being sued, separately from Mr Fingleton, by State-owned Irish Bank Resolution Corporation (IBRC) over “catastrophic” losses of some €6 billion at the society between 2008 and 2010.

Mr Purcell denies the claims against him and is claiming entitlement to a contribution and indemnity from the Central Bank should IBRC win its case.

He claims the Central Bank and Financial Regulator knew of the alleged delegation of board powers over 12 years between 1997 to 2009 to Mr Fingleton.

The Irish Examiner

The scale of the setback for both Government parties in the local and European elections is proportionate to the chances of €2bn in budget cuts being implemented next October.

The ESRI, Ibec, and now the Nevin Economic Research Institute, are among the bodies urging the Government to ease up on consolidation.

Finance Minister Michael Noonan has signalled that he will wait until the end of the summer when there is much greater clarity on tax receipts and economic growth before making any decision.

However, the minister has said on a number of occasions, if the budgetary arithmetic stacks up, he would like to provide tax relief for middle-income earners.

Joan Burton and Alex White are battling it out for leadership of the Labour Party. Whoever wins will try and gain as many concessions as possible for traditional Labour policies.

Europe

Euro Topics:  Even small affairs rock Poland: The Polish government has discussed the consequences of the latest publication of secret recordings in the Wprost scandal. The whole affair puts the state in a very bad light, the news magazine Newsweek Polska comments: "Four years ago [at the time of the Smolensk disaster] we already saw how irresponsible behaviour and ineptitude led to the death of our president and rocked our state. And now we are once again seeing how easy it is to shake this state. This is as sad as it is worrying. All it takes is a good bugging expert. He or his client decides whose conversations should be bugged. And he effectively decides what we learn and when. And our intelligence services, of which there are more than 20, haven't got a clue what to do about it."

Government will pay high price for help: With its demand that an inclusive united Iraq government be formed the US is expecting a lot from the current leadership in Iraq, the liberal-conservative Portuguese daily Diário de Notícias observes: "Washington has recognised that Iraq is really facing collapse, and that's why the chief US diplomat has been sent to Baghdad. In his briefcase he brings promises, but also conditions. ... The US - like the EU - wants incumbent Prime Minister Nouri al-Maliki to form a government comprising Shiites, Sunnis and Kurds. A difficult decision for the Shiite Maliki, who has been in power for four years and relies solely on the Shiites. But he will have to comply (as quickly as possible) if he wants to save the country and the region from the Sunni extremists. It looks like Saudi Arabia will stop supporting the latter if Iran limits its influence on Baghdad - all this in exchange for US backing, as it were."

Japan will retaliate for German export greed: German exports to Asian countries like China, Vietnam and South Korea have risen by an average of over ten percent annually in the past ten years. The fact that with similar products Japanese exports have only increased by just under seven percent per year will have consequences, the liberal French business daily La Tribune warns: "Japan sees Germany's ambitions in Asia as an aggression that calls for retaliatory measures. The first has been the monetary weapon: The Bank of Japan started the offensive by lowering the value of the yen, which has already depreciated by 30 percent against the euro since July 2012. Let there be no mistake: seen from afar, Germany - and by extension the Eurozone - are considered predators that, having sated their domestic demand, are now seeking to sate the demand of other countries. But the rest of the world is not about to sit back and let them do it."

Spaniards only show patriotism in football: The Spanish team won its last game before its already definite departure from the World Cup 3-0 against Australia. The conservative Spanish daily ABC notes approvingly that unlike most of the time the Spaniards openly show their patriotism when it comes to football: "The great virtue of football in a country with millions of fans is its capacity to bring people of all ages, origins, social classes and cultural levels together in their emotions, their passion and common goals. ... Through football we have managed to be a nation - and that is something extraordinary. True, we're normally a nation in private. Surveys have shown again and again that the great majority of us feel Spanish and love our nation. But beyond the private sphere we have problems expressing this identification with our nation in public."


© Copyright 2011 by Finfacts.com

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