Goldman eyes cost cuts: CEO

US banking giant Goldman Sachs is weighing cost cuts to deal with a slowing global economy, its chief executive Lloyd Blankfein said Tuesday. 

PHOTO: REUTERS

FEB 10, 20166:58 AM

[NEW YORK] US banking giant Goldman Sachs is weighing cost cuts to deal with a slowing global economy, its chief executive Lloyd Blankfein said Tuesday.

A person with knowledge of the situation said Goldman intends to slash at least five per cent of its total workforce this year.

Speaking a day after Goldman shares plunged 4.6 per cent amid rising market worries over credit quality in banks, Mr Blankfein said that the bank can "absolutely do a lot more on the cost side if we have to." "We take a particular and energetic look at continued cost cuts when revenues are stalled.... Necessity is the mother of invention," he said at a Credit Suisse financial services forum in Miami.

Despite reducing staff among its traders and bankers, Goldman has been forced to boost its workforce to deal with new regulatory requirements. The number of those employees rose 11 per cent from 2012 to 36,800 by the end of 2015, the bank said.

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According to the informed source, Goldman's job axe will fall most sharply in its fixed-income products, such as bonds, currencies and commodities activities, where 10 per cent of the staff will lose their jobs.

Big banks have been under pressure to rein in budgets as the economic slowdown heightens worries about deteriorating credit quality, particularly as energy companies grapple with the sharp decline in oil and gas prices.

Bank stocks have sunk in recent weeks, with Goldman shares almost 18 per cent lower since the start of the year.

AFP

    
 

White House budget sees modest 2.6% growth in 2016-2017

The White House expects only modest growth for the US economy over the next two years, restrained by global economic weakness, according to its annual budget proposal released Tuesday. 

PHOTO: AFP

FEB 10, 20167:04 AM

[WASHINGTON] The White House expects only modest growth for the US economy over the next two years, restrained by global economic weakness, according to its annual budget proposal released Tuesday.

The proposal also foresees steadily increasing budget deficits, after several years of reduction, unless Congress passes a package of reforms that will increase taxes on the country's wealthiest.

President Barack Obama's US$4.15 trillion budget proposal for fiscal 2017, starting from October 1 this year, sees the US economy growing at 2.6 per cent this year and around the same pace in 2017.

That was slower than the forecast a year ago, the effect of unexpectedly weak growth elsewhere in the world and the remnant effects of the 2008-09 Great Recession.

"The United States right now has the strongest, most durable economy in the world," the White House said in the budget.

However, growth remains only moderate "due in part to the special nature of the most recent recession," which has left many households and businesses still struggling to bring down debt burdens.

In addition, it said, "weakness abroad, in Europe and in large emerging markets, is also likely to affect growth in the next couple of years."

The budget, with a five per cent increase in spending over the current year, sees the US fiscal deficit holding at 3.2-3.3 per cent of gross domestic product through 2018 and then starting to rise toward an unhealthy 5 per cent by 2026 if reforms on taxes and spending are not implemented.

Rising costs from social security retirement payments and health care for an ageing society will mount over that period, adding to the fiscal shortfall.

On the other hand, the White House said that by cutting tax loopholes and special breaks for the wealthy, reforming business and capital gains taxes, and adding a US$10 a barrel tax on crude oil, the deficit can be held below three percent of GDP without hurting the US economy with hefty spending cutbacks.

The budget, which will have to be approved by a Congress perennially hostile to Mr Obama's reform proposals, calls to end the "sequester" automatic spending reductions agreed in 2013 amid a grinding battle over the government's finances between Democrats and Republicans.

"As the American people work to continue our economic and fiscal progress, it is critical that the federal government support, rather than impede, economic growth," the budget says.

"That means ending the harmful spending cuts known as sequestration, which limit the ability to invest in the building blocks of long-term economic growth, like research and development, infrastructure, job training, and education."

To offset any increase in spending, the White House said its tax, immigration and healthcare reforms would reap US$2.9 trillion in savings over the next 10 years.

AFP

    
 

EU's founding members back two-speed Europe

The six founding members of the European Union on Tuesday reiterated their commitment to "ever closer union", even it means leaving less enthusiastic partners like Britain behind. 

PHOTO: EPA

FEB 10, 20166:48 AM

[ROME] The six founding members of the European Union on Tuesday reiterated their commitment to "ever closer union", even it means leaving less enthusiastic partners like Britain behind.

London has demanded an opt-out from the "ever closer union" principle enshrined in the EU's treaties as part of reforms it wants to agree before holding a referendum on its membership of the bloc.

At informal talks in Rome, the foreign ministers of Belgium, France, Germany, Italy, Luxembourg and the Netherlands issued a joint communique in which they admitted to being "concerned about the state of the European project".

They said the EU was facing "very challenging times" due to the migration crisis and the threat posed by terrorism.

And they insisted that, for them, the answer lay in more, not less integration while also acknowledging that not every country in what is now a 28-member bloc should have to agree.

"We firmly believe that the European Union remains the best answer we have for today's challenges and allows for different paths of integration," the communique read.

"We remain resolved to continue the process of creating an ever closer union among the people of Europe."

Tuesday's dinner meeting was called by Italy, whose centre-left government has made it clear it wants a core of EU countries to forge ahead with steps towards further integration, with moves towards a banking union, tighter fiscal harmonisation and increased political and security cooperation the areas where they see change as most desirable.

Rome has also indicated that it is relaxed with countries like Britain limiting their engagement with the EU to essentially being part of a large free trade area - an option Italian officials say they would much prefer to the unpredictable scenario of a "Brexit", as Britain's possible departure has been dubbed.

British Prime Minister David Cameron is hoping to tie down a package of reforms at a summit of EU leaders on February 18-19.

If he succeeds, he is expected to move quickly to hold an in-out referendum in which he will argue that membership no longer poses a threat of further erosion of British sovereignty.

A two-speed EU is already a reality to an extent, with only 19 of the 28 member states having adopted the euro single currency - although all the other countries, except Britain and Denmark, are theoretically committed to working towards joining.

But the idea of formally enshrining the "two-speed" principle has long been taboo among supporters of deeper integration who often argue that the Union is like a bicycle which can only balance when it is moving forward.

Italy meanwhile will ask its citizens how they want to see the EU develop via an online consultation to be launched on February 12, parliamentary speaker Laura Boldrini announced earlier on Tuesday.

The six-question survey will seek to establish what Italians see as the EU's strengths and weaknesses, the areas in which it could do more, how it could be more efficient and how to reform its institutions.

"We are facing major challenges - climate change, terrorism, migration - and no state can face them alone," Ms Boldrini said in comments which reflect the view of much of the Italian political class but not necessarily those of voters.

"United we can influence events, divided we become totally insignificant."

AFP

    
 

Amid cybersecurity warnings, Obama unveils 'action plan'

US President Barack Obama unveiled a cybersecurity "national action plan" on Tuesday as his intelligence chief warned of growing risks from new technologies that open more doors to hackers. 

PHOTO: EPA

FEB 10, 20166:40 AM

[WASHINGTON] US President Barack Obama unveiled a cybersecurity "national action plan" on Tuesday as his intelligence chief warned of growing risks from new technologies that open more doors to hackers.

Mr Obama asked for US$19 billion for cybersecurity efforts in his budget request, a 35 per cent increase from current levels, with US$3 billion earmarked to help modernise the patchwork of computer systems used in government agencies.

"More and more, keeping America safe is not just about more tanks or more airplanes," Mr Obama told reporters at the White House.

"We also have to bolster our security online. As we've seen in the past few years, and just in the past few days, cyber threats pose a danger not only to our national security but our economic security."

US intelligence chief James Clapper underscored those risks at a Senate hearing, pointing out that wider adoption of connected devices and new systems that rely on artificial intelligence can open up doors to hackers.

Mr Clapper said "smart" Internet of Things (IoT) devices for autonomous vehicles, household appliances and systems such as electric power grids create new vulnerabilities.

The intelligence chief named Russia, China, Iran and North Korea as "leading threat actors" which pose risks for US security, and said these risks are growing as technology evolves and moves into new devices.

"Future cyber operations will almost certainly include an increased emphasis on changing or manipulating data to compromise its integrity... to affect decision making, reduce trust in systems, or cause adverse physical effects," Mr Clapper said.

"Russian cyber actors, who post disinformation on commercial websites, might seek to alter online media as a means to influence public discourse and create confusion. Chinese military doctrine outlines the use of cyber deception operations to conceal intentions, modify stored data, transmit false data, manipulate the flow of information, or influence public sentiments."

The Obama cyber initiative responds to an epidemic of data breaches and cyber attacks on both government and private networks in recent years, and passage last year of a cybersecurity bill that aims to promote better threat sharing.

Mr Obama said some US computer networks are "archaic" and use systems that date back to the 1960s.

"If you've got broken, old systems - computers, mainframes, software that doesn't work anymore - then you can keep on putting a bunch of patches on it, but it's not going to make it safe," he told reporters.

The launch comes after disclosures last year that personal data from some 20 million federal employees, contractors and others had been leaked in a massive breach at the Office of Personnel Management.

That followed news of attacks hitting health care networks, retailers and others affecting tens of millions more, and a devastating cyber attack on Sony Pictures.

Michael Daniel, Obama's special assistant for cybersecurity, said the plan calls for "both the modernization of our IT (information technology) and the modernization of how we handle cybersecurity."

As part of his initiative, Mr Obama issued an executive order creating a 12-member cybersecurity commission to make recommendations to both the public and private sectors.

The panel is to issue a report to the president by December 1.

A White House statement said the plan calls for a new federal chief information security officer to direct cybersecurity across the federal government.

The White House also will join the private sector in a campaign to help consumers improve online security, in part by helping reduce dependence on passwords, which can often be stolen by hackers.

The campaign is about "moving beyond just passwords and adding an extra layer of security," such as biometric identification or multi-factor authentication using a secure code, according to the White House.

The effort includes major technology firms such as Google, Facebook, Dropbox and Microsoft as well as financial service providers such as MasterCard, Visa and PayPal.

Another part of the programme calls for the government to step up security for its own transactions with citizens to avoid password or identity theft, the White House said.

The announcements were made on "Safer Internet Day," designated by governments and technology firms to boost awareness of cybersecurity issues.

AFP

    
 

Michael Bloomberg says eyeing 2016 run for president -FT

Michael Bloomberg, the billionaire former mayor of New York City, said he is considering running for US president in 2016, the Financial Times reported on Monday. 

PHOTO: REUTERS

FEB 9, 20169:56 AM

[LONDON] Michael Bloomberg, the billionaire former mayor of New York City, said he is considering running for US president in 2016, the Financial Times reported on Monday.

The 73-year-old founder of the eponymous financial information group was critical of the quality of debate in the presidential contest and said he was "looking at all the options" when asked whether he was considering a run, the newspaper said. "I find the level of discourse and discussion distressingly banal and an outrage and an insult to the voters," Mr Bloomberg told the Financial Times in an interview, adding that the US public deserved "a lot better."

Mr Bloomberg has told aides to draw up plans for an independent campaign for the US presidency, a source familiar with the situation told Reuters on Jan 23, confirming a report in the New York Times.

He would be willing to spend at least US$1 billion of his own money on a campaign for the November 2016 election, according to the source, who spoke on condition of anonymity to discuss the former mayor's thinking.

Mr Bloomberg has given himself an early March deadline for entering the race, the source said, after commissioning a poll in December to see how he would fare against real estate mogul Donald Trump and Mrs Hillary Clinton, the Republican and Democratic front-runners.

No third-party candidate has ever won a US presidential election. But Mr Bloomberg, who has close Wall Street ties and liberal social views, sees an opening for his candidacy if Republicans nominate Mr Trump or Texas Senator Ted Cruz and the Democrats nominate Vermont Senator Bernie Sanders, the source said.

A recent Reuters/Ipsos poll showed a third-party presidential run by Mr Bloomberg would be a long shot but could help Mr Trump if he lands the Republican nomination.

In a matchup between Mr Trump and Mrs Clinton, adding Mr Bloomberg's name to the ballot would trim Mrs Clinton's lead over Mr Trump to six percentage points from 10, according to the poll conducted from Jan 23 to Jan 27.

In a matchup pitting Mr Trump versus Mr Sanders, adding Bloomberg would erode Mr Sanders' lead over Trump to seven points from 12, the poll results showed.

In all matchups, Mr Bloomberg himself would land just 10 per cent or less of the vote in November.

The 73-year-old financial information industry billionaire, who earned a reputation as a social liberal with strong Wall Street ties during his time as New York City mayor, has considered a White House run for years.

REUTERS

    
 

Rescuers race for Taiwan quake victims as 'golden window' closes

Rescuers deployed heavy machinery on Tuesday in a renewed effort to locate more than 100 people trapped in the rubble of a Taiwan apartment complex felled by an earthquake as the 72-hour "golden window" for finding survivors passed. 

PHOTO: EPA

FEB 9, 201612:51 PM

[TAINAN, Taiwan] Rescuers deployed heavy machinery on Tuesday in a renewed effort to locate more than 100 people trapped in the rubble of a Taiwan apartment complex felled by an earthquake as the 72-hour "golden window" for finding survivors passed.

More than 210 have been pulled from the 16-storey Wei-kuan building - the only high-rise in the southern city of Tainan to crumble completely when the 6.4 magnitude quake struck before dawn on Saturday, killing more than 40 people.

But the city government and rescuers estimated more than 100 others could still be buried in the rubble.

Tainan mayor William Lai ordered rescuers to start using diggers and extractors to remove giant concrete slabs to better detect signs of life, which they have found in three different areas.

"It's approaching the 73rd hour and relatives are getting more anxious as time passes by and expect more. They hope the rescue team can make further moves," he said at the scene early Tuesday.

Use of heavy machinery had been repeatedly delayed after rescuers detected signs of life in upper parts of the toppled structure.

There have been some dramatic rescues, including a eight-year-old girl and three others pulled from the wreckage on Monday.

While the rescue operation was underway, the island was jolted by a 4.9-magnitude quake off the eastern city of Hualien city, but no damage or casualties were reported.

President Ma Ying-jeou said on Monday there was still hope of survivors, even beyond the 72-hour window.

"We will carry on until the last second. The golden 72 hours of rescue is the standard but there are many exceptions," said Mr Ma after visiting two survivors in hospital with bone fractures.

Cranes, drills, ladders, sniffer dogs and life detection equipment are being used to locate those trapped, but emergency workers and soldiers have also had to shore up the ruins to avoid further tragedies.

Prosecutors have launched an investigation into the collapse of the building.

The quake struck the weekend before Chinese New Year, when many relatives would have joined families to enjoy the holiday.

Taiwan lies near the junction of two tectonic plates and is regularly hit by earthquakes.

The island's worst tremor in recent decades was a 7.6 magnitude quake in September 1999 that killed around 2,400 people.

AFP