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Batteries on a Wind Farm Help Control Power Output

October 29, 2011 by Leave a Comment

The purpose of the 1.3 million batteries is to tame the wind, but only slightly, according to the AES Corporation of Arlington, Va., which developed both the wind farm, known as Laurel Mountain, and the battery project.

The installation is far too small to store a night’s wind production and give it back during the day when it is needed, or to supply power when the wind farm is calm for more than a few minutes. Instead, AES says, the battery will be a shock absorber of sorts, making variations in wind energy production a little less jagged and the farm’s output more useful to the grid.

The technology is young, and the finances are challenging. But the task of smoothing output, and the more ambitious one of storing many hours of electricity generated by wind production, seem likely to become ever more important as states require that a rising percentage of their electricity come from renewable sources.

The 13-state regional power grid that includes West Virginia, for example, has a capacity of 4,800 megawatts of electricity from the wind. But that number would grow eightfold if all of the states involved reached their renewable targets.

Power systems have always faced fluctuations in demand. As they incorporate more wind into the mix, they will have to cope with supply fluctuations as well.

Predicting wind output can be a challenge. “If you blow your forecast, you’re in a heap of hurt,” said one storage expert, David L. Hawkins, a senior consultant at KEMA, a consulting firm.

Other power sources, mostly natural gas plants, can be called on as replacements, but such plants take longer to ramp up — or ramp down — than a wind farm or a field of solar panels, a problem that is becoming more widely recognized across the country. This year, two big manufacturers of gas-fired power plants, Siemens and General Electric, promoted new models that could change output faster, but system operators say that even these may not be nimble enough.

“That’s the challenge you have in running the power system,” said Mark T. Osborn, an executive at Portland General Electric in Oregon who is working on a similar installation in the Pacific Northwest. “Storage has been thought about for years, but the costs have always been too high. Now when you’re trying to integrate more renewable resources, storage becomes more necessary.”

Already, in periods of low energy demand on windy nights, wind production is so strong that electricity prices on the grid can decline to zero or even go negative. When they are negative, grid operators bill wind suppliers to put power into the system.

In theory, the assumption would be that the operators of the batteries here would charge them at night and release the energy during peak periods in the daytime.

But the batteries are so small — somewhere between C and D batteries in size — that the wind farm, at full power, would fully charge them in about 15 minutes. Even at a peak demand time, the energy stored would only be worth a few hundred dollars.

The economics can be likened to storing tap water in a solid gold vessel. While AES did not disclose the price of the wind farm or the battery installation, a company executive gave a nod when presented with an industry estimate that the batteries and related electronics cost in the range of $25 million.   The supplier, A123 Systems, of Westborough, Mass., says future installations will use batteries developed for electric cars and will cost less.

Yet the batteries perform two other tasks that the company hopes will turn a profit and pave the way for even bigger projects.

Rather than store power on a daily basis, said John M. Zahurancik, vice president for operations and deployment at AES Energy Storage, the installation will earn its keep by storing energy for minutes at a time, over and over again.

In the space of an hour, the output from the wind farm could go from 98 megawatts to zero. “In any short couple-minute interval, it could vary 20 or 30 or 40 percent,” Mr. Zahurancik said.

The batteries will smooth out the changes so the rest of the grid can catch up, he said, making the electricity sold more valuable.

The battery installation will also assist with a different kind of grid stabilization: trying to keep the alternating current system correctly synchronized. To keep the system as close to 60 cycles as possible, the regional grid operator, the PJM Interconnection, sends a signal every four seconds, asking for power to be added or withdrawn.

Experts foresee other roles as the grid evolves. For example, PJM operates a real-time market in which electricity is priced in five-minute blocks. At a given location, the price from one block to the next can vary significantly.

Mr. Hawkins of Kema said that a big battery array could make money in that market.

“It’s kind of like being a day trader on Wall Street,” he said. “If you see a $30 price spread, you can make some interesting trades doing it over and over in the course of a day.”

Article source: http://feeds.nytimes.com/click.phdo?i=b1128abc88da03d3510b6c93a95d56bb

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Selling Pieces of Law Firms to Investors

October 29, 2011 by Leave a Comment

The concept may not be that far-fetched.

England began this month to allow groups other than lawyers to own and control law practices, and some of the country’s major retailers have begun offering legal services in their stores and online. Other countries, most notably Australia, already allow someone other than a lawyer to own a practice.

Now, with calls increasing for a similar model in the United States, the country’s chief legal ethics authority intends to propose a plan to permit law practices to have limited outside ownership.

Such a move could upend the industry’s stiff adherence to the partnership system in favor of full-fledged corporations that have access to the capital markets.

Some legal experts envision a marketplace that would become more customer-friendly, affordable and accessible for the average consumer: one-stop shops on street corners that bundle, for instance, legal, banking, accounting and real estate services; drive-through-style law firms with numerous branches across the country, similar to accounting shops like HR Block; more complex legal services offered online; and, of course, retail stores with a legal unit.

Although Australia’s legal landscape has not shifted in this direction since it began allowing outside ownership of law firms in 2007, analysts are eagerly watching to see what will become of the legal market in England, which has more global prominence.

Regulators hope giving law practices access to private capital will allow them to invest in technology and other resources that could help them operate more efficiently and at cheaper rates.

“That surely expands the pool of individuals and organizations that have access to effective legal services,” said Mark Ross, the vice president of legal services at Integreon, an international legal process outsourcing company.

An ethics commission of the American Bar Association is expected to circulate by early November a draft proposal recommending that ethics rules be amended to allow other professional service providers — like accountants, economists and social workers — to partner with lawyers and own up to 25 percent of a law firm.

The current rules say that only lawyers may share directly in legal fees.

Individual states have the final say on whether to allow ownership by someone other than a lawyer. Washington is now the only jurisdiction in the United States that allows it. A bill to allow investments in law firms was introduced this year in North Carolina. One New York firm, Jacoby Meyers, has sued the state’s court system to allow it to receive capital from outside investors.

Despite these efforts, many lawyers and legal analysts remain skeptical about the need for outside investors and are concerned about the ethical implications.

“The idea is that nonlawyers might not have the same codes of ethics,” said Andrew M. Perlman, a legal ethics professor at Suffolk University Law School and the chief reporter for the American Bar Association’s Ethics 20/20 commission, which is preparing the draft recommendation. “They might not be bound by the same sense of professional responsibility and might push the lawyers to do things that they should not be doing to chase the dollar rather than abiding by the rules of professional conduct.”

One ethical concern is about lawyer-client privilege, as shareholders would have an interest in knowing who the firm’s clients were and the specifics of their cases. Another is that lawyers might feel pressured, for example, to settle a lawsuit to make shareholders happy, no matter what the best interest of their client was.

But such thinking derives from the naïve assumption that the lawyers “who currently own law firms are not motivated by profit,” said Ken Fowlie, the executive director of Slater Gordon, an Australian law firm that was the first in the world to become a publicly traded company.

Article source: http://feeds.nytimes.com/click.phdo?i=985c3b9eb4a20c4957ebc3e898dd3a87

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Cigarettes Are Being Used in Studies to Help Smokers Quit

October 29, 2011 by Leave a Comment

These were no ordinary cigarettes, but experimental ones, made of genetically altered tobacco to lower the nicotine content by 97 percent while preserving all the other tastes and smells and rituals for smokers of conventional cigarettes.

Researchers had been seeking a new and bigger supply because shortages had limited previous studies to just dozens of people. The experimental cigarettes are produced by a Massachusetts company, the 22nd Century Group, which holds 98 patents for genetic manipulation of tobacco plants to reduce or increase the amount of nicotine in cigarettes.

The National Institutes of Health bought nine million of these cigarettes, marked “for research purposes only,” from the 22nd Century Group as part of a broadening scientific effort to find ways to regulate cigarettes so that they are nonaddictive. The Spectrum brand test cigarettes have eight different levels of nicotine for research, from a nicotine content of 3 percent to 100 percent of the nicotine in the best-selling Marlboro Gold, though a 97 percent reduction is the most common level.

Dr. Nora D. Volkow, director of the National Institute on Drug Abuse of the N.I.H., which oversees the work, called the delivery crucial for the new federal research projects. These include last month’s award of $2.5 million for the first year of a planned five-year series of studies into threshold levels of nicotine addiction and the possible impact of a sharp reduction in nicotine on smoking and public health.

One study of the test cigarettes will follow about 500 smokers over six months to determine whether they are more likely to quit if they switch to those cigarettes quickly or gradually. The research, led by Dorothy K. Hatsukami, a professor of psychiatry at the University of Minnesota, and Eric C. Donny, associate professor of psychology at the University of Pittsburgh, will use about 1.5 million of the recently acquired cigarettes.

For researchers, the availability of a new supply of test cigarettes is “a game changer,” said Mitch Zeller, co-chairman of the Tobacco Harm Reduction Network at the National Cancer Institute and a consultant on nicotine replacement products. “It’s still all about the nicotine. Only now we have the power to do something about it.”

At the same time, officials in the $80 billion tobacco industry have warned of unexpected side effects from addiction withdrawal and black market products, complex issues the Food and Drug Administration will have to study in considering regulation.

Under a 2009 law giving the F.D.A. authority over tobacco products, the agency cannot ban nicotine, but can require that it be reduced to extremely low levels if that is proved to benefit public health.

“We really need to have good science to determine whether this might be a product standard, and to have good science, we need reduced-nicotine cigarettes,” said Dr. Hatsukami, who is also a member of the F.D.A. Tobacco Products Scientific Advisory Committee. Her work stalled when companies stopped making very-low-nicotine cigarettes. “In the middle of a study, we don’t have the cigarettes,” she said.

Dr. Neal L. Benowitz, another researcher and member of the federal committee, had received specially manufactured low-nicotine cigarettes from Philip Morris, a division of the Altria Group, makers of Marlboro cigarettes. When he went back for more, Philip Morris had stopped making them. Dr. Benowitz is also relying on the new supply, which the government will give to researchers without charge.

The 22nd Century Group is also applying for F.D.A. approval of its own test cigarette, called “X-22,” as a prescription-only smoking cessation device.

“No one has ever sought F.D.A. approval of a cigarette as a medical device,” Joseph Pandolfino, the founder and chief executive of 22nd Century, said in an interview. Preliminary studies show smokers can have an easier time quitting if they taper off the nicotine while still being able to do all the other things they do with cigarettes, he said, but larger studies are needed.

Another cigarette in testing, called “Brand B,” has tobacco that was genetically modified to have high levels of nicotine. The company hopes it will be approved by the F.D.A. as a “modified risk” tobacco product — a safer cigarette because users would take fewer puffs to get the same amount of nicotine.

The growing industry of quit-smoking products — patches, gum, lozenges and pills — has not further dented the rather steady rate of smoking recently in the United States, which has stayed at about 20 percent since 2004 after years of notable decline. A new crop of electronic cigarettes and smokeless tobacco products seem aimed more at getting smokers through smoke-free times rather than quitting.

Earlier this month, the F.D.A. and N.I.H. also announced they were starting a $118 million study to track about 44,000 people over five years to assess usage trends, risk perception, quit-smoking attempts and the possible impact of new tobacco regulations. In 2006, a federal judge found that tobacco companies had designed cigarettes to precisely control the amount of nicotine and provide doses sufficient for addiction, while concealing much of their nicotine research. They marketed so-called light cigarettes, which delivered a lower dose to smoking machines because of holes in the filter, but the same dose or worse to smokers who compensated by covering the holes with their lips and drawing harder.

In two small studies by Dr. Hatsukami and Dr. Benowitz, the genetically altered cigarettes were found to defeat the phenomenon of smoker “compensation.” But researchers said they needed much more evidence.

Tests so far on the experimental cigarettes are encouraging enough that Dr. Hatsukami is going into a Phase 3 clinical trial. That means Phase 2 trials have proven effectiveness on humans. Phase 3 measures both effectiveness and safety. 22nd Century is also planning to start Phase 3 trials next year.

The studies are examining gradual or rapid reductions of nicotine. In a regulated marketplace, the government could set limits on nicotine and ratchet down. And teenagers could still experiment with cigarettes, as they are wont to do, without getting addicted.

“It’s a hot topic,” said Clifford E. Douglas, director of the University of Michigan Tobacco Research Network. “But as difficult as menthol has been, nicotine will be more difficult, because it’s not 15 million smokers, it’s every smoker in the United States.” The F.D.A., under its new authority, has focused on Congressional mandates over menthol, dissolvable products and graphic warning labels on cigarette packages, each a contentious issue of its own with tobacco companies challenging science and policy.

The F.D.A.’s advisory panel has not put nicotine on its agenda yet, which is why Dr. Gregory N. Connolly, a Harvard professor of public health and antismoking advocate, said he resigned from the F.D.A. panel in December.

“After 50 years of knowing cigarettes cause cancer, it’s nice to know we have a supply we can investigate,” Dr. Connolly said. “But the real issue is the F.D.A. should have begun a process two years ago to see if we can eliminate nicotine in cigarettes, at least for children. If we can put a man on the moon, we can get rid of nicotine.”

Article source: http://feeds.nytimes.com/click.phdo?i=4b4a62f3d4b154e2ab2fe484b0219136

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William A. Niskanen, a Blunt Libertarian Economist, Dies at 78

October 29, 2011 by Leave a Comment

His death, of a stroke, was announced by the Cato Institute, the libertarian research organization, where he had been chairman for 23 years before stepping down in 2008.

Mr. Niskanen (pronounced nis-CAN-en) had a long career as an economist, both in and out of government. He taught at the University of California at both Berkeley and Los Angeles, worked as a defense analyst at the RAND Corporation and held prominent positions at the Office of Management and Budget, where he was assistant director, and at the Defense Department, where he was the director of special studies for the secretary of defense.

Mr. Niskanen, who stood 6-foot-4, was rarely one to tailor his message to his audience. A few years after joining Ford in 1975 and becoming its chief economist, he was critical of the company when it ended its longtime commitment to free trade and pushed for restrictions on Japanese imports. Mr. Niskanen contended that the real challenge to the domestic auto industry came not from Japan, but from the inability of American carmakers to cater to the public’s desire for smaller, more fuel-efficient vehicles. He also thought it inappropriate for corporations to ask Washington for breaks.

“A common commitment to refrain from special favors,” he wrote in a memo at the time, “serves the same economic function as a common commitment to refrain from stealing.”

His criticism did not sit well with Ford and it fired him.

In 1984, while at the Council of Economic Advisers, he caused a stir when, in a speech before a group called Women in Government Relations, he suggested that one reason men were often paid more than women in comparable jobs was because women interrupted their careers to raise children. Walter F. Mondale, then the Democratic presidential nominee, leapt on the comments and said they reflected the Reagan administration’s attitude toward women. A White House spokesman said Mr. Niskanen had expressed his own views, not those of the administration.

William Arthur Niskanen was born on March 13, 1933, in Bend, Ore., and earned a bachelor’s degree from Harvard and a Ph.D. in economics from the University of Chicago, where he studied under Milton Friedman, the free-marketeer and Nobel laureate.

Mr. Niskanen, who lived in Washington, is survived by his wife, Kathryn Washburn, and three daughters; Lia Niskanen of Brooklyn, Pamela Niskanen of West Winfield, N.Y., and Jaime Brunetti of Berkeley, Calif.

Mr. Niskanen’s essays are collected in “Bureaucracy and Public Economics” and “Reflections of a Political Economist: Selected Articles on Government Policies and Political Processes.” He also wrote a memoir, “Reaganonomics: An Insider’s Account of the Policies and the People,” an occasionally critical look at his time at the White House. In it, he called Donald Regan, a Treasury secretary and chief of staff under Reagan, “a tower of jelly.”

He praised Mr. Reagan for vision and charisma, but lamented that as president he had been unable to curtail federal spending.

“In the end,” Mr. Niskanen wrote, “there was no Reagan revolution.”

Article source: http://feeds.nytimes.com/click.phdo?i=499db0146a0cf7d4eae05839532b2002

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Business Briefing | Company News: Newell Rubbermaid Will Consolidate Its Structure

October 29, 2011 by Leave a Comment

Newell Rubbermaid, the maker of Rubbermaid containers and Sharpie pens, said it was simplifying its structure to find savings and to focus more on its high-growth businesses and markets. The new structure, effective on Jan. 1, will reduce the number of operating groups to two from three, with one for consumers and the other for the professional market. Newell will also consolidate its manufacturing plants and distribution centers. The changes will result in 500 layoffs, primarily white-collar jobs. The company also reported better-than-expected earnings and affirmed its full-year outlook. Newell reported a net loss of $177.6 million, which included a one-time charge of a charge of $382.6 million. Shares of the company rose 11 percent, to $15.36.

Article source: http://feeds.nytimes.com/click.phdo?i=ee53d20720cdc45fd69efae21ffe7e5a

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Business Briefing | Company News: Cablevision Struggles, and Its Shares Fall 12.5%

October 29, 2011 by Leave a Comment

Cablevision Systems’ quarterly earnings widely missed Wall Street estimates, as the company dealt with a weak economy, high programming costs and competition from phone companies that offer television services. The company posted a profit of $39.3 million, down from $68.4 million a year earlier, though its revenue increased 8 percent, to $1.67 billion. Cablevision, which mainly serves the New York area and owns a newspaper and television networks in addition to its cable business, said it lost 19,000 video subscribers in the third quarter. The earnings raised questions among analysts about the company’s growth prospects, as it faces mounting costs and a shrinking user base. The company’s shares closed down 12.5 percent, to $15.14.

Article source: http://feeds.nytimes.com/click.phdo?i=9a57b171476bb2bf31f9d075e83f6e5d

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Greek Anger on Debt Agreement Is Focused Especially on Germany

October 29, 2011 by Leave a Comment

Here in Greece, anger is running so high — especially toward Germany, whose Nazi occupation still leaves deep scars here and which now dominates the European Union’s bailout of debt-ridden Greece — that National Day celebrations were called off on Friday in the northern city of Thessaloniki for the first time ever after a group shouted “traitor” to the Greek president, Karolos Papoulias.

“I was the one fighting the Germans,” Mr. Papoulias, 82, said on national television. “I am sorry for those who cursed at me. They should be ashamed of themselves. We fought for Greece. I was an insurgent from the age of 15. I fought the Nazis and the Germans, and now they call me a traitor?”

Beyond populist talk, which ranges from euro-skepticism to anti-German demagoguery, experts say the concessions that Greece has made in exchange for the foreign aid it needs to stave off default — including allowing European Union officials to monitor Greek state affairs closely — are unprecedented for a member nation, making Greece a bellwether for the future of European integration.

The European superpowers Germany and France are trying to translate the new deal, to accept a loss on part of Greece’s debt, into changing European Union treaties to give the union greater oversight of national budgets and to create tougher, more easily enforceable rules for countries that go astray.

After years of pay cuts and tax increases that have pushed the Greek middle class to the breaking point, Greeks are not inclined to feel grateful to the so-called troika of foreign lenders — the European Union, European Central Bank and International Monetary Fund — that demanded austerity in exchange for loans. Instead, they increasingly feel they have become a de facto European Union protectorate.

“If we weren’t under the E.U., which is the only reason this loss of sovereignty may be justified, I’d have to say that Greece is an occupied country,” said Nikos Alivizatos, a constitutional lawyer in Athens.

Such feelings run so deep that after reaching a deal in Brussels this week for banks to accept a 50 percent loss on the face value of their Greek bonds, Prime Minister George Papandreou took great pains to explain that a new agreement — a troika presence until 2020 — would only offer technical assistance and that it was not tantamount to Greece’s relinquishing control of its fate.

“Nothing in this deal sacrifices our right to take our own decision. On the contrary, it will pave the way for us to freedom from dependency,” Mr. Papandreou said in a televised address.

But few Greeks agree. “Our politicians are just employees, simple employees,” said Margarita Tripolia, 17, a high school student who marched in the National Day parade. She, like other students, turned her face away from representatives of the government, church and military outside Parliament in a silent protest against the austerity measures and the direction the country was going.

But the sovereignty question goes far beyond street protest.

One highly delicate, unresolved question, in negotiations between the European Union and banks over the Greek debt deal, is whether future Greek bonds will be governed by international law, not Greek law, which currently governs 90 percent of Greek bonds. Such a change — aimed at preventing Greece from changing its laws to the detriment of creditors — would be unprecedented for a European Union member country.

Some argue that greater oversight is needed for Greece to push through the structural changes it promised in exchange for foreign aid. They say some loss of Greek sovereignty is a small price to pay considering that the new debt deal and eventual recapitalization of some banks comes at the expense of taxpayers from other European countries.

Dimitris Bounias contributed reporting.

Article source: http://www.nytimes.com/2011/10/29/world/europe/greeks-direct-anger-at-germany-and-european-union.html?partner=rss&emc=rss

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Hitches Signal Difficulties for the Euro Zone

October 29, 2011 by Leave a Comment

Italy was obliged to pay the highest rate in more than a decade to sell a new bond issue, a sign that investors remained wary of the country’s political paralysis and a debt load equal to 120 percent of yearly economic output. If Italy’s borrowing costs become unsustainable, the country is potentially a much greater threat than Greece to Europe and the world economy.

“The current Italian government has lost the confidence of investors,” said Alessandro Giansanti, a rates strategist at ING in Amsterdam.

Elsewhere in the troubled euro zone, a big loss by an Austrian bank served as a reminder of the fragility of financial institutions, while a German supreme court decision scrambled efforts to speed up political decision making. In the meantime, the head of Europe’s bailout fund turned to China to invest in the fund.

The shift in mood Friday was sudden and stopped a rally only a day after it began.

On Thursday, major European indexes soared and bank shares rebounded after an all-night session in Brussels by European leaders that produced the boldest response yet to the debt crisis.

While major European stock indexes on Friday largely held on to their gains from the day before, investors seemed to be reflecting on the unanswered questions in the latest rescue package.

The plan, which was short on details, includes measures to bolster the resiliency of banks, to ease Greece’s crushing debt load and to turbocharge the euro area’s $623 billion rescue fund.

The benchmark indexes in Frankfurt, Paris and London were little changed at the end of trading Friday, while Italian shares fell 1.8 percent. The euro barely budged, trading at about $1.42.

The Euro Stoxx 50 index of euro zone blue chips closed down 0.6 percent, while markets in Britain and Paris were also slightly lower. Germany’s DAX was up 0.13 percent.

In the United States, the Standard Poor’s 500-stock index registered a microscopic increase of 0.04 percent, ending the week up more than 3 percent, mainly on Thursday’s lift from the summit meeting in Brussels and a report of growth in the American economy.

European technocrats are now charged with working out in the weeks ahead the specifics behind the broad outlines of Thursday’s plan. The pace is unsettling for markets, but that is the methodical way that European leaders are determined to operate. Elected officials are focused on their reluctant voters, not on investors impatient for bold initiatives.

“If you ask someone on the street, they’ll say they want the Deutsche mark back,” said Martin Lueck, an economist at UBS in Frankfurt. “This is why the politicians need to move in a piecemeal fashion. They need to keep people on board.”

Officials of the European Union and the International Monetary Fund hoped that Thursday’s deal would soothe market anxiety by easing the terms of Greece’s debt repayments enough to avoid default, as well as by building a war chest for safeguarding the larger Italian and Spanish economies against possible contagion.

But the lack of confidence in the plan was evident in the rise in interest rates on the bonds of both Italy and Spain. Benchmark yields jumped 14.4 basis points (about one-seventh of a percentage point) to 6.01 percent in Italy and 17.7 basis points to 5.49 percent in Spain.

Italy was supposed to help its own case this week by producing concrete evidence that it was streamlining its economy and cutting public debt. But Prime Minister Silvio Berlusconi’s government, weakened by internal strife, delivered only promises, handing officials in Brussels a letter of intent describing hoped-for measures.

While Italy has a relatively low annual budget deficit, the ratio of total debt to gross domestic product is second-highest in the euro zone after that of Greece.

The market’s skepticism showed in the auction results Friday. The Italian Treasury sold 3 billion euros of bonds due in 2022 at 6.06 percent, the highest rate since the creation of the euro. Italy also sold 3.1 billion euros of bonds due in 2014 to yield 4.93 percent, up from 4.68 percent at their last auction on Sept. 29.

Elisabetta Povoledo and Gaia Pianigiani contributed reporting.

Article source: http://www.nytimes.com/2011/10/29/business/global/italys-borrowing-costs-rise-amid-uncertainty-about-rescue.html?partner=rss&emc=rss

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Europe Seeks Chinese Investment in Euro Rescue

October 29, 2011 by Leave a Comment

China is expected to demand significant concessions, including financial guarantees and limits on what Beijing sees as discriminatory trade policies, in exchange for any investment in Europe’s emergency stability fund. The head of the rescue fund, Klaus Regling, got a cautious reply from Chinese officials Friday during a visit to Beijing, where he said he did not expect to reach an investment deal with China anytime soon.

A senior Chinese official, Vice Finance Minister Zhu Guangyao, said China — like the rest of the world — was still waiting for the Europeans to deliver crucial details on how the rescue fund, the European Financial Stability Facility, would operate and be profitable before deciding on whether to participate.

That Europe would turn so openly to China to help stabilize the debt crisis shows how quickly the Chinese economic juggernaut has risen on the world stage. Indeed, if China comes to Europe’s aid, it will signal a new international order, with China beginning to rival the role long played by the United States as the world’s pivotal financial power.

“This would be a tectonic shift,” said Pieter P. Bottelier, an expert on China who teaches at the School of Advanced International Studies at Johns Hopkins University. “It would be so important economically and politically.”

Arvind Subramanian, a senior fellow at the Peterson Institute for International Economics in Washington, said Europe’s appeal was another sign that China was already a dominant global power.

“China’s power is more imminent, broader in scope and greater in magnitude than anyone imagines,” he said. “For instance, China’s currency is already having a negative effect not just on the U.S. and Europe, but on everyone else, too. And the rest of the world can’t do anything about it. If that’s not dominance, what is?”

Europe has turned to Beijing and a handful of other emerging market economies to consider investing in the fund to supplement contributions by the 17 countries that use the euro. Outside investment was presented as critical for the Europeans to create a financial firewall of up to $1.4 trillion to prevent the debt crisis that started in Greece from ravaging larger countries, including Italy and Spain.

In a sign that the crisis was far from over and that investors were still wary of Italy’s political paralysis and its huge debt, it was obliged on Friday to pay the highest rate in more than a decade to sell a new bond issue.

The fear is that a failure to contain the crisis would lead to contagion in global financial markets on par with the Lehman Brothers debacle, and deliver a blow not only to the economies of Europe, but also to the United States and other major trading partners.

Such a deterioration would certainly be bad news for China, which could hardly afford to see two of its biggest markets hobbled at the same time.

China has a $3.2 trillion nest egg in foreign reserves, by far the largest hoard of foreign currency in the world, and it needs to find places to park those reserves rather than convert them all to Chinese renminbi, a step that could set off domestic inflation and lead to sharp appreciation in the currency’s value. Europeans know that China is eager to move some of the money out of its vast pile of United States Treasury securities, and they are pushing the Continent’s crisis as a good opportunity to invest on the cheap.

Hours after European leaders unveiled their grand plan, President Nicolas Sarkozy of France called President Hu Jintao to say that Europe was still looking for some cash, and lobbied Beijing to play a “major role” in helping Europe get its house in order.

Since the Europe crisis worsened two years ago, regional leaders once wary of China’s influence have rolled out the red carpet in hopes that China might be a savior for their ailing economies. China has already made deals to expand its footprint into choice Western European countries like Italy and Spain. Now, Chinese-owned companies run the biggest shipping port in Greece. They own highways and other crucial infrastructure, and are working to snap up other strategic businesses to anchor their presence on European soil.

Liz Alderman reported from Paris, and David Barboza from Beijing. Keith Bradsher contributed reporting from Hong Kong.

Article source: http://www.nytimes.com/2011/10/29/world/asia/europe-seeks-chinese-investment-in-euro-rescue.html?partner=rss&emc=rss

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Bank of America Rethinking Debit Card Fee

October 29, 2011 by Leave a Comment

Although bank officials said their thinking was “evolving” and no firm conclusions had been reached, the bank is likely to broaden the number of customers exempt from the fee. Customers who hold Bank of America credit cards, directly deposit wages into the bank or hold a minimum balance will not be charged under a new plan. Previously, the bank said the minimum balance required to avoid the fee was $20,000, but lowering that minimum is also possible.

The hesitation at Bank of America comes as other banks are also pulling back, at least for now. Wells Fargo said Friday that it was canceling a test that would have imposed a $3-a-month charge on debit card holders in Georgia, Nevada, New Mexico, Washington and Oregon. JPMorgan Chase, which was testing a $3-a-month charge, has decided it will not impose a stand-alone debit card use fee, a person briefed on the situation said.

Bank of America officials were caught off guard after the planned $5 fee was disclosed late last month. Days later, President Obama said customers should not be “mistreated” in pursuit of profit, while Vice President Joseph R. Biden Jr. called the move “incredibly tone deaf.” Senator Richard J. Durbin of Illinois, the No. 2 Senate Democrat, took the unusual step of denouncing the bank on the Senate floor, urging customers, “Vote with your feet. Get the heck out of that bank.”

Despite the apparent change of heart, banks are likely to continue to find ways to make up for billions in lost revenue because of new federal regulations that sharply reduce the fees paid to the banks by merchants when consumers use debit cards. At the same time, other bank businesses, like lending and sales and trading, have been anemic.

Besides losing an estimated $6 billion from the reduction in the so-called swipe fees, the industry faces the disappearance of billions of dollars from the end of overdraft penalty fees.

Article source: http://feeds.nytimes.com/click.phdo?i=cc6e112d0071ab0d957d914bd3f9b5c1

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