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ArcelorMittal to Invest in French Steel Site, Keep Jobs

November 30, 2012 by Leave a Comment

PARIS (Reuters) – Steelmaker ArcelorMittal will invest 180 million euros in its Florange steelworks in northern France under a deal with the government to save jobs at two shuttered blast furnaces, Prime Minister Jean-Marc Ayrault said on Friday.

Ayrault said the investment, to be made over five years, meant there would be no layoffs at the site, although the two blast furnaces would not be restarted for now given flagging demand for steel in Europe.

“The government decided against the idea of a temporary nationalization,” Ayrault told reporters, three hours before a midnight deadline to strike a deal, adding: “There will be no redundancy plan.”

(Reporting by Brian Love; Writing by Catherine Bremer)

Article source: http://www.nytimes.com/reuters/2012/11/30/business/30reuters-france-arcelormittal-plan.html?partner=rss&emc=rss

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Your Money: A Warning for Airbnb Hosts, Who May Be Breaking the Law

November 30, 2012 by Leave a Comment

But when he returned from a three-night trip to Colorado, he heard from his landlord. Special enforcement officers from the city showed up while he was gone, and the landlord received five violations for running afoul of rules related to illegal transient hotels. Added together, the potential fines looked as if they could reach over $40,000.

Mr. Warren, like many if not most Airbnb users, hadn’t read the terms and conditions on Airbnb’s Web site telling him not to break any laws (while also wiping the company’s hands clean of responsibility for hosts’ compliance with those laws).

So he gulped hard, begged his landlord not to evict him and told him that he’d attend the mandatory administrative hearing related to the violations and pay any fines. Then, he gulped harder and hired a lawyer for $415 an hour.

He also fired off a note to Airbnb, which collects the nightly fee on behalf of its hosts and keeps a bit for itself. Given that the company knows good and well that many of the hosts on its site who live in big cities are violating the rules, he said, why not warn people more explicitly about the kind of trouble they could find themselves in? “By ignoring local laws, you are making casualties of the very people you need to make your site a success.”

From the perspective of an Airbnb customer who needs someplace to stay — and I count myself among the growing numbers of satisfied Airbnb customers — its service pushes every possible consumer pleasure button. You beat the system by avoiding high hotel rates, get to stay in neighborhoods where there aren’t hotels at all and can connect with plugged-in local hosts, too.

But all airy talk in tech start-up circles of “collaborative consumption” and “the sharing economy” aside, five-figure fines and the possibility of eviction are no joke for those hosts. In fact, local laws may prohibit most or all short-term rentals under many circumstances, though enforcement can be sporadic and you have no way of knowing how tough your local authorities will be. Your landlord may not allow such rentals in your lease or your condominium board may not look kindly on it.

Mr. Warren, 30, acknowledges that he broke the city rules and did not read his lease to see if this sort of subletting was kosher. Ignorance of the law is no excuse, even if Airbnb avoids educating the people who provide its inventory.

But one enduring mystery for him was why the city came after him in the first place. He was not renting out his bedroom all that often, after all.

Still, he was breaking the law. And that law says you cannot rent out single-family homes or apartments, or rooms in them, for less than 30 days unless you are living in the home at the same time. Popular Airbnb markets like San Francisco and New Orleans have even more restrictive rules, and London and Paris have their own ordinances. People who want to go through the official licensing process for inns or bed-and-breakfasts have that option if they so choose.

That said, New York City officials don’t come looking for you unless your neighbor, doorman or janitor has complained to the authorities about the strangers traipsing around. “It’s not the bargain that somebody who bought or rented an apartment struck, that their neighbors could change by the day,” said John Feinblatt, the chief adviser to Mayor Michael R. Bloomberg for policy and strategic planning and the criminal justice coordinator. The city is also concerned with fire safety and maintaining at least some availability of rental inventory for people who actually live there.

Since the mayor’s office of special enforcement began looking at the short-term rental issue in earnest in 2006, it has received more than 3,000 complaints, conducted nearly 2,000 inspections and issued nearly 6,000 notices of violation.

On Thursday, Mr. Warren became one of the lucky violators. He arrived on the 10th floor of a city building in Lower Manhattan expecting to take his lumps during a hearing and write a large check. Instead, he discovered that the buildings department never filed the proper paperwork with the Environmental Control Board, which runs the hearings. A clerk there dismissed all violations against him with no fines, and I could see the color coming back into Mr. Warren’s face.

This article has been revised to reflect the following correction:

Correction: November 30, 2012

An earlier version of a picture caption with this article misstated the legal jeopardy faced by Nigel Warren for renting out his bedroom. His potential fines totaled $40,000 before the case was dismissed; he is not currently fighting $10,000 in fines.

Article source: http://www.nytimes.com/2012/12/01/your-money/a-warning-for-airbnb-hosts-who-may-be-breaking-the-law.html?partner=rss&emc=rss

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Common Sense: H.P.’s Autonomy Blunder Might Be One for the Record Books

November 30, 2012 by Leave a Comment

The deal was considered so bad, and such an object lesson for a generation of deal makers and corporate executives, that it seemed likely never to be repeated, rivaled or surpassed.

Until now.

Hewlett-Packard’s acquisition last year of the British software maker Autonomy for $11.1 billion “may be worse than Time Warner,” Toni Sacconaghi, the respected technology analyst at Sanford C. Bernstein, told me, a view that was echoed this week by several H.P. analysts, rivals and disgruntled investors.

Last week, H.P. stunned investors still reeling from more than a year of management upheavals, corporate blunders and disappointing earnings when it said it was writing down $8.8 billion of its acquisition of Autonomy, in effect admitting that it had overpaid by an astonishing 79 percent.

And it attributed more than $5 billion of the write-off to what it called a “willful effort on behalf of certain former Autonomy employees to inflate the underlying financial metrics of the company in order to mislead investors and potential buyers,” adding, “These misrepresentations and lack of disclosure severely impacted H.P. management’s ability to fairly value Autonomy at the time of the deal.”

H.P. has declined to document the basis for its charges, saying it has turned the results of its internal investigation over to the Securities and Exchange Commission and Britain’s Serious Fraud Office “for civil and criminal investigation.” In an unusually aggressive public relations counterattack, Autonomy’s founder, Michael Lynch, a Cambridge-educated Ph.D., has denied the charges and accused Hewlett-Packard of mismanaging the acquisition. H.P. asked Mr. Lynch to step aside last May after Autonomy’s results fell far short of expectations.

But others say the issue of fraud, while it may offer a face-saving excuse for at least some of H.P.’s huge write-down, shouldn’t obscure the fact the deal was wildly overpriced from the outset, that at least some people at Hewlett-Packard recognized that, and that H.P.’s chairman, Ray Lane, and the board that approved the deal should be held accountable.

A Hewlett-Packard spokesman said in a statement: “H.P.’s board of directors, like H.P. management and deal team, had no reason to believe that Autonomy’s audited financial statements were inaccurate and that its financial performance was materially overstated. It goes without saying that they are disappointed that much of the information they relied upon appears to have been manipulated or inaccurate.”

It’s true that H.P. directors and management can’t be blamed for a fraud that eluded teams of bankers and accountants, if that’s what it turns out to be. But the huge write-down and the disappointing results at Autonomy, combined with other missteps, have contributed to the widespread perception that H.P., once one of the country’s most admired companies, has lost its way.

Hewlett-Packard announced the acquisition of Autonomy, which focuses on so-called intelligent search and data analysis, on Aug. 18, 2011, along with its decision to abandon its tablet computer and consider getting out of the personal computer business. H.P. didn’t stress the price — $11.1 billion, or an eye-popping multiple of 12.6 times Autonomy’s 2010 revenue — but focused on Autonomy’s potential to transform H.P. from a low-margin producer of printers, PCs and other hardware into a high-margin, cutting-edge software company. “Together with Autonomy we plan to reinvent how both structured and unstructured data is processed, analyzed, optimized, automated and protected,” Léo Apotheker, H.P.’s chief executive at the time, proclaimed.

Autonomy had already been shopped by investment bankers by the time H.P. took the bait. The pitch book was prepared by Qatalyst Partners, founded by Frank Quattrone, the Silicon Valley investment banker whose 2004 conviction on witness tampering and obstruction of justice was reversed on appeal. Qatalyst projected double-digit revenue and earnings growth in both 2011 and 2012, and suggested a visionary future of great opportunities: “The secular migration towards unstructured data has created a large and meaningful addressable opportunity in managing, regulating and monetizing the use of information.”

Article source: http://www.nytimes.com/2012/12/01/business/hps-autonomy-blunder-might-be-one-for-the-record-books.html?partner=rss&emc=rss

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Off the Charts: An Uneven Recovery in the World’s Cities

November 30, 2012 by Leave a Comment

— Matthew 20:16

SO it was in the Great Recession, according to a new survey of the world’s 300 largest metropolitan areas.

None of the wealthiest areas in the world escaped the downturn, and most of them have yet to fully recover more than four years after the downturn began. But nearly half of the poorest areas never suffered any decline, and most of those that did have recovered.

The survey, released by the Metropolitan Policy Program of the Brookings Institution, found that this year the pattern began to change. Growth rates slowed from 2011 in most areas, but the trend was less pronounced in wealthier areas. North America was the only region where more than half of the metropolitan areas grew faster than they had in 2011.

“The global metropolitan economy is fragile and many problems, like the falling euro zone and the slowdown of emerging economies, are here to stay, at least for the immediate future,” said Emilia Istrate, an associate fellow at Brookings. “Despite their challenges, U.S. metro economies are helping to power the global recovery.”

The survey looked at two measures of growth — gross domestic product and jobs — but did so in slightly different ways. It measured the change in per-capita G.D.P. but looked at total employment without adjusting for population change.

Within the United States, only three of the 76 metro areas measured are estimated to have fully recovered in both employment and per capita G.D.P. — Dallas, Pittsburgh and Knoxville, Tenn. Within the euro zone, nearly all major metro areas in Germany and Austria have recovered, but none outside those countries have done so. Nor have any of the major British areas.

Similarly, while more than three-quarters of the 48 Chinese areas have fully recovered, if they declined at all, none of the 12 Japanese areas have done so. While growth slowed this year in China, it still dominated the list of the fastest-growing regions.

The 300 metropolitan areas in the survey are the largest in the world in terms of G.D.P. and together account for nearly one-half of global output, Brookings said. But they include just 19 percent of the world population. The 2012 figures were estimated by Brookings based on data from Oxford Economics, Moody’s Analytics and the United States Census Bureau.

The accompanying charts break down the results by both wealth and region. Brookings found that 40 of the 300 regions did not suffer even one annual decline in employment or per capita G.D.P. from 2008 through 2012. Most of them were in the bottom fifth of areas, as measured by per capita G.D.P. in 2007, before the recession began. None were in the areas that made up the wealthiest half of the world.

The charts show the proportion of areas that experienced no decline, as well as the proportion that have fully recovered in both economic growth and employment and those that recovered by one measure but not the other. While most fell in 2008 and later made at least partial recoveries, there are a few, notably in Australia, that escaped pain early on but declined this year as Chinese growth — and demand for some imports — slowed.

This is the third year that Brookings has done the study, although it includes more areas than the previous studies did. One sad fact remained constant. Athens was the worst performer in 2012, as it had been in the previous years. The good news, if you can call it that, is that things are getting worse more slowly. Brookings estimates employment in the Athens area declined 6.9 percent in 2012, while per capita G.D.P. fell 5.1 percent. Both declines are greater than in any other area this year, but they are smaller than the ones Athens recorded in 2011.

Floyd Norris comments on finance and the economy at nytimes.com/economix.

Article source: http://www.nytimes.com/2012/12/01/business/economy/an-uneven-recovery-in-the-worlds-cities.html?partner=rss&emc=rss

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Markey Presses F.T.C. to Investigate Energy Drink Ads

November 30, 2012 by Leave a Comment

In a letter, that lawmaker, Representative Edward J. Markey of Massachusetts, told the F.T.C. that he found claims made by the sellers of products like 5-Hour Energy, Monster Energy and Rockstar Energy particularly disturbing because they were often made to appeal to younger people.

In marketing promotions and advertisements, producers of energy drinks typically claim that the products can make users more alert, energized and less fatigued. The request by Mr. Markey follows disclosures that the Food and Drug Administration received reports of 18 deaths in recent years in which energy drinks may have played a role; producers deny any link.

“The advertising claims made by energy drink manufacturers are particularly alarming in light of the increase in advertisements targeted primarily to children and teenagers,” Mr. Markey wrote.

A spokeswoman for the F.T.C., Betsy Lordan, said the agency would consider Mr. Markey’s request. She declined to say whether the F.T.C. was already examining energy drink promotions.

Energy drink makers have said that the claims they have made for their products are supported. They have added that they do not market the beverages to children, a group defined by the industry as those under 12 years of age.

Public officials are looking into the marketing claims of energy drink manufacturers, including the attorney general of New York State and the top lawyer for the city of San Francisco. Newsday reported this week that the Suffolk County Board of Health on Long Island urged county lawmakers to ban the sale of energy drinks to people younger than 19. The board cited potential health dangers that have been associated with the drinks, including elevated heart rates and higher blood pressure, dizziness and possible death.

In his letter, Mr. Markey asked the F.T.C. whether it believed any of the claims made by energy drink producers were deceptive or fraudulent and, if so, whether the agency planned to take any actions in response.

In 2010, both the F.T.C. and the F.D.A. took action against companies that were selling beverages that were a mix of energy drinks and alcohol.

Article source: http://www.nytimes.com/2012/12/01/business/markey-presses-ftc-to-investigate-energy-drink-ads.html?partner=rss&emc=rss

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A Hospital War Reflects a Tightening Bind for Doctors Nationwide

November 30, 2012 by Leave a Comment

But that began to change a few years ago, when the city’s largest hospital, St. Luke’s Health System, began rapidly buying physician practices all over town, from general practitioners to cardiologists to orthopedic surgeons.

Today, Boise is a medical battleground.

A little more than half of the 1,400 doctors in southwestern Idaho are employed by St. Luke’s or its smaller competitor, St. Alphonsus Regional Medical Center.

Many of the independent doctors complain that both hospitals, but especially St. Luke’s, have too much power over every aspect of the medical pipeline, dictating which tests and procedures to perform, how much to charge and which patients to admit. In interviews, they said their referrals from doctors now employed by St. Luke’s had dropped sharply, while patients, in many cases, were paying more there for the same level of treatment.

Boise’s experience reflects a growing national trend toward consolidation. Across the country, doctors who sold their practices and signed on as employees have similar criticisms. In lawsuits and interviews, they describe increasing pressure to meet the financial goals of their new employers — often by performing unnecessary tests and procedures or by admitting patients who do not need a hospital stay.

In Boise, just a few weeks ago, even the hospitals were at war. St. Alphonsus went to court seeking an injunction to stop St. Luke’s from buying another physician practice group, arguing that the hospital’s dominance in the market was enabling it to drive up prices and to demand exclusive or preferential agreements with insurers. The price of a colonoscopy has quadrupled in some instances, and in other cases St. Luke’s charges nearly three times as much for laboratory work as nearby facilities, according to the St. Alphonsus complaint.

Federal and state officials have also joined the fray. In one of a handful of similar cases, the Federal Trade Commission and the Idaho attorney general are investigating whether St. Luke’s has become too powerful in Boise, using its newfound leverage to stifle competition.

Dr. David C. Pate, chief executive of St. Luke’s, denied the assertions by St. Alphonsus that the hospital’s acquisitions had limited patient choice or always resulted in higher prices. In some cases, Dr. Pate said, services that had been underpriced were raised to reflect market value. St. Luke’s, he argued, is simply embracing the new model of health care, which he predicted would lead over the long term to lower overall costs as fewer unnecessary tests and procedures were performed.

Regulators expressed some skepticism about the results, for patients, of rapid consolidation, although the trend is still too new to know for sure. “We’re seeing a lot more consolidation than we did 10 years ago,” said Jeffrey Perry, an assistant director in the F.T.C.’s Bureau of Competition. “Historically, what we’ve seen with the consolidation in the health care industry is that prices go up, but quality does not improve.”

A Drive to Consolidate

An array of new economic realities, from reduced Medicare reimbursements to higher technology costs, is driving consolidation in health care and transforming the practice of medicine in Boise and other communities large and small. In one manifestation of the trend, hospitals, private equity firms and even health insurance companies are acquiring physician practices at a rapid rate.

Today, about 39 percent of doctors nationwide are independent, down from 57 percent in 2000, according to estimates by Accenture, a consulting firm.

Many policy experts have praised the shift away from independent medical practices as a way of making health care less fragmented and expensive. Systems that employ doctors, modeled after well-known organizations like Kaiser Permanente, are better positioned to coordinate patient care and to find ways to deliver improved services at lower costs, these advocates say. Indeed, consolidation is encouraged by some aspects of the Obama administration’s health care law.

“If you’re going to be paid for value, for performance, you’ve got to perform together,” said Dr. Ricardo Martinez, chief medical officer for North Highland, an Atlanta-based consultant that works with hospitals.

The recent trend is reminiscent of the consolidation that swept the industry in the 1990s in response to the creation of health maintenance organizations, or H.M.O.’s — but there is one major difference. Then, hospitals had difficulty managing the practices, contending that doctors did not work as hard when they were employees as they had as private operators. This time, hospitals are writing contracts more in their own favor.

Article source: http://www.nytimes.com/2012/12/01/business/a-hospital-war-reflects-a-tightening-bind-for-doctors-nationwide.html?partner=rss&emc=rss

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Consumers Cut Spending in October

November 30, 2012 by Leave a Comment

Consumer spending dropped 0.2 percent in October, the government said. That was down from an increase of 0.8 percent in September and was the weakest showing since May.

Income was flat in the month, following a 0.4 percent rise in September.

The government said work interruptions caused by the late October storm reduced wages and salaries by about $18 billion at an annual rate. Hurricane Sandy affected 24 states, with the most severe damage in New York and New Jersey.

Consumers may also be worried about automatic tax increases and spending cuts that will take effect in January if lawmakers and the Obama administration fail to strike a deal before then.

The depressed spending figures suggest economic growth are likely to be weak in the October-December quarter. Consumer spending drives nearly 70 percent of economic activity in the United States.

Discounting the effects of the storm, income growth would have risen a still-weak 0.1 percent. After-tax income adjusted for inflation fell 0.1 percent, while spending adjusted for inflation dropped 0.3 percent.

The saving rate edged up slightly, to 3.4 percent of after-tax income in October, compared with 3.3 percent in September.

The government reported Thursday that the overall economy grew at an annual rate of 2.7 percent in the July-September quarter, an improvement from the 2 percent rate of growth initially estimated. However, economists believe the acceleration in activity will be short-lived.

Many of them predict growth is slowing in the current October-December quarter to less than 2 percent, a rate that is too weak to make a significant dent in unemployment. But they expect growth to rebound in the New Year when the rebuilding phase begins in the Northeast.

In October, spending at retail businesses fell 0.3 percent, the first drop after three months of gains. Auto sales dropped 1.5 percent, the biggest decline in a year.

Article source: http://www.nytimes.com/2012/12/01/business/economy/consumers-cut-spending-in-october.html?partner=rss&emc=rss

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Brazil Registers Anemic Growth in 3rd Quarter, Surprising Economists

November 30, 2012 by Leave a Comment

Gross domestic product grew just 0.6 percent from the previous quarter, stunning economists who had forecast double that rate. Brazil’s economy is now expected to grow only about 1 percent in 2012, delivering a challenge to President Dilma Rousseff, who has tried to increase growth through an array of huge stimulus projects.

Even economists with favorable views of Ms. Rousseff’s policies of assertively directing large government banks and other state-controlled enterprises to promote growth expressed surprise over the figures, which reflect a sharp departure from 2010, the last year of Luiz Inácio Lula da Silva’s presidency, when Brazil’s economy grew 7.5 percent.

Antônio Delfim Netto, an influential former economy chief, called the G.D.P. figures “a tragedy” in comments to reporters here on Friday. Under Ms. Rousseff, who has been president since 2011, Brazil is on track to deliver its weakest two-year period of growth since the early 1990s, before a stabilization program that radically restructured the economy. Finance Minister Guido Mantega contends that Brazil is on the cusp of a recovery, forecasting 4 percent growth next year.

While growth has declined considerably from the boom years, the slowdown has been blunted by state-supported projects aimed at creating jobs, like a shipbuilding sector conceived to support the oil industry. Brazil’s unemployment rate, 5.3 percent, is still hovering around historic lows.

Authorities are also financing broadly popular antipoverty programs. Federal spending surged 9 percent in October compared with October 2011, partly a result of outlays for an moderate-income housing program called Minha Casa Minha Vida (My House My Life). As millions of poor Brazilians are shielded from the slowdown, Ms. Rousseff’s approval ratings remain high.

Still, critics are growing more vocal about the need for Brazil to become more energetic in addressing complex structural dilemmas weighing the economy down, including its byzantine bureaucracy and woeful public schools. Ms. Rousseff is moving to address these issues; she altered an oil royalties bill on Friday, shifting 100 percent of future proceeds to an education fund.

Yet as economic growth slows to a snail’s pace, smaller Latin American countries are doing better, calling into question Brazil’s ambitions of exerting more influence in the region. Panama is set to grow 8.5 percent this year, according to the International Monetary Fund, while Peru should grow 6 percent and Mexico 3.8 percent.

Article source: http://www.nytimes.com/2012/12/01/world/americas/brazil-registers-slow-economic-growth-in-3rd-quarter-shocking-economists.html?partner=rss&emc=rss

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France Reaches Deal to Save Jobs at Steel Plant

November 30, 2012 by Leave a Comment

The deal, announced by Prime Minister Jean-Marc Ayrault, brings to an end a tense two-month standoff that escalated earlier this week into the threat of a possible nationalization of the plant.

In a televised announcement, Mr. Ayrault said that while ArcelorMittal had agreed “unconditionally” to keep all 2,700 employees at its site in Florange, in northeastern France, two idled blast furnaces — at which 600 of those people worked — would remain offline until flagging European steel demand improves. The affected workers will be redeployed at other areas of the plant, he said.

“The government has decided against the idea of a temporary nationalisation,” Mr. Ayrault said. There will be no layoffs, he added.

Nicola Davidson, a spokeswoman for ArcelorMittal, confirmed by e-mail that an agreement had been reached but declined to confirm the details pending a formal announcement on Saturday.

The accord appeared to bring an end to the ugly dispute, which had pitted the French state, in its traditional role as defender of industry, against a company with mounting debts that is trying to reduce capacity in line with the slowdown in the European economy. ArcelorMittal, the world’s largest steelmaker, had sought to permanently close the two blast furnaces at the Florange plant but wanted to continue operating a part of the facility that processes steel for the car industry.

In all, ArcelorMittal employs about 20,000 people in France.

With unemployment hovering above 10 percent, the Socialist government of President François Hollande is desperate to avoid more layoffs by name-brand companies. Several big employers, including PSA Peugeot Citroën, Air France and Sanofi, have announced big job cuts this year. But some analysts said that by taking such a strongly interventionist stand to protect steelworkers, France risked sending the wrong signal to multinational companies, whose investment the economy needs if it is to stave off long-term decline.

ArcelorMittal had agreed to give the government until midnight Friday to find a buyer for the furnaces, offering them for a symbolic single euro, despite skepticism that a buyer would be interested in anything less than the entire factory.

Arnaud Montebourg, France’s industry minister, had previously insisted that the company agree to sell the entire plant and said that two different companies were interested, although he declined to identify them.

It was Mr. Montebourg who first raised the possibility of a “temporary nationalization” of the Florange plant in a newspaper interview published this week. In the interview, the minister accused Lakshmi Mittal, the Indian-born billionaire who serves as the company’s chairman and chief executive, of “failing to respect France” and of a “failure to keep promises, blackmail and threats.”

Mr. Mittal, who built ArcelorMittal from the 2006 merger of his Mittal Steel with Arcelor, then the largest European steelmaker, had promised at the time to help modernize the European steel sector. But the company said that the Florange plant was already scheduled for closing under Arcelor, its previous owner.

Stanley Reed contributed reporting from London.

Article source: http://www.nytimes.com/2012/12/01/business/global/france-reaches-deal-to-save-jobs-at-steel-plant.html?partner=rss&emc=rss

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German Lawmakers Back Latest Round of Aid for Greece

November 30, 2012 by Leave a Comment

BERLIN — Lawmakers in Germany’s lower house of Parliament easily passed the next round of financial support for Greece on Friday, despite growing doubt among members of Chancellor Angela Merkel’s coalition and opposition parties that the measures will be sufficient to resolve the Greek problem.

As expected, a clear majority of 473 out of 584 lawmakers casting ballots voted in favor of the package of measures agreed to by European finance ministers and international lenders last week that will unlock loan installments totaling €43.7 billion, or $56.7 billion. One hundred lawmakers voted against the measure and 11 abstained.

Germany is one of Greece’s largest creditors and support from Berlin is crucial for the success of the program. Yet with a parliamentary election scheduled for Sept. 22, German politicians from all sides have been reluctant to take on extra financial burdens.

Wolfgang Schäuble, Germany’s finance minister, defended the latest bailout package and praised the restructuring efforts that have been made by the government of Antonis Samaras, prime minister of Greece. But he warned that the current discussion of writing down Greek debt would sap Athens’s drive to continue with the painful course of reforms that Germany has required in exchange for more financial assistance.

“If we say that the debt will be forgiven, then the readiness to save in exchange for further help is weakened. Consequently, this is the false incentive,” Mr. Schäuble said. “If we want to help Greece along this difficult path, then we must go forward step by step.”

The current package aims to cut Greek debt, currently estimated at 175 percent of gross domestic product, down to 124 percent by 2020. Mr. Schäuble acknowledged for the first time that the bailout would cut into Germany’s federal budget, but warned that failure to approve it could be disastrous for the nation and the rest of Europe.

Already the 17 European Union nations using the common currency are in recession. Unemployment in the bloc has also climbed to 11.7 percent, its highest rate since 1995, according to official European figures released Friday.

While the German economy remained largely immune to the suffering on its borders, the most recent official figures show growth slowing and investor confidence dipping.

Against this backdrop, Ms. Merkel has been able to quell calls from within own her center-right coalition for Greece to leave the euro zone, by insisting that the consequences of such a step would be far more dire for Germany than providing more financial assistance.

Ms. Merkel’s government rests on an alliance of her own conservative Christian Democratic Union with the sister party for the state of Bavaria, the Christian Social Union, and the liberal pro-business Free Democrats. It was not immediately clear if a fully majority of her government had supported the bailout measure.

The leading opposition parties, the Social Democrats and the Greens, criticized Ms. Merkel’s government for taking too long to agree to help Greece and for failing to level with German taxpayers about the true cost of the effort, but nevertheless backed the package.

“We will vote for it because we don’t want our reliability as European partners left in any doubt,” Ms. Merkel’s main challenger for the election, Peer Steinbrück of the Social Democrats, told German public television ahead of Friday’s vote. “It has nothing to do with the government.”

Article source: http://www.nytimes.com/2012/12/01/business/global/german-finance-minister-urges-lawmakers-to-approve-greek-debt-deal.html?partner=rss&emc=rss

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