Rush for safe havens as euro fears rise

US benchmark borrowing costs plunged to levels last seen in 1946 and those for Germany and the UK hit all-time lows as investors took fright at what they see as a disjointed policy response to the debt crisis in Spain and Italy. In a striking sign of the flight to haven assets, German two-year bond yields fell to zero for the first time, below the equivalent rate for Japan, meaning investors are willing to lend to Berlin for no return. US 10-year yields fell as low as 1.62 per cent, a level last reached in March 1946, according to Global Financial Data. German benchmark yields reached 1.26 per cent while Denmark's came close to breaching the 1 per cent level, hitting 1.09 per cent. UK rates fell to 1.64 per cent, the lowest since records for benchmark borrowing costs began in 1703. "They are extreme levels because we are in an extremely perilous situation. People just want to put their money somewhere where they think they will get it back. People may soon be paying Germany or the US to look after their money," said Gary Jenkins, head of Swordfish Research, an independent credit analysis company. The flight to safety came as the situation in Italy and Spain, the eurozone's third- and fourth-largest economies, deteriorated further. Italy held a disappointing debt auction and saw its benchmark borrowing costs rise above 6 per cent for the first time since January. The euro fell 0.8 per cent against the dollar to under $1.24 for the first time in two years. Confusion over how the Spanish government's rescue of Bankia, the stricken lender, will be structured led the premium Madrid pays over Berlin to borrow to hit fresh highs for the euro era at 540 basis points. Analysts said the elevated level meant that clearing houses could soon raise the amount of margin, or collateral, that traders need to post against Spanish debt, a move that led to the escalation of crises in Portugal and Ireland. The European Central Bank has made clear to Spain that it cannot use the bank's liquidity operations as part of a recapitalision of Bankia. However, the central bank said on Wednesday it had not been officially consulted on the plans. Equity markets globally fell on the eurozone fears with bourses in Paris, Frankfurt and London all dropping 2 per cent. But Nick Gartside, international chief investment officer for JPMorgan Asset Management, noted that while US bond yields had halved since April last year the S&P 500 equity market was at the same level. "One of those two markets is mispriced. Core government bonds are an efficient market and they are ahead," he added. Investors said borrowing costs for the US, UK and Germany were likely to continue to fall amid a worsening economic backdrop and the threat of more central bank intervention. Wealth managers have been moving client assets into currency havens in recent weeks, with the Swiss franc and the US dollar among the biggest beneficiaries "Risk aversion, a rapidly slowing global economy and unusually low policy rates will pin these short and intermediate maturity bonds at unprecedented low levels for quite a while," said Mohamed El-Erian, chief executive of Pimco, one of the world's largest bond investors. Mr Gartside said he could easily see German rates going below 1 per cent, following a path that only Japan and Switzerland have taken among major economies, while the US and UK could dip under 1.5 per cent. Markets are increasingly resigned to more turmoil until policy makers take more radical action. The two most popular plans of action for investors are for the ECB to buy Spanish and Italian bonds in unlimited size or for eurozone countries to agree on a fiscal union involving the pooling of debt. "You have to throw everything at it. Spain is just too big for half measures. The next intervention has to be not just massive in size but it has to show a total commitment," said Mr Jenkins. He recommends that the ECB set targets either for the premium Spain and Italy pay to borrow over Germany or for their yields.

Euro break-up 'could wipe 50pc off London house prices'

Property prices in the capital’s most sought-after postcodes have been driven up by investors moving funds out of assets held in euros to buy into what is seen as a “safe haven” alternative. Foreign money seeking a refuge from the wider economic turmoil accounted for 60pc of acquisitions of prime central London property between 2007 and 2011, according to a report by Fathom Consulting for Development Securities. If the shared currency broke up completely, London property would initially be boosted by the continued flight towards a safe haven, the report predicts. But, once the break-up had taken place, demand for these assets as an insurance against this event would start to ebb. “Although fears about a messy end to the euro debt crisis may account for much of the gain in prime central London (PCL) prices that has taken place over the past two years, we find that a break-up of the single currency area is also the single greatest threat to PCL,” said researchers.

Leveson - The Hunt is on

Up until now, Lord Justice Leveson has only held the future of the British press in his hands. Today, despite all his protests to the contrary, his inquiry may determine the fate of the culture secretary, Jeremy Hunt. The judge insists that it is not his job to put any minister in the dock and that he certainly will not be giving his verdict on whether there have been any breaches of the ministerial code. Nevertheless, the prime minister has made it clear that he sees today's hearing as the moment when Mr Hunt must defend his much criticised handling of News Corp's £8bn bid for total control of BSkyB. The culture secretary has, I'm told, submitted more than 160 pages of internal memos, emails and text message transcripts to the Leveson Inquiry. I understand that he will insist that, despite having originally been a cheerleader not just for Rupert Murdoch but also for his bid, he acted in ways which frustrated it rather than accelerated it once he was made the minister in charge. He will claim that he referred it to the broadcasting regulator Ofcom when told by officials that it wasn't necessary to do so. He is likely to face questions about why he did not follow Ofcom's advice to refer the bid to the Competition Commission. He is likely to reply that he was given legal advice that he had first to consider News Corps offer to spin off Sky News so as to deal with so-called plurality issues. The culture secretary is likely to be asked how he can claim to have been unaware of the scale or nature of the contact between News Corp and his political adviser, Adam Smith - who resigned once his flood of emails and texts were revealed. I understand that Jeremy Hunt originally believed that his adviser had done nothing wrong and told friends he would resign himself rather than letting a junior official resign for him. The prime minister shows no sign yet of wanting to force him out - believing that however bad things may now look, Mr Hunt didn't actually do anything wrong or anything which helped the Murdochs and their bid. Labour argue that - even before today's hearing - it is evident the culture secretary should go as he is in breach of the ministerial code for failing to supervise his adviser, and for misleading the House of Commons when he wrongly asserted he had published all contacts between his department and News Corp - as well as claiming never to have intervened to affect the outcome of the bid.

Coulson on Sheridan perjury charge

David Cameron's former communications chief Andy Coulson has been charged over allegations he committed perjury during the trial of former MSP Tommy Sheridan. The 44-year-old was detained for questioning at Govan police station in Glasgow by officers from Strathclyde Police. More than six hours later, the force confirmed he had been arrested and charged with perjury. A report will be sent to the procurator fiscal which will decide if Coulson is to face court proceedings. The former News of the World editor gave evidence at Sheridan's perjury trial at the High Court in Glasgow in December 2010, while he was employed by Downing Street as director of communications. At the trial, he claimed he had no knowledge of illegal activities by reporters during the time that he was editor of the now-defunct newspaper. He said: "I don't accept there was a culture of phone hacking at the News of the World." Sheridan was ultimately jailed for three years in January last year after being found guilty of perjury during his 2006 defamation action against the News of the World. He had been awarded £200,000 in damages after winning the civil case but a jury found him guilty of lying about the tabloid's claims that he was an adulterer who visited a swingers' club. The former Scottish Socialist Party (SSP) leader was convicted of five out of six allegations in a single charge of perjury relating to his evidence during the civil action at the Court of Session in Edinburgh. Sheridan was released from jail in January this year after serving one year of his sentence and vowed to continue the fight to clear his name. Coulson was arrested last year in relation to Scotland Yard's long-running investigation into phone hacking at the newspaper. He was held in July on suspicion of conspiring to intercept communications and corruption, and had his bail extended earlier this month. Coulson resigned as editor in 2007 after the paper's former royal editor Clive Goodman and private investigator Glenn Mulcaire were jailed for phone hacking. In May that year, he was unveiled as director of communications and planning with the Conservative Party. He quit his role as Downing Street communications chief in January last year after admitting the News of the World phone-hacking row was making his job impossible.

Julian Assange's fight to evade extradition to Sweden appears doomed despite stay of execution

Julian Assange's fight to evade extradition to Sweden appeared doomed today though he was given a stay of execution by the highest court in the land. His celebrity-endorsed legal battle trundled on without him as the self-proclaimed champion of truth and transparency remained stuck in London's notorious traffic, undoubtedly disappointing his legion of fans. While vastly diminished in number from the early days of the furore surrounding the WikiLeaks founder, they were as vociferous as ever, penned in outside the Supreme Court yesterday, carrying megaphones, guitars and banners proclaiming “Free Assange” and “God Save Julian”. Mr Assange, 40, had argued that an European Extradition Warrant from Sweden to face allegations of rape and sexual molestation was invalid as the public prosecutor who issued it did not constitute a “judicial authority”. He denies the accusations, insisting they are “politically motivated”. His case was partially trumped by the French translation of the words judicial authority, which judges at the Supreme Court said carried a far wider meaning that simply a judge or court. By a majority of five to two they decided the practice by many European countries to have public prosecutors issue such warrants countered the interpretation in United Kingdom and his appeal failed. Nevertheless they granted his lawyers 14 days to apply to have the case re-opened after they insisted that they had not been given an opportunity to argue on the very legal points on which the judges had based their decision.

FORMER Downing Street communications chief Andy Coulson has been arrested on suspicion of committing perjury during the Tommy Sheridan trial

Andy Coulson has been arrested on suspicion of perjury. Picture: Getty

FORMER Downing Street communications chief Andy Coulson has been arrested on suspicion of committing perjury during the Tommy Sheridan trial at the High Court in Glasgow, the Crown Office said today.

 

The 44-year-old was detained in London this morning by officers from Strathclyde Police.

 

Coulson gave evidence in Mr Sheridan’s perjury trial at the High Court in Glasgow in December 2010.

 

He was also arrested last year in relation to Scotland Yard’s long-running investigation into phone-hacking at the News of the World.

 

He was held in July on suspicion of conspiring to intercept communications and corruption and had his bail extended earlier this month.

 

A Strathclyde Police spokesman said: “Officers from Strathclyde Police Operation Rubicon detained a 44-year-old man in London this morning under section 14 of the Criminal Procedures Scotland Act on suspicion of committing perjury before the High Court in Glasgow.

 

“It would be inappropriate to comment any further at this time.”

 

It is understood Coulson is on his way to Glasgow.

 

Operation Rubicon detectives have been looking at whether certain witnesses lied to the court during Sheridan’s trial as part of a “full” investigation into phone hacking in Scotland.

 

Mr Coulson, then employed by Downing Street as director of communications, told the trial in December 2010 he had no knowledge of illegal activities by reporters while he was editor of the News of the World.

 

He also claimed: “I don’t accept there was a culture of phone hacking at the News of the World.”

Former News of the World Editor arrested in dawn raid on his London home

 

PR man: Andy Coulson was held today by Strathclyde Police,David Cameron’s former No 10 spin doctor Andy Coulson was arrested today on suspicion of committing perjury.

Mr Coulson, 44, was detained at his home in Dulwich at 6.30am by seven officers from Strathclyde police and taken to Glasgow where he will be questioned.

The case centres on claims that he misled a court about his knowledge of phone-hacking during a criminal trial in Glasgow. The former News of the World editor, hired by the Prime Minister as his director of communications, told a court in 2010 that he had no knowledge of illegal voicemail interception when in charge of the tabloid.

During the perjury trial of former Scottish MP Tommy Sheridan, Mr Coulson said: “I don’t accept there was a culture of phone hacking at the News of the World.” He also denied knowing that the

 newspaper paid corrupt police officers for tip-offs. Mr Cameron has faced questions over his decision to bring Mr Coulson into the heart of government. Mr Coulson has already been arrested by the Met on suspicion of phone-hacking and bribing public officials.

The perjury charge, which carries a maximum prison sentence of seven years, is potentially the most serious facing the former Conservative Party spokesman.

One Downing Street source said the arrest came as a “complete surprise”.

Mr Coulson was a major witness in a trial involving Sheridan who was accused of lying in court during a libel victory against the NoW.

Coulson was editor when it published a story that labelled Sheridan an adulterer who visited swingers’ clubs. He was called as a witness and told the court that he had no knowledge of illegal activities by reporters.

Sheridan was jailed for three years last year after being found guilty of perjury during his 2006 defamation action against the NoW. He had successfully sued the newspaper over its claims.

Strathclyde police announced its probe into Mr Coulson last July but it was thought to be taking a back seat as five major Scotland Yard inquiries into the Murdoch media empire rumbled on.

However, the Standard can disclose that officers from Scotland recently visited London to interview several former NoW staff about their old boss.

Under Scottish law a suspect is detained on suspicion of an offence unlike in England and Wales where a suspect is arrested. Mr Coulson has not been charged.

FSA fines hedge fund chief £3m who hid losses

Alberto Micalizzi, chief executive of London-based Dynamic Decisions Capital Management (DDCM), was yesterday handed the fine by the Financial Services Authority. The regulator accused Mr Micalizzi of lying repeatedly to investors after DDCM lost more than $390m (£223m), or 85pc of its value, in the months following the collapse of Lehman Brothers in September 2008. Instead of telling investors of the losses, Mr Micalizzi – a former professor finance at Milan’s prestigious Bocconi University, the alma mater of Italian prime minister Mario Monti, who also once taught economics there – is alleged to have created artificial profits by recognising gains on a bond that was bought for substantially less than it was worth. As the scale of the losses grew, Mr Micalizzi, working in concert with two companies only identified as 'Company A’ and 'Company B’, bought and sold back parts of the bond to artificially offset the collapse in the fund’s value. In total, $418m of profits were created through a series of transactions with Company A, which was set up in 2007 and was described as having “no identifiable track record in the financial services or commodity trading industries”.

Worth nearly £4m: David Cameron is one of 18 millionaires in the Cabinet

PA

THE combined wealth of the Cabinet is more than £70million, with Prime Minister David Cameron worth almost £4million, it was revealed yesterday.

The new Cabinet “rich list” shows more than two thirds of the Cabinet – 18 out of 29 ministers – are millionaires.

Many of them will directly benefit from George Osborne’s decision to slash the 50p top rate of tax to 45p in the Budget.

The PM’s property and salary make him worth at least £3.8million, according to a report by intelligence firm Wealth-X.

It estimates Mr Cameron has liquid assets of £190,000 from current and previous salaries, while his house in North Kensington is valued at £2.7million, and his Oxfordshire home at £960,000.

The report says his combined wealth with wife Samantha, the daughter of landowner Sir Reginald Sheffield, could rise to £25.3million with inheritances.

Chancellor Mr Osborne is said to be worth £4.5million thanks to property and his trust fund from the family wallpaper firm Osborne & Little.

The richest Cabinet member is said to be House of Lords leader Lord Strathcylde, who is worth an estimated £9.5million due to inheritance and his stake in the family’s estate management company.

Defence Secretary Philip Hammond is reported to have an £8.2million fortune from his stake in the nursing home company Castlemead.

Culture Secretary Jeremy Hunt is thought to be worth £4.8million from his Hotcourses business.

Foreign Secretary William Hague has made an estimated £4.8million from public speaking, consultancy and writing, the report says.

Environment Secretary Caroline Spelman is worth an estimated £4.5million.

The figures primarily reflect the value of properties owned by Mrs Spelman and her husband Mark, a senior partner at consulting firm Accenture.

Dominic Grieve, the Attorney General, has £2.9million from private investments “funded by salaries as barrister and QC,” the report says.

Other Cabinet millionaires include International Development Secretary Andrew Mitchell, thought to be worth £2.2million. The former investment banker owns a number of homes.

Minister Francis Maude has built up an estimated £3.2million pot from his former work as the managing director at Morgan Stanley and other directorships.

Deputy Prime Minister Nick Clegg is said to be worth £2million.

Home Secretary Theresa May’s £1.7million wealth is attributed to her owning two homes and her former career as a financial consultant.

Justice Secretary Ken Clarke is said to be worth £1.6million thanks to his political career and various directorships including a stint as deputy chairman of British American Tobacco. And Wealth-X says David Willetts’ wealth of £1.6million may have been boosted by artist wife Sarah Butterfield’s earnings.

The richest person in the Commons, according to the report, is Tory MP Zac Goldsmith, who inherited £284million from his financier father.

And the richest Lib Dem is said to be John Hemming, whose stake in the software company JHC is estimated at £10million.

Last week, the Mirror revealed multi-millionaires Michael Spencer and Sir Anthony Bamford had given thousands of pounds to the Conservatives within hours of Mr Osborne’s tax decision.

Labour MP Gareth Thomas, the Shadow Cabinet Office Minister, said last night: “No wonder David Cameron and George Osborne are so out of touch with just how tough the rest of the country is finding the rising cost of living.

“It also explains why the Cabinet thought the Budget’s tax-cut for millionaires was a good idea even as taxes went up for everyone else.”

A Downing Street spokesman said last night it was “complete nonsense” to suggest the Camerons could be worth £25million.

“They own two houses – in Witney and in London – and that’s it,” insisted the spokesman.

Spanish bank crisis hits US markets

Another flare-up in Europe's debt crisis, this time involving a Spanish bank, has pegged back US markets. Stock indexes were fluctuating between small gains and losses until news broke that troubled Spanish lender Bankia had asked the government for 23.8 billion dollars (£15.2 billion) in support. Earlier in the day, Standard & Poor's cut the bank's credit rating to junk status because of deepening uncertainty over its restructuring plans. The Dow Jones industrial average dropped as much as 108 points before closing at 12,454.83, down 74.92 points. Concerns about Europe have sent the Dow on a steady slide this month, erasing most of its gains from the first quarter. It finished the week slightly higher, its first weekly gain for May. The declines were broad. Eight of the 10 industry groups in the Standard & Poor's 500 index fell. The only sectors that rose were utilities and telecommunications, which investors tend to buy when they are nervous about the market. Trading volume was light ahead of the Memorial Day holiday. Facebook, marking its one-week anniversary as a public company, fell 3.4 % to 31.91 dollars (£20.34). Talbots, the women's clothing chain, plunged 41% to 1.51 dollars (96p) after announcing that a deadline expired without a deal to be bought by Sycamore Partners. In addition to the new worries about Spain, the head of Germany's central bank, which has been sceptical of bailing out Greece and other weak European countries, reinforced the point when he said it was an "illusion" to think allowing eurozone countries to borrow money jointly would solve the crisis. The Portuguese parliament endorsed a budget plan that would set legal limits on government spending. In Asia, media reports suggested that some of China's biggest banks will miss their annual lending targets for the first time in seven years, and Taiwan lowered its economic growth forecast for the year. Caterpillar, which relies heavily on demand from China, fell 1%. In other trading, the Standard & Poor's 500 index fell 2.86 points to 1,317.82. The Nasdaq composite fell 1.85 points to 2,837.53. Stock indexes in France, Britain, Germany and Spain rose, while Greece's ATHEX plunged 3.5%. Borrowing rates edged higher for Spain and Italy.

EU cookie implementation deadline is today

A year after its implementation in May 2011, the European Commission's Privacy and Electronic Communications Directive will finally start to be enforced as of tonight, meaning visitors to websites are required to be informed of, and given choice over, the site's intentions to store their data in cookies. Though there has been fierce opposition to the directive, some companies, such as the BBC, Channel 4 and the Guardian, have now begun implementing measures that range from multiple user choices in the level of information shared with the site, to a single message informing the user that, by continuing to browse, they have automatically agreed to have their information stored. Further reading EU cookie law is a 'restraint to trade online', says online retailer Most UK organisations not compliant with EU cookie law New EU cookie law set to come into force But the majority of companies, it is widely reported, will miss tonight's deadline. While the Information Commissioner's Office (ICO) still disagrees that a "one size fits all" policy of standardisation is not the way forward when enforcing cookie legislation, some believe such a framework is the only way forward. Society for engineering and technology professionals, the Institution of Engineering & Technology said, "The implementation of this directive is likely to prove very variable until the introduction of a set of standards on the best way to provide a balance between easy browsing and personal privacy. "We had hoped that more progress would have been made on achieving this in the 12 month implementation delay that the Information Commissioner, Christopher Graham, gave British organisations."

Google plans to warn more than half a million users of a computer infection that may knock their computers off the Internet this summer.

Unknown to most of them, their problem began when international hackers ran an online advertising scam to take control of infected computers around the world. In a highly unusual response, the FBI set up a safety net months ago using government computers to prevent Internet disruptions for those infected users. But that system will be shut down July 9 -- killing connections for those people.

The FBI has run an impressive campaign for months, encouraging people to visit a website that will inform them whether they're infected and explain how to fix the problem. After July 9, infected users won't be able to connect to the Internet.

LONG ARM OF SCOFFLAW

An online ad scam is having some unintended ramifications: The fix may prevent as many as 360,000 from getting online. Several sites will show if you're infected:

DNS Changer Working Group: can discern whether you’re infected and explain how to fix the problem.

DNSChanger Eye Chart: if the site goes red, you’re in harm’s way. Green means clean.

The FBI website: type in the IP address of your DNS server to find out if it is infected.

Read more on how to stay safe

On Tuesday, May 22, Google announced it would throw its weight into the awareness campaign, rolling out alerts to users via a special message that will appear at the top of the Google search results page for users with affected computers, CNET reported. 

“We believe directly messaging affected users on a trusted site and in their preferred language will produce the best possible results,” wrote Google security engineer Damian Menscher in a post on the company’s security blog.

“If more devices are cleaned and steps are taken to better secure the machines against further abuse, the notification effort will be well worth it,” he wrote.

The challenge, and the reason for the awareness campaigns: Most victims don't even know their computers have been infected, although the malicious software probably has slowed their web surfing and disabled their antivirus software, making their machines more vulnerable to other problems.

Last November, when the FBI and other authorities were preparing to take down a hacker ring that had been running an Internet ad scam on a massive network of infected computers, the agency realized this may become an issue.

"We started to realize that we might have a little bit of a problem on our hands because ... if we just pulled the plug on their criminal infrastructure and threw everybody in jail, the victims of this were going to be without Internet service," said Tom Grasso, an FBI supervisory special agent. "The average user would open up Internet Explorer and get `page not found' and think the Internet is broken."

On the night of the arrests, the agency brought in Paul Vixie, chairman and founder of Internet Systems Consortium, to install two Internet servers to take the place of the truckload of impounded rogue servers that infected computers were using. Federal officials planned to keep their servers online until March, giving everyone opportunity to clean their computers.

But it wasn't enough time.

A federal judge in New York extended the deadline until July.

Now, said Grasso, "the full court press is on to get people to address this problem." And it's up to computer users to check their PCs.

'We started to realize that we might have a little bit of a problem on our hands...'

- Tom Grasso, an FBI supervisory special agent

This is what happened:

Hackers infected a network of probably more than 570,000 computers worldwide. They took advantage of vulnerabilities in the Microsoft Windows operating system to install malicious software on the victim computers. This turned off antivirus updates and changed the way the computers reconcile website addresses behind the scenes on the Internet's domain name system.

The DNS system is a network of servers that translates a web address -- such as http://www.foxnews.com -- into the numerical addresses that computers use. Victim computers were reprogrammed to use rogue DNS servers owned by the attackers. This allowed the attackers to redirect computers to fraudulent versions of any website.

The hackers earned profits from advertisements that appeared on websites that victims were tricked into visiting. The scam netted the hackers at least $14 million, according to the FBI. It also made thousands of computers reliant on the rogue servers for their Internet browsing.

When the FBI and others arrested six Estonians last November, the agency replaced the rogue servers with Vixie's clean ones. Installing and running the two substitute servers for eight months is costing the federal government about $87,000.

The number of victims is hard to pinpoint, but the FBI believes that on the day of the arrests, at least 568,000 unique Internet addresses were using the rogue servers. Five months later, FBI estimates that the number is down to at least 360,000. The U.S. has the most, about 85,000, federal authorities said. Other countries with more than 20,000 each include Italy, India, England and Germany. Smaller numbers are online in Spain, France, Canada, China and Mexico.

Vixie said most of the victims are probably individual home users, rather than corporations that have technology staffs who routinely check the computers.

FBI officials said they organized an unusual system to avoid any appearance of government intrusion into the Internet or private computers. And while this is the first time the FBI used it, it won't be the last.

"This is the future of what we will be doing," said Eric Strom, a unit chief in the FBI's Cyber Division. "Until there is a change in legal system, both inside and outside the United States, to get up to speed with the cyber problem, we will have to go down these paths, trail-blazing if you will, on these types of investigations."

Now, he said, every time the agency gets near the end of a cyber case, "we get to the point where we say, how are we going to do this, how are we going to clean the system" without creating a bigger mess than before

Under European Union law, Greece cannot leave the euro.

That is the theory. But in practice, any protection the law offers investors could be difficult to enforce, according to lawyers trying to protect their corporate clients against the upheaval sure to follow if Greece defaults on its debts and adopts a new currency. So their advice is blunt: Remove cash and other liquid assets from Greece and prepare to take a short-term hit on any other investments. “My personal view is that it is irrational for anyone, whether a corporation or an individual, to be leaving money in Greek financial institutions, so long as there is a credible prospect of a euro zone exit,” said Ian Clark, a partner in London for White & Case, a global law firm that has a team of 10 attorneys focusing on the issue. Several multinational corporations have already taken the same view. Vodafone, the mobile phone operator, and GlaxoSmithKline, the pharmaceuticals firm, say they are “sweeping” money out of Greece and into British banks each evening. This applies not just to Greece but to most other euro nations, although Glaxo says it still keeps money in Germany. Corporate attorneys say looking to E.U. law provides only approximate guidance on whether Greece could stop using the euro while remaining in the Union. Although the E.U. prides itself on basing decisions on strict interpretation of the legal texts in its governing treaty and other legislation, the rules on euro membership have proved flexible. For example, while all 27 E.U. nations are supposedly obliged to join the single currency, once they meet certain economic criteria, Britain and Denmark were able to negotiate the option of retaining their own currencies. Sweden is one of the nations technically obliged to join the euro, but since a national referendum opposed the idea in 2003, no one has pressed the country to do so. Similarly, while leaving the euro might, legally, mean quitting the union itself, most experts see this as a technicality that can be circumvented as well. “The treaty doesn’t cover the question of what would happen if a country were to leave the euro and return to its previous currency,” said Stephen Weatherill, Jacques Delors Professor of European Law at Oxford University. “In the absence of any provision, there is plenty of space for European governments to concoct a solution, adopt it and for it to be legally enforceable,” he added. “In general, you can do anything you like, so long as you do not breach pre-existing international obligations.” The mechanics of leaving the euro would surely lead Greece to impose so-called capital controls to stem the flight of money from a currency destined to be devalued. Again, such controls look impossible under E.U. law. But Mr. Weatherill thinks that a loophole allowing for the protection of public security could be invoked. Mr. Clark, of White & Case, a global law firm, points to a clause in Article 65 of the treaty that says that the pledge on free movement should not prevent countries from taking measures “which are justified on grounds of public policy or public security.” Mr. Clark and his team serve clients that include financial institutions like BNP Paribas and hedge funds. In February, Andrew Witty, the chief executive of GlaxoSmithKline, said: “We don’t leave any cash in most European countries” except Germany. Tens of millions of pounds flow into accounts in Britain every day, he said. But, apart from trying to ensure that debts are paid promptly and therefore in euros, legal options for companies are limited. Contracts covered by Greek law, particularly for services delivered in Greece, provide little protection against the currency’s being redenominated and devalued — a development regarded as unlikely until recently. “Greece would, through its laws, be able to amend contracts governed by Greek law or to be performed within the territory of Greece,” Mr. Clark said. “It is the governing law and the place of performance of the contract that is most important.” International contracts, which might be covered by English, German or Swiss law, would be more likely to be honored in the designated currency, though in some cases the wording of the legal document may be vague. And even if the law is on their side, companies would find that to extract payment from a Greek company, they would need a judge in Greece to enforce a ruling from a foreign court. “Enforcement of foreign judgments is harder or easier from country to country within the E.U.,” Mr. Clark said. “Greece has always had a reputation of being a difficult place in which to enforce judgments, from a practical perspective.” That means that international trading partners are likely to share in any losses that accompany a Greek exit from the euro. “International businesses that have long-term interests in Greece are going to have to be pragmatic and probably, in the short term, give some dispensation to their Greek counterparties, rather than trying to enforce the terms of contracts that cannot be performed,” Mr. Clark said.

Former Lloyds worker Jessica Harper in £2.5m fraud charge

A former head of security at Lloyds Bank has been charged in connection with an alleged £2.5m fraud. Jessica Harper, 50, of Croydon, south London, is accused of submitting false invoices to claim payments, between September 2008 and December 2011. At the time she was working as head of fraud and security for digital banking and allegedly made false claims totalling £2,463,750. Ms Harper will appear at Westminster Magistrates' Court on 31 May. She has been charged with one count of fraud by abuse of position. The bank, which is now 39.7% state-owned after being bailed out by the government during the financial crisis, refused to comment on the charging of Ms Harper. A Metropolitan Police spokesman said she was arrested on 21 December 2011 by officers from its fraud squad. Andrew Penhale, from the Crown Prosecution Service's Central Fraud Group, said: "The charge relates to an allegation that between 1 September 2008 and 21 December 2011, Jessica Harper dishonestly and with the intention of making a gain for herself, abused her position as an employee of Lloyds Banking Group, in which she was expected to safeguard the financial interests of Lloyds Banking Group, by submitting false invoices to claim payments totalling £2,463,750.88, to which she was not entitled. "This decision to prosecute was taken in accordance with the Code for Crown Prosecutors. "We have determined that there is a realistic prospect of conviction and a prosecution is in the public interest."

Bankia shares are suspended in Madrid

Trading in shares in the Spanish lender Bankia have been suspended in Madrid. The market regulator CNMV said it was "due to circumstances that may affect the normal share trading". Bankia is reported to be due to ask the government for a bailout of more than 15bn euros ($19bn; £12bn) after a board meeting later on Friday. Bankia, which is Spain's fourth-largest bank, was part-nationalised two weeks ago because of its problems with bad property debt. Any extra government money would be on top of the 4.5bn euros in state loans that the government had to convert into shares in the group in the part-nationalisation process. Shares in Bankia's parent company Banco Financiero y de Ahorros (BFA) have also been suspended. Bankia was created in 2010 from the merger of seven struggling regional savings banks. It holds 32bn euros in distressed property assets.

Facebook’s Wall Street investment banks warned top clients of new doubts about the social network’s financial prospects

Facebook’s Wall Street investment banks warned top clients of new doubts about the social network’s financial prospects just days before the company’s IPO, according to a series of reports that emerged Tuesday. After receiving briefings from Facebook executives, analysts at the banks lowered their financial forecasts for big institutional clients, some of whom scaled back plans to buy Facebook stock, even as the banks raised the IPO price and number of shares amid a frenzy of hype.

Although Facebook had publicly disclosed mobile advertising challenges, the new revelations raised questions about whether Facebook’s underwriters selectively disclosed information that gave favored clients an unfair advantage over other investors. The revelations, which came as Facebook shares plunged nearly 9% Tuesday, drew immediate scrutiny from federal regulators as well as a subpoena from Massachusetts officials.  Meanwhile, the Nasdaq stock exchange faced a growing chorus of anger — and a class action lawsuit — over its botched handling of the IPO, which has already become the worst-performing three-day start for an offering over $1 billion in the last five years.

 

Facebook’s highly-vaunted IPO — which was supposed to be a shining moment for the social network, as well as its lead banker Morgan Stanley and the Nasdaq exchange — has morphed into a debacle that’s reinforced some of the worst stereotypes about Wall Street: that corporate executives and their bankers engineer IPOs to maximize profits at the public’s expense; that Wall Street’s own systems have become too complex for its personnel to handle; and that the entire game is a hype-fueled casino, rigged for the house with a sucker played by the average investor.

Three killed in northern Italy earthquake

Three people have been killed in a 5.9-magnitude earthquake that struck northern Italy near Bologna, according to reports. The quake that struck at just after 4am local time was centred 21.75 miles north-northwest of Bologna at a relatively shallow depth of six miles, the US Geological Survey said. Italian news agency Ansa, citing emergency services, said two people were killed in Sant'Agostino di Ferrara when a ceramics factory collapsed. Another person was killed in Ponte Rodoni do Bondeno. In late January, A 5.4-magnitude quake shook northern Italy. Some office buildings in Milan were evacuated as a precaution and there were scattered reports of falling masonry and cracks in buildings. The tremor was one of the strongest to shake the region, seismologists said. Initial television footage indicated that older buildings had suffered damage. Roofs collapsed, church towers showed cracks and the bricks of some stone walls tumbled into the street during the quake. As dawn broke over the region, residents milled about the streets inspecting the damage. Italy's Sky TG24 showed images of the collapsed ceramics factory in Sant'Agostino di Ferrara where the two workers were reportedly killed. The structure, which appeared to be a hangar of sorts, had twisted metal supports jutting out at odd angles amid the mangled collapsed roof. The quake “was a strong one, and it lasted quite a long time”, said Emilio Bianco, receptionist at Modena's Canalgrande hotel, housed in an ornate 18th century palazzo. The hotel suffered no damage and Modena itself was spared, but guests spilled into the streets as soon as the quake hit, he said. Many people were still awake in the town since it was a “white night”, with shops and restaurants open all night. Museums were supposed to have remained open as well but closed following the bombing of a school in southern Italy that killed one person. The quake epicentre was between the towns of Finale Emilia, San Felice sul Panaro and Sermide, but was felt as far away as Tuscany and northern Alto Adige. The initial quake was followed about an hour later by a 5.1-magnitude aftershock, USGS said. And it was preceded by a 4.1-magnitude tremor. In late January, a 5.4-magnitude quake shook northern Italy. Some office buildings in Milan were evacuated as a precaution and there were scattered reports of falling masonry and cracks in buildings. In 2009, a devastating tremor killed more than 300 people in the central city of L'Aquila.

JPMorgan's Trading Loss Is Said to Rise at Least 50%

The trading losses suffered by JPMorgan Chase have surged in recent days, surpassing the bank’s initial $2 billion estimate by at least $1 billion, according to people with knowledge of the losses. When Jamie Dimon, JPMorgan’s chief executive, announced the losses last Thursday, he indicated they could double within the next few quarters. But that process has been compressed into four trading days as hedge funds and other investors take advantage of JPMorgan’s distress, fueling faster deterioration in the underlying credit market positions held by the bank. A spokeswoman for the bank declined to comment, although Mr. Dimon has said the total paper trading losses will be volatile depending on day-to-day market fluctuations. The Federal Reserve is examining the scope of the growing losses and the original bet, along with whether JPMorgan’s chief investment office took risks that were inappropriate for a federally insured depository institution, according to several people with knowledge of the examination. They spoke on the condition of anonymity because the investigation is still under way. The overall health of the bank remains strong, even with the additional losses, and JPMorgan has been able to increase its stock dividend faster than its rivals because of stronger earnings and a more solid capital buffer. Still, the huge trading losses rocked Wall Street and reignited the debate over how tightly giant financial institutions should be regulated. Bank analysts say that while the bank’s stability is not threatened, if the losses continue to mount, the outlook for the bank’s dividend will grow uncertain. The bank’s leadership has discussed the impact of the losses on future earnings, although a dividend cut remains highly unlikely for now. In March, the company raised the quarterly dividend by 5 cents, to 30 cents, which will cost the bank about $190 million more this quarter. A spokeswoman for the bank said a dividend cut has not been discussed internally. At the bank’s annual meeting in Tampa, Fla., on Tuesday, Mr. Dimon did not definitively rule out cutting the dividend, although he said that he “hoped” it would not be cut. John Lackey, a shareholder from Richmond, Va., who attended the meeting precisely to ask about the dividend, was not reassured. “That wasn’t a very clear answer,” he said of Mr. Dimon’s response. “I expect that shareholders are going to suffer because of this.” Analysts expect the bank to earn $4 billion in the second quarter, factoring in the original estimated loss of $2 billion. Even if the additional trading losses were to double, the bank could still earn a profit of $2 billion. And many analysts and investors remain optimistic about the bank’s long-term prospects. Glenn Schorr, a widely followed analyst with Nomura, reiterated on Wednesday his buy rating on JPMorgan shares, which are down more than 10 percent since the trading loss became public last week. What’s more, the chief investment office earned more than $5 billion in the last three years, which leaves it ahead over all, even given the added red ink. But the underlying problem is that while these sharp swings are expected at a big hedge fund, they should not be occurring at a bank whose deposits are government-backed and which has access to ultralow cost capital from the Federal Reserve, experts said. “JPMorgan Chase has a big hedge fund inside a commercial bank,” said Mark Williams, a professor of finance at Boston University, who also served as a Federal Reserve bank examiner. “They should be taking in deposits and making loans, not taking large speculative bets.” Not long after Mr. Dimon’s announcement of a dividend increase in March, the notorious bet by JPMorgan’s chief investment office began to fall apart. Traders at the unit’s London desk and elsewhere are now frantically trying to defuse the huge bet that was built up over years, but started generating erratic returns in late March. After a brief pause, the losses began to mount again in late April, prompting Mr. Dimon’s announcement on May 10. Beginning on Friday, the same trends that had been causing the losses for six weeks accelerated, since traders on the opposite side of the bet knew the bank was under pressure to unwind the losing trade and could not double down in any way. Another issue is that the trader who executed the complex wager, Bruno Iksil, is no longer on the trading desk. Nicknamed the London Whale, Mr. Iksil had a firm grasp on the trade — knowledge that is hard to replace, even though his anticipated departure is seen as sign of the bank’s taking responsibility for the debacle. “They were caught short,” said one experienced credit trader who spoke on the condition of anonymity because the situation is still fluid. The market player, who does not stand to gain from JPMorgan’s losses and is not involved in the trade, added, “this is a very hard trade to get out of because it’s so big.” He estimated that the initial loss of just over $2 billion was caused by a move of a quarter percentage point, or 25 basis points, on a portfolio with a notional value of $150 billion to $200 billion — in other words, the total value of the contracts traded, not JPMorgan’s exposure. In the four trading days since Mr. Dimon’s disclosure, the market has moved at least 15 to 20 basis points more against JPMorgan, he said. The overall losses are not directly proportional to the move in basis points because of the complexity of the trade. Many of the positions are highly illiquid, making them difficult to value for regulators and the bank itself. In its simplest form, traders said, the complex position assembled by the bank included a bullish bet on an index of investment-grade corporate debt, later paired with a bearish bet on high-yield securities, achieved by selling insurance contracts known as credit-default swaps. A big move in the interest rate spread between the investment grade securities and risk-free government bonds in recent months hurt the first part of the bet, and was not offset by equally large moves in the price of the insurance on the high yield bonds. As the credit yield curve steepened, the losses piled up on the corporate grade index, overwhelming gains elsewhere on the trades. Making matters worse, there was a mismatch between the expiration of different instruments within the trade, increasing losses. The additional losses represent a worsening of what is already the most embarrassing misstep for JPMorgan since Mr. Dimon became chief executive in 2005. No one has blamed Mr. Dimon for the trade, which was under the oversight of the head of the chief investment office, Ina Drew, but he has repeatedly apologized, calling it “stupid” and “sloppy.” Ms. Drew resigned Monday and more departures are anticipated.

Windfall for founder as Yell buys Moonfruit

A entrepreneur who was forced to sack her mother and husband from her website-making business to save money has sold it to the Yellow Pages publisher Yell for up to £23m. Wendy Tan-White sketched out the idea for Moonfruit, a company helping people and small businesses create their own websites, at her kitchen table in London in 1999. With a team including her then boyfriend, Joe White, and her best friend from student days, Eirik Pettersen, it raised more than £5m in the first tech boom, from investors including Bernard Arnault, the LVMH tycoon. But when the tech bubble burst Mrs Tan-White was forced to fire 60 staff, including Mr White, by then her fiancé, and her mum. The company survived, however, and yesterday, after more than five million sites and 230,000 shops have been built in the UK and US using Moonfruit technology, it was snapped up by Yell in a deal worth £23m. "It was a long night. We only finished signing the contracts at 4am," Mrs Tan-White said. She owns a "considerable" stake in the business, with about 50 per cent shared between the mother of two and her husband, plus Mr Pettersen and Moonfruit employees. "It feels quite extraordinary," she said. "In the run-up to the deal there was so much legal stuff and work managing our team and investors that it was all overwhelming but this morning the sun is shining. We all feel happy. "We started off in the dot.com boom, took money that we didn't know what to do with, but came through the period, made something that customers like and over the middle years we learnt to build a real business." Moonfruit today has a team of 40 working in an office above HMV on London's Oxford Street. "We chose Yell because it's a British-founded company, and we've been big supporters of UK entrepreneurial talent," Mrs Tan-White said. The entrepreneur was one of the poster stars of the Government's Business In You campaign, launched this year to encourage UK businesses to grow. "Financially we'll be comfortable," Mrs Tan-White said of her windfall. The deal sees her stay on at Yell for at least two years. "We've got two young kids who are seven and four and have been travelling a lot without them recently, so I'd love to spend some of the money taking them away, perhaps to Morocco. I'm looking forward to enjoying the space to think about what to do next."

The Twitter news map of Britain

What are the most influential news sites across Britain? Inspired by Forbes's news map of America, we wanted to see how it works over here. Url-shortener Bitly - used by thousands on Twitter and Facebook - has shared data which shows above-average clicks for each of the major UK news websites, and where those clicks happened. It doesn't show total traffic - but it does give a picture of how we consume our news via Bitly. Click a news site on the left to see its spread across the country - and share that view with your friends
• Read more about how this map was made - and discuss it
• With thanks to Anna Smith and Hilary Mason at Bitly - and Jon Bruner at Forbes

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• Chris Cross and Simon Rogers
• guardian.co.uk, Wednesday 16 May 2012 15.28 BST

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•  Daily Mail
•  The Economist
•  Daily Express
• The Guardian
• The Independent
• The Sun
• Sky News
• BBC News
• The Telegraph
• The Scotsman
• Wales Online
• The Mirror
• The Times

Rebbeca Brooks learned this morning that she will be taken to court over accusations of perverting the course of justice in relation to the phone hacking scandal.

The former editor of the News of the World and the Sun is to be charged with five others, including her husband Charlie Brooks.

Alison Levitt QC, principal legal adviser to the Director of Public Prosecutions, announced the decision at 10am, days after Mrs Brooks appeared at the Leveson inquiry into press ethics.

Mr and Mrs Brooks said: "We deplore this weak and unjust decision. After the further unprecedented posturing of the CPS we will respond later today after our return from the police station."

^{Rebekah Brooks arriving at the Leveson Inquiry}