Record unemployment, low inflation underline Europe’s pain
By Robin Emmott and Martin Santa
BRUSSELS | Fri May 31, 2013 7:18am EDT
(Reuters) – Unemployment has reached a new high in the euro zone and inflation remains well below the European Central Bank’s target, underscoring just how severe a challenge EU leaders face to revive the bloc’s sickly economy.
Joblessness in the 17-nation currency area rose to 12.2 percent in April, statistics agency Eurostat said on Friday, marking a new record since the data series began in 1995.
With the euro zone also in its longest recession since its creation in 1999, consumer price inflation was far below the ECB’s target of just below 2 percent, coming in at 1.4 percent in May, slightly above April’s 1.2 percent rate.
That rise may quieten concerns about deflation, but the deepening unemployment crisis is a threat to the social fabric of the euro zone, with almost two-thirds of young Greeks unable to find work exemplifying southern Europe’s threat of creating a ‘lost generation’.
Economists and policy makers have expressed concern that the greatest threat to the unity of the euro zone is now social breakdown from the crisis, rather than market-driven factors.
In France, Europe’s second largest economy, the number of jobless rose to a record in April, while in Italy, the unemployment rate hit its highest level in at least 36 years, with 40 percent of young people out of work.
Some economists expect the ECB, which meets on June 6, to act to revive the economy and go beyond another interest rate cut to consider a U.S.-style money printing program known as quantitative easing.
“We do not expect a strong recovery in the euro zone,” said Nick Matthews, a senior economist at Nomura International in London. “It puts pressure on the ECB to deliver even more conventional and non conventional measures.”
In the past, the euro zone has needed economic growth of around 1.5 percent to create new jobs, according to Carsten Brzeski, an economist at ING. With the Organisation for Economic Cooperation and Development forecasting this week that the euro zone economy would contract by 0.6 percent this year, unemployment is set to worsen long before it turns around.
“We do not see a stabilization in unemployment before the middle of next year,” said Frederik Ducrozet, an economist at Economist at Credit Agricole in Paris. “The picture in France is still deteriorating.”
5.6 MILLION YOUNG JOBLESS
ECB President Mario Draghi, whose bold decision-making helped protect the euro zone from break-up last year with a plan to buy the bonds of governments in trouble, has so far preferred to leave the onus on euro zone governments to reform.
A majority of economists polled by Reuters do not expect the ECB to cut its deposit or main refinancing rates in the coming months, although the OECD this week called for the bank to consider quantitative easing.
The Commission, the EU’s executive, told governments this week they must focus on reforms to outdated labor and pension systems to regain Europe’s lost business dynamism, a move to shift focus away from debilitating budget cuts towards growth.
EU leaders meeting at the end of June in Brussels are expected to put the problem of joblessness at the forefront of their summit.
European Council President Herman Van Rompuy, who chairs the meetings, said last week youth unemployment was one of the most pressing issues for the 27-nation European Union as a whole.
Ministers from France, Italy and Germany, meeting in Paris this week, called on their counterparts to help tackle youth unemployment, with German Finance Minister Wolfgang Schaeuble describing it as a “battle for Europe’s unity”.
In April, 5.6 million people under 25 were unemployed in the European Union, with 3.6 million of those in the euro zone.
Even if governments take on unions and vested interests to enact reforms, they will take time to produce benefits.
The impact of the euro zone’s debt and banking crises has been sapping confidence fromcompanies and households.
Private consumption saved Germany from slipping into recession in the first three months of this year, but retail sales still fell unexpectedly in April because of the cold European winter.
Meanwhile, French consumer spending dropped again in February, falling by 0.2 percent after contracting in January. French household purchasing power contracted in 2012 for the first time since 1984.
(Reporting by Robin Emmott and Martin Santa; editing by Luke Baker and Jeremy Gaunt)
After tour abroad, dissident blogger Sanchez returns to Cuba
By Jeff Franks
HAVANA | Fri May 31, 2013 3:09am EDT
(Reuters) – Dissident blogger Yoani Sanchez, wearing a brightly colored dress and a big smile, returned on Thursday to the homeland she both loves and lambastes, after more than three months on a tour through the Americas and Europe.
Her family and about a dozen supporters applauded loudly and shouted “welcome home” as she emerged from the customs area at the Havana airport
With tears in her eyes, she hugged them all as curious Cubans awaiting other passengers looked on and asked reporters who she was.
In brief comments to the press, the 37-year-old who has dark, waist-length hair said she had had a “marvelous trip, a trip that’s going to change my life in many ways.”
“I’m here with many projects,” Sanchez said. “The future is wide open.”
Even though the Cuban government considers Sanchez public enemy No. 1 because she regularly blisters the country’s leaders and socialist system in her Generation Y blog, she whisked through immigration and customs and was one of the first passengers off the Air Europa flight from Madrid.
Her trip was made possible by a newly liberalized travel law that ended the requirement for an exit visa from the government, which she has said were denied her 20 times.
After leaving Cuba on February 17 she traveled to a dozen countries, including the United States, where she collected previously won prizes for her work, gave speeches criticizing the Cuban government as well as U.S. policy toward the communist-led island and occasionally was the object of protests.
In Mexico City, opponents threw fake U.S. dollars at her, implying, as the Cuban government does, that she is funded by Washington.
Sanchez deflected their antagonism by saying she wished such open protests were permitted in her own country.
The trip raised her international profile and gained her 100,000 new followers on Twitter.
In the past, she has been subjected to a steady bombardment of government derision and has been detained on a number of occasions, and it appeared on Thursday the derision, at least, would continue.
A government blogger, Yohandry Fontana, sent tweets about her arrival saying that the U.S. government had paid for her trip.
“How much must the more than 90-day trip of Yoani Sanchez have cost USAID,” he said, referring to the U.S. Agency for International Development. “They say it was more than $250,000.”
“Can someone tell me how a trip of 90 days through I don’t know how many countries can be financed with a blog? So I can learn, ha ha ha, ” Fontana said in another tweet.
Sanchez said during her trip that she plans to launch a media company, which will likely run afoul of the government, which controls Cuban media.
Since the liberalization of the travel law took effect on January 14, a number of the island’s best-known dissidents have traveled abroad to collect prizes and give anti-government speeches.
So far, all those who have returned have had few problems.
(Additional reporting by Nelson Acosta; editing by Christopher Wilson)
Brazil’s Portinari tops Christie’s Latin American art sale
By Walker Simon
NEW YORK | Thu May 30, 2013 12:01pm EDT
(Reuters) – A dream-like painting of children releasing kites by Brazil’s Candido Portinari sold for $1.4 million at Christie’s Latin American art sale and set a world auction record for the artist.
Portinari’s 1941 “Meninos Soltando Pipas” was the top seller at the Wednesday evening sale, which totaled $16 million and set benchmarks for other Latin American artists.
“The strength of the Brazilian market reigned supreme,” said Virgilio Garza, Christie’s Latin American art chief.
Portinari, who died in 1962, left a prolific legacy including monumental murals for the U.S. Library of Congress and the United Nationsheadquarters in New York.
Colombian Fernando Botero’s 2000 bronze “Dancers,” which fetched $1.14 million, was another top seller. The work, coated in brown patina, shows a heavily muscled nude man and a woman, her left hand on his right shoulder.
Mexican Alfredo Ramos Martinez’s “Mujeres con Frutas (Women with Fruit),” a portrait of two young Mexican Indian women, sold for $1.07 million.
Ramos Martinez created the piece shortly after relocating to Los Angeles in the late 1920s to obtain expert medical care for his daughter. Hollywood luminaries of the time collected his work.
Art experts had high hopes going into the Latin American art sales amid a buoyant market, sparked by a record-breaking sale of contemporary art earlier this month. Christie’s contemporary art sale hauled in $495 million – the highest of any art auction ever.
During Wednesday’s auction, records were set for Peruvian Tilsa Tsuchiya with the $339,750 sale of her 1974 oil on canvas “Mujer Volando,” and for Venezuelan Francisco Narvarez, whose untitled ebony wood sculpture of a kneeling woman fetched $267,750.
Brazilian artist Milton Dacosta also hit an auction record with the $171,500 sale of “Figura,” a 1954 oil on canvas, and Mexican surrealist Remedios Varos’ “Vista al Pasado,” a 1957 graphite and pigment on paper, sold for $291,750, a record high for her work on paper.
Other highlights included three works by Brazilian artist Afredo Volpi including “Fachada (no. 1331),” which sold for $783,750, “Bandeirinhas horizontais com mastro (No. 1330),” which fetched $651,750 and “Bandeirinhas com mastro. (No. 2133)” which went for $507,750.
(Reporting by Walker Simon; Editing by Patricia Reaney and Vicki Allen)