Europe's next bankruptcy candidates?

As the situation in Greece continues to intensify, fears are increasing that the debt crisis will spread throughout Europe. DW takes a look at some of the European bankruptcy candidates in line behind Athens

In financial circles, they are referred to as PIGS - Portugal, Ireland, Greece, and Spain - and sometimes even PIIGS, if you include Italy as one of the European countries at risk of going bankrupt in the near future. 

The common denominator for these eurozone countries is mounting budget deficit coupled with weak economic growth. In Ireland and Spain, the financial crisis has led to the collapse of the construction and real estate industries.

Portugal: Financial experts say, to stay afloat, Lisbon will need at least 20 billion euros ($26.4 billion) during 2010 - most likely in the form of government securities. Debts totaling six million euros are due by the end of May. The interest rates that Portugal will have to pay for those securities are rising starkly, due in most part to the country's sinking credit ratings.

Lisbon is nowhere near as indebted as Greece, but its economic base is similarly weak. Competition for Portuguese jobs is on the decline as most industries are increasingly unable to compete with its European and global counterparts. Most companies are in debt, with budget problems increasingly threatening solvency. The Portuguese government has attempted to launch a massive austerity package; however, this was met with fervent protests across the country. The government is expected to take on new debts of eight percent of GDP next year, as their total debt quota remains around 85 percent. The official EU limit for annual debt is three percent, for total debt 60 percent.

Ireland: Empty office space, houses for sale, deserted shopping streets - these are the indisputable signs that the crisis has hit Ireland. The value of real estate has gone down in many cities by around 50 percent. Most people who took out enormous loans following the economic boom of the 90's are now unable to pay them off. Public deficit in the country is set to increase to almost 15 percent of GDP this year, even more than in crisis-ridden Greece.

The Irish government is desperately attempting to save money, but this has proved more difficult than imagined. The state has radically cut public service and in the process reduced further risks that government loans turn into unpayable debts. Ireland's total debt levels are around 82 percent, comparable to Portugal. This is an improvement to recent ratings, which had Dublin's debts at over 90 percent.

Italy: Italy's finance politicians resent their country's status as one of the PIGS. Indeed, Italy's current debt of 5.3 percent of GDP is relatively low compared to those four countries. However, total debts in Italy are almost double the allowed limit - at a whopping 117 percent of GDP. Financial markets have apparently become accustomed to these levels, as Rome's total debt was almost 100 percent. 

Italy, although on a financial tightrope for quite some time, has been able to manage its economy. This is due to the fact that the country's industry is better constructed than some of its southern European neighbors. In 2010, the Italian economy is supposed to grow by 0.7 percent. 

Spain: Finance minister Elena Salgado has been quoted on a number of occasions saying "We are not Greece!" According to the numbers, she is right. Spain's total debts are around 66 percent of GDP, with 2010 levels close to 10 percent. The interest rates Spain has to pay for its government loans are still bearable at this point, though they are increasing. On Wednesday, however, Spaniards were shocked to learn that their credit rating had been downgraded by the S&P rating agency.

The Spanish government, which holds the rotating EU presidency, has passed an austerity package totaling 50 billion euros in an attempt to control its growing deficit. Unemployment in the country is around 20 percent, and the Spanish economy - the fourth largest in the EU - is set to decline this year while most others in Europe have already bounced back from the global recession. Financial experts stress, however, that Madrid is still far from collapse.

Outside the eurozone: Hungary, Latvia and Romania have already received financial aid from the EU and the International Monetary Fund in order to avert state bankruptcy. In 2008, Hungary was allotted 20 billion euros in aid, but with the help of drastic budget cuts it finally only needed 9 billion.

Latvia, meanwhile, has been drip-fed 7.5 billion euros from the international money lender. Salaries for civil servants have been cut in the Baltic state, which is already in an unemployment crisis. The governing coalition collapsed in February 2009 under the weight of cost-cutting measures.

Romania has received a combined credit of 20 billion euros from the EU, the IMF and the World Bank. The IMF suspended its payments last winter because Romania was not complying with the lender's strict requirements. Romania's new government has since promised to improve, and is now allowed to obtain credit once again.

European countries outside the EU: Ukraine obtained 12.2 billion euros from the IMF in 2009, but payments were suspended after the country did not implement its austerity measures. With 2 billion euros of credits, Belarus is also deeply indebted to the IMF. Serbia, Bosnia-Herzegovina and Moldova have also requested aid up to 3 billion euros. Moldova, Europe's poorest country, will receive 425 million euros interest-free until 2011.

Iceland also went practically broke in November of 2008, when its banks collapsed, plunging the government into financial crisis. The IMF agreed to give the island 1.5 billion euros. Norway and other Nordic countries gave Iceland twice that sum as part of a multilateral credit agreement.

Great Britain: The solvency of Britain's banks fell in February according to rating agencies. The nation is having trouble working its way out of the recession. Last year its new debt was at about 13 percent - as much as Greece's.  Britain's total debt was around 840 billion pounds (967 billion euros), about 68 percent of GDP. The government intends to wait until the next fiscal year to pass a resolution on new austerity packages, after next week's parliamentary elections. If Britain doesn't hit the brakes soon, though, it could see a dramatic aggravation of its debt crisis.

Germany: And what does all this mean for the EU's largest national economy? Germany's budget deficit is relatively small, at three to four percent of GDP. Still, the total of Germany's new borrowing is enormous. By the end of 2013, Germany and its states must obtain 500 billion euros on the financial markets. The entire national debt has risen to two trillion euros, and the percentage of national budgets which goes to paying interest to investors is swiftly rising. 

Germany, having long been the benchmark in Europe, must now offer three percent interest on its bonds. Starting in 2016, the new constitutional debt brake will take effect, prescribing a nearly balanced budget.

Author: Bernd Riegert (glb/dl)

Editor: Susan Houlton

Deutsche Welle

HP says to buy Palm for $1.2 billion

(Reuters) - Hewlett-Packard Co (HPQ.N) said it has struck a deal to buy Palm Inc (PALM.O) for $1.2 billion, offering a 23 percent premium to expand into the smartphone market.

The news comes after much speculation on Wall Street about the future of Palm, which once dominated the market but which has been overshadowed by rivals like Apple Inc's (AAPL.O) iPhone or Research in Motion's (RIM.TO) BlackBerry.

Under the deal approved by the two companies' boards of directors, HP will pay $5.70 cash per share of Palm, a 23 percent premium to its closing price on Wednesday of $4.63.

Palm's current chairman and CEO, Jon Rubinstein, is expected to remain with the company, HP said in a statement, adding that it expects the acquisition to close during its third fiscal quarter ending July 31.

Some investment banking sources had thought that Lenovo (0992.HK) was the leading candidate to buy Palm after the U.S. firm was rebuffed by other potential Asian buyers including HTC Corp (2498.TW) and Huawei HWT.UL.

Reporting by Tiffany Wu; editing by Carol Bishopric

Reuters

UN helicopters fly baby Congo gorillas to safety

By Thomas Hubert

KINSHASA (Reuters) - United Nations peacekeepers in Congo have used helicopters to airlift endangered baby gorillas to a sanctuary after they were rescued in a conflict zone where they faced being captured or eaten.

The animals ferried to safety are eastern lowland gorillas, a species that only lives in Democratic Republic of Congo and is classified as "endangered" on the International Union for the Conservation of Nature's (IUCN) red list.

The four gorillas, which had been rescued from traffickers in various parts of Congo's rebel-infested east, were flown by helicopter on Tuesday from Goma to the Kasugho Sanctuary in North Kivu province.

"If you use vehicles, there is a great risk of losing the animals because they are traumatised. We used aircraft because we really wanted to reduce their stress level," Benoit Kisuki, Conservation International's country director, told Reuters.

Kisuki said the air transfer was part of a wider project to combat the illegal trade in baby gorillas, which has intensified in recent years with the proliferation of armed groups and constant insecurity in eastern Congo.

"The objective is to reintroduce them in their natural environment," he added.

The gorillas are often caught, trafficked and sold for thousands of dollars on the world market as exotic pets. Others are killed and sold locally as "bush meat".

The research centre in Kasugho has developed a two-hectare (4.9 acre) area where scientists can monitor young gorillas as they prepare to be released into the wild.

Six other individuals, currently under protection in Rwanda, are due to be flown in on June 10 to "socialise" with the first group and "form a family of 10", Kisuki said.

The gorillas could be a valuable asset for the future economic development of east Congo, after the animals became a major tourist attraction in Uganda and Rwanda, raising several million dollars in revenues.

There is no accurate data for eastern lowland gorilla populations. But Congo's gorillas have weathered years of warfare in the east and more than 150 rangers have been killed trying to protect the area's five national parks from poachers.

A U.N.-backed report last month said gorillas may become near-extinct in Africa's Greater Congo Basin by the mid-2020s unless action is taken to stop poaching and protect their habitat.

Reuters Africa

Palestinian shot dead at Gaza border protest: medics

GAZA CITY — A 20-year-old Palestinian was killed in the Gaza Strip by Israeli fire on Wednesday during a protest near the heavily guarded border fence, local medics said.

Ahmed Salim, 20, was taken to Gaza's Al-Shifa hospital after being shot in the thigh and died shortly after arrival, said Muawiya Hassanein, the head of Gaza emergency services.

An Israeli army spokesman told AFP that soldiers had fired warning shots at stone-throwing demonstrators who tried to start a fire near the border security barrier, without specifying if any Palestinians were hit.

They entered "a combat zone where access is banned following several attempted attacks and infiltrations by terrorist groups," he said.

Witnesses, including an AFP correspondent, said Salim was with a group of a few dozen Palestinian youths hurling rocks at Israeli troops stationed along the border during a weekly protest attended by a few hundred people.

Gazans have started to hold weekly demonstrations against the buffer zone that extends more than 300 metres (yards) from the Israeli security barrier. The demonstrations are modeled on similar actions in the West Bank.

Israel insists it only fires warning shots during the protests to keep people out of what it views as a restricted military area, but several people have been wounded since the start of the protests.

The military says the buffer zone is necessary to prevent militant attacks along the border of the territory ruled by the Islamist movement Hamas.

AFP

Government expands Thailand travel warning

OTTAWA — The government on Wednesday upgraded its travel warning for Thailand, warning Canadians to avoid "non-essential" trips to the kingdom marred by political violence.

In a statement, Canada's foreign affairs department advised "against non-essential travel to the Kingdom of Thailand due to ongoing large-scale political demonstrations, which have been marked by violence, death, and injury".

"The security situation is very volatile with significant potential for further civil unrest, violent clashes, and attacks," said the department.

Canadians already in Thailand should "if violence erupts, remain indoors," it said.

Earlier, Thai troops opened fire on "Red Shirt" protesters during a tense confrontation on a highway in Bangkok's northern suburbs that left one soldier dead and 18 people injured.

The demonstrators hurled rocks at soldiers and riot police, who used coils of razor wire to block their convoy on a major road heading out of the city where they have been rallying for weeks in a bid to overthrow the government.

It was the third bout of bloodshed in recent weeks in Bangkok, where 27 people have died and almost 1,000 have been injured this month in the country's worst political violence in almost two decades.

The Reds want immediate elections to replace Prime Minister Abhisit Vejjajiva's government.

AFP

Authorities raid Deutsche Bank and 50 other firms

BY MAX SCHNEIDER AND STEFAN ERNST

Around 50 German firms have been raided by police investigating suspected large scale tax evasion.

The chief public prosecutor’s office searched more than 230 business premises across Germany – including those of international giant Deutsche Bank – as well as the homes of accused individuals.

More than 1,000 officials from the tax fraud investigation office, theFederal Criminal Police Office (BKA) and different police authorities took part in the raids.

Searches also took place simultaneously in other EU member states.

Around 150 people are under suspicion of VAT evasion over the trading of greenhouse gas emission permits.

Wednesday morning at 8.20am in Frankfurt: A large contingent of police and other officials arrived at Deutsche Bank. They pulled out their ID at the entrance and entered the building on Theodor Heuss Allee.

Shortly afterwards, a convoy of vehicles with investigators and specialists from the BKA turned up and pulled into the underground car park with blue lights flashing.

In response to an enquiry from BILD.de, a spokesman from the bank said: “We can confirm that we are one of the 230 entities which were searched. We are co-operating with the public prosecutor’s office”.

A spokesman for another major institution, Commerzbank, said it had not been involved in the raids.

WHAT IS IT ALL ABOUT?

The trick is called VAT carousel or missing trader fraud, and according to BILD’s information the current suspected cases add up to a lost revenue of around €1 billion for the German government.

HOW IT WORKS

Dealers in different EU countries buy and sell permits which allow industrial enterprises to release a certain amount of greenhouse gases.

On the sale from dealer A to dealer B across a state border, no VAT is due. Upon the resale of the permits by dealer B to dealer C within the same country (i.e. Germany), VAT does become owed which dealer C can then claim back from the tax office.

Dealer B owes the authorities 19 per cent in VAT – it doesn’t pay, but pockets the 19 per cent and disappears off the market.

The permit is passed along from dealer to dealer until it arrives back at dealer A, which starts a new chain or carousel

Bild.com

Coffee: Is it healthier than you think?

By Sarah Klein, Health.com

(Health.com) -- Elaine Murszewski is a self-proclaimed coffee addict.

"I have been a coffee drinker for more years than I can remember," she says. "My coffeemaker must have an auto-start feature so that when I wake up, it's ready."

The 53-year-old former software company representative from Aurora, Colorado, never uses cream or milk because they just "spoil the taste." She prefers coffee over alcohol -- even at a bar.

Murszewski has a lot of company. More than half of adults in the U.S., or 54 percent, are habitual coffee drinkers, according to the National Coffee Association. In fact, 146 billion cups are consumed in the U.S. each year, nearly three times more than tea.

But for years, coffee had a bad reputation. Linked in many people's minds with smoking, coffee is associated with over-caffeination and insomnia.

The caffeine found in coffee can stay in your system for up to 12 hours, making it more difficult to fall asleep, and it affects your quality of sleep as well. Caffeine is also a diuretic, meaning that it increases urine output, which can lead to dehydration.

Health.com: 12 surprising sources of caffeine

The general consensus used to be that tea was the better bet in terms of health benefits. But recent research suggests that despite the downsides of coffee, the "devil's brew" does have an upside: Coffee drinkers may be at lower risk of liver and colon cancer, type 2 diabetes, and Parkinson's disease.

Health.com: The many perks of coffee

And in 2009, two coffee studies suggested additional benefits: Coffee-drinking men seemed to have a lower risk of advanced or lethal prostate cancer than other men, and middle-aged people who drank moderate amounts of coffee -- three to five cups a day -- had the lowest risk for dementia and Alzheimer's disease later in life compared to less (or more) frequent drinkers.

Can drinking coffee even help you live longer? Maybe. A 2008 study found that women who drank coffee regularly -- up to six cups a day -- were less likely to die of various causes during the study than their non-coffee-drinking counterparts. Because consumption of decaf coffee showed similar results, researchers don't think caffeine is at work.

Coffee contains antioxidants

While coffee drinkers may have other lifestyle habits that could explain the potential health benefits, researchers are also looking for compounds in coffee that explain the results.

One possibility? Antioxidants, those healthy compounds most often associated with fruits and vegetables. While the amount of antioxidants per serving is indeed much higher in things like berries, beans, and pecans, these foods are consumed less frequently than coffee.

In fact, a 2005 study found that Americans get more antioxidants from coffee than anywhere else. More than half of adults drink coffee daily, and the average coffee drinker downs about three cups each day.

"Most people drink it for the caffeine," says Joe A. Vinson, Ph.D., a professor of chemistry at the University of Scranton who led the 2005 study and has studied coffee extensively. "[But] it's the Number 1 source of antioxidants in the U.S. diet".

Polyphenols or flavonoids, the type of antioxidants found in coffee, are also found in other foods and drinks, like tea, red wine, and chocolate. All three have been proven to moderately help brain function, a benefit that can't be chalked up to caffeine, says Vinson, who has received speaking fees from the National Coffee Association. Caffeine, the most commonly used drug in the U.S., says Vinson, does affect alertness, but hasn't been found to offer much in the way of health benefits.

Health.com: The healing power of tea

Polyphenols are the "the good guys in coffee," says Vinson. "If you're not interested in keeping alert, then it seems decaf coffee would be your best bet".

Researchers have investigated other compounds in coffee, such as chlorogenic acid, which also gives eggplant its bitter flavor. In fact, there are potentially hundreds of biologically active compounds in coffee. "One of the detriments of working with foods and beverages is they're mixtures," says Vinson. "There's no magic bullet compound; it's the mix".

The beneficial effects could be due to natural agents that discourage the growth of harmful bacteria, or those that encourage the growth of helpful bacteria, called probiotics. Coffee may also alter levels of gut peptides, the hormones naturally released to control things like hunger or fullness.

Coffee may even have a hormone-like effect in the body, says Clinton Allred, an assistant professor in the department of nutrition and food science at Texas A&M University. A compound known as trigonelline "can act like estrogen," he says. "People didn't know coffee would carry such activity".

Because it acts as a hormone, trigonelline may be dangerous in women who have breast cancer, but it may also protect against colon cancer. "Estrogen is preventative of tumor formation for colon cancer, we believe," says Allred. "But it's just way too early for us to know [all] this particular compound could do".

Coffee drinkers may have healthier lifestyles

Another obstacle in pinpointing the benefits of coffee is that it's difficult to isolate the effects of coffee from other healthy habits or lifestyles associated with coffee drinking. A 1999 study of coffee and tea consumption in Scotland, for instance, found that coffee drinkers were younger, had higher incomes, and were healthier in general than tea drinkers.

Coffee drinkers in the U.S. seem to fit a similar profile. Seventy percent of Americans with an annual household income of $150,000 or more drink coffee, compared with 54 percent of Americans in a household making less than $25,000 a year, according to consumer market research firm Experian Simmons.

Research has shown for decades that poorer people are more likely to die from virtually any cause than people with a higher socioeconomic status. Wealthier people are more likely to be physically active and eat healthier, and less likely to smoke -- behaviors that could prevent some of the conditions assumed to be affected by coffee.

"That's the problem [with most of the studies done on coffee]," says Vinson. "There's no perfect study out there because they can't control all the variables. The problem with a human study is everybody's different".

To isolate the benefits of the coffee in particular, newer studies have focused on filtering out the effects of less-than-healthy behaviors, like smoking, that coffee drinkers are likely to engage in.

In a 2008 study, Esther Lopez-Garcia, a researcher in the department of preventive medicine and public health at the Autonomous University of Madrid, in Spain, found that coffee drinkers had a slightly lower risk of death from all causes than people who didn't drink coffee.

Although the participants in her study were all nurses and health professionals, she says the results are probably applicable to people with similar education and socioeconomic status. "However," she warns, "[generalizing the results] has to be made with precaution, because it's clear that socioeconomic status influences mortality".

Of course, coffee isn't a quick fix, and may even cause problems in some people. It can worsen existing heart conditions, and caffeine could cause sleeping problems, as well as a racing heartbeat and anxiety. Plus, many coffee drinkers are only adding calories and fat to their diet by mixing in heavy cream and too much sugar.

Health.com: America's healthiest superfoods for women

More research needs to be completed before doctors can recommend coffee to their patients, experts say.

"It is always difficult to give dietary recommendations based on studies that lasted only several months, because they cannot investigate long-term effects," says Christian Herder, a diabetes researcher at Heinrich Heine University, in Dusseldorf, Germany. In a 2010 study, for instance, Herder found that changes in coffee-drinking habits had no adverse effects on diabetes risk factors.

But because the study lasted only three months, he says, it didn't provide enough evidence to directly recommend -- or prohibit -- drinking coffee. "There seems to be no reason to discourage middle-aged men and women from drinking coffee," Herder adds.

However, says Lopez-Garcia, "anyone with health problems that can be worsened by coffee -- insomnia, anxiety, hypertension, or heart problems -- should ask the doctor about his specific risk".

A better understanding of the risks and benefits of coffee might not come anytime soon. "Studies are few and far between," says Vinson. Plus, he says, many of the studies that have been done entailed "super-high consumptions" (12 cups a day, for example) and may not apply to the normal amount Americans typically drink.

So far, evidence of coffee's health benefits is limited. "I want to be convinced, but I haven't been. It's not cause and effect; it's just a hint," says Vinson. "[But] there are a lot of wonderful hints".

In the meantime, coffee drinkers can still dare to hope their precious brew is also good for them. Murszewski says she has noticed benefits from her java habit. "I have not asked my doctor about the benefits of coffee, although I have noticed that when suffering from a migraine, coffee helps," she says. "It's not full-blown with drinking coffee".

CNN