Important news from Cleopatra

UPDATE 1-BlackRock’s Fink says don’t ignore Wall St protests

NEW YORK Oct 13 (Reuters) - The chief executive of the world’s largest money manager said Thursday he welcomed the anti-Wall Street protests spreading around the country, saying they would help add balance to the debate on America’s future.”I believe we should not turn our backs on these protests,” said BlackRock Inc Chief Executive Laurence Fink at the Financial Times’ View from the Top conference in New York.”Maybe we will get some balance,” he added, noting that it would be helpful to have both right-leaning Tea Party members and the more left-leaning Wall Street protesters contribute to the national debate on economic issues.BlackRock is the world’s largest money manager with more than $3 trillion worth of assets under management.The Occupy Wall Street movement has sparked nationwide protests in more than 1,400 cities, according to Occupy Together, which has become an online hub for protest activity.Protesters are upset that the billions of dollars in bank bailouts doled out during the recession allowed banks to resume earning huge profits while average Americans have had no relief from high unemployment and job insecurity.The jobless rate has been at or above 9 percent since March and roughly 45 percent of the 14 million Americans without jobs have been unemployed for six months or more.Earlier on Thursday, Steven Rattner, a former adviser to the U.S. treasury secretary who led efforts to overhaul the U.S. auto industry, said healthy profits for U.S. companies have not trickled down to workers or the broader economy.Fink said having multiple voices involved in the debate is important, as the country faces serious challenges that will not soon fade away.”The two real engines of the economy over the last 10 to 20 years were consumer (spending) and housing,” he said, “and I don’t think those are going to come back any time soon.”Fink said it could take two to three years before those sectors recover. While he said the Federal Reserve has not been given enough credit for stepping in to stabilize the economy, he said the country now needs clarity and leadership from lawmakers.Earlier this week, the U.S. Senate defeated President Barack Obama’s $447 billion job-creation package, suggesting Washington is too paralyzed to take major steps to spur hiring before the 2012 elections.”We need to find our footing. It’s so much about leadership and clarity and we just haven’t found our footing as a country,” Fink said.He said the current sense of malaise infecting the country reminded him of the 1970s when the United States faced high unemployment and inflation.”We were really pessimistic about who we were in the 70s, but we showed resiliency many years ago. We should have the same capacity,” he said.But with jobs scarce, Fink warned that overly aggressive regulation of the financial industry could eventually drive firms in the United States as well as Britain and Europe to less costly bases in Singapore and Hong Kong.If firms find “that the cost of doing business in the UK, Europe and the U.S. rises, you’re going to see movement of people and trading activity” to other countries, Fink said.

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Europe tempted to save Greek trauma for later

By Neil Unmack The author is a Reuters Breakingviews columnist. The opinions expressed are his own. Euro zone leaders may be trying to tweak the Greek debt swap to impose marginally deeper losses on private creditors than agreed in July. That wouldn’t help Greece much, but it would stagger the pain for banks, and Greece’s public creditors. Greece’s creditors originally agreed to a 21 percent haircut on their bonds, in the 135 billion euro swap agreed as part of the country’s second bailout. Euro zone officials are now contemplating a 30-to-50 percent haircut, officials told Reuters. But part of that would simply come from changing market conditions, suggesting banks may simply use a higher discount rate to value the new securities they would get in exchange for their bonds. In other words, the larger apparent haircut could be more of an accounting trick than a way to lighten Greece’s debt load. The swap agreed in July used a below-market discount rate of 9 percent to value coupons on the new 30-year bonds. But yields for 30-year Greek debt have risen since July to 17 percent. Twiddle the discount rate to 15 percent, and banks losses jump to 39 percent, even though the terms of the deal haven’t changed. Greece’s budget deficit this year will be larger than forecast in July, largely because austerity is biting hard. The swap may also need tweaking to lighten Greece’s interest costs and cut the deficit. Cutting the interest rate offered to creditors by a full two percentage points — to 2 percent — would be a step in the right direction, increasing the haircut to some 52 percent. But Europe seems to be hesitating to go that far. There may be advantages to a more gentle approach for both banks and politicians. Banks would stagger losses over time, taking some pain now and some later. And they would preserve the benefits of the July swap, which protects their principal by getting Greece to collateralise the new bonds with risk-free securities; this means lower losses in the future restructuring. Euro zone governments can argue they have extracted more from bondholders, and delay the day when they have to take losses on their own loans to Greece. Moreover, Athens would still be slaving under a heavy debt load, keeping it under pressure to reform. But Europe’s leaders should understand that the risk of the crisis dragging on, or even getting worse increases if the debt problem isn’t tackled for good now.

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UPDATE 1-FDA reviewers unconvinced on Teva Parkinson’s drug

By Alina SelyukhOct 13 (Reuters) - Teva Neuroscience Inc’s clinical trials of its Parkinson’s drug Azilect left U.S. drug reviewers unconvinced that the treatment slows the disease’s progression.In documents released on Thursday, Food and Drug Administration researchers raised concerns about the design of the studies, their analysis and results.They added, however, that, “it has not been clear what sort of data would definitively establish” whether a drug modifies the disease.”There is no demonstrated benefit of rasagiline (Azilect’s generic name) for slowing the rate of progression of Parkinson’s Disease,” one reviewer wrote.Azilect, which Teva markets alongside Danish partner Lundbeck in a number of countries, is approved to treat symptoms of the neurological disorder, such as trembling limbs, stiffness, slow movement and impaired balance.The Israel-based drugmaker wants to expand the drug’s indication to show that Azilect slows the clinical progression of Parkinson’s.There is no existing cure or treatment that slows or entirely stops the progression of Parkinson’s.The review was also complicated by the fact that it is hard to draw a line between treating the symptoms of Parkinson’s and treating the disease.Much is unknown about Parkinson’s, including the causes of the neurogenetic disorder. Anywhere from 500,000 to 1.5 million Americans are estimated have the disease, and nearly 60,000 are diagnosed each year, according to Parkinson’s Action Network.Azilect received FDA approval in 2006 for use as a single drug therapy in early Parkinson’s and, in more advanced patients, as addition to levodopa, a standard treatment for the disease that can mask symptoms of the disease, but does not stop its progression.Teva’s drug works by blocking the breakdown of dopamine, a chemical that sends information to the parts of the brain that control muscle movement and coordination.FDA advisers will vote on Oct. 17 on whether Teva has provided the drug regulator with enough evidence of Azilect slowing down Parkinson’s.

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Europe highlights urgency for new U.S. swaps rules

* Investors embrace clearing in boon for CME, LCH, ICE* CFTC inundated with thousands of industry lettersBy Jonathan Spicer and Ann SaphirCHICAGO, Oct 12 (Reuters) - Europe’s debt problems are increasing anxiety about the vulnerability of global markets because too many new U.S. derivatives rules intended to prevent a repeat of the 2008 crisis have yet to be defined.Investors have responded in recent months by embracing the clearing of swaps, essentially beating regulators to the punch, to protect themselves in volatile markets.Clearing allows investors to avoid the credit risk of trading with banks that appear newly vulnerable amid Europe’s debt crisis. In 2008-2009 banks’ worries about the health of their trading partners resulted in a widespread freezing of credit, which nearly sank the global economy.Executives at a futures industry conference here urged regulators to speedily adopt rules for trading and clearing in the over-the-counter swaps market. The longer we wait, they said, the more dangerous it becomes.”If we were the five senior staff on the Titanic, I’d like to think we wouldn’t be standing back, looking at the safety boats and thinking about whether we can design them better,” CME Group Inc chief executive Craig Donohue said at the Futures Industry Association.”We’d be thinking about how to get people on the boats and get them to safety, and maybe we can improve on that in the future,” he said.It has been three years since a U.S. financial crisis sent the global economy into a tailspin, and more than a year since lawmakers passed a bill designed to prevent a new crisis from taking down the financial system in similar fashion. Regulators are scrambling to finish writing the rules.Now, with Europe’s debt crisis showing some of the same signs as the United States’ meltdown, investors have rushed into clearing credit and interest rate swaps, a boon in volatile markets for companies like CME and Europe’s LCH.Clearnet.The Commodity Futures Trading Commission, which must make final about 50 new rules under the Dodd-Frank law, has struggled to keep up with the rule-making process, having finished only about a dozen of the rules.Several key rules, including capital and margin requirements, will be pushed into the first quarter of 2012, putting the agency well behind a July 2011 deadline Congress had set.Regulators have benefited from public meetings that provided input for the rules-writing, said CFTC Chairman Gary Gensler. “But the American public needs us to move forward and get the job done and finish these rules,” he told reporters.”The crisis emanating from Europe reminds us that the public is still unprotected.“‘FISH OR CUT BAIT’Investor appetite for CME’s cleared swaps soared last month, with trading in credit default and interest rate swaps rising to $42 billion in September, from less than $1 billion about a month earlier.CME’s futures business has also benefited, as swaps users seek safer alternatives to their bilateral dealings with banks. Asset managers are increasingly shifting their trades to CME, doubling their use of CME’s short-term interest rate futures in the past year for instance, and trading in currency futures rose to records in September as investors sought safety through clearing.”The trend is there,” said Jeffrey Sprecher, chief executive of IntercontinentalExchange Inc , which began clearing CDS in early 2009 and saw an 11 percent jump in credit-related revenues from the second to the third quarter of this year.”It’s obviously a very complicated global environment right now for global exchange risk, and you are seeing a migration towards futures more than the OTC market.”Despite delays by the CFTC and other agencies in defining the Dodd-Frank rules, the expectation that they will eventually come into force has allowed investors to begin clearing products they never had before.In a global market of some $480 trillion in clearable interest rate swaps, an estimated $180 trillion has yet to be cleared.Yet some, including Donohue and Sprecher, cautioned in interviews that it was important the CFTC takes the time to sift through the thousands of comment letters and get the rules right. “I think it’s well intentioned,” Sprecher said.There is also the real threat of lawsuits from the industry once the rules — from limits on excessive speculation to real-time reporting of trades to end-user exemptions — are formally adopted.But based on interviews with several traders and industry executives, the euro zone crisis is giving a new urgency to the need to define how exactly regulators want to safeguard the market.”Let’s fish or cut bait,” said Chris Hehmeyer, chief executive of Chicago-based proprietary trading firm HTG Capital Partners. “It’s time for them to go ahead and get the definitions out there so that we can get on with it.”