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Scotiabank (TSX: BNS) reported Tuesday that its third-quarter profits rose 18 per cent to $1.29 billion, helped by recent acquisitions and strength in its international division.

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President Hugo Chavez accused his opponents on Thursday of representing U.S. interests and trying to stir up discontent in Venezuela’s military while he undergoes cancer treatment in Cuba.

Chavez addressed the nation on television twice by phone, saying he was in bed receiving a fourth consecutive day of chemotherapy and expected to return to Venezuela soon.

He mocked his opponents, saying their coalition is “of the United States.”

“All of those attacking the Armed Force are subordinated to imperialism,” Chavez said, using the formal name for the Venezuelan military. “They’re following the orders of imperialism, trying to divide the Armed Force, trying to demoralize it.”

He did not give details but referred to recent criticisms of some top generals by opponents, and he warned his foes: “Leave the Armed Force alone.”

Chavez said the military’s response to any provocations from his opponents should be to notify state intelligence agencies and remain unified.

The opposition coalition responded with a statement saying the president’s remarks “show the tension that exists within the government.”

“The head of state should worry about what’s happening within his government,” the opposition coalition said. “The message is for you, Mr. President: Leave the Armed Force alone. Don’t oblige Venezuelan soldiers to say slogans in favor of you or your political ideology.”

Chavez, who says he is trying to install a socialist system in Venezuela, made his remarks during a televised gathering of soldiers in a helicopter unit. After two days without speaking publicly, Chavez appeared eager to assert himself both in domestic and international affairs.

He said he was sorry to see the unrest in London. He referred to the U.S. government’s debt woes and said, “The empire is sinking.”

“It’s a terrible crisis they have. It’s capitalism,” Chavez said.

Chavez urged his military to be ready for any possible conflict like those in Libya and Syria. He reiterated his long-standing concerns about a potential conflict with the United States, saying: “They’re like a wounded lion.”

Despite Chavez’s tensions with Washington, Venezuela continues to rely heavily on oil sales to the United States, which is its top client.

Chavez said the current economic crisis will affect Venezuela but that his government has been diversifying and becoming more independent.

He said officials planned to sign an agreement with China on Thursday finalizing a new $4 billion loan to be repaid in oil. The leftist leader said Venezuela no longer “depends on the Yankees, the Yankee banks.”

Russia is also providing a $4 billion loan to Venezuela for arms deals and other purposes, Chavez said.

As for his cancer treatment, Chavez said his body has been responding well. He underwent surgery in June to remove a tumor from his pelvic region, and says the chemotherapy aims to ensure that no malignant cells reappear.

Chavez dismissed a protest by bus drivers in parts of Venezuela on Thursday, saying he believes political adversaries were behind it.

He also expressed confidence about the presidential vote expected in late 2012. “We’re going to knock them out,” Chavez said.

Source

Britain’s cities were largely quiet early Thursday after days of rioting and looting that drew thousands of extra police officers onto the streets and a stern warning from Prime Minister David Cameron that order would be restored by whatever means necessary.

Tensions remained high even in the absence of any major incidents, and Cameron has recalled Parliament from its summer recess for an emergency debate on the riots later Thursday. He will face mounting pressure to reconsider planned police budget cuts, which critics claim will strain an already overstretched force.

An eerie calm prevailed over most of London overnight, with a highly visible police presence watching over the capital. Metropolitan Police said objects had been thrown at officers in south London’s Eltham neighborhood but that the incident had been “dealt with” and a group was dispersed.

Other cities where looters had wreaked havoc earlier this week also came through the night largely unscathed, though for the first time minor disturbances were reported in Wales.

Police continued to make arrests linked to the disturbances, with the number of arrests in London alone climbing to 820. Courts were staffing around the clock to process alleged looters, vandals and thieves _ including one as young as 11.

Even as Cameron promised Wednesday not to let a “culture of fear” take hold, tensions flared in Birmingham, where a murder probe was opened after three men were killed in a hit-and-run incident as they took to the streets to defend shops from looting.

“We needed a fightback and a fightback is under way,” Cameron said in a somber televised statement outside his Downing Street office after a meeting of the nation’s crisis committee. As if to indicate his resolve, he underlined “nothing is off the table” _ including water cannon, commonly used in Northern Ireland but never deployed in Britain.

Outside the capital, in England’s second largest city of Birmingham, police launched a murder investigation into the deaths of the three men hit by a car. Residents said the victims, aged 21 to 31, were members of Birmingham’s South Asian communities who had been patrolling their neighborhood to keep it safe from looters.

“They lost their lives for other people, doing the job of the police,” said witness Mohammed Shakiel, 34. “They weren’t standing outside a mosque, a temple, a synagogue or a church _ they were standing outside shops where everybody goes. They were protecting the community.”

Tariq Jahan, whose 21-year-old son Haroon was killed, stood in a Birmingham street and pleaded with the South Asian community not to seek revenge against the car’s occupants, reported to be black.

“Today we stand here to plead with all the youth to remain calm, for our community to stand united,” he said. “This is not a race issue. The family has received messages of sympathy and support from all parts of the community _ all races, all faiths and backgrounds.”

He remonstrated with angry young men, urging them to “grow up” and go home.

Chris Sims, chief constable of West Midlands Police, said a man had been arrested on suspicion of murder.

“The information we have at the moment would support the idea that the car was deliberately driven,” he said, appealing for calm. “My concern would be that that single incident doesn’t lead to a much wider level of distress and even violence between different communities.”

The violence has revived debate about the Conservative-led government’s austerity measures, which will slash 80 billion pounds ($130 billion) from public spending by 2015 to reduce the country’s swollen budget deficit.

Cameron’s government has slashed police budgets as part of the cuts. A report last month said the cuts will mean 16,000 fewer police officers by 2015.

London Mayor Boris Johnson _ like Cameron, a Conservative _ broke with the government to say such cuts are wrong.

“That case was always pretty frail and it has been substantially weakened,” he told BBC radio. “This is not a time to think about making substantial cuts in police numbers.”

Scenes of ransacked stores, torched cars and blackened buildings have frightened and outraged Britons just a year before their country is to host next summer’s Olympic Games, bringing demands for a tougher response from law enforcement. Police across the country have made almost 1,200 arrests _ including the more than 800 in London _ since the violence broke out in the capital on Saturday.

Britain’s soccer authorities were talking with police Wednesday to see whether this weekend’s season-opening matches of the Premier League could still go ahead in London. A Wednesday match between England and the Netherlands at London’s Wembley stadium was canceled.

Britain’s riots began Saturday when an initially peaceful protest over a police shooting in London’s Tottenham neighborhood turned violent. That clash has morphed into general lawlessness in London and several other cities that police have struggled to halt.

While the rioters have run off with goods every teen wants _ new sneakers, bikes, electronics and leather goods _ they also have torched stores apparently just to see something burn. They were left virtually unchallenged in several neighborhoods, and when police did arrive they often were able to flee quickly and regroup.

Some residents stood guard to protect their neighborhoods _ Sikhs protected their temple in Southall, west London, and some 1,000 far-right members reportedly took to the streets to deter rioters.

Source

How to put this politely? While not a deadbeat, the U.S. is no longer among the world’s most creditworthy nations. America now has a lower credit rating than Liechtenstein. And the Toronto-Dominion Bank.

Mind you, that’s a matter of opinion.

On Friday, U.S. credit rating agency Standard & Poor’s for the first time in 70 years stripped the world’s largest economy of its top, triple-A rating on America’s $14.3 trillion in government debt. S&P dropped its rating a notch, to AA-plus.

But the two other members of the U.S. ratings oligopoly, Moody’s Investors Service and Fitch Ratings, earlier in the week reconfirmed their top rating on U.S. debt.

Just 16 of the 126 nations whose debt is rated by S&P earn its coveted triple-A rating, Canada among them.

For S&P, last week’s panicky, acrimonious budget-cutting deal that narrowly averted a first-ever default by Washington was a factor in its U.S. debt downgrade.

“(S&P’s) conclusion was pretty much motivated by all of the debate about the raising of the debt ceiling,” John Chambers, chairman of S&P’s sovereign ratings committee, told The Wall Street Journal Friday.

“It involved a level of brinkmanship greater than what we had expected.”

A furious Obama administration pleaded with S&P to hold off on its announcement for a few weeks of further assessment, arguing that such a historic decision should be free of political considerations. But S&P was having none of that.

In S&P’s view, the intransigence of hard-right U.S. deficit hawks, notably the so-called Tea Partiers, is highly relevant in determining a nation’s ability or willingness to honour its debt obligations.

“The kind of debate we’ve seen over the debt ceiling has made us think the United States is no longer in the top echelon on its political settings.” That’s Chambers’ gentle way of saying that America’s political class can no longer be relied upon to expertly manage the nation’s finances.

China’s central banker, Zhou Xiaochuan, was a little blunter, depicting the Americans as a threat to the world economy. “Big fluctuations and uncertainty in the U.S. Treasury market will influence the stability of international monetary and financial systems, thus hurting the global economic recovery,” the chief of the People’s Bank of China said last week.

China, the world’s largest creditor nation, holds about $2 trillion worth of U.S.-denominated securities.

For years, the U.S. has been hectoring Beijing on everything from its allegedly overvalued currency to human rights abuses to intellectual property theft pay day loans.

You can sense Zhou relishing this moment to return fire: “We hope that the U.S. government and the Congress will take concrete and responsible policy measures . . . to properly deal with its debt issues, so as to ensure smooth operation of the Treasury market and investor safety.”

Stop playing with matches, is Beijing’s humiliating admonition to the U.S. And really, there’s no snappy comeback to that, although the state Xinhua News Agency was piling it on in labelling the recent Washington budget debate a “madcap farce” (we know, we know) and U.S. debt a “ticking bomb.”

Typically, a lower debt rating means steeper borrowing costs, for consumers, business and government. Debt issuers must offer a higher rate of interest to attract buyers of higher-risk securities.

But hold on.

As noted, S&P is an “outlier” in banishing the U.S. from the triple-A club. Also, the U.S. owes most of its debt to itself. Less than one-third of U.S. government debt is held by foreigners, while most of crisis-stricken Greece’s debt is owed to offshore lenders. And U.S. Treasurys are still unmatched as a safe store of value for investors worldwide.

Yet for many economic observers, S&P’s move is overdue.

Across a range of factors — including anemic GDP growth, still-declining house values, a 9.1 per cent jobless rate, stagnant middle-class incomes and recent inflation in food, gasoline and apparel prices — the U.S. economy has been underperforming for years. Layering unmanageable debt atop that plethora of sickly leading indicators made a U.S. debt downgrade inevitable.

Felix Salmon, the top economics analyst who blogs at Reuters, expects the U.S. has lost its triple-A rating forever. “If we came that close to defaulting,” Salmon writes, “there’s no way that our securities can be risk-free.” The downgrade, he says, is “merely a late-to-the-party recognition of that fact.”

I don’t know about forever. But it will take a lot of convincing for S&P to restore America’s membership in the triple-A fraternity. We should know. S&P downgraded Canada in 1992, when we seemed blasé about a record $43 billion deficit.

Not until Canada was well into its 11-year run of consecutive budget surpluses — unmatched by any G8 nation — did S&P deign to restore our triple-A status, in 2002.

Elapsed time: nine years and nine months.

dolive@thestar.ca

Source

MONTREAL

Iceland closed its main international airport Sunday as a volcanic eruption sent a plume of ash, smoke and steam 12 miles (20 kilometers) into the air.

Airport and air traffic control operator ISAVIA said Keflavik airport was closed at 0830 GMT (4:30 a.m. EDT), and no flights were taking off or landing.

Spokeswoman Hjordis Gudmundsdottir said the ash plume was covering Iceland, but “the good news is that it is not heading to Europe.”

She said the ash was blowing west toward Greenland instead.

She said officials were investigating whether Iceland’s other airports could take Keflavik-bound flights.

Trans-Atlantic flights were being diverted away from Iceland, and there was no sign yet that the eruption would cause the widespread travel disruption triggered last year by ash from the Eyjafjallajokull volcano.

In April 2010, officials closed the continent’s air space for five days, fearing the ash could harm jet engines. Some 10 million travelers were stranded.

The Grimsvotn volcano, which lies under the uninhabited Vatnajokull glacier, began erupting Saturday for the first time since 2004.

Pall Einarsson, a geophysicist at the University of Iceland, said last year’s eruption was a rare event and Grimsvotn would likely have much less effect on international air traffic.

“The ash in Eyjafjallajokull was persistent or unremitting and fine-grained,” Einarsson said. “The ash in Grimsvotn is more coarse and not as likely to cause danger as it falls to the ground faster and doesn’t stay as long in the air as in the Eyjafjallajokull eruption.”

Sparsely populated Iceland is one of the world’s most volcanically active countries and eruptions are frequent.

Eruptions often cause local flooding from melting glacier ice, but rarely cause deaths. Police closed a main road near the volcano Sunday as heavy ash fell.

The Grimsvotn volcano also erupted in 1998, 1996 and 1993. The eruptions have lasted between a day and several weeks.

Source

Fewer people purchased previously occupied homes in April, a troubling sign that the weak housing market remains a drag on the economy.

Sales fell 0.8 percent in April to a seasonally adjusted annual rate of 5.05 million units, the National Association of Realtors said Thursday. That’s far below the 6 million homes a year that economists say represents a healthy market.

Purchases made by first-time homebuyers did increase but not nearly enough to signal a housing recovery is on the way. First-time buyers are critical because they typically improve their properties and invest in their communities, a combination that helps home values rise.

Foreclosures, on the other hand, force prices down. They represented more than a third of all sales in April and more are expected in the months ahead.

Since the housing boom went bust, sales have fallen in four of the past five years and hit a 13-year low last year. Declining home prices and low mortgage rates haven’t been enough to boost sales this year.

Some who want to buy can’t, mostly because banks have tightened lending requirements and are insisting on larger down payments. Many buyers who can qualify for loans are holding off. They are worried that home prices have yet to bottom out.

Economists say it could be years before the housing market fully recovers.

A growing problem is that some sales that are under contract are falling apart. A separate survey from the trade group found 11 percent of Realtors said a contract was canceled because an appraisal came in below the negotiated price. And 14 percent said a contract was renegotiated to a lower price because of a low appraisal.

The median sales price in April was $163,700. That’s down 5 percent from the same month one year ago. The median price of a new home is now nearly 31 percent higher than the median price for a previously occupied home _ or twice the normal markup.

The gap is largely because of the flood of foreclosures or short sales _ when the lender accepts less than what is owed on the mortgage. Those sales are forcing down prices.

Sales of homes at risk of foreclosure fell in April. But they still made up 37 percent of all purchases. And a large number of pending foreclosures are backlogged in the courts or held up by state and federal probes into troubled foreclosure practices by lenders.

A record 1 million homes were lost to foreclosures last year and foreclosure tracker RealtyTrac Inc. expects 1.2 million more will be lost this year.

Another problem for the housing market is the glut of unsold homes. In April, the supply rose to nearly 3.9 million. At last month’s sales pace, it would take more than 9 months to clear those homes. Analysts say a healthy supply can be cleared in six months.

The increase in unsold inventory “should continue to weigh on prices,” said Dan Greenhaus, chief economic strategist at Miller Tabak + Co.

The situation is much worse when taking into account the “shadow inventory” of homes, economists say. These are homes that are in the early stages of the foreclosure process but, because of backlogged courts or the government probes, have not hit the market for re-sale.

The Mortgage Bankers Association said Monday that about 8.3 percent of homeowners missed at least one mortgage payment in the January-March quarter when adjusted for seasonal factors. That’s up 0.7 percent from the previous quarter.

Sales fell across most regions of the country. In April, sales declined 7.5 percent in the Northeast, 1.6 percent in the West and 1 percent in the South. But they rose 5.7 percent in the Midwest.

Source

India’s inflation was faster than estimated in April, adding pressure on the central bank to extend interest-rate increases as the biggest rise in gasoline tariffs in three years threatens to intensify price gains.

The wholesale-price index rose 8.66 percent in April from a year earlier, the commerce ministry said in a statement in New Delhi today. The median of 19 estimates in a Bloomberg News survey was for an 8.5 percent climb. Prices advanced a revised 9.1 percent in March, according to data compiled by Bloomberg.

The Reserve Bank of India pledged to maintain the fight against inflation after boosting borrowing costs this month for the ninth time since mid-March 2010, the fastest pace of rate rises among major Asian economies. The nation increased the cost of gasoline as much as 8.5 percent yesterday, triggering protests by the main opposition party.

“Inflation will further accelerate after hikes in oil prices, meaning the central bank’s focus will have to be on tightening to control inflation,” said Rupa Rege Nitsure, a Mumbai-based economist at Bank of Baroda. “There is going to be no respite from inflation this year.”

The Bombay Stock Exchange’s Sensitive Index fell 0.9 percent as of 1:42 p.m. in Mumbai after the inflation report. The rupee weakened 0.4 percent to 45.07 against the dollar, while the yield on the 7.8 percent note due April 2021 was up five basis points from 8.25 percent before the report.

‘Elevated’ Inflation

The ministry announced March’s revision after the release, saying the wholesale-price index has been adjusted from April 2004 after errors were discovered.

Governor Duvvuri Subbarao said on May 3 inflation will stay at an “elevated level” until September as he raised the central bank’s repurchase rate by half a percentage point to 7.25 percent. Counterparts from China to South Korea have also extended rate increases as Asia fights prices pressures spurred by elevated oil and food costs.

Monetary tightening in India will slow growth this year and help ease inflation to 6 percent “with an upward bias” by March 31, 2012, Subbarao said. India’s economy may expand “around 8 percent” in the year through March from 8.6 percent in the previous 12 months, he estimated.

For now, indicators such as industrial production and credit expansion show that consumer demand is holding up fast cash without a hassle.

Industrial Output

Industrial output grew 7.3 percent in March from a year earlier, the fastest pace in five months, the commerce ministry said May 12. Commercial credit given by lenders including ICICI Bank Ltd., the nation’s biggest private bank, rose 22 percent from the previous year as of April 22, more than the 19 percent rate prescribed by the Reserve Bank.

Stronger consumer demand is giving companies scope to charge more for their products.

Maruti Suzuki India Ltd. (MSIL), India’s largest carmaker, boosted the prices of its vehicles by as much as 9,000 rupees ($200) last month, Mayank Pareek, the automaker’s head of sales, said April 5.

Source

The operator of Japan’s radiation-leaking nuclear plant has agreed to drastic restructuring and cost-cutting in exchange for a government plan to support the company in its obligations to compensate people affected by the crisis.

Tokyo Electric Power Co., which operates the Fukushima Dai-ichi plant, said Wednesday it accepted the government-set reorganization plan. To insure damages, the government plans to create a fund of mandatory contributions from electric utilities in case the total exceeds TEPCO’s financial capacity.

TEPCO has sought a 2 trillion yen ($24.8 billion) loan to tide it through the initial emergency. It also expects to pay 50 billion yen ($620 million) in initial compensation to the nearly 80,000 residents evacuated around the plant. Overall damages are expected to be much higher.

Source

When Federal Reserve Chairman Ben Bernanke talks about ’subdued inflation trends,” many Americans probably wonder if he ever buys groceries or gasoline.

Food and energy make up less than one-fourth of the official Consumer Price Index, but they loom large in the average person’s perception of how fast prices are moving. We know that gasoline is nearly $4 a gallon, and we know when our favorite cut of meat costs more.

Can’t the Fed see the same things?

Of course it can, but Bernanke and his colleagues don’t want to be distracted by temporary changes that are caused by weather or events in the Middle East. They pay close attention to something called core inflation, which omits food and energy prices.

That opens them up to criticism, of course. It seems as though they’re ignoring all the things that are going up, while only counting the stuff that is stable or declining.

Energy prices, for example, rose 15.5 percent between March 2010 and March 2011, including a 27.5 percent jump in gasoline. Food was up 3.6 percent, including a 7.9 percent rise in meat prices.

The overall CPI rose 2.7 percent, and the core number, which Bernanke was alluding to when he spoke of ’subdued” inflation, rose just 1.2 percent. (Actually, the Fed focuses on something called the personal consumption expenditure index, and core PCE is up just 0.9 percent. Over longer periods, the PCE and CPI should show similar trends.)

Given the disparity between core and headline, it’s not surprising that many Americans see the Fed as out of touch. “There is somewhat of a disconnect between inflation numbers that are reported and the inflation that people feel out there,” acknowledges William Gavin, an economist at the Federal Reserve Bank of St. Louis. “People form their inflation expectations based on the prices of things they buy frequently.”

That means the average American probably doesn’t notice the price of housing unless they’re shopping for a new place to live. Shelter, though, makes up nearly a third of the market basket used to calculate the CPI, and its prices are fairly stable, up just 0.9 percent in the past year.

Armchair economists also are less sensitive to the prices of things like recreation, clothing and communications services, although among them they make up 12 percent of the market basket. All three have declined in price in the past year, according to CPI statisticians.

When I hear from readers who contend that the government undercounts inflation, they’re often just expressing an opinion about the prices that are most visible to them. For low-income Americans, though, the cost of living has risen faster than the CPI would indicate.

“If you look at the lowest-income people in the U.S., almost half of their income is spent on food and energy,” Gavin said. “The people who are hurt most by inflation are those who have the most exposure to things that are going up in price.”

As for the Fed’s focus on core inflation, Gavin says it probably “has backfired a little bit” by making policymakers seem insensitive to everyday concerns.

The central bank is truly concerned about the overall price level, not about any subset of the CPI, Gavin says. “I don’t think there has ever been any doubt