Actual finance blog

Battered by the strong yen and supply disruptions from Thailand’s floods, Honda said Tuesday that its net earnings in the October-December quarter tumbled 41 percent to 47.6 billion yen ($625 million) and projected a sharply lower full-year profit.

The Japanese automobile and motorcycle maker forecast it would earn 215 billion yen for the fiscal year through March, down nearly 60 percent from the 534 billion yen it earned the previous fiscal year.

Honda had scrapped its earnings forecast in October, when it reported its previous quarterly results, because the flooding in Thailand _ a key Asian production hub for Honda and many Japanese companies _ made the outlook too uncertain.

Honda stopped making cars at its automobile assembly plant in Ayutthaya, north of Bangkok, in October after it was damaged in the worst floods to hit Thailand in 50 years. The company said in a statement that it was making progress on draining the plant of flood water and cleaning up equipment, and that production was expected to resume by the end of March.

The flooding also disrupted the output at many Honda suppliers in Thailand, forcing it to reduce production as far away as the U.S. and Canada. Honda said production in neighboring Asian countries interrupted by the problems in Thailand was expected to return to normal by April.

All told, the problems related to flooding in Thailand have cost the company 260,000 vehicles in lost production worldwide, according to Tomohiro Okada, a company spokesman.

Quarterly sales slid 8 percent during the fiscal third quarter to 1.942 trillion yen.

The strong yen, which erodes Japanese exporters’ foreign earned income when repatriated, also ate into the company’s income. Declines due to unfavorable exchange rates accounted for 33.6 billion yen, or nearly half, of the 73.1 billion yen drop in net income before taxes reported the same quarter a year ago, Okada said.

A bright spot for the company was its motorcycle business, amid strong demand in emerging markets. Motorcycle sales rose 6.3 percent during the quarter to nearly 3.1 million units.

(This version CORRECTS Corrects impact from currencies in paragraph 8, adds lost production of vehicles from Thai flooding in paragraph 6, adds details about growth in motorcycle business)

Source

100% Online payday loans. No Fax. Instant Approval. Bad Credit OK!

On the day the Deepwater Horizon sank, BP officials warned in an internal memo that if the well was not protected by the blow-out preventer at the drill site, crude oil could burst into the Gulf of Mexico at a rate of 3.4 million gallons a day, an amount a million gallons higher than what the government later believed spilled daily from the site.

The email conversation, which BP agreed to release Friday as part of federal court proceedings, suggests BP managers recognized the potential of the disaster in its early hours, and company officials sought to make sure that the model-developed information wasn’t shared with outsiders. The emails also suggest BP was having heated discussions with Coast Guard officials over the potential of the oil spill.

The memo was released as part of the court proceedings to determine the division of responsibility for the nation’s worst offshore oil disaster, which began when the BP-leased Deepwater Horizon exploded April 20, 2010, killing 11 men about 50 miles southeast of the Louisiana coast. The first phase of the trial is set to start Feb. 27.

BP officials declined to comment on the emails late Friday.

The official amount of oil that flowed from the well was pegged at 206 million gallons from at least April 22 until the well was capped on July 15, a period of 85 days. That’s a daily flow rate of about 2.4 million gallons _ two-thirds of the way to BP’s projection of what could leak from the well if it was an “open hole.” BP has disputed the government’s estimates.

Having an accurate flow rate estimate is needed to determine how much in civil and criminal penalties BP and the other companies drilling the well face under the Clean Water Act.

In the memo, a BP official urges not to share the flow-rate projections and refers to the “difficult discussions” the company was having at the time with the Coast Guard guaranteed personal loan approval.

Gary Imm, a BP manager, told Rob Marshall, BP’s subsea manager in the Gulf, to tell the modeler doing the estimates “not to communicate to anyone on this.”

“A number of people have been looking at this we already have had difficult discussions with the USCG on the numbers,” Imm said in the email string, referring to the Coast Guard and flow estimates.

On April 23, 2010, the Coast Guard, relying on BP’s remotely operated vehicles, said no oil was leaking from the well a mile under the sea. A day later, Coast Guard Rear Adm. Mary Landry announced that oil was leaking an estimated rate of 42,000 gallons a day. The Coast Guard and BP did not divulge how they reached that figure.

In the second week after the spill, the official flow rate was increased to 210,000 gallons a day, an estimate the government continued to use until May 27.

On May 24, BP informed Congress they used an “undisclosed method to generate much higher figures” than the official estimates, according to a report from a presidential commission investigating the spill. BP estimated that the flow rates were between 210,000 gallons and 1.6 million gallons a day, the January 2011 report said.

As the spill grew into weeks and months, and soiled fishing grounds, beaches and coastal marshes, independent scientists questioned the official flow rates. Eventually, the federal government convened teams of government and independent scientists to determine how much oil leaked out of the well. They came up with an official estimate of about 2.4 million gallons of oil a day on average.

Source

Stop the guess work, get your 100% free credit score and report today and know exactly what's on all three of your free credit reports

Swedish inflation-linked bonds may be understating the risk of price gains in the largest Nordic economy as most forecasters, including the central bank, predict inflation will outpace market bets.

The breakeven rate on Sweden

PARIS

Consumers are demanding better service in unprecedented ways.

In the past several months, public outrage has helped beat back efforts by Bank of America, Netflix and Verizon to raise fees or significantly alter services. The victories come at a time when money is tight all around and consumers are tapping into social media to air their frustrations with like-minded individuals.

“In the past people would be angry, but they’d be all over the country talking to their neighbors,” said Kit Yarrow a professor of consumer psychology at Golden Gate University. “Now they can connect online and they have power.”

For example, petitions on Change.org were instrumental in convincing Bank of America and Verizon to drop plans for new fees. “Bank Transfer Day,” which sprang to life after Bank of America’s announcement, called on Facebook supporters to move their money to a credit union or community bank.

Not every issue demands a mass call to action. But consumers basking in their newfound sense of empowerment should keep their expectations high going into 2012. Here are some strategies for making sure you get the service you deserve.

_____

Work the chain of command

Before you switch into outrage mode, give a company a fair chance to right any wrongs. It may be that the issue can be easily resolved with a simple email or phone call to customer service.

But if the customary means aren’t helpful, one strategy is to reach out to the company CEO or another high-ranking officer. Most major companies have “executive resolution teams” that field correspondence from customers who take their complaints to the top, says Edgar Dworsky, founder of ConsumerWorld.org, which features news and tips on deals. And these teams generally have a lot more leeway to appease customers.

To get your message in the right hands, start by searching under the “About” section on the company’s website. Even if executive contact information isn’t listed, you can usually figure out their email addresses based on the contact information listed for other employees. Otherwise, try mailing a letter to the corporate headquarters.

“Really boil it down,” Dworsky said. “If it goes on and on, they’re not going to have the time or patience to read it. Put yourself in the shoes of the recipient of the letter.”

Make it easy for the company by quickly spelling out the resolution that you’re seeking. And don’t forget to include any relevant information, such as order numbers or purchase dates.

Reach out and tweet

You don’t have to be Alec Baldwin to have your complaints heard on Twitter.

Most major companies have a social media presence by now. And since they don’t want negative mentions turning up in search results, any reasonable question or complaint is likely to get a response.

Even if you don’t hear back from anyone, it’s likely that companies are taking note of any comments about them.

At JetBlue, for example, a few customers recently tweeted about a crowded gate that only had one agent. That triggered the airline’s social media team to contact staff at the airport to find out if any additional agents were available to help out, said Morgan Johnston, JetBlue’s social media strategist.

But he noted that Twitter is more commonly used to request time-sensitive information that can be conveyed in 140 characters _ such as connecting flight or gate numbers. The company monitors its Twitter account around the clock and tries to respond within a few minutes.

“It’s more of an information booth than a traditional customer service channel,” Johnston said.

Twitter isn’t only for basic information requests, however. Citibank also monitors the site and tries to respond to any questions within an hour, said Frank Eliason, who heads the bank’s social media strategy. If customers need to share personal account information, they’re sent a link to a private page on the bank’s website where they can continue the exchange in the same Twitter-like format.

Call for backup

If you’re not getting anywhere and feel your complaints are being brushed off, it can help to get a third-party involved.

If you paid with your credit card, you can always file a claim to have a charge removed from your account. Keep in mind that you need a concrete reason _ such as a product defect or missed delivery _ to make such claims. Your card issuer isn’t going to investigate a dispute just because you were unhappy with a rude waiter.

Another option is to file a complaint with the Better Business Bureau at www.bbb.org/complaint. The local BBB office will contact the company within two days and ask for a response to the complaint on your behalf. The vast majority of complaints are resolved this way, said spokeswoman Katherine Hutt. That’s because businesses know their ratings are affected by whether they respond to complaints.

For more serious situations where you suspect fraud or feel your rights were violated, consider filing a complaint with the Federal Trade Commission or your state attorney general’s office. You likely won’t get a speedy resolution but at least those agencies will be on notice in case other customers are reporting similar abuses.

Stay connected online

In rare situations, you may feel a company policy calls for a broader action. In the case of Bank of America and Verizon, online petitions were key in quantifying the public’s widespread distaste for new fees.

“It’s an incredibly efficient means of customer feedback that’s not controlled by the company,” said Ben Rattray, founder of the Change.org, which hosted the petitions against both companies. “It’s customer feedback that’s controlled by customers.”

Your issues don’t necessarily have to be with a big national company either. Change.org plans to roll out localized versions so users can voice concerns about businesses in their communities.

Source

The job market is looking a little brighter at the start of the new year.

Weekly unemployment benefit applications have fallen to levels last seen more than three years ago. Holiday sales were solid. Service companies grew a little faster in December. And many small businesses say they plan to add jobs over the next three months.

The mix of private and government data released Thursday sketched a picture of an economy that is slowly strengthening, stoking optimism one day ahead of the government’s important read on December job growth.

“Businesses have increased hiring to meet the underlying pick-up in (consumer) demand,” said Neil Dutta, an economist at Bank of America Merrill Lynch.

The mostly positive reports had little impact on financial markets. Traders seemed more focused on the debt crisis in Europe, which could slow U.S. growth later this year. The Dow Jones industrial average dropped 37 points in midday trading. Broader indexes were mixed.

Weekly applications for unemployment benefits dropped to a seasonally adjusted 372,000 last week, the Labor Department said Thursday. That’s 11 percent lower than the same time last year.

The four-week average, which smooths fluctuations, fell to 373,250 _ the lowest level since June 2008.

When applications drop below 375,000 _ consistently _ they generally signal that hiring is strong enough to reduce the unemployment rate.

Steven Wood, an economist at Insight Economics, said applications last year averaged 411,000 per week, down from 459,000 per week in 2010.

That’s “a clear indication that the pace of layoffs has slowed,” Wood said.

U.S. service firms, which employ roughly 90 percent of the work force, grew a little faster in December, according to the Institute for Supply Management.

The trade group of purchasing managers said its index of non-manufacturing activity rose to 52.6. That’s slightly above November’s reading of 52 _ the lowest in nearly two years _ but well below last year’s high of 59.7 recorded in February.

Any reading above 50 indicates expansion.

An increase in new orders and stronger imports drove last month’s modest expansion. But a gauge of hiring showed many service firms were hesitant to add workers no fax payday advance.

Retailers, meanwhile, reported solid but not spectacular sales gains last month. And much of the increase stemmed from heavy discounting that will likely cut into profits.

Sales rose 3.5 percent in December for a group of 25 retail chains tracked by the International Council of Shopping Centers. Holiday sales, which cover the last two months of the year, rose 3.3 percent, a decent rise but less than last year’s gain.

Small businesses remain encouraged about their plans to hire over the next three months. The National Federation of Independent Business says the proportion of those firms that expect to add workers is slightly off from the three-year high hit last month.

Economists are predicting that overall hiring increased in December and will strengthen this year.

John Ryding, an economist at RDQ Economics, forecasts that employers added 180,000 jobs last month, a big jump from November’s 120,000 net jobs.

Economists surveyed by the Associated Press project that the economy will generate an average of 175,000 jobs per month this year. That would be a step up from average monthly gains of 130,000 last year and 78,000 in 2010.

In November, the unemployment rate fell to 8.6 percent from 9 percent. Still, about half that decline occurred because many of the unemployed gave up looking for work. When people stop looking for a job, they’re no longer counted as unemployed.

The pickup in hiring reflects some modest improvement in the economy. Growth will likely top 3 percent at an annual rate in the final three months of this year, economists expect. That would be a sharp improvement over the 1.8 percent growth in the July-September quarter.

Even so, many economists forecast that growth could slow to roughly 2 percent this year. Europe is almost certain to fall into recession because of its financial troubles. And without more jobs and higher incomes, consumers may have to cut back on spending. That could drag on growth in 2012.

___

AP Economics Writer Martin Crutsinger contributed to this report.

Source

Commodities may rebound from their first retreat in three years as developing economies shore up global growth, driving demand higher at a time when raw-material producers are already struggling to keep up.

Precious metals will advance 27 percent or more, industrial metals at least 17 percent and grains 5 percent, according to the median estimates in a Bloomberg survey of 143 analysts, traders and investors. Nine of the 15 commodities covered by a similar survey a year earlier reached their predicted highs in 2011, with another five no more than 4 percent away.

The Standard & Poor

Prime Minister Mario Monti is prescribing more

+%3Cp%3EDeserted+by+many+of+his+fellow+Republicans%2C+U.S.+House+Speaker+John+Boehner+surrendered+to+attacks+from+President+Barack+Obama+and+congressional+Democrats+and+agreed+to+a+two-month+extension+of+a+payroll+tax+cut+that+he+derided+hours+earlier.+%3C%2Fp%3E+%3Cp%3EThe+decision+kicks+the+fight+over+extending+the+tax+cut+for+160+million+U.S.+workers+into+early+next+year+without+resolving+deep+divides+over+how+to+cover+the+cost+through+2012.+%3C%2Fp%3E+%3Cp%3EDemocrats+are+focused+on+imposing+a+new+tax+on+income+exceeding+%241+million+while+Republicans+want+to+cut+the+federal+work+force+and+freeze+pay+for+government+workers.+Republicans+also+want+to+attach+policies+to+a+payroll+tax+cut+extension+–+opposed+by+Democrats+–+such+as+a+rewrite+of+the+unemployment+system+or+weaker+rules+for+industrial+emissions.+%3C%2Fp%3E+%3Cp%3EThe+deal+that+Boehner+and+Senate+Majority+Leader+Harry+Reid%2C+a+Nevada+Democrat%2C+agreed+to+yesterday+includes+language+that+calls+on+Obama+to+accelerate+approval+of+the+Keystone+XL+Canadian+oil+pipeline.+Both+chambers+plan+to+pass+the+tax+cut+deal+today+by+unanimous+consent%2C+which+means+most+lawmakers+won%92t+have+to+return+to+Washington+over+the+holiday+recess.+%3C%2Fp%3E+%3Cp%3EBoehner+could+be+in+a+weaker+position+entering+the+2012+negotiations+after+presiding+over+the+tumult+of+recent+days%2C+in+which+Senate+Republicans+opposed+Boehner%92s+stance+and+some+House+Republicans+had+begun+to+defect+as+well.+The+talks+next+year+will+unfold+in+the+months+ahead+of+a+presidential+election%2C+making+Boehner%92s+task+more+difficult.+%3C%2Fp%3E+No+Time+for+Celebration++%3Cp%3E%93I+don%92t+think+it%92s+a+time+for+celebration%2C%94+the+Ohio+Republican+told+reporters+yesterday.+%93Our+economy+is+struggling.+We%92ve+got+a+lot+of+work+ahead+of+us+in+the+coming+year.%94+%3C%2Fp%3E+%3Cp%3EAfter+days+of+relentless+attacks+from+Democrats+and+negative+headlines+in+the+press%2C+some+Republicans+were+pleased+to+see+Boehner+cut+his+losses.+%3C%2Fp%3E+%3Cp%3E%93The+great+danger+would+have+been+if+we+continued%2C%94+said+Representative+Tom+Cole+of+Oklahoma.+%93We+made+our+points.+We%92ve+gotten+some+modifications.%94+%3C%2Fp%3E+%3Cp%3EThe+pressure+for+Boehner+to+cut+a+deal+was+building+for+days.+Republican+Senators+Olympia+Snowe+of+Maine%2C+Scott+Brown+of+Massachusetts%2C+John+McCain+of+Arizona+and+Bob+Corker+of+Tennessee%2C+criticized+Boehner%92s+move+to+reject+the+bipartisan+two-month+extension+after+it+passed+the+Senate+on+Dec.+17%2C+just+two+weeks+before+the+tax+cut+was+set+to+expire.+%3C%2Fp%3E+Isolation+in+Opposition++%3Cp%3EBoehner+became+more+isolated+in+his+opposition+to+the+Senate-passed+bipartisan+bill+after+the+top+Republican+in+the+Senate%2C+Mitch+McConnell+of+Kentucky%2C+issued+a+statement+before+lunchtime+yesterday+urging+the+House+to+pass+the+short-term+measure.+%3C%2Fp%3E+%3Cp%3EMcConnell+said+the+House+should+pass+a+bill+that+averts+%93any+disruption+in+the+payroll+tax+holiday+or+other+expiring+provisions+and+allows+Congress+to+work+on+a+solution+for+the+longer+extensions.%94+%3C%2Fp%3E+%3Cp%3EThat+statement+%93sealed+the+deal%94+in+ending+the+standoff%2C+said+Brian+Gardner%2C+the+senior+vice+president+for+Washington+research+at+KBW+Inc.+%3C%2Fp%3E+%3Cp%3EBoehner+held+a+conference+call+with+Republicans+yesterday.+On+a+similar+conference+call+following+the+Dec.+17+Senate+passage+of+the+two-month+extension%2C+rank-and-file+Republicans+pressed+Boehner+to+oppose+the+measure.+They+did+so+on+Dec.+20+as+the+House+rejected+the+Senate+bill+229-193.+%3C%2Fp%3E+Different+Tone++%3Cp%3EHouse+Republicans+who+participated+in+yesterday%92s+call+said+the+tone+was+much+different+than+after+the+Senate+vote.+%3C%2Fp%3E+%3Cp%3E%93It+wasn%92t+truly+a+conference+call%2C%94+Representative+Jack+Kingston%2C+a+Georgia+Republican%2C+said.+%93It+wasn%92t+a+solicitation+of+opinion.%94+%3C%2Fp%3E+%3Cp%3EThough+most+House+Republicans+still+want+a+yearlong+deal%2C+Kingston+said+that+it+was+time+for+the+party+to+move+forward.+%3C%2Fp%3E+%3Cp%3E%93This+takes+the+whole+thing+off+the+front+page+and+that%92s+a+good+thing%2C%94+he+said.+%3C%2Fp%3E+%3Cp%3ESome+House+Republicans+said+yesterday+they+don%92t+think+Boehner%92s+agreement+to+pass+the+two-month+extension+puts+him+in+immediate+danger+of+losing+the+support+of+the+Republican+majority+he+leads.+%3C%2Fp%3E+%3Cp%3ERepresentative+Sean+Duffy%2C+a+freshman+Republican+from+Wisconsin%2C+said+Boehner+was+trying+to+reflect+the+views+of+his+colleagues.+Duffy+said+he+is+pleased+that+a+tax+increase+will+be+avoided+in+January+and+doesn%92t+think+the+saga+would+hurt+Republicans+in+the+2012+election.+%3C%2Fp%3E+%3Cp%3E%93I+think+the+American+public+will+look+at+the+economy+and+job+growth+and+the+lack+thereof%2C%94+Duffy+said.+%93I+don%92t+think+this+is+an+indicator+of+what+will+happen+next+year.+%3C%2Fp%3E+Provisions+Extended++%3Cp%3EWithout+congressional+action%2C+the+payroll+tax+for+employees+would+rise+in+January+to+6.2+percent+from+the+current+4.2+percent.+The+tax+funds+Social+Security.+The+deal+also+averts+an+end+to+emergency+unemployment+benefits+set+to+expire+on+Dec.+31+and+assures+doctors+their+Medicare+reimbursement+rates+won%92t+be+reduced+starting+in+January.+%3C%2Fp%3E+%3Cp%3EMichael+Feroli%2C+%3Ca+topic_url%3D%22http%3A%2F%2Ftopics.bloomberg.com%2Fjpmorgan-chase-%26amp%3B-co%2F%22+href%3D%22http%3A%2F%2Fwww.bloomberg.com%2Fapps%2Fquote%3Fticker%3DJPM%3AUS%22+density%3D%22sparse%22+title%3D%22Get+Quote%22+ticker%3D%22JPM%3AUS%22+class%3D%22web_ticker%22%3EJPMorgan+Chase+%26amp%3B+Co.+%28JPM%29%92s+New+York-based+chief+U.S.+economist%2C+said+economic+growth+would+be+reduced+by+0.5+percentage+points+in+the+first+quarter+and+1.5+percentage+points+in+the+second+quarter+of+2012+if+the+payroll+tax+cut+and+expanded+unemployment+benefits+weren%92t+continued.+If+they+are+extended+for+the+year%2C+he+expects+growth+of+2.5+percent+in+the+first+half+of+the+year%2C+he+said+in+a+Dec.+16+note+to+clients.+%3C%2Fp%3E+%3Cp%3EHouse+Ways+and+Means+Committee+Chairman+Dave+Camp%2C+a+Michigan+Republican%2C+will+introduce+the+legislation+in+the+House+today+that+will+implement+the+agreement.+%3C%2Fp%3E+Unanimous+Consent++%3Cp%3EThe+measure+will+be+brought+up+in+the+House+under+unanimous+consent+to+avoid+requiring+lawmakers+to+return+and+could+be+cleared+in+the+Senate+later+in+the+day+using+the+same+process.+%3C%2Fp%3E+%3Cp%3EThe+legislation+includes+one+difference+from+the+version+passed+by+the+Senate.+A+yearlong+payroll+tax+cut+extension+would+apply+to+the+first+%24110%2C100+in+wages.+To+prevent+someone+from+shifting+all+their+income+into+the+first+two+months+of+the+year%2C+the+Senate+bill+limited+the+tax+break+to+the+first+%2418%2C350+a+worker+earns.+%3C%2Fp%3E+%3Cp%3ERepublicans+changed+the+bill+to+apply+the+tax+cut+to+the+full+%24110%2C100+in+wages%2C+according+to+information+provided+by+Camp%92s+office.+That+makes+it+easier+for+payroll+processors+to+continue+the+tax+cut+if+it+is+extended+beyond+February.+%3C%2Fp%3E+%3Cp%3EWorkers+who+earn+more+than+%2418%2C350+during+the+first+two+months+of+the+year+will+pay+an+additional+2+percentage+point+tax+when+they+file+their+returns+in+2013.+%3C%2Fp%3E+%3Cp%3EThe+bill+is+HR+3630.+%3C%2Fp%3E++%3Cp%3E%3Ca+href%3D%27http%3A%2F%2Fwww.bloomberg.com%2Fnews%2F2011-12-22%2Fhouse-s-boehner-senate-s-reid-said-to-agree-on-u-s-payroll-tax-cut-plan.html%27+rel%3D%27nofollow%27%3ESource%3C%2Fa%3E%3C%2Fp%3E+

The euro slid below $1.30 on Wednesday for the first time since the early days of 2011 and Italian borrowing rates rose ominously, as the optimism from a dramatic European summit last week fades with the realization that the continent’s underlying debt problems remain unsolved.

Italy’s last bond auction of the year Wednesday showed the heavily indebted country facing even higher rates to get investors to lend it their cash. The eurozone’s third-largest economy paid 6.47 percent interest to borrow euro3 billion ($3.95 billion) for five years at a bond auction, up from 6.30 percent just a month ago.

Higher rates are a sign that last week’s agreement to tighten the rules against eurozone governments piling up debt has failed to restore confidence.

That’s evident in the performance of the euro too, which has suffered an acute bout of selling since Friday’s deal. On Wednesday, it traded below $1.30 for the first time since January 12, hitting a low of $1.2968.

As experts from the different capitals start the laborious work of putting the deal into practice through a new treaty, the questions continued about the financial steadiness of governments, banks and the eurozone economy, which is showing signs of sinking back into recession. Industrial production fell a further 0.1 percent in October, yet another sign of weakness many think will lead to a recession that will only make repaying debt harder.

“The process of negotiating the final deal to suit all will only add to doubts about its relevance in the long run _ meanwhile the immediate crisis continues,” said Elisabeth Afseth, an analyst at Evolution Securities.

While praised as a step toward preventing another buildup of debt in coming years, last week’s deal does not provide a convincing resolution to the crisis. It does not reduce current debt levels and offered little reassurance that eurozone governments will be able to find the money they need to roll over those debts in the coming few months.

It did not convince markets there is a financial backstop big and flexible enough to support Italy and Spain, the latest focus of the two-year old debt crisis that began in October 2009 when Greece admitted its finances were much worse than it had previously said.

Greece, Ireland and Portugal have all needed bailouts as fear of default spread from country to country and drove up their borrowing rates, eventually cutting them off from bond markets.

The summit did come up with a commitment from EU governments to loan up to euro200 ($264 billion) to the International Monetary Fund, which in turn could help out the eurozone.

Leaders also agreed to activate a new euro500 billion ($659 billion) euro backstop fund, the European Stability Mechanism, a year ahead of time in July. But since the existing rescue funds, which have the same financing caps, would expire once the ESM comes into force, the overall amount of money available from the eurozone to help out struggling governments will remain the same payday loans no teletrack.

The fund is still considered too small to convincingly backstop Italy, which has euro1.9 trillion ($2.5 trillion) in outstanding debt. That leaves many economists saying that eventually the European Central Bank will have to step up its so-far limited purchases of government debt.

They say only a clear statement by the ECB that it will buy as much debt as needed to keep borrowing costs down can convince markets. That is because the ECB has the power to buy bonds with newly-created money.

The bank however has held off, with ECB head Mario Draghi saying governments must cut deficits and take steps to improve growth themselves to win back bond market confidence _ and not rely on central bank bailouts.

The current limited bond buys have eased some of the pressure on Italy, but the bank says they are only intended to steer short term interest rates, which is its main job.

Draghi must also contend with fierce opposition to printing money to fund large-scale bond purchase from Germany’s Bundesbank central bank, which is part of the ECB.

Bundesbank head Jens Weidmann is the leading critic of the idea, saying that creating new money would violate the bank’s legal mandate, since the EU treaty requires it to fight inflation as its first priority.

The debt treaty does provide some assurance governments are working together to address the euro’s flaws in the long-term. But it will not be signed until March at the earliest, and a text must first win approval from the 17 eurozone governments and nine others that the EU hopes will sign. Britain has said it will not.

The first draft of the new treaty is expected to be circulated among European capitals sometime next week, EU officials say, but governments will likely try to keep its content confidential until some of the more tricky issues have been resolved.

The biggest among these is how the new accord will interact with the existing Treaty of the European Union and whether it can rely on EU institutions, such as the European Commission and the European Court of Justice, to enforce the new budget rules.

Governments and national parliaments are also likely to watch closely how much sovereignty they are transferring to Brussels or their fellow euro members and whether their own constitutions will be affected.

__

Gabriele Steinhauser is Brussels contributed to this report.

Source