Dow, S&P rise on jobs, but Apple bites Nasdaq again

NEW YORK (Reuters) - The Dow and the S&P 500 advanced modestly on Friday, though another sell-off in Apple depressed technology shares and kept the Nasdaq negative, overshadowing a sharply better-than-expected jobs report.

Trading was light, continuing the week's trend of slight moves and anemic volume. The S&P 500 ended up a mere 0.1 percent for the week, following several volatile sessions that repeatedly pushed it in and out of positive territory. The benchmark index is just 3.8 percent below the 2012 intraday high of 1,474.51 reached in mid-September.

Equities opened higher after the non-farm payrolls report, which showed 146,000 jobs added in November, far more than had been expected, while the U.S. unemployment rate dropped to 7.7 percent. A sour reading on consumer sentiment caused an erosion of those gains, though markets rebounded going into the close.

The Thomson Reuters/University of Michigan's consumer sentiment index for early December fell to its lowest level since August. Sentiment fell on growing concerns over the "fiscal cliff" debates in Washington, which have been a major factor preventing broader moves as well.

"We're not as concerned as we were a few months ago because of improvement like you can see in the employment number, but there's such a wild card over the cliff," said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland, Ohio. "There are such concerns about what could happen that markets will be overhung until a resolution is more certain."

One of the biggest drags on the Nasdaq was Apple which fell 2.6 percent to $533.25, extending its losses for the week to 8.9 percent. This was the worst week for the stock since May 2010, and with the losses, the stock of the largest U.S. company by market value is now down 24.4 percent from an all-time intraday high reached in late September.

In Friday's session, Apple's 50-day moving average fell to $599.52 - below its 200-day moving average at $601.38. The weakness drove the S&P information technology sector <.gspt> lower. The index fell 0.6 percent and was the weakest of the S&P 500's 10 major industry sectors on Friday.

The Dow Jones industrial average <.dji> gained 81.09 points, or 0.62 percent, to 13,155.13 at the close. The Standard & Poor's 500 Index <.spx> rose 4.13 points, or 0.29 percent, to 1,418.07. The Nasdaq Composite Index <.ixic> slipped 11.23 points, or 0.38 percent, to close at 2,978.04.

For the week, the Nasdaq is down 1.1 percent, hurt largely by the decline in Apple.

The Dow, which does not count Apple as a component, rose 1 percent for its third straight week of gains. The S&P 500 is also up for three straight weeks, rising 4.3 percent over that period.

The equity market has regained most of the ground it lost following President Barack Obama's re-election as markets turned their focus to the coming "fiscal cliff." Market response to the macroeconomic data remained muted as negotiations continued to command investor attention.

U.S. House Speaker John Boehner said that talks this week with President Barack Obama produced no progress, and he renewed his demand that the president provide a new offer to avert the series of tax increases and spending cuts that are likely to hurt economic demand in 2013.

Material shares <.gspm> were the strongest performers of the day, with that index up 0.8 percent. Freeport-McMoRan Copper & Gold Co gained 2.9 percent to $31.70 while Dow Chemical added 2.2 percent to $30.30.

Amarin Corp fell 18.9 percent to $9.69 after the biopharmaceutical company raised $100 million in financing to help it launch its heart drug, Vascepa, but disappointed investors, who had hoped for a sale or partnership.

CombiMatrix Corp shares more than quadrupled, soaring 336.6 percent to $8.60 after the company said two studies published in a medical journal favored technology it uses for prenatal diagnosis of genetic abnormalities over traditional technologies.

About 52 percent of shares listed on the New York Stock Exchange closed higher while slightly more than 50 percent of Nasdaq-listed stocks closed lower.

Volume was light, with about 5.47 billion shares changing hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, below the daily average so far this year of about 6.48 billion shares.

(Editing by Jan Paschal)

Read More..

As Egypt’s Crisis Deepens, Morsi Turns to Muslim Brotherhood

CAIRO — Facing the most serious crisis of his presidency, Mohamed Morsi is leaning more closely than ever on his Islamist allies in the Muslim Brotherhood, betting on their political muscle to push through a decisive victory in the referendum on Egypt’s divisive draft constitution.

As tens of thousands chanted for his downfall or even imprisonment in a fourth day of protests outside the presidential palace, Mr. Morsi’s advisers and Brotherhood leaders acknowledged Friday that outside his core base of Islamist supporters he feels increasingly isolated in the political arena and even within his own government. The Brotherhood “is who he can depend on,” said one person close to Mr. Morsi, speaking on the condition of anonymity to discuss internal deliberations. Mr. Morsi appeared to believe that he and the Brotherhood could deliver a strong vote for the draft constitution in next Saturday’s referendum — strong enough to discredit the opposition, allow him a fresh start and restore some of his authority.

Struggling to quell protests and violence around the country, Mr. Morsi appeared to offer a new concession to his opponents Friday by opening the door to a possible delay in the referendum on the draft constitution, now scheduled for Dec. 15, and even potential revisions by the Islamist-dominated constitutional assembly. But opposition leaders turned a deaf ear, reiterating their demands to begin an overhaul of the assembly itself.

“He has to take these steps, and I hope that he listens to us,” Mohamed ElBaradei, the former United Nations diplomat and coordinator of the opposition front, said Friday in televised response.

But Mr. Morsi’s advisers said he held out little hope of reaching a compromise and instead remained reliant on rallying his Islamist base, a strategy he displayed most vividly in a televised speech to the nation Thursday night. Addressing clashes between his Islamist supporters and their opponents that had killed at least six, Mr. Morsi all but declined to play the unifier, something he could have accomplished by sympathizing equally with those injured or killed on either side.

Instead, he struck the themes with the most resonance to his Islamist supporters, arguing that his backers outside the palace had come under attack by hired thugs paid with “black money” from a conspiracy of loyalists to the ousted president, Hosni Mubarak, and foreign interests determined to thwart the revolution. And he also said that some of the culprits had “direct links” to the political opposition, calling on Egyptians “to stand up to these heinous crimes.”

Mr. Morsi’s turn back toward his Islamist base is a bet that the Brotherhood’s political machine can easily overcome even the re-energized secular opposition. And his advisers argue that the achievement of even an imperfect constitution will prove his commitment to the democratic rule of law and restore his credibility. But it also contributes to the paralyzing polarization now gripping Egyptian politics. It risks tarnishing both the Constitution and Mr. Morsi as purely partisan and unable to represent all Egyptians. And it makes Mr. Morsi even more dependent on the same insular group that plucked him from anonymity and propelled him to the presidency.

The result could be a hollow victory that perpetuates the instability of the political transition. “O.K., so you will have the referendum on Dec. 15 and you will end up with a ‘yes’ vote,” said Khaled Fahmy, a historian at the American University in Cairo. “On Dec. 16, Egypt will be infinitely more difficult to govern than it already is now.”

Some senior Brotherhood leaders have acknowledged that the bruising battle may hurt their party’s fortunes in the next parliamentary elections, which are set for February if the constitution passes. “I don’t think we will have the same level of trust, and I think our numbers will probably be affected,” one senior Brotherhood leader said Friday, speaking on the condition of anonymity to discuss internal deliberations.

Two employees of The New York Times contributed reporting.

Read More..

New iPad mini orders will be delivered in time for Christmas

Read More..

Snake on a Plane - For Real - Forces Emergency Landing

People Pets

By Alison Schwartz

12/06/2012 at 07:55 PM EST

An Egyptian cobra, similar to the reptile pictured, made its way on-board a Kuwait-bound flight

Annie Katz/Getty

In a scene that played out like the plotline of a Samuel L. Jackson movie, some not-so-precious cargo made its way onto an Egypt Air flight. Yes, there was a snake on a plane.

But unlike the 2006 thriller Snakes on a Plane – in which Jackson takes charge on a reptile-rife voyage – the smuggled snake didn't cause any fatalities.

A 48-year old Jordanian man snuck the Egyptian cobra onto the 90-passenger flight from Cairo to Kuwait on Monday. After the snake bit him and began slithering through the aircraft, the plane made an emergency landing on the Red Sea in the resort town of Al Ghardaqah, reports The Jordan Times.

The man, identified as Akram Abdul Latif, ignored doctors' suggestions to wait 24 hours in a hospital for observation. (According to wildlife experts, reports CNN, cobra venom is lethal enough to kill a full-grown elephant in three hours or a human in 15 minutes.)

The original flight finished its trip later on Monday morning after authorities confiscated the cobra, and Latif made his way to Kuwait that night.

Perhaps snakes are frequent flyers: Earlier this year, a golden tree snake slithered its way onto a cargo plane in Australia.

Read More..

Celebrations planned as Wash. legalizes marijuana

SEATTLE (AP) — Legal marijuana possession becomes a reality under Washington state law on Thursday, and some people planned to celebrate the new law by breaking it.

Voters in Washington and Colorado last month made those the first states to decriminalize and regulate the recreational use of marijuana. Washington's law takes effect Thursday and allows adults to have up to an ounce of pot — but it bans public use of marijuana, which is punishable by a fine, just like drinking in public.

Nevertheless, some people planned to gather at 12:01 a.m. PST Thursday to smoke in public beneath Seattle's Space Needle. Others planned a midnight party outside the Seattle headquarters of Hempfest, the 21-year-old festival that attracts tens of thousands of pot fans every summer.

"This is a big day because all our lives we've been living under the iron curtain of prohibition," said Hempfest director Vivian McPeak. "The whole world sees that prohibition just took a body blow."

In another sweeping change for Washington, Gov. Chris Gregoire on Wednesday signed into law a measure that legalizes same-sex marriage. The state joins several others that allow gay and lesbian couples to wed.

That law also takes effect Thursday, when gay and lesbian couples can start picking up their wedding certificates and licenses at county auditors' offices. Those offices in King County, the state's largest and home to Seattle, and Thurston County, home to the state capital of Olympia, planned to open the earliest, at 12:01 a.m. Thursday, to start issuing marriage licenses. Because the state has a three-day waiting period, the earliest that weddings can take place is Sunday.

The Seattle Police Department provided this public marijuana use enforcement guidance to its officers via email Wednesday night: "Until further notice, officers shall not take any enforcement action — other than to issue a verbal warning — for a violation of Initiative 502."

Thanks to a 2003 law, marijuana enforcement remains the department's lowest priority. Even before I-502 passed on Nov. 6, police rarely busted people at Hempfest, despite widespread pot use, and the city attorney here doesn't prosecute people for having small amounts of marijuana.

Officers will be advising people to take their weed inside, police spokesman Jonah Spangenthal-Lee wrote on the SPD Blotter. "The police department believes that, under state law, you may responsibly get baked, order some pizzas and enjoy a 'Lord of the Rings' marathon in the privacy of your own home, if you want to."

Washington's new law decriminalizes possession of up to an ounce for those over 21, but for now selling marijuana remains illegal. I-502 gives the state a year to come up with a system of state-licensed growers, processors and retail stores, with the marijuana taxed 25 percent at each stage. Analysts have estimated that a legal pot market could bring Washington hundreds of millions of dollars a year in new tax revenue for schools, health care and basic government functions.

But marijuana remains illegal under federal law. That means federal agents can still arrest people for it, and it's banned from federal properties, including military bases and national parks.

The Justice Department has not said whether it will sue to try to block the regulatory schemes in Washington and Colorado from taking effect.

"The department's responsibility to enforce the Controlled Substances Act remains unchanged," said a statement issued Wednesday by the Seattle U.S. attorney's office. "Neither states nor the executive branch can nullify a statute passed by Congress" — a non-issue, since the measures passed in Washington and Colorado don't "nullify" federal law, which federal agents remain free to enforce.

The legal question is whether the establishment of a regulated marijuana market would "frustrate the purpose" of the federal pot prohibition, and many constitutional law scholars say it very likely would.

That leaves the political question of whether the administration wants to try to block the regulatory system, even though it would remain legal to possess up to an ounce of marijuana.

Colorado's measure, as far as decriminalizing possession goes, is set to take effect by Jan. 5. That state's regulatory scheme is due to be up and running by October 2013.

___(equals)

Johnson can be reached at https://twitter.com/GeneAPseattle

Read More..

Syria’s Chemical Weapons Moves Lead U.S. to Be Flexible

WASHINGTON — When President Obama first warned Syria’s leader, President Bashar al-Assad, that even making moves toward using chemical weapons would cross a “red line” that might force the United States to drop its reluctance to intervene in the country’s civil war, Mr. Obama took an expansive view of where he drew that boundary.

“We cannot have a situation where chemical or biological weapons are falling into the hands of the wrong people,” he said at an Aug. 20 news conference. He added: “A red line for us is we start seeing a whole bunch of chemical weapons moving around or being utilized. That would change my calculus.”

But in the past week, amid intelligence reports that some precursor chemicals have been mixed for possible use as weapons, Mr. Obama’s “red line” appears to have shifted. His warning against “moving” weapons has disappeared from his public pronouncements, as well as those of Secretary of State Hillary Rodham Clinton. The new warning is that if Mr. Assad makes use of those weapons, presumably against his own people or his neighbors, he will face unspecified consequences.

It is a veiled threat that Defense Secretary Leon E. Panetta repeated Thursday: “The president of the United States has made very clear that there will be consequences, there will be consequences if the Assad regime makes a terrible mistake by using these chemical weapons on their own people.”

The White House says the president has not changed his position at all — it is all in the definition of the word “moving.”

Tommy Vietor, the spokesman for the National Security Council, said Thursday that “ ‘moving around’ means proliferation,” as in allowing extremist groups like Hezbollah, which has training camps near the weapons sites, to obtain the material.

Such shifts are nothing new in global standoffs; the Israelis have moved their lines more than a half-dozen times in recent years when talking about how close they would allow Iran to get toward the capacity to build a nuclear weapon before taking action.

But for Mr. Obama, the change in wording reflects the difficult politics and logistics of acting pre-emptively against Mr. Assad. No American president has talked more about the need to prevent the use of weapons of mass destruction, and to lock down existing stockpiles. And no president has insisted more publicly that this is a time for the United States to exit wars in the Middle East, not enter new ones.

“We’re kind of boxed in,” an administration official said this week as intelligence agencies in the United States and its allies were trying to figure out the worrisome activity at one or two of the three dozen sites where Syria’s chemical weapons are stockpiled. “There’s an issue of presidential credibility here,” the official said. “But our options are quite limited.”

The chief limitation, American and Israeli officials say, is that chemical weapons sites cannot be safely bombed. “That could create the exact situation we are trying to avoid,” said one senior American military official, who like several others interviewed would speak only on the condition of anonymity.

Making things worse, many of the storage sites are near the border with Jordan, raising the possibility that any plume of chemicals created by an attack could drift over the territory of an American ally. Putting troops on the ground has never been a serious option, American officials say.

But the Israelis clearly take the concept of pre-emptive strikes seriously. They conducted one against Saddam Hussein’s nuclear reactor in Iraq in 1981, and another, against a North Korean-built reactor in the Syrian desert, in September 2007.

“I don’t think we’d act again unless we thought Hezbollah might get their hands on these weapons,” said one senior Israeli official. “But we’ve proven that we are willing to do it, and probably more willing than the Americans.”

When Mr. Obama warned against moving chemical weapons, administration officials said he did not mean shifting the weapons from one site to another, which has happened several times, but preparing them for use.

But in recent days, that is exactly what intelligence agencies fear has happened. American officials have detected that Syrian troops have mixed small amounts of precursor chemicals for sarin, a deadly nerve gas, at one or two storage sites — though there is no indication that Mr. Assad, whose troops are under fierce assault from rebel forces, is ready to order the use of his arsenal.

Mr. Panetta said Thursday that the administration was “very concerned, very concerned” that as the opposition fighters close in on Damascus, the Syrian capital, the Assad government might actually use a chemical weapon. Over the past four decades, Syria has amassed one of the largest undeclared stockpiles of chemicals in the world, including huge supplies of mustard gas, sarin nerve agent and cyanide, according to unclassified reports by the C.I.A.

Read More..

No Grammy love for Justin Bieber, One Direction

LOS ANGELES (Reuters) – Irate fans of Justin Bieber and boy band One Direction took to social media on Thursday to voice their outrage after being snubbed by the Grammys for a chance to win the biggest honors in the music industry.

Indie-pop band fun and rapper Frank Ocean led the 2013 nominations, tying with The Black Keys, Mumford & Sons, Jay-Z and Kanye West for six nods. But The Recording Academy overlooked some of the year’s biggest and most commercially successful artists in Wednesday’s nominations.

While Bieber, 18, who won three American Music Awards in November, stayed quiet on his omission, his manager Scooter Braun took to Twitter.

“Grammy board u blew it on this one. the hardest thing to do is transition, keep the train moving. The kid delivered. Huge successful album, sold out tour, and won people over. … This time he deserved to be recognized,” Braun posted in a series of tweets.

Many of Bieber’s 31 million Twitter fans quickly followed suit, with hashtags such as #BieberForGrammys trending on the micro-blogging service.

The Canadian singer, who has never won a Grammy, in June released album “Believe,” showcasing a more grown-up image. The album, which produced top 10 hits “Boyfriend” and “As Long As You Love Me,” has sold more than 1.1 million copies.

British boy band One Direction was also left empty-handed despite their debut album “Up All Night” having topped the Billboard 200 album chart.

The quintet has performed sold-out shows across the world and won three MTV video music awards earlier this year.

The Grammy Awards are voted on by members of The Recording Academy and recognize achievement in 81 categories.

Lady Gaga, rapper Nicki Minaj and Korea’s Psy also failed to snag any nominations.

While Gaga hasn’t released new music this year, focusing on her global tour, Minaj released “Pink Friday: Roman Reloaded,” which topped the Billboard 200 chart and spawned singles such as “Starships.”

Psy may have YouTube’s most watched video ever with “Gangnam Style,” – over 897 million views – but he missed out on becoming the first Korean artist to receive a Grammy nod.

The Grammy Awards will be handed out at a live performance show and ceremony on February 10 in Los Angeles.

(Reporting By Piya Sinha-Roy; editing by Jill Serjeant and Todd Eastham)

Internet News Headlines – Yahoo! News

Read More..

Kate Receives Hospital Visit from Pippa and James

12/05/2012 at 07:30 PM EST

James and Pippa Middleton

Alpha /Landov; Inset:Allpix/ plash News Online

The Duchess of Cambridge had more hospital visitors on Wednesday.

Just two days after husband Prince William, 30, was photographed leaving the King Edward VII Hospital in Central London where a pregnant Kate, 30, was admitted for hyperemesis gravidarum, her sister, Pippa Middleton, brother James and mom Carole (not pictured), also dropped by to keep the mom-to-be company.

Pippa was bundled up in a coat, sporting a tan-colored ensemble, while her brother was casually dressed in jeans and layered tops.

The Palace announced the Duchess's pregnancy Monday in a statement. "Their Royal Highnesses The Duke and Duchess of Cambridge are very pleased to announce that The Duchess of Cambridge is expecting a baby," it said. "The Queen, The Duke of Edinburgh, The Prince of Wales, The Duchess of Cornwall and Prince Harry and members of both families are delighted with the news."

Read More..

Dow, S&P rise, but Nasdaq sours with Apple in wild day

NEW YORK (Reuters) - A volatile trading session ended with U.S. stocks mostly higher on Wednesday, even as Apple, the most valuable company in the United States, suffered its worst day of losses in almost four years.

In a strange occurrence, Apple accounted for the entirety of the Nasdaq 100's <.ndx> fall of 1.1 percent, while the Dow industrials - which do not include Apple as a component - enjoyed the best day since November 28.

With the drop, Apple shed nearly $35 billion in market capitalization, its biggest one-day market-cap loss ever. The company's market value, or market capitalization, now stands at $506.85 billion.

"Today's move is because of index weightings, with the Nasdaq down because of Apple's decline," said Rex Macey, chief investment officer of Wilmington Trust in Atlanta. "The S&P is up because Apple isn't as big a weight in that index, and the Dow is up even more because it isn't there at all."

The broad market seesawed, with the S&P 500 dropping into negative territory before it rebounded off the 1,400 level, seen as a key support point over the past two weeks. Investors cited comments from President Barack Obama suggesting a potential near-term resolution to the "fiscal cliff" wrangling in Washington as a catalyst for the rebound.

Shares of The Travelers Cos Inc rose 4.9 percent to $74. The stock ranked as the Dow's top percentage gainer after the insurance company said it intended to resume stock buybacks it had temporarily suspended while it assessed its exposure to Superstorm Sandy. The company also said a preliminary estimate of net losses from Sandy was about $650 million after tax.

The Dow Jones industrial average <.dji> rose 82.71 points, or 0.64 percent, to 13,034.49 at the close. The Standard & Poor's 500 Index <.spx> gained 2.23 points, or 0.16 percent, to 1,409.28. But the Nasdaq Composite Index <.ixic> fell 22.99 points, or 0.77 percent, to end at 2,973.70.

Apple, the largest U.S. company by market capitalization and a big weight in both the S&P 500 and the Nasdaq, fell 6.4 percent to $538.79. Apple is down more than 20 percent from an all-time high reached in late September, putting the stock into bear market territory.

Banking shares were led higher by a 6.3 percent jump in Citigroup to $36.46 after the company said it would cut 4 percent of its workforce. The S&P financial sector index <.gspf> climbed 1.3 percent, and Bank of America hit a 52-week high of $10.55 before pulling back slightly. The stock, a Dow component, ended at $10.46, up 5.7 percent for the day.

Cyclical sectors, which are tied to the pace of economic growth, rallied on optimism about progress on a solution to avoid the fiscal cliff. An S&P index of industrial stocks <.gspi> rose 1.1 percent, buoyed by Caterpillar Inc , up 2.2 percent at $86.05, while an S&P index of energy shares <.gspe> climbed 0.7 percent. The Dow Jones Transportation Average <.djt> gained 0.9 percent, with CSX Corp jumping 2.7 percent to $20.16.

Still, Apple struggled throughout the session. Market participants cited a host of reasons for the drop in the iPad maker's stock, including a consultant's report about the company losing share in the tablet market and reports that margin requirements had been raised by at least one clearing firm, as well as year-end tax selling ahead of a possible rise in capital-gains tax rates next year.

On the Washington front, Obama told the Business Roundtable, a group of chief executives, on Wednesday that a fiscal cliff deal was possible "in about a week" if Republicans acknowledged the need to raise taxes on the wealthiest Americans.

Equities have struggled to gain ground recently because of concerns over the fiscal cliff - a series of mandatory spending cuts and tax increases effective in early January that could push the U.S. economy into recession next year. Recently equities have moved on any whiffs of sentiment from Washington in headlines about negotiations.

"Obama's comments generated a lot of optimism, but to the extent the market believes them, that's how much we're setting ourselves up for a decline if that deadline passes with no progress," said Macey, who helps oversee about $20 billion in assets.

In an interview on CNBC after the market closed, U.S. Treasury Secretary Tim Geithner said that uncertainty over the fiscal cliff was standing in the way of stronger economic growth, and that there was no prospect for an agreement if tax rates didn't rise on the wealthiest taxpayers.

The stock of Freeport-McMoRan Copper & Gold Inc fell 16 percent to $32.17 and ranked as the S&P 500's biggest percentage decliner. The company said it was acquiring Plains Exploration & Production Co and McMoRan Exploration Co in two separate deals for $9 billion in cash and stock in a major expansion into energy.

McMoRan Exploration soared 87 percent to $15.82 and Plains surged 23.4 percent to $44.50.

About half of the stocks traded on the New York Stock Exchange closed in positive territory, while about 54 percent of Nasdaq-listed shares ended lower.

Volume was higher than it has been in recent sessions, with about 6.93 billion shares changing hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, above the daily average so far this year of about 6.48 billion shares.

(Editing by Jan Paschal)

Read More..

For Greece, Oligarchs Are an Obstacle to Recovery

ATHENS — A dynamic entrepreneur, Lavrentis Lavrentiadis seemed to represent a promising new era for Greece. He dazzled the country’s traditionally insular business world by spinning together a multibillion-dollar empire just a few years after inheriting a small family firm at 18. Seeking acceptance in elite circles, he gave lavishly to charities and cultivated ties to the leading political parties.

Icon/Reuters

Lavrentis Lavrentiadis embezzled money from a bank he controlled, prosecutors say.

But as Greece’s economy soured in recent years, his fortunes sagged and he began embezzling money from a bank he controlled, prosecutors say. With charges looming, it looked like his rapid rise would be followed by an equally precipitous fall. Thanks to a law passed quietly by the Greek Parliament, however, he avoided prosecution, at least for a time, simply by paying the money back.

Now 40, Mr. Lavrentiadis is back in the spotlight as one of the names on the so-called Lagarde list of more than 2,000 Greeks said to have accounts in a Geneva branch of the bank HSBC and who are suspected of tax evasion. Given to Greek officials two years ago by Christine Lagarde, then the French finance minister and now head of the International Monetary Fund, the list was expected to cast a damning light on the shady practices of the rich.

Instead, it was swept under the rug, and now two former finance ministers and Greece’s top tax officials are under investigation for having failed to act.

Greece’s economic troubles are often blamed on a public sector packed full of redundant workers, a lavish pension system and uncompetitive industries hampered by overpaid workers with lifetime employment guarantees. Often overlooked, however, is the role played by a handful of wealthy families, politicians and the news media — often owned by the magnates — that make up the Greek power structure.

In a country crushed by years of austerity and 25 percent unemployment, average Greeks are growing increasingly resentful of an oligarchy that, critics say, presides over an opaque, closed economy that is at the root of many of the country’s problems and operates with virtual impunity. Several dozen powerful families control critical sectors, including banking, shipping and construction, and can usually count on the political class to look out for their interests, sometimes by passing legislation tailored to their specific needs.

The result, analysts say, is a lack of competition that undermines the economy by allowing the magnates to run cartels and enrich themselves through crony capitalism. “That makes it rational for them to form a close, incestuous relationship with politicians and the media, which is then highly vulnerable to corruption,” said Kevin Featherstone, a professor of European Politics at the London School of Economics.

This week the anticorruption watchdog Transparency International ranked Greece as the most corrupt nation in Europe, behind former Soviet states like Bulgaria, Romania and Slovakia. Under the pressure of the financial crisis, Greece is being pressed by Germany and its international lenders to make fundamental changes to its economic system in exchange for the money it needs to avoid bankruptcy.

But it remains an open question whether Greece’s leaders will be able to engineer such a transformation. In the past year, despite numerous promises to increase transparency, the country actually dropped 14 places from the previous corruption survey.

Mr. Lavrentiadis is still facing a host of accusations stemming from hundreds of millions of dollars in loans made by his Proton bank to dormant companies — sometimes, investigators say, ordering an employee to withdraw the money in bags of cash. But with Greece scrambling to complete a critical bank recapitalization and restructuring, his case is emblematic of a larger battle between Greece’s famously weak institutions and fledgling regulatory structures against these entrenched interests.

Many say that the system has to change in order for Greece to emerge from the crisis. “Keeping the status quo will simply prolong the disaster in Greece,” Mr. Featherstone said. While the case of Mr. Lavrentiadis suggests that the status quo is at least under scrutiny, he added, “It’s not under sufficient attack.”

In a nearly two-hour interview, Mr. Lavrentiadis denied accusations of wrongdoing and said that he held “a few accounts” at HSBC in Geneva that totaled only about $65,000, all of it legitimate, taxed income. He also sidestepped questions about his political ties and declined to comment on any details of the continuing investigation into Proton Bank.

Read More..