Monday Business Edition

Support for the government collapsed in the face of the beleaguered economy, soaring unemployment and massive street protests, a grim omen for 2012 general elections.

With 98.21 percent of the municipal ballots counted, the Socialists had just 27.81 percent of the total vote compared to 37.58 percent for their conservative Popular Party opponents.

“In theory, we are going to continue” the protests after the elections, said Angela Cartagena, a spokeswoman for the organisers at the ramshackle protest ‘village’ that has sprung up in Madrid’s Puerta del Sol square.

A “general assembly” of the organisers would be held on Sunday morning to confirm the decision, she said.

Protesters, who blame politicians for bleak economic prospects and jobless rate of more than 21 percent, remained camped under plastic covers in central Madrid’s Puerta del Sol square on election day.

The electoral impact of the swelling protests, which have brought tens of thousands into the streets since last weekend, including an estimated 60,000 on the eve of the election, was difficult to gauge.

Finance Minister Giulio Tremonti described S&P’s decision as “strange” and said the ruling lacked “even one example of a decline in the economy or public finances to justify downgrading the forecast,” according to the Corriere della Sera.

The Treasury issued a statement Saturday saying Italy would “respect its commitments,” adding: “Economic growth and public accounts have been constantly better than expected.”

“We are discussing a four-year programme that guarantees our exit from the crisis and other serious changes, structural. We are talking about a serious and systematic negotiation,” Papandreou said in an interview to Sunday newspaper Ethnos.

The prime minister ruled out a restructuring of Greece’s mountain of sovereign debt which has rocketed to 340 billion euros ($484 billion).

After months of warning that chaos would follow a restructuring, a “soft” version is now being presented by some within the eurozone as a lesser evil to save Greece once more from potential devastation.

European finance ministers crossed a line this past week by indicating a willingness to reschedule repayments on Greece’s 110-billion-euro EU-IMF bailout, provided private investors agree to share the pain.

Despite the spectacular fall of his chief rival Dominique Strauss-Kahn, arrested in New York on sex assault charges, Sarkozy’s domestic approval rating is — according to several polls — stuck at less than a third.

But the ambitious campaigner remains confident, his allies say, pointing to stronger than expected growth figures, a slight bump in his popularity and disarray in the opposition camp. Now he is counting on international glory.

Experts and aviation authorities said however that the impact of the Grimsvoetn eruption should not be as far-reaching.

Grimsvoetn, Iceland’s most active volcano located at the heart of its biggest glacier Vatnajoekull, began erupting late Saturday, sending a plume of smoke and ash as high as 20 kilometres (12 miles) into the sky.

Top executives from online giants like Google, Facebook and Microsoft will tout the economic potential of the Internet, which their host, French President Nicolas Sarkozy, has put on the agenda of the G8 summit two days later.

After Tuesday and Wednesday’s “e-G8” bash, some of the biggest names will then meet with G8 leaders at the summit in Deauville, northwestern France, on May 26 and 27, a French presidential official said.

Leaders of the three countries met in Tokyo to discuss Japan’s handling of world’s worst atomic crisis since Chernobyl 25 years ago.

They also said they would aim this year to finish research into a wide-ranging free trade deal between the three nations.

APEC — a 21-member Asia-Pacific bloc that encompasses more than half of the world economy and includes the United States, China, Japan and Australia — called Friday for “open and transparent” food markets.

In a joint statement after talks in the ski resort of Big Sky, Montana, APEC trade officials said that open markets would ensure food security by increasing reliability of supply and reducing price volatility.

India’s pharmaceutical industry has rolled out a strong local presence in South Africa, cornering a large share of the market and using the country as a base to gush a flood of cheap generic drugs into Africa.

Unlike most multinational companies, India’s “big three” pharmaceuticals — Ranbaxy, Cipla and Dr Reddy’s — have carefully cultivated their local credentials by bringing South Africans into the top corporate echelons.

“It is getting to the point of reckoning — when Swaziland will no longer be able to sustain its deficit,” visiting World Bank economist Jean van Houtte told AFP, ahead of a meeting here Monday organised by the lender on the crisis.

“We have said if you need a little time to get your house in order you can re-peg at a different level.”

“EBRD shareholders have made significant progress towards a decision on extending the bank’s investment to countries in the Middle East and North Africa,” the bank said in a statement.

Political decisions about the major expansion of the bank’s role after the uprisings that swept through Arab North Africa in the past months will come in “the weeks and months ahead”, it said.

A raft of new austerity measures being studied include deeper cuts in public sector wages, more consumer tax increases, and even the taboo issue of dismissing full-time civil servants.

At stake is a 12-billion euro aid tranche under the EU/IMF bailout agreed last year, as well as additional loans needed to plug a funding gap next year as the overborrowed country is unlikely to return to bond markets in 2012.

Papandreou must present a fiscal plan next week that is credible enough for the European Union and the International Monetary Fund to continue bankrolling his debt-laden country.

But a large majority of Greeks reject more austerity, according to a poll published on Saturday, which also shows the ruling socialists losing their lead versus the conservative opposition for the first time since their 2009 election victory.

Fitch was the second rating agency to warn that it would consider any loss imposed on bondholders as a default after Standard and Poor’s said the same earlier this month.

“An extension of the maturity of existing bonds would be considered by Fitch to be a default event and Greece and its obligations would be rated accordingly,” the rating agency said.

The downward revision, which raises the risk of a downgrade of Italy’s sovereign rating, may heighten fears that contagion from Greece’s and other European countries’ debt crisis could be spreading to the euro zone’s third-largest economy.

“In our view Italy’s current growth prospects are weak, and the political commitment for productivity-enhancing reforms appears to be faltering,” Standard & Poor’s said in a statement released early on Saturday.

The triple blow of the March earthquake, tsunami and nuclear crisis has nudged Japan into recession and led to a surprisingly deep 0.9 percent contraction in January-March, which Moody’s said was negative for Japan’s rating and made it increasingly urgent for Prime Minister Naoto Kan to compile a second extra budget.

“Reconstruction and relief expenditures will eventually lead to a rebound in economic growth later this year and in 2012,” Moody’s said in a statement on Monday.

The maker of PlayStation video games, Vaio computers and Bravia TVs has been battling to recover from the devastating Japan earthquake in March, and more recently, a series of computing hacking attacks that affected more than 100 million user accounts.

“I have been skeptical about Sony for a long time. Sony has been overtaken by Apple and other companies,” said Yuuki Sakurai, CEO and president of Fukoku Capital Management in Tokyo. “The management is not able to show shareholders the future of the company.”

Much-criticized president, Masataka Shimizu, 66, resigned to take responsibility for the worst nuclear crisis since Chernobyl in 1986, making way for an insider, managing director Toshio Nishizawa, 60.

Engineers are battling to plug radiation leaks and bring the plant northeast of Tokyo under control more than two months after a 9.0 magnitude earthquake and deadly tsunami that devastated a swathe of Japan’s coastline and tipped the economy into recession.

In a letter obtained by Reuters, U.S. Toyota brand sales chief Bob Carter told dealers the company was in a “healthy position” as it moved toward a full production schedule.

The company recently announced that eight of its North American-built models, including the Camry and Corolla, would return to 100 percent production in June.

After several strong quarters, the global economic recovery appears to be sputtering. In particular, the industrial sector, a key driver of the bounce-back from a historic worldwide recession, looks to be fraying.

“People need to seriously consider the scenario where global industrial growth, once again, starts to throttle back — because it’s not that far away,” said Lakshman Achuthan, managing director of the Economic Cycle Research Institute.

Pressure for a correction in the stock market has been building up in the past few weeks as the euro and oil prices fell in tandem, knocking down shares of energy companies and dollar-sensitive multinationals.

Still, investors have averted a broad sell-off by diving into shares of companies that are less vulnerable to the economic cycle, including well-known defensive sectors such as utilities and household products, but also large-cap companies with steady earnings performance.

Japanese trading house Mitsui’s (8031.T) exploration unit MOEX owned 10 percent of the Macondo well but had sought to avoid paying its share of the costs, claiming BP was negligent and MOEX should be exempted from this obligation.

The settlement is likely the first of a series of settlements between BP and its partners before the February 2012 trial date set for hundreds of spill-related lawsuits, said David A. Logan, dean of Roger Williams University School of Law in Bristol, Rhode Island.

Investors fretted that the debt crisis was turning more acute due to mounting speculation Greece will have to restructure its debts, a heavy defeat for Spain’s governing Socialists in regional elections and a warning from a leading credit ratings agency over Italy’s public finances.

The renewed jitters were particularly visible in stock markets, where most leading indexes around the world shed over 1 percent of their value. The euro was also in the firing line, dropping 2 cents on the day to $1.3976, the first time since March it traded below $1.40.

Prime Minister Jose Luis Rodriguez Zapatero said the result was due punishment of his government for the state of the economy – the jobless rate is a eurozone high of 21.3 percent. But he said he had no plans to move up general elections, which must be held by March of next year, and pledged to press on with job-creating reforms despite the loud outcry of opposition to his party.

The win for the conservative opposition Popular Party puts it in even a stronger position to win the general elections and return to power after eight years of Socialist rule.

George Papandreou said in an interview to daily Ethnos published Sunday that “it does not appear at present that Greece will be able to cover its borrowing requirements in 2012 normally, from the markets.”

As part of its euro110 billion bailout deal with the European Union and the International Monetary Fund, Greece was expected to raise euro27 billion to help pay its bills in 2012.

Fitch cited problems with Greece’s implementation of essential reforms to its economy, which European officials have said are behind schedule and need to be broadened.

The downgrade “reflects the scale of the challenge facing Greece in implementing a radical fiscal and structural reform program necessary to secure solvency of the state and the foundations for sustained economic recovery,” the agency said.

Investors worried that the government of Prime Minister Jose Luis Rodriguez Zapatero had lost support in its drive to heal public finances and faced a period of political uncertainty. Daily protests against both the Socialists and the opposition conservatives, meanwhile, were spreading to cities across the country and expected to last for days.

The Ibex 35 index on the Madrid stock market was down nearly 2 percent in mid-day trading and the yield on Spanish 10-year bonds on the secondary market was up sharply at 5.6 percent. That indicates investors are more cautious about the country’s ability to repay its debts.

The Associated Press-GfK poll suggests that arguments for overhauling the massive benefit programs to pare government debt have failed to sway the public. The debate is unlikely to be resolved before next year’s elections for president and Congress.

Americans worry about the future of the retirement safety net, the poll found, and 3 out of 5 say the two programs are vital to their basic financial security as they age. That helps explain why the Republican Medicare privatization plan flopped, and why President Barack Obama’s Medicare cuts to finance his health care law contributed to Democrats losing control of the House in last year’s elections.

Foxconn Technology Group, the contractor that manufactures Apple’s iPhones and iPads, said Friday’s blast in the western city of Chengdu killed three employees and injured 15. The Taiwanese company said production was suspended but did not respond to questions Monday about how supplies of iPads might be affected.

Foxconn said the blast was caused by combustible dust in a workshop that polished products. It said operations in workshops that do similar work at its other factories in China would be suspended pending an investigation.

And at LivingSocial, well, the living is a little too social. Its third office in Washington, open just two months, ran out of room so fast that employees have to work at narrow desks in the hallway.

Deal-a-day websites blast email offers for deep discounts, sometimes good for only a few hours. And they’re becoming so popular that their offices are starting to look as crowded as their subscribers’ inboxes.

Japanese automaker Toyota Motor Corp. and Salesforce.com, based in San Francisco, announced their alliance Monday to launch “Toyota Friend,” a private social network for Toyota owners that works similar to tweets on Twitter.

In a demonstration at a Tokyo showroom, an owner of a plug-in Prius hybrid found out through a cell phone message from his Prius called “Pre-boy” that he should remember to recharge his car overnight.

A safer and increasingly attractive alternative for today’s criminal is electronic cash loaded on what are called stored-value or prepaid cards. Getting them doesn’t require a bank account, and many types can be used anonymously.

U.S. crimefighters consider the cards a burgeoning threat that regulators haven’t adequately addressed.

Property values continued to fall, however, and next month Ballek expects to sell his family’s home for less than what he owes on it. He doesn’t have much of a choice. Like thousands of service members, Ballek is moving across the nation this summer per the military’s order.

“How can you feel?” Ballek said. “It’s frustrating.”

Michigan, Missouri and Arkansas recently reduced the maximum number of weeks that the jobless can get state unemployment benefits. Florida is on the verge of doing so. Unemployment in those states ranges from 7.8 percent in Arkansas to 11.1 percent in Florida.

The benefit cuts come as legislatures deal with the damage that the recession inflicted on state unemployment insurance programs. The sharp increase in the number of people who lost their jobs drained the reservoir of money dedicated to paying out benefits.

By the time it was over, as many as 40 people had been treated by paramedics for headaches, nausea, dizziness and asthma attacks.

During the coming months, state air quality regulators would field more than 200 additional complaints about the “rotten egg” fumes overtaking this dusty agricultural community at the northern tip of the Salton Sea and tracked the smell to a soil recycling facility that leases tribal land less than two miles from the school.

Did Strauss-Kahn bring on his own ruin at a luxury Manhattan hotel? Or did his political enemies in France set him up in a sinister plot to undo the known womanizer who was a top contender to become France’s next president?

From the moment that Strauss-Kahn’s arrest for the alleged sexual assault of a chambermaid flashed around the world, doubts emerged in France. A week later, with evidence still under wraps and the accused and the accuser silent, speculation abounds.

Across Africa, India is reaching out with a generous mix of aid, education and technology transfers it hopes will pay rich dividends in the global scramble for natural resources.

Over the weekend, Indian Prime Minister Manmohan Singh and scores of business leaders flew to Ethiopia for a meeting with African leaders aimed at prying open doors for greater business opportunities.

To make that point, they’ve turned it around, and made gold as good as cash. Utah became the first state in the country this month to legalize gold and silver coins as currency. The law also will exempt the sale of the coins from state capital gains taxes.

Craig Franco hopes to cash in on it with his Utah Gold and Silver Depository, and he thinks others will soon follow.

The app, called DOL-Timesheet, lets workers calculate regular work hours, break time and overtime pay to create their own wage records. Department officials say the information could prove valuable in a dispute over pay or during a government investigation when an employer has failed to keep accurate records.

“This app will help empower workers to understand and stand up for their rights when employers have denied their hard-earned pay,” Labor Secretary Hilda Solis said.

The country’s main airport was closed and pilots were warned to steer clear of Iceland as areas close to the Grimsvotn (GREEMSH-votn) volcano were plunged into darkness. But scientists said another widespread aviation shutdown is unlikely, in part because the ash from this eruption is coarser and falling to Earth more quickly.

The volcano, which lies beneath the ice of the uninhabited Vatnajokull glacier in southeast Iceland, began erupting Saturday for the first time since 2004. It was the volcano’s largest eruption in 100 years.

Lagarde has emerged as a front-runner to replace Dominique Strauss-Kahn, also of France, who resigned this week to face charges in New York that he tried to rape a hotel maid. He denies the charges.

Germany’s Finance Minister Wolfgang Schaeuble said Lagarde would give Europe its best chance to again lead the fund. Chancellor Angela Merkel called her a “distinguished” and “very experienced” personality.

Only four of the country’s 17 nuclear power plants were online after the energy utility RWE AG took its Emsland plant off the grid Saturday.

Environmentalists accused the utilities of staging simultaneous maintenance shutdowns while threatening blackouts to put pressure on Chancellor Angela Merkel’s government, which appears determined in the wake of the Fukushima Dai-ichi catastrophe to phase out nuclear power within a good decade.

Prolific author, gold bug, droll chronicler of Wall Street folly, Grant would be easy to dismiss as an entertaining but irrelevant throwback if he hadn’t been proven so right so often. Now, as small investors are putting more money into markets, the publisher of the biweekly Grant’s Interest Rate Observer is warning of new dangers. He says prices are too high for nearly every asset you can think of – stocks, junk bonds, Treasury bonds, British gilts, even Iowa corn fields.

With its wry observations about investor self-delusion, Grant’s newsletter ($910 for an annual subscription) has become a sort of bible among the bold and bearish alike. Though detractors say he’s far too negative, he’s been praised for some timely calls. In the 1980s, he warned of an overheated junk bond market before it collapsed. He foretold of the bursting of the tech bubble in the late 1990s, and revealed the false alchemy of Wall Street’s mortgage packaging business before housing crashed four years ago.

In an East African country that tried and failed to run its economy on Marxist lines, it is now the turn of small-time businessmen like Waziweyi to step forward. Waziweyi is a seed salesman and part of a chain linking scientists and farmers that experts hope will help Mozambique and other African countries solve their chronic food crises.

Waziweyi has gone from aid worker to entrepreneur, producing high-yield, drought-resistant hybrid seeds and selling them through the company he and his wife founded last year, called “Nzara Yapera” – “an end to hunger.”

AFL-CIO President Richard Trumka’s threat of a pullback Friday was the latest warning to a party that has long relied on labor’s cash and grass-roots support. If it makes good on its threat, labor probably would spend more time and money combating union-busting efforts by state officials.

“We will change the way we spend, the way we do things and the way we function that creates power for workers,” Trumka said.