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French President Nicolas Sarkozy said the euro region is ready to rescue Greece should the government struggle to fund its budget deficit, arguing that the country is “under attack” from so-called speculators.

“I want to be very clear: if it were necessary, the states of the euro zone would fulfill their commitments,” he said in Paris yesterday after a meeting with Greek Prime Minister George Papandreou. “There can be no doubt in this regard.” While Greece doesn’t need assistance right now, “we have measures, we are ready, we are determined,” he said.

Sarkozy’s comments are among the strongest by an EU leader to signal the bloc would bail out Greece as they try to warn investors off making further bets against the euro and Greek bonds. Papandreou’s government last week passed a further round of austerity measures and sold 5 billion euros ($6.8 billion) in government debt. Europe’s single currency has dropped 8 percent in the past three months.

“Speculators and the markets should know that solidarity means something and that, if there’s a problem, we are there,” said Sarkozy. “The sooner we say that and the more firmly we say that, the more rapidly we settle the problem.”

The spread between the yield on Greek 10-year bonds and their German counterparts fell to the lowest in three weeks on March 3. Papandreou, who meets President Barack Obama in Washington tomorrow, said he wants a “normalization” in Greek market interest rates after the deficit-cutting steps.

Greece faces more than 20 billion euros in debt redemptions in April and May.

Green Light

Sarkozy wouldn’t say what steps the EU would take and German Chancellor Angela Merkel, who runs Europe’s largest economy, has so far refused to give the green light to any aid package. Merkel said after meeting Papandreou on March 5 that the question of a bailout “‘absolutely doesn’t arise.” Her coalition partner, Guido Westerwelle, said he won’t sign a “blank check” for Greece.

“Nobody can doubt how reluctant the Germans are, and I am starting to think that if official money is needed in May, then there may first be a major discussion between the Germans and the French how to do this,” said Erik Nielsen, chief European economist at Goldman Sachs Group Inc. in London, in an e-mailed note. “It really comes down to some very fundamental issues of how the euro-zone will function going forward.”

European Monetary Fund

German Finance Minister Wolfgang Schaeuble indicated that his government is already thinking about how another Greek crisis can be avoided, saying that the euro region should consider creating an institution similar to the International Monetary Fund.

“We shouldn’t rule anything out, including the creation of a European Monetary Fund,” he said in an interview with the Welt am Sonntag newspaper published yesterday.

The comments come after proposals for a European Monetary Fund were put forward last month by Deutsche Bank AG Chief Economist Thomas Mayer and Daniel Gros, director of the Centre for European Policy Studies in Brussels.

The EMF could ease the disruption caused by the failure of a euro member to pay its bills by offering investors new EMF bonds in exchange for the defaulted securities, they said. Investors would be required to take a “haircut.”

“Setting up a European Monetary Fund is superior to the option of either calling in the IMF or muddling through on the basis of ad hoc interventions,” Mayer and Gros wrote in an article in the Economist last month.

Flaws in the euro region’s governance were also indentified by former Federal Reserve Chairman Paul Volcker, who said in an interview on March 6 that the lack of a political union to back up the European Central Bank is a “structural crack.”

“Maybe fortunately it’s tested with a country as small as Greece, which doesn’t present an insuperable financing problem,” he said.

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Toyota executives told lawmakers Tuesday that its U.S. and Canadian divisions will have more authority to decide when to issue a recall as the automaker faces mounting pressure from Washington over its recent safety problems.

Toyota has recalled millions of vehicles worldwide for problems related to sudden acceleration, which have been blamed for several accidents resulting in injuries and death. The automaker has repeatedly apologized for the lapses in quality control and Toyota technicians are working extended hours to repair the recalled vehicles.

Under new plans to improve quality control, Toyota’s North American operations "will have more autonomy and decision-making power with regard to recall and other safety issues," Yoshimi Inaba, president and chief operating officer of Toyota North America, said in testimony before the Senate Commerce Committee.

Inaba also announced that Rodney Slater, a former U.S. Transportation Secretary, will head a "blue ribbon" panel to review Toyota’s own investigation into its global operations.

Toyota came under fire last week during two separate House hearings for the automaker’s management structure, which some lawmakers said gives Japanese executives too much power over U.S. operations.

"For the future, our U.S. staff will have a clear decision-making role," Shinichi Sasaki, executive vice president at Toyota Motor in charge of quality assurance and customer service, told the committee. "Ultimately, our goal is for the United States to have an even greater voice in decisions on recalls and other safety and satisfaction issues."

In response to questioning, Sasaki acknowledged that Toyota’s North American management were not included in the recall decision-making process in the past. Speaking through a translator, he said that this policy may have caused "some concern or suspicion."

He said Toyota will deploy the new system immediately should the company issue another recall.

Questions unresolved

At the conclusion of the hearing, Sen. Jay Rockefeller, D-W.Va., the committee’s chairman, said key questions remain unanswered about Toyota’s safety record.

"We feel some frustration in trying to communicate or effort to get to the bottom of some of the questions," he said, adding that the frustration was due in part to the language barrier.

"It’s the question of accountability," the senator said. "I think there is more knowledge at the table than has disclosed itself."

Rockefeller also pledged to work on "comprehensive legislation" aimed at improving how the government regulates the auto industry. "The American people deserve a top-to-bottom review, not just on past errors, but on the road ahead," he said.

He said Congress should consider, among other things, making brake override systems mandatory for all automakers and require senior executives to legally certify information submitted to safety regulators.

Since 2000, there have been 43 complaints of fatal incidents that allegedly involve sudden acceleration in Toyota vehicles, according to the National Highway Transportation Safety Administration.

While those complaints have not yet been confirmed, the reported incidents involve 52 fatalities and 38 injuries, NHTSA said.

The sudden acceleration issue has been in the spotlight since it was disclosed last month that an accident involving a Toyota vehicle killed four people in San Diego last August free credit scores.

That accident sparked the recall of millions of Toyota vehicles for problems with floor mats that could cause accelerator pedals to become trapped. Toyota has subsequently recalled millions more cars for "sticky" accelerator pedals.

"It’s clear that somewhere along the way, public safety took a back seat to corporate profits," Rockefeller said.

Akio Toyoda, the company’s president, acknowledged last week that Toyota’s rapid growth over the last few years has contributed to the recent safety problems.

Concern about electronics

However, some lawmakers and outside researchers have suggested that sudden acceleration in Toyota vehicles could also be caused by defects in its electronic throttle control system (ETCS).

Toyota maintains that electronics are not to blame for sudden acceleration.

"As a result of our extensive testing, we do not believe sudden unintended acceleration because of a defect in our ETCS has ever happened," Uchiyamada said. "However, will continue to search for any event in which such a failure could occur."

LaHood said NHTSA is conducting a review of the electronic throttle control system in Toyota vehicles. He also said the Transportation Department may recommend that all cars sold in the United States come equipped with a brake override system.

Lawmakers criticized NHTSA for failing to respond sufficiently to reports of sudden acceleration dating back several years. "The public’s trust has been compromised and the system has broken down," Rockefeller said.

LaHood, who was named Transportation Secretary in January 2009, defended his agency.

"NHTSA has a very aggressive enforcement program," he said. "We stand ready to ensure prompt action on any additional defects that we have reason to believe are present."

Clarence Ditlow, executive director of the Center for Auto Safety, told the committee that regulators need to enact radical reform and that lawmakers should provide additional resources to ensure effective oversight.

"The government has to totally revamp its investigatory system," said the Center for Auto Safety’s Ditlow. "It has to realize that it’s the cop on the beat, not Mr. Nice Guy."

Toyota has also come under fire for a 2009 memo in which staffers boasted of the company saving $100 million by negotiating with U.S. regulators for a limited recall for certain cars.

In response to a question about the 2009 report, David Strickland, NHTSA’s administrator, denied that the agency has shown Toyota any preferential treatment.

"The claims that Toyota made about negotiating or influences are false," he said. "That document has no foundation."

Inaba, whose name appeared on the document, said it was prepared before he rejoined the company and was inconsistent with Toyota’s "guiding principle."  

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Companies will begin slowly adding to their payrolls in 2010, according to an annual White House review of the economy.

The White House Council of Economic Advisers, which on Thursday released a 462-page analysis of the president’s economic initiatives, said that the unemployment rate will be at 10% during 2010. It is now at 9.7%.

"With millions of Americans still unemployed, much work remains to restore the American economy to health," the report said. "It will take a prolonged and robust GDP expansion to eliminate the large jobs deficit that has opened up over the course of the recession."

On a call Wednesday with reporters, Council Chairwoman Christina Romer said she expects an average of 95,000 jobs a month to be created this year, and that the nation’s GDP will expand at a 2.5% rate.

The report, which is delivered to Congress, looks at the actions President Obama took to deal with the recession over the past year. It also discusses the economic challenges that lie ahead for the nation, but offers little insight that’s new.

Overall, the analysis enthusiastically supports the administration’s handling of the economic crisis and its proposals to strengthen the country’s fiscal standing in the future.

Romer called the report "a page-turner" and noted that it’s available for download to Kindle and other e-readers.

Placing blame

The report places blame on the Bush administration for running up debts and cutting taxes.

Romer blogged about the study on WhiteHouse.gov. "Largely because of two tax cuts, two wars, and a major new Medicare drug benefit that were not paid for, the budget surpluses of the 1990s had been replaced by substantial actual and projected future deficits long before the recession began at the end of 2007," she wrote.

She also took another whack at Obama’s favorite new target: Wall Street.

"Much of the economic growth that the United States experienced in the past decade was fueled by consumers and the government running up large debts, aided by a financial system better at making short-term profits than managing long-term risks," she wrote business cards.

Republicans were quick to react the report, calling it fluff and noting that the report says that unemployment won’t fall back to its 2008 level for another seven years.

"The Obama Administration’s report is full of blame for the policies of years past, praise for its own failed policies of the past year, and promises about their ideological agenda to grow government, said Rep. Eric Cantor, R-Va., the House GOP whip. "Instead of praising themselves and blaming others, a greater focus on small businesses and smart solutions to reduce uncertainty and create jobs would be welcomed and is long overdue."

Praising policies

The report has kind words for the $862 billion American Recovery and Reinvestment Act, the centerpiece of Obama’s economic policy in his first year. Calling the program the "great unsung hero of the past year," Romer reiterated that the program has funded up to 2 million jobs and helped turn the economy around.

Going forward, the report highlights several areas of financial concerns. These include health care, the deficit, living standards, business investment and trade, climate change and financial regulation. As consumers spend less, the government must foster an atmosphere which allows companies to ramp up their investments and exports.

The report lays out the administration’s proposals to address these issues.

Obama has made job creation his central focus in his second year in office. He has recently traveled the country promoting tax credits for small businesses, the source of many new hires. And on Tuesday, he brought together congressional leaders to push for a bipartisan agreement on legislation to boost hiring. 

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Virginia may be for lovers, but Florida is for romantics, with four cities – Miami, Gainesville, Orlando and Tallahassee – ranked among the 20 most romantic cities by Amazon. com.

Miami ranked second, followed by Gainesville at No. 6, Orlando at No. 10 and Tallahassee at No. 18.

Miami was also named the nation’s sexiest city, with the most per capita sales in the sexual wellness category, according to Amazon.

Miami Gardens was on the list of least romantic cities, with the fewest number of overall purchases in that category.

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Fairfax-based SRA International has completed its acquisition of Perrin Quarrels Associates Inc. for an undisclosed sum.

Charlottesville, Va.-based PQA specializes is environmental programs like air quality and climate change. The Environmental Protection Agency is among its biggest customers.

The acquisition adds $6 million to the balance of SRA’s current fiscal year. The company will report fiscal second quarter results this month.

SRA International’s (NYSE: SRX) first quarter revenue was $417.5 million, up from $392.4 million in the same quarter a year earlier.

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Oracle Corp. President Charles Phillips admitted Friday to an affair first exposed on pricey billboards plastered throughout New York’s Times Square, San Francisco and Atlanta.

The supersize ads feature him and his mistress, beaming and canoodling. A Web address listed on the billboards, charlesphillipsandyavaughniewilkins.com, directed viewers to a site, which is no longer running, filled with photos and notes documenting a romance dating back to 2001.

"I had an 8½-year serious relationship with YaVaughnie Wilkins," Phillips said in a statement released Friday by Oracle’s public relations team. "My divorce proceedings began in 2008. The relationship with Ms. Wilkins has since ended, and we both wish each other well."

Phillips, 50, is reportedly still married to his wife Karen, and the two have a son together.

Wilkins declined to speak directly to the media, instead fielding requests through her cousin Misha Davila, who told CNN that Wilkins thought Phillips’ divorce was finalized in 2003.

Last summer, Davila said Wilkins received an anonymous e-mail tip about Phillips’ marital status. She hired and private investigator, and after learning Phillips was still married, ended the relationship last October payday loans in one hour.

Davila said Wilkins created the Web site, which apparently launched in October, as a gift from Wilkins for Phillips’ 50th birthday. She said the billboards were an attempt by Wilkins to reclaim her version of her relationship with Phillips– not an act of revenge.

Phillips, who has served on President Obama’s economic recovery advisory board since last February, joined Oracle (ORCL, Fortune 500) in 2003. Prior to joining the business software giant, he worked as a tech industry analyst at Morgan Stanley and served as a captain in the U.S. Marine Corps.

Often talked of as a potential successor to Oracle founder and CEO Larry Ellison, Phillips is one of the software company’s most senior — and highly paid — excecutives. On top of an $800,000 salary for 2009, he took home stock options and other compensation valued by Oracle at more than $18 million.

–CNN’s Mythili Rao contributed to this article. 

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The U.K.’s inflation rate probably jumped the most in at least 12 years in December as the economy shook off the recession and oil prices rose, economists say.

Consumer prices climbed 2.6 percent from a year earlier, compared with a 1.9 percent gain the previous month, according to the median forecast of 30 economists in a Bloomberg News survey. The 0.7 percentage-point jump would be the most since comparable records began in 1997. The Office for National Statistics will publish the data at 9.30 a.m. today in London.

The data would be the first since May showing inflation above the Bank of England’s 2 percent target, presenting a challenge to officials as they assess when to start raising interest rates from a record low. Gordon Brown’s spokesman said last week that the prime minister, who faces an election by June, is confident the economy has returned to growth.

“While the economy has been in recession the Bank of England hasn’t been focusing on inflation but it will become more of a concern,” Michael Saunders, chief economist for western Europe at Citigroup Inc, said in an interview. “I think they’ll hike rates in the second or third quarter.”

Saunders predicts the Bank of England will raise the benchmark interest rate to 1.5 percent by the end of the year. Officials makers have kept the rate at 0.5 percent since March. He says January data for inflation due next month will breach the government’s 3 percent upper limit, and it will reach 4 percent by the middle of the year.

Inflation, which troughed at 1.1 percent in September, has accelerated since then as energy costs increased and the economy recovered from the slump.

Producer Prices

Crude oil has doubled in the past 12 months, raising consumer gasoline costs. Producer prices jumped 0.5 percent in December, more than twice as much as the median forecast of economists in a survey by Bloomberg News.

The factory-gate data in part reflect the weakness of sterling. The pound has dropped by about a quarter in the past two years against a trade-weighted basket of currencies, raising the cost of imports for manufacturers.

Finance Minister Alistair Darling’s temporary 2.5 percentage-point reduction in sales tax in December 2008 to stimulate the economy will drop out of the annual comparison in the data for December 2009 and also raise the inflation rate, Saunders said.

For now, Bank of England officials say inflation will accelerate before dipping below the target later this year because of slack in the economy after the recession. Policy makers are showing few signs of unwinding emergency measures designed to fight deflation after they pledged to buy 200 billion pounds ($327 billion) of bonds. The bank will release new forecasts on Feb. 10.

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Gov. Arnold Schwarzenegger’s proposed $82.9 billion state budget replaces furloughs with pay cuts, slashes health care and social services for the poor and relies on $4.5 billion in fund shifting to back-fill government programs.

The proposed spending plan mostly protects education at the currently level of funding.

It also looks to the federal government for $6.9 billion in additional funding — and includes an ominous list of programs that will be axed completely if the money doesn’t come through. Some tax hits will be extended to fill the gap, too.

The state is facing a $19.9 billion budget deficit over the next 18 months. That amount includes a $6.6 billion shortfall in the current fiscal year, a $12.3 billion projected shortfall for 2010-11 and money needed for a $1 billion reserve.

Assuming the feds come up with the money — a premise many think is iffy, at best — major cuts include:

• $1.4 billion in compensation for state workers
• $2.4 billion cuts in health and human services, including cuts in Medi-Cal services, wages for In-Home Supportive Services workers and new restrictions on eligibility for CalWorks, the state welfare program and
• $1.2 billion in cuts in prison funding.

The current furlough program for state workers would end June 30, replaced by a 5 percent cut in all salaries. Department directors are ordered to cut their payrolls by 5 percent by July 1, when employees’ monthly retirement contribution will increase by 5 percent.

The change in pension contribution and pay reduction will require collective bargaining and statute changes.

“I know many of these cuts are painful,” Schwarzenegger said at a press conference Friday morning on the budget proposal. “Believe me, these are the hardest decisions a governor can make.”

It could get much worse.

Schwarzenegger and legislative leaders will travel to Washington later this month to demand $6.9 billion to the federal share of the cost of health care services to the poor, federal education mandates and incarceration of undocumented immigrants payday loans guaranteed no fax.

“We are not looking for a federal payout; we are looking for federal fairness,” Schwarzenegger said.

The proposed budget has a trigger mechanism to backfill for every dollar the state is unable to squeeze out of the feds. It includes up to $4.6 billion in program cuts and $2.4 billion in tax adjustments on business.

Major program cuts include:

• $1 billion from elimination of CalWorks
• $847 million by using Proposition 63 funding to finance existing mental health services
• $532 million by reducing Medi-Cal eligibility to the minimum allowed under federal law and axing most of the remaining optional benefits
• $495 million from elimination of the In-Home Supportive Services Program
• $280 million from elimination of non-court required inmate rehabilitation programs, moving some felons from prisons to jails and increasing parole agents’ caseloads
• $126 million from elimination of the Healthy Families Program
• $115 million from elimination of various health services programs funded by Proposition 99
• $111.9 million from elimination of funding for enrollment growth at the University of California and California State University and
• $100 million from an unallocated reduction in funding for trial courts.

Major programs to enhance revenue include $1.2 billion from suspension of a business’s ability to reduce taxable income by applying net operating losses from prior years and $504 million from cutting tax credits for dependents to $102 from $319.

Schwarzenegger declared another fiscal emergency and called for another special session of the Legislature.

“California is resilient,” he said. “We will … get through this challenge.”

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About 155 employees at a Mississauga air conditioning manufacturer that abruptly closed three weeks ago did not get their back pay before Christmas, but finally collected some of it by New Year’s Day.

Bob Chernecki, a senior official for the Canadian Auto Workers, said on Monday that workers at the M&I Air Systems plant picked up cheques with two weeks of earnings worth more than $1,000 on Dec. 30 after a glitch with M&I’s bankers prevented earlier payment.

However, the workers are still waiting for cheques for a third week of work and vacation pay, plus some indication about the plant’s future, Chernecki added.

"They (the workers) have been told that management is making arrangements for the third week and vacation pay sometime later this month.

"Beyond that, there are no guarantees of anything until they know the status of the plant."

Chernecki also said the company didn’t give the employees eight weeks’ notice of a layoff, as required under provincial labour law.

M&I, which provides air-moving technology and systems for industrial and institutional buildings, missed a pay on Dec high quality business cards. 10 but told employees it would submit earnings the following Monday if they worked on the weekend to finish a project.

But the company didn’t pay the employees, who earn between $18 and $19.50 an hour, on the Monday and laid them off the next day without warning.

When demands for pay and information about the plant’s status were ignored, workers occupied the plant for more than three hours on Dec. 21. They left after M&I agreed to a meeting with the union.

M&I indicated it would provide workers with two weeks of back pay within a few days and a decision soon on whether the plant would reopen, Chernecki said.

"They (employees) should know this week or next whether they have a future," Chernecki said.

A company spokesman could not be reached for comment.

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WASHINGTON – A U.S. federal appeals court has upheld a US$290-million judgement against Microsoft Corp. in a patent case launched by Toronto-based i4i Inc.

The ruling also includes an injunction, set to go into effect Jan. 11, that would prevent the sale of at least some versions of Microsoft's popular Word word processing software.

The Tuesday decision was on an appeal Microsoft launched against a verdict returned by a Texas jury in favour of i4i . The jury found recent versions of Microsoft Word infringed on a software patent.

I4i sued Microsoft (NASDAQ:MSFT) over the way Word 2003 and Word 2007 customize XML, or extensible markup language, used in encoding and displaying information.

The injunction prevents Microsoft from selling Word products that have the capability of opening an XML file containing custom XML.

Kevin Kutz, Microsoft's director of public affairs, said the world's biggest software company is "moving quickly to comply with the injunction."

Kutz said the injunction "applies only to copies of Microsoft Word 2007 and Microsoft Office 2007 sold in the U.S. on or after the injunction date of Jan. 11, 2010."

"Copies of these products sold before this date are not affected," he added.

"With respect to Microsoft Word 2007 and Microsoft Office 2007, we have been preparing for this possibility since the District Court issued its injunction in August 2009 and have put the wheels in motion to remove this little-used feature from these products," he said.

"Therefore, we expect to have copies of Microsoft Word 2007 and Office 2007, with this feature removed, available for U.S. sale and distribution by the injunction date.

"In addition, the beta versions of Microsoft Word 2010 and Microsoft Office 2010, which are available now for downloading, do not contain the technology covered by the injunction."

Kutz also said Microsoft was considering it legal options, “which could include a request for a rehearing by the Federal Circuit Court of Appeals en banc or a request for a writ of certiorari from the U.S. Supreme Court."

– With files from The Canadian Press

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