July 2011

Robert Teitelman: ‘The Start-Up of You’ Isn’t New

by on July 31, 2011

Huffington Post…

Reid Hoffman and Thomas Friedman advocate treating your career like an entrepreneur starting a business, but the advice isn’t new and doesn’t often pan out even in Silicon Valley, argues The Deal magazine’s Robert Teitelman in this video.

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Robert Teitelman: ‘The Start-Up of You’ Isn’t New

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Debt Ceiling Deal Could Mean Problems For States

by AP on July 31, 2011

Huffington Post…

HARTFORD, Conn. — The cost of the compromise needed to raise the federal debt ceiling will likely inflict more fiscal pain on states still struggling to recover from the recession and the end of federal stimulus spending. While the details of the spending cuts to states remain unclear, lawmakers from both parties have discussed the need to cut or impose caps on so-called discretionary spending over the next decade. That could mean wide-ranging cuts in federal aid to states, affecting everything from the Head Start school readiness program, Meals on Wheels and worker-training initiatives to funding for transit agencies and education grants that serve disabled children. There also is concern among governors, state lawmakers and state agency heads that Congress will make deep reductions or changes in federal aid for health services for the needy, most notably through Medicaid. That could shift more of the costs onto states that already are having trouble balancing their budgets. “We have the potential for disaster should there be a major realignment in federal funding that results in a cost shift to states,” said Nevada state Sen. Sheila Leslie, a Democrat from Reno who recently discussed the issue with Obama administration officials in Washington. “In short, we are teetering on the edge right now, and a cost shift could send us over the cliff.” States already have closed nearly $480 billion in budget gaps since the beginning of the recession, according to the National Conference of State Legislatures. In Connecticut, for example, officials have struggled to cover a $3.3 billion deficit, accounting for more than 16 percent of the state’s main budget account. About 19 percent of the state’s non-transportation revenue comes from the federal government. “The timing is lousy in every respect,” said Benjamin Barnes, secretary of the Connecticut Office of Policy and Management. “It will certainly have a recessionary impact on the overall national economy, and that’s the last thing we want right now.” Among the programs that could be affected is a service that delivers meals to the home-bound elderly. Connecticut received about $4.5 million from the federal government for the program this year and $1.8 million from the state. Marie Allen, executive director of the Southwestern Connecticut Agency on Aging, said the program is a staple for many senior citizens on tight budgets. The federal aid ultimately saves taxpayers money because it helps keep people out of costly nursing homes, she said. “If we don’t have the support for them in the community, people end up in nursing facilities because they don’t have proper nutrition,” Allen said. “These are the real reasons why we spend more money on skilled nursing care.” State officials across the country are worried about the austerity steps demanded by fiscal conservatives in exchange for raising the nation’s debt ceiling, said Brian Sigritz, director of state fiscal studies at the National Association of State Budget Officers. He said the association expects states to be affected by cuts, if not immediately, then in the next year or two. While the legislation being considered did not cut entitlement programs such as Medicare and Medicaid, it did call for creating a special congressional committee to find additional savings. That next step likely would lead to specific recommendations to trim spending on entitlement programs. Darrell Steinberg, president pro-tem of the California state Senate, said he is concerned about such cuts, especially if they reduce payments to the states for Medicaid, which provide health care for the poor and disabled. The state’s version is known as Medi-Cal and covers 7.5 million people. Significant cuts could force California to look for ways to make up for the funding at a time when the state is slowly emerging from a recession that has left it with one of the highest unemployment rates in the nation. Lawmakers closed a $26.6 billion shortfall this year, partly with the help of rising tax revenue. “Certainly in California, we’re on the verge of turning a corner …” said Steinberg, a Democrat. “We want to go forward, not backwards.” A concern in many states is a possible change in the federal-state formula known as FMAP, which is used to fund Medicaid programs. In Nevada, for example, the federal government pays 55 percent of the cost. Every 1 percent of cost that is shifted to the state equals roughly $15 million. “The change in FMAP is probably one of the more fearful ones that we could experience,” said Mike Willden, director of the Nevada Department of Health and Human Services. Not all state officials are dismayed by the possibility of broad-based cuts in federal aid. Alaska Gov. Sean Parnell said he believes substantial funding cuts would have less of an impact on his state than allowing the federal government to stay on its current course of mounting debt. He is among a small group of GOP governors who signed a pledge urging Congress to oppose increasing the debt limit unless certain conditions are met, including substantial spending cuts. “We need a serious directional change to recover, and merely raising the debt limit will lead only to disaster,” he wrote in a recent email. The long-term effects of a compromise to raise the debt ceiling could come as a surprise to many state officials, said Rep. George Miller of California. The top Democratic lawmaker on the House Education and Workforce Committee said he has received almost no input so far from state education departments and local school districts about the looming spending cuts. He said reductions contained in the debt-ceiling legislation are “going to make life much more difficult for” for public schools. Robert Moran, who represents the American Association of State Colleges and Universities, said plans offered by the leaders of the House and Senate each kept a major aid program largely intact. Pell grants, which provide up to $5,550 to low-income students, would sustain cuts, but they would be relatively small, he said. “I think the higher-education community was probably pleasantly surprised about that,” he said. But he said colleges still face a double-whammy – federal cuts coming on the heels of deep state cuts. In many university systems around the country, departments have lost funding and class offerings have been reduced. Barry Toiv, the vice president of public affairs for the Association of American Universities, said continuing to take money out of education would slowly and steadily degrade the quality of the nation’s universities and affect America’s ability to produce the next generation of leaders. “It’s like termites in the wall, gradually eating away at the underpinnings of our innovation,” he said. “If you do that over a long period of time, at some point you’re no longer leading the world. And eventually, like with termites in the wall, you’re not really going to have a house anymore.” ___ Ramde reported from Milwaukee. Associated Press writers Kevin Freking in Washington, D.C.; Sandra Chereb in Carson City, Nev.; Judy Lin in Sacramento, Calif.; and Becky Bohrer in Juneau, Alaska, contributed to this report.

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Gary Shapiro: Enough Already!

July 31, 2011

Enough already! Americans want our political leaders to stop fighting and cut a debt limit deal. While Americans are concerned about jobs, our leaders are destroying the dollar, the economy and the nation by their failure to compromise and extend the debt limit. Leadership requires compromise. Compromise has always been a substitute for violence. We compromise with our friends and within our families. We do it in our jobs and business relationships. Our forefathers did it in drafting and approving the Constitution. Our leaders must compromise now, not only to save the dollar, but to save the country. A downgraded dollar means higher interest rates, which means everyone will pay for Washington’s failure. Equally disturbing, the dollar’s fall as the world’s reserve currency would be devastating to our economy. The consequences are not only economic; our stature in the world and its confidence in America would plummet if we don’t resolve this silly situation. The president and all members of Congress swear to uphold the Constitution and they pledge allegiance to the United States — not to preserve Medicare, lower taxes or any specific interest group. Other pledges are serious but must be subservient, especially when their interpretation is arbitrary, arguable, foolish and by one unelected individual. Whether closing tax loopholes or ending temporary tax benefits are actions that should be considered, tax increases are debatable; however, God has not spoken on these issues nor are there any legal doctrines at play. Even Republicans disagree on the best way forward. So how is it that one unelected person can make a Biblical pronouncement and inspire such fear in Republicans? If they are serious about the deficit, Republicans have to step up and offer something in exchange for large spending cuts. The most obvious is to eliminate the Bush tax cuts on the top earners. The deficit is so bad and our tax share of GDP is at such historic lows that it is difficult to justify letting these tax cuts continue. Democrats have to step up also. They talk a good game about seeking cuts in the deficit, but they have offered little other than unspecified cuts far in the future. More, President Obama’s attack on House Budget Committee Chairman Paul Ryan’s budget proposal and on distractions like corporate jets is simply foolish and divisive. This type of rhetoric is unhelpful as it is inaccurate. It builds distrust by fomenting class warfare and makes finding solutions to the big spending programs problematic. Every day, business leaders negotiate deals because they know it is in the interests of their companies. But our political leaders, whose company is the entire nation, are negotiating in the best interests of their party and the next election rather than putting needs of the nation first. While they try to game each other, America and Americans will suffer. If this unpatriotic rhetoric and partisanship continues, I suspect Americans will put a pox on both their parties and all three of their houses and look for alternatives in November 2012. This is not a Democratic or Republican country; it is our country. And as long as we are sending kids overseas to risk life and limb defending it, we can at least ask, expect and even demand our leaders act like adults. It appears that both parties’ failure to address the tough cost-cutting issues means that neither party truly cares about our children, born and unborn, who will bear the burden of our mistakes today. King Solomon wisely tried to resolve two mothers’ claim to a baby by proposing the baby be cut in half. This forced the real mother to come forward, while the bogus mother thought it a fair compromise to kill the baby. Our nation is about to be cut in half — when will someone step forward to save it? Unfortunately, I fear both parties will destroy the country rather than compromise with the other side. For shame! Gary Shapiro is president and CEO of the Consumer Electronics Association (CEA), the U.S. trade association representing some 2,000 consumer electronics companies, and author of the New York Times bestselling book, “The Comeback: How Innovation Will Restore the American Dream.”

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Tea Party May Face Make Or Break Moment In Contentious Standoff

July 31, 2011

The partisan standoff over raising the federal debt ceiling could do more than destroy the nation’s credit rating and economic health. It could make or break the long-term prospects for the political movement that birthed the fight: the tea party.

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Paul A. London: Economic History Holds the Answers

July 31, 2011

It took the United States 10 years to recover from the Crash that ended the stock speculation of the late 1920s. It may take longer to emerge from the aftermath of the housing crash of 2007 because today’s politics makes it impossible to imagine a massive spending program like the one that finally ended the Depression. Yes, World War II in its economic dimension was a stimulus program plain and simple. The great economic surge in the U.S. between 1940 and 1945 came from producing 300,000 military aircraft, 2,700 Liberty ships, aircraft carriers, battleships, 88,000 tanks and self-propelled guns, 2.4 million trucks, millions of bombs and billions of bullets, and more billions of dollars worth of food and clothing to supply 13 million American soldiers. It was largely financed by purchases of government bonds by the Federal Reserve, America’s way of printing money. What the Nation got for this was victory, full employment, and a boost to the economy that lasted well into the 1960s. Today’s “Great Recession,” painful as it, is not as dreadful as the Great Depression. Three years after the Crash of 1929 unemployment stood at 24 percent. Frederick Lewis Allen in Since Yesterday , his classic book on the lost decade of the 1930s, conveys the utter confusion of political and business leaders in the face of economic catastrophe. The Crash “blew into thin air” $30 billion of wealth, a share of the Nation’s wealth in those days far larger than the share blown into thin air by the collapse of housing prices since 2007, and nobody knew what to do about it. Allen’s book is no panegyric to Franklin Roosevelt, the New Deal or the Democratic Party. He is sympathetic to Herbert Hoover, who he sees as the unlucky Republican president who presided over a debacle that no one understood. Hoover worked himself to the bone to find a solution, and suffered because he could not do so. He was no hard-hearted reactionary. He cared about people, having skillfully managed vast humanitarian efforts in Europe after World War I, and along the Mississippi after the great flood of 1927. He tried all the conventional economic cures that the Republican Party still believes in today. He got Congress to pass “a reduction in individual and corporate income taxes.” He cut public spending wherever he could. The government maintained a budget surplus well into 1932. He and the “Big Men” of business urged “confidence.” They told the public over and over again in 1929, 1930, 1931 and 1932 that everything would be all right if the government would just let the private economy alone. But the Depression deepened until in 1933 Hoover and the business titans admitted that they had no answers. The disappearance of all that speculative wealth was not followed automatically by a recovery. Nor was the disaster amenable to small measures and happy talk, and that was all the Republicans had in their repertoire. It should be obvious on the basis of this history that the hangover from the vast destruction of housing wealth since 2007 will not be cured by a repeat of the policies that failed Hoover, and the cheery hope that business investment is waiting in the wings for a friendlier administration. The United States needs the economic equivalent of World War II to put people back to work. A large infrastructure program financed by Federal Reserve — a QE3 that encourages real investment instead of just pushing down interest rates and filling the coffers of banks — is what I think we ought to be discussing. The Fed bought government bonds in vast quantities from 1941 through 1945 to finance the war. It would be no different if the Fed now purchased a few trillion dollars worth of new infrastructure bonds collateralized in most cases — as World War II bonds were not — by a flow of user fees. And this time Americans would get assets far more useful and durable than tanks, war planes, Liberty ships, and uniforms The pity is that the Republican Party ignores the economic history captured in Lewis’s readable classic. It wants to bet the country’s future on policies that Hoover himself knew had failed. This is the definition of reaction and it is very dangerous as Allen sensed as he watched Hitler rise to power in Germany because he promised action.

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Donald Blinken: Privatization Helps: The Hungarian Example

July 31, 2011

As Greece works itself out of financial crisis, it should look to Hungary fifteen years ago for part of the answer. Far too large a segment of the Greek economy remains locked up in public hands. Their sale to the private sector, as Hungarians discovered, while not a panacea, will help reduce catastrophic public debts, and salaries and pensions will become the responsibility of private owners rather than the government. The Greek Parliament’s austerity plan would raise 70bn euros from privatization by 2015. The government will sell stakes in banking, airports, water utilities, motorway concessions, port operations, state land, and mining rights. Selling assets to the private sector will also improve managerial know-how, increase transparency, and encourage confidence in a Greek recovery. There is a precedent for this, although on a much smaller scale, in the similar challenges Hungary faced in the mid-1990s. In 1995 Hungary’s economy was in a dangerous free-fall. Its foreign debt, which Hungary had refused to disown after the fall of communism, was approaching $30 billion, the highest per capita debt in all of Central and Eastern Europe. A quick look at Hungary’s dilemma revealed that there was no easy solution in sight. The country’s annual budget, bloated with social program spending, was $3 billion in the red; most of that would have to be borrowed, causing the debt burden to balloon further. The balance of payments showed a $4 billion deficit, largely due to the long-deprived Hungarians’ rush to buy luxury foreign goods. The really frightening number, however, was the rate of inflation. We grow concerned in the United States if inflation runs a few percent a year. In Hungary, the inflation rate had skyrocketed to 30 percent annually! That meant the average Hungarian could buy only two-thirds the groceries and household goods with forints as they could in the previous year. The sharp decline in the forint’s value was a catastrophe for consumers and prospective outside investors alike. Both the U.S. government and the International Monetary Fund concurred that Hungary’s economic problems could result in a crash and perhaps necessitate a costly bailout by the United States. A similar economic disaster had developed in Mexico the year before, which had turned to us for massive economic aid to avoid defaulting on its loans and going bankrupt. The numbers told the story. Nearly 70 percent of Hungary’s economy was still controlled by the government. Although more than $10 billion had been invested in Hungary from abroad since the end of the Cold War, much more restructuring needed to be done. Selling state-owned industries to foreign entities that would pay dollars, marks, or yen to buy and upgrade Hungarian factories and facilities were seen as ways to transform Hungary’s lagging economy and outmoded industrial sector and boost the country’s financial position. As a result of U.S. and IMF warnings and advice, Hungarian Prime Minister Gyula Horn made crucial new economic decisions in early 1995. He replaced the finance minister and the interim head of the central bank with two Western-trained bankers: Lajos Bokros as finance minister and Gyorgy Suranyi as president of the National Bank of Hungary, both highly respected by their counterparts in many Western capitals. Dubbed the “Dream Team,” a term the press picked up on, and the new appointees didn’t disappoint when they immediately stressed the necessity of reducing Hungary’s large deficits. The new financial team made the privatization of Hungarian industry a top priority; they agreed that the importation of new capital into the Hungarian economy and the infusion of Western managerial experience brought to privatized companies was the soundest way for Hungary to jump-start itself out of its financial dilemma. From that point on, the pace of privatization accelerated. With U.S. urging and consultation, the Hungarian privatization agency, given the green light in 1995, sold forty-two companies in its first four months, which brought in about $620 million of new capital. Most of that money went to repay foreign debt, putting the country on a stronger financial footing. The Hungarian government’s signal that foreign investment was welcome resulted in additional direct foreign investments of $10bn by 1997, reducing government ownership of industry to less than 30%. The size of Greece’s current financial crisis and its potential devastating impact, if not resolved, are much greater than those challenging Hungary or Europe in the 1990s. Hungary’s default would not have threatened European governments or financial institutions. And like Hungary in the 1990s, the need for Greece to reschedule its foreign debt, reduce its public employment, and take unfortunate, but necessary, austerity measures, all take precedence. But, privatization, long overdue, will complement these measures and, most importantly, establish a healthier climate for sustainable recovery and the ultimate restoration of confidence in Greece’s future.

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Ken Blackwell: Avoiding the Danger of a "Clean" BBA

July 31, 2011

Liberals are trying to kill the prospect of a Balanced Budget Amendment (BBA) in the ongoing battle over the debt ceiling. Some on the Right respond that they might settle for a “clean” BBA. But there are two types of a clean BBA, one of which would be even worse than the terrible mess we have today. Some advocate that the BBA should require only that federal outlays cannot exceed federal tax revenues. They see it as two numbers, where the former must be less than the latter. But this misses one critical point. If BBA only requires government to spend less than it collects, there are two ways to fix it. The first is cutting spending, and the second is raising taxes. Many supporters of a clean BBA are not too worried. Although acknowledging the risk, they’re willing to take it on the grounds that they can use the prospect of electoral defeat to exert political pressure on members of Congress to ensure they don’t vote for tax increases. But what about the courts? What if a judge orders a tax increase? A judge could, if the BBA only says that spending must be less than revenues. Courts currently lack the power to make changes to taxes or spending. Article I and the Sixteenth Amendment of the Constitution only authorize four types of taxes — excises, imposts, capitation taxes, and income taxes — and specify that Congress is the branch with power to levy these taxes. The Framers specifically wanted fiscal control in the hands of elected legislators. “No taxation without representation!” was the battle cry that helped precipitate the American Revolution. So three fiscal levers are exclusively in Congress’ hands: only Congress can tax, spend, or borrow. Congress’ control over the purse strings gives legislators leverage over the other branches. And the members of one congressional chamber — the House of Representatives — must stand before the people every other year, ensuring that those with taxing and spending power would be strictly accountable to the voters. But a “clean” BBA would change that. It would create a constitutional command. A private party with standing could ask a federal judge to remedy a violation of a clean BBA by ordering increases in taxes to close budgetary gaps, instead of spending cuts. Advocates of a clean BBA point out that with every provision in a BBA, it becomes harder to find the votes for a two-thirds supermajority needed to vote the BBA out of Congress and propose it to the states, where it would very likely be ratified in short order. Each of the provisions in the BBA currently proposed in Congress is there for a reason. The best version is Senate Joint Resolution 10 , the Hatch-Lee version, which has eleven sections. Section 8 of the BBA in S.J.R. 10 specifies that no federal or state court can order a revenue increase under this amendment. In other words, it leaves open the possibility that political gridlock between the elected branches might result in a court cutting federal spending, but never hiking taxes. This is critically important. Federal judges hold their offices for life to insulate them from politics so that they can faithfully uphold the Constitution and laws, even when extremely unpopular. This is especially vital when public outcry pushes Congress and the president to do something unconstitutional, leaving judges free to strike it down. But to grant judges the power to raise taxes would be antithetical to the constitutional design of political accountability for taxes. It would create a perverse incentive for members of Congress who wanted to raise taxes but were politically vulnerable to foster gridlock on spending battles, then let the courts do their dirty work for them by increasing taxes to make up the shortfall. So the bottom line is that the only type of “clean” BBA that should even be considered is a second variety. In addition to specifying that revenues must exceed spending, it must also retain the current Section 8 that no judge has power to raise taxes. America’s problem is our debt, not our debt ceiling. We desperately need a BBA to tackle our debt. But a BBA that allows judges to hike taxes would be even worse than the status quo. Given how horrible the status quo is, that’s quite a statement. Ken Blackwell and Ken Klukowski are on the faculty of Liberty University. They are the best selling authors of Resurgent: How Constitutional Conservatism Can Save America.

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Debt Ceiling Deal In The Works, Default At Stake

July 31, 2011

WASHINGTON — The U.S. Senate plunged on Sunday into what many lawmakers and the White House – and millions of Americans coast to coast – hoped would be an all-but-decisive last-minute effort to raise the nation’s debt ceiling and defuse a crisis that still could lead to an unprecedented government default. As senators began debate in a rare Sunday session – just hours after Saturday night’s concluded – Democratic leader Harry Reid said he was “cautiously optimistic” agreement could be reached. But first, in a partisan vote, the Senate rejected an effort to advance a Democratic approach to resolving the debt issue. The vote was 50-49, or 10 short of the 60 votes needed to move forward on legislation proposed by Reid that would have carried out $2.2 trillion in deficit reduction over 10 years while raising the debt ceiling by $2.4 trillion. The outcome of that vote did not directly affect the behind-the-scenes negotiations on a compromise. Immediately afterward, Reid told fellow senators that while they were “not there yet,” a vote on a possible compromise could still happen Sunday. “We are hopeful and confident it can be done.” Senate Republican leader Mitch McConnell, a key player in the negotiations, said as he headed back to his office that the sides were “really, really close.” Tuesday is the deadline for averting default, the day the Treasury says it will reach the limits of its borrowing authority to pay all the nation’s bills. McConnell, R-Ky., said earlier on the Sunday talk shows that negotiators were looking at a deal that would cut spending by some $3 trillion over the next decade while raising the debt ceiling through 2012 in a two-stage process. A Democratic official, speaking on condition of anonymity to discuss the private talks, said Vice President Joe Biden had been on the phone with McConnell multiple times over the preceding 24 hours. Biden has remained a key negotiator for the White House following the more public role he had earlier in leading several weeks of debt talks with lawmakers. Appearing on CNN and CBS, McConnell said he hoped to soon be able to present to his fellow Republicans an agreement “that they’ll consider supporting.” That agreement would include raising the debt ceiling, cutting spending by some $1 trillion initially and creating a joint committee of members of Congress that would look at a larger plate of cuts including tax and entitlement changes. Sen. Chuck Schumer, D-N.Y., a member of the Democratic leadership, told CNN that while “there is no final agreement,” there was a sense of relief that the two sides were finally working on a compromise plan. Schumer later told CBS that one of the last sticking points is the creation of a “trigger” mechanism that would hit priorities of both parties if the committee does not come up with a plan for further deficit reduction. Among the trigger ideas being discussed are automatically reducing spending on entitlement programs such as Medicare along with closing tax loopholes or reducing defense and non-defense programs by an equal amount. “It should be equally tough on Democrats and Republicans,” Schumer said. McConnell said the bipartisan committee, which would be asked to come up with a plan by Thanksgiving, would have a “broad mandate” to look at all aspects of government finance, including tax reform. McConnell said he had talked to both President Barack Obama and Biden on Saturday. “I particularly appreciate that we are back talking to the only person in American who can sign something into law, and that’s the president of the United States,” he said. McConnell said the deal being worked on, while raising the debt ceiling in two stages, would satisfy Obama’s demand that there not be another divisive debate before next year’s election. The scenario being discussed would raise the debt ceiling unless there is a two-thirds majority in both houses of Congress to reject it. McConnell said that there would be no tax increases in the deal, and White House National Economic Council Chairman Gene Sperling, on CNN and Fox, said there would be no revenue increases over the next year and a half. But while keeping higher taxes out of the deal was the top priority of many Republicans, it’s still going to be a task for McConnell to sell any agreement to his caucus. Sen. Lindsey Graham, R-S.C., said on ABC that this would be the first time that he could remember that the nation is paying for future debt increases dollar-for-dollar and that “from the Republican Party’s point of view, I think we can declare victory in a limited fashion.” But he said that even with the agreement the national debt will continue to rise and “I don’t know where I’m going to land” on a vote. “From a big picture,” Graham said, “I’m not ready to vote for this.” On the House side, where GOP conservatives have pushed their party toward greater cuts and linking future debt ceiling raises to passage of a balanced budget amendment, a leadership aide said that while the negotiators appeared to be heading in the right direction, no agreement will be final until members have a chance to weigh in. Sperling said Obama has presented three principles that the final package must meet: a significant down payment on deficit reduction, major entitlement and tax reform at a later date, and an end to the uncertainty created by the threat of the nation’s defaulting on the debt. He said the nation doesn’t want to “go through this mess again around the holidays.” Under the proposed agreement, Congress would also have to vote on a constitutional amendment requiring a balanced federal budget, a top-flight GOP goal. Unlike a bill approved Friday by the Republican-run House, none of the debt limit increase would be tied to congressional approval of that amendment. Details of a possible accord began emerging Saturday night after Reid, D-Nev., said on the Senate floor that the two sides were trying to nail down loose ends and complete an agreement. “I’m glad to see this move toward cooperation and compromise, and hope it bears fruit,” he said. A Democratic official said that while bargainers were not on the cusp of a deal, one could gel quickly. A Republican said there was consensus on general concepts but cautioned there were no guarantees of a final handshake. Both spoke on condition of anonymity to reveal details of confidential talks. Any pact would have to quickly pass both chambers of Congress after a rancorous period that has seen the two parties repeatedly belittle each other’s efforts to end the standoff. Even so, the deal under discussion offers wins for both sides. Republicans and their tea party supporters would get spending cuts at least as large as the amount the debt ceiling would grow and avoid any tax increases. For Obama and Democrats, there would be no renewed battle over extending the borrowing limit until after next year’s elections. Under the possible compromise, the debt limit would rise by an initial $1 trillion. A second, $1.4 trillion increase would be tied to a specially created congressional committee that would have to suggest deficit cuts of a slightly larger amount. If that panel did not act – or if Congress rejected their recommendations – automatic spending cuts would be triggered that could affect Medicare and defense spending, two of the most politically sacrosanct programs. The government has exhausted its $14.3 trillion borrowing limit and has paid its bills since May with money freed up by accounting maneuvers. McConnell and Schumer appeared on CNN’s “State of the Union” and CBS’ “Face the Nation” while Graham spoke on ABC’s “This Week.” Sperling appeared on “State of the Union” and “Fox News Sunday.” ___ Associated Press writer David Espo contributed to this report.

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Voters Play Role In Debt Ceiling Standoff

July 31, 2011

WASHINGTON — Dear voter: Want to know why Democrats and Republicans in Congress find it so hard to work together to solve tough problems like the debt ceiling, health care and Social Security? Look in the mirror. Americans gripe about cowardly, self-serving politicians, and Congress doubtlessly has its feckless moments and members. But voters are quick to overlook their own role in legislative impasses that keep the nation from resolving big, obvious, festering problems such as immigration, the long-term stability of Medicare, and now, the debt ceiling. Here’s the truth: The overwhelming majority of senators and House members do what their constituents want them to do. Or, more to the point, they respond to people in their districts who bother to vote. Nothing is dearer to politicians than re-election, and most have a keen sense of when they are straying into dangerous waters. For a growing number of senators and representatives, the only risk is in their party’s primary, not in the general election. Most voters, and many news outlets, ignore primaries. That gives control to a relative handful of motivated, hard-core liberals (in Democratic contests) and full-bore conservatives (in GOP primaries). In politically balanced districts, a hard-right or hard-left nominee may have trouble in the general election, when many independent and centrist voters turn out. But many House districts today aren’t balanced, thanks largely to legislative gerrymandering and Americans’ inclination to live and work near people who share their views and values. The result is districts so solidly conservative that no GOP nominee can possibly lose, or so firmly liberal that any Democratic nominee is certain to win. In these districts, the primary is the whole ball game. Republican lawmakers are under constant pressure to drift to the right, to make sure no fire-breathing conservative outflanks them in a light-turnout primary dominated by ideologues. The same goes for Democrats on the left. So who turns up on Capitol Hill for freshman orientation? Democrats and Republicans who can barely comprehend each other’s political viewpoints, let alone embrace them enough to pursue a possible compromise on big issues. But what if a Republican and Democrat do decide to meet halfway in hopes of finding, say, a path to shore up Social Security for decades to come. What can they expect? In some states and districts, they can expect to be drummed out of their party for the crime of engaging with “the enemy.” That’s what happened last year to Bob Bennett of Utah, a mainstream conservative Republican senator. A relatively small number of conservative activists, led by tea partyers, bounced him from the ticket at a GOP convention. They taunted Bennett with chants of “TARP, TARP.” He had voted for the bipartisan bank bailout legislation pushed by Republican President George W. Bush. The Senate’s GOP leaders also voted for the bill. But it was an unacceptable compromise in the eyes of Utah Republicans picking their Senate nominee. In Alaska, GOP primary voters also kicked Sen. Lisa Murkowski off their ballot. She barely saved her seat with a scrappy write-in candidacy. Murkowski supported the bank bailout and, admittedly, is more moderate than the average congressional Republican. But her improbable write-in victory proved she is popular with Alaskans in general, even if her own party rejected her in the primary. Tea party leaders spell out a warning in their periodic Washington rallies. “The message is that we’re watching, and we want you to vote based on our core values,” Mark Meckler, a co-founder of the Tea Party Patriots, said at one such event. When Democratic leaders were struggling earlier this year to strike a budget deal and avert a government shutdown, Phil Kerpen of the conservative group Americans for Prosperity said sharply, “No Republican better help them.” The crowd cheered loudly. Such threats are mainly aimed at Republicans for now, largely because of the tea party’s rapid rise. But Democratic lawmakers also know liberal discontent might undo them if they stray too far to the center. “It’s astounding how often some Democratic leaders sacrifice principles when critical issues are at stake,” said a writer for the liberal AmericaBlog. The column rebuked Sen. Dick Durbin, D-Ill., for working with the bipartisan “Gang of Six” on a debt-reduction plan. A McClatchy-Marist poll this year found that 71 percent of registered voters want political leaders in Washington to compromise to get things done. If those voters skip key primaries, however, they may have little say in the matter. Political enthusiasts, whether they wear peace signs or “Don’t Tread On Me” T-shirts, will determine who gets elected in many districts before a wide swath of Americans even notice it’s an election year. Except for a recently appointed senator from Nevada, every member of Congress got there the same way: American voters elected them. People may bristle at the notion that we get the government we deserve. But there’s no denying we get the government we elect.

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Art Markman, Ph.D.: How To Win A Negotiation

July 31, 2011

There are lots of opportunities for negotiation these days. Bargain hunters wander through weekend garage sales and haggle with the sellers. Car buyers have to settle on a final price for a car with a dealer. House hunters send proposals back and forth trying to decide on a selling price for a house. There is a lot of interesting psychology in these negotiations. The first thing that happens in most negotiations is that either the buyer or the seller makes an offer. That initial offer serves as an anchor. Research on the rules that people use to make judgments suggests that we often use a strategy called anchoring and adjustment . According to this strategy, we start with some anchor point and the adjust our belief about the true value based on other information. In the case of a negotiation, we know that people try to buy low and sell high. So, if the buyer makes an offer, the seller knows that the initial offer needs to be adjusted upward to get a fair price. The key question is how much that offer should be adjusted. This issue was addressed by Yossi Maaravi, Yoav Gonzach and Asya Pazy in a paper in the August, 2011 issue of the Journal of Personality and Social Psychology . They were interested in the role that persuasive arguments might play during negotiations. Because people use the initial offer as an anchor, many people have suggested that including a persuasive argument for why the anchor is correct may minimize the amount that people adjust the anchor when making their counteroffer in the negotiation. For example, if you are interested in buying a house, the seller might ask for $350,000, arguing that the house was newly-renovated and is near good schools. Maaravi, Gonzach and Pazy argued that when people hear an argument in favor of the initial offer, they think of counterarguments. These counterarguments may actually push the counteroffer further away from the initial offer than it would have been had there been no persuasive argument. Someone looking at a house might find all the areas that still need renovation and think about other houses even closer to the better schools in town and give a low offer on the house. They supported this view in a number of studies. In one of the four experiments in this paper, half the people played the role of the seller of a factory, while the rest played the role of the buyer. Everyone received detailed information about the factory. In some groups, the seller was asked to make the first offer. For half of these groups, the seller also had to give arguments in favor of their offer. In this case, the counteroffers by the buyer were lower when the seller made arguments in favor of the initial bid than when the seller gave no arguments. The buyers were asked to write down reasons for their counteroffers, and they gave more reasons for making a low bid when they were responding to arguments by a seller than when there were no arguments. The final price the group agreed on was also lower when the seller made arguments with the initial offer than when no argument was made. The opposite pattern was observed for groups where the buyer went first. In this case, sellers generated more reasons why the buyer’s initial offer was bad when the buyer made arguments along with the initial offer than when there were no arguments. The sellers made higher counteroffers when there were arguments along with the initial offer than when there weren’t. Finally, the purchase price was higher when the buyer made arguments than when there were no arguments made. Putting all this together, then, it appears that it is hard to be persuasive when negotiating. People enter negotiations knowing that the other party is an adversary. Each side wants to get the best deal, and so they treat every piece of information given by the other party with skepticism. They find reasons why persuasive arguments are flawed and use those counterarguments when adjusting the anchor set by the initial offer. What does this mean for you? If you are involved in a negotiation, it is probably a good idea to make the first offer. That initial offer serves as an anchor. However, after you make that initial offer, resist the temptation to give reasons to justify that initial bid. Instead, let the other party come back with a counteroffer. Chances are, that counteroffer will not be adjusted as far away from your initial offer as it would have been if you had made arguments in your own favor.

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Forex Trading Weekly Forecast – 08.01.11

July 31, 2011

US Dollar Could Fall Further on Debt Ceiling Impasse, Nonfarm Payrolls Euro’s Sovereign Debt Crisis Simmering Behind US Deficit Headlines Japanese Yen to Consolidate as …

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European Week: ECB & BoE decisions amid slowing growth and rising debt woes

July 31, 2011

The cycle continues and the jitters are only extending. He we are starting a new month and further economic softness has been reported into the third quarter and this week the focus will again be on …

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The most important economic data and decisions from Asian banks this week

July 31, 2011

Asian region is to release a group of key economic data this week, along with the decisions of some central banks, which comes on top is the Reserve Bank of Australia and Japan’s central bank, in …

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U.S. Ahead: the world’s leading economy highlights this week with manufacturing, income and Jobs data

July 31, 2011

A new week awaits the world’s superpower dear reader, unfolding a fresh round of economic fundamentals covering several industries, and giving an insight of the recent economic conjuncture as …

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Chavez wants higher Opec quota for Venezuela

July 31, 2011

(MENAFN) Venezuela’s President Hugo Chavez urged the Opec producer group on Friday to raise its quota for the South American nation given its vast reserves in the Orinoco heavy crude …

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US economy slowed sharply in H1, Obama expects growth

July 31, 2011

(MENAFN) White House spokesman Jay Carney said on Friday President Barack Obama expects the US economy to keep growing despite a slowing trend reflected by weak GDP numbers. The economy grew at a …

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Global stocks, dollar and oil drop on disappointing US growth data

July 31, 2011

(MENAFN) World stocks headed for their biggest weekly loss in almost a year on Friday as investors piled into safe havens on worries about sovereign debt crises on both sides of the Atlantic and …

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Terex to buy Demag Cranes at USD1.4b

July 31, 2011

(MENAFN) Demag Cranes stated it reached an agreement with Terex Corp, under which the latter would buy Demag for USD1.36 billion, reported Bloomberg. The deal came at a price higher than the …

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Merck to slash 13,000 jobs by 2015

July 31, 2011

(MENAFN) Merck, the second-largest United States drugmaker, reported that it plans to cut up to 14 percent of the company’s workforce, which stand for about 12,000 to 13,000 jobs, by the end of the …

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Iran’s steel production up 11.6% in H1

July 31, 2011

(MENAFN) The World Steel Association (WSA) said that Iran’s steel production increased in the first half of the current year by 11.6 percent, year-on-year, and reached 6.63 million tons of crude …

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States Preparing For Fallout If Debt Ceiling Deal Isn’t Reached

July 31, 2011

LOS ANGELES — As gridlocked Washington edges toward default, states staggering out of the last recession are preparing for the worst: The federal piggy-bank that helps them pay for health care, jobless benefits, road building and schools could run out of cash. Kansas Gov. Sam Brownback is warning that his state might not be able to fully cover potential shortfalls, and jittery California cushioned its finances last week by borrowing $5.4 billion from private investors. Massachusetts is preparing to replace $850 million in U.S. payments that could be derailed in August, while Oregon plans to free up a cache of money if Washington stops sending checks. Freighted with uncertainty, states can’t look to lessons from the past: There aren’t any. The U.S. government, which has a gilded credit rating, has never defaulted. And no one seems to know what funding could be cut, by how much or for how long. That would be determined in Washington if Congress fails to raise the government’s borrowing limit by Tuesday. “You’re chasing a ghost,” says Nevada Department of Health and Human Services Director Mike Willden. “What’s the deal? What is the cut? What can I expect?” A congressional compromise remained elusive, with anxiety over a possible default increasing with the passing days. At issue is the debt ceiling, a legal limit on how much debt the government can accumulate. If Congress fails to raise the borrowing limit by Tuesday, the U.S. might not be able to pay all its financial obligations. A default could send financial markets and the economy into a tailspin, spreading angst from Wall Street to Main Street. If the U.S. loses its top-notch credit rating, it could drag down ratings for some states, too, driving up borrowing costs. The most vulnerable are Maryland, Virginia, South Carolina, Tennessee and New Mexico because of their reliance on federal money, according to one rating agency. A group of California legislators warned Congress that failure to raise the debt limit could threaten a fragile economic recovery – California remains in the grip of double-digit unemployment. In statehouses around the country, preparations were under way as states judged what would happen if federal dollars slowed or stopped. Some were rushing to claim any federal aid that might be in the pipeline before Tuesday’s deadline. Many states appeared to have enough cash on hand to fill short-term gaps from Washington. For example, Vermont Finance and Management Commissioner Jim Reardon said the state Medicaid program is expected to receive a payment of more than $53 million from the federal government Monday, a day before the federal government might stop paying some bills. Rhode Island and New Hampshire have enough money on hand to cover expenses through August, giving Congress extra time to resolve the stalemate before programs might take a hit. But Florida’s courts system would be unable to make payroll if a crisis lasts beyond Aug. 22. In North Carolina, state Budget Director Andy Willis said the state could cover Medicaid reimbursements for a few days but floating the payments for a longer period might be a different matter because of a tight budget. Ohio has an 8.8 percent jobless rate and “if the country stops paying its bills now, those numbers will only get worse,” a bipartisan group of Ohio mayors said in a letter to the White House, calling for a settlement. All states rely on federal aid, but the impact will vary state to state. New Jersey, for example, counts on a smaller percent of federal money for state spending than other states, chiefly because it has more wealthy residents. Kansas gets about half its money from Washington. California, the nation’s most populous state, gets nearly $80 billion annually, much of it for health care for the poor. If the debt ceiling is not lifted by the deadline, the Treasury Department, which issues tens of millions of payments each month for everything from food stamps to Social Security, would have to decide what bills it could pay, in what order. The amount of cash would be limited, since the government borrows about 40 cents of every dollar it spends. With the fall school term approaching, the University of California is trying to figure out what a U.S. default would mean for more than $3.5 billion in federal research dollars and student aid it’s slated to get this year – 720,000 students receive Pell Grants at UC, one of the nation’s largest public universities. In Alabama, the state is moving some of its investment funds into cash to guard against fluctuations in the financial markets. Massachusetts is looking at whether it could provide interim financing to keep some or all of the programs funded, should federal checks slow or stop. The state receives about $200 million a week in federal funds, and 1.25 million people rely on federally subsidized Medicaid. “If we were to say we can’t make those payments any more … it’s hard to imagine what would happen,” said Administration and Finance Secretary Jay Gonzalez. “There would be potentially some dire consequences.” Some government officials worry about longer-term damage. In Los Angeles, the nation’s second-largest city, pension funds rely on income from the stock market, and if it plunges taxpayers are on the hook to make up shortfalls that, in a worst-case scenario, could reach hundreds of millions of dollars. If the region’s double-digit unemployment rate goes up, that inevitably digs into the city’s share of sales, hotel and other taxes needed to run local government. And if the nation’s credit rating goes down, uncertainty could rattle the bond market, making investors less likely to jump in while driving up interest rates that make borrowing more costly for governments around the U.S. “Should there be a crisis generated by the debt ceiling not being lifted, that would bring us to a very critical state,” said City Administrative Officer Miguel Santana. “We have little room left to manage it. Now we are at the bone in terms of the core services we provide,” Santana said. “We are sort of victims to the outcome of the gridlock.” At the Hollywood Senior Center in Portland, Ore., optimism was holding up among the low-income seniors who rely on Medicaid and other social-assistance programs to survive. But executive director Amber Kern-Johnson said the idea of federal dollars drying up seemed unfathomable to the center’s clients. “Many of them just don’t believe something like that could happen,” Kern-Johnson said. ___ Associated Press writers Sandra Chereb in Carson City, Nev., Beth DeFalco in Trenton, N.J., Nigel Duara in Portland, Ore., Susan Haigh in Hartford, Conn., John Hanna in Wichita, Kan., Dave Gram in Montpelier, Vt., Susan Haigh in Hartford, Conn., Johanna Kaiser in Boston, Jay Reeves in Birmingham, Ala., and Gary D. Robertson in Raleigh, N.C.

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Claudia Ricci: What, Now to Get a Job You Already Need to Have a Job?

July 31, 2011

Beverly Bowne, who lives in the Bronx, worked for 28 years as a billing coordinator for a printing company in New York City. And then in 2009, she and a number of other employees at the company — including her own supervisor — were laid off. Bowne’s employer was hard hit by the recession. The company, like so many in the printing industry, is shriveling fast as internet communication replaces the need for printed materials. For Bowne, the lay off was devastating. “I fell apart completely,” she said. “You have to go through the grieving process.” Bowne has spent the last two and a half years looking for work, sending out hundreds of resumes. Often, she gets the cold shoulder from prospective employers reacting to her grey hair and her age (she’ll be 60 next month.) Now, she’s begun to see a new kind of snub — job ads on Careerbuilder.com from companies saying that applicants must already be employed in order to apply for the job. Bowne calls the ads “outright discrimination,” adding that these ads “remind me of the ‘Irish need not apply’ ads of our earlier history.” Bowne isn’t the only one infuriated by the ads. The progressive activist orgranization USAction has now launched an on-line petition campaign to stop what they are calling an “outrageous” form of job discrimination. “It’s outrageous enough that 14 million Americans are out of work. But discriminating against jobless people who just want to feed their families and stay in their homes? Employers should not penalize applicants for a job status that they cannot control, especially when prohibiting the unemployed from applying only compounds the issue.” To say American’s are job-hungry is an understatement. So many Americans are downright desperate. To those folks, some of whom were comfortably employed at the top of their fields before they got bounced, the idea that you can’t apply for a job unless you have one may sound a bit Kafka-esque. Or downright cruel. But to companies advertising in places like Careerbuilder, Craigslist and Monster.com, there is a certain evil logic. These days, it is clearly an employer’s job market. With so many millions of people unemployed, and frantic to find jobs, companies are routinely flooded with applications for every open position. That flood gives employers the privilege to be very, very picky. Some employers reason that people who were let go during the recession — people like Bowne who still cannot find work — tend to be less desirable employees. Those lucky folks who have managed to keep their jobs are the cream of the crop. This logic seems to Bowne like just one more punch in the face as millions of jobless remain unemployed, through no fault of their own. “They treat you like you don’t want to work,” she says, which is absolutely not the case. “We want to go back to work, but basically there is nothing out there.” Bowne has attended numerous job fairs, and she’s also had extensive guidance from social services on how to get re-employed. One tip she’s taken to heart: volunteer work. She now spends two days a week volunteering at a nearby nursing home, and while there, she took the initiative to reorganize and clean out the conference room. She also took charge of the nursing home’s files, and got them all in order. Still, she’s so discouraged by job hunting in the New York area that she is now planning to relocate in the next month or two to Mesa, Arizona, where she has family. Hopefully, there, she will have more luck finding work. The job ads in question are particularly hard on older Americans, for whom job-hunting already has a cruel twist. The clock is ticking for these folks, as they pass out of their prime working years. Bowne says that in the many seminars and job fairs that she’s attended looking for work, she’s met a slew of middle-aged men and women who are up a tree looking for jobs. “Anybody in their 50s or older is really having a tough time,” she says. “I’ve seen executives who have been out two or three years. Many of them are in their early fifties, in their prime, they’ve been vice presidents, and still they’re without jobs.” An article in the New York Times indicates that job ads telling unemployed people not to apply is a practice that technically doesn’t break the law: Legal experts say that the practice probably does not violate discrimination laws because unemployment is not a protected status, like age or race. The Equal Employment Opportunity Commission recently held a hearing, though, on whether discriminating against the jobless might be illegal because it disproportionately hurts older people and blacks. According to the Times , companies of all sizes and types are engaged in this advertising practice. The University of Phoenix removed their ads after the Times inquired about them. Other job categories included among those discriminating against unemployed workers include “hotel concierges, restaurant managers, teachers, I.T. specialists, business analysts, sales directors, account executives, orthopedics device salesmen, auditors and air-conditioning technicians.” In a recent report, the Washington, D.C.-based National Employment Law Project called the job ads a “perverse catch-22 [which] is deepening our unemployment crisis by arbitrarily foreclosing job opportunities to many who are otherwise qualified for them. It dilutes the storehouse of talent in America, by casting aside an untold number of skilled and dedicated workers who have the misfortune of being unemployed in the worst downturn since the Great Depression. And it adds to the crisis that unemployed workers, their families and their communities face, as we try to crawl out of this deep recessionary hole.”

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10 Signs The Double-Dip Recession Has Begun

July 31, 2011

Today’s news on GDP shows the double dip has arrived–an expansion of only 1.3% and consumer spending up .1% in the second quarter. Astonishingly low by any account.. The debt ceiling trouble and lack of a longer term resolution to the deficit will make it worse.

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Billionaire Downplays Downgrade Threat To Markets

July 31, 2011

DUBLIN (Reuters) – A downgrade of sovereign debt would not necessarily have a big impact on financial markets, billionaire investor Wilbur Ross said. Entrenched differences were hampering a compromise between Republicans and Democrats on Saturday to head off a ruinous debt default, less than 100 hours before the government says it will run out of money to pay all its bills. A late deal could raise the prospect the United States will lose its top-notch triple-A credit rating, which analysts say would rattle financial markets and raise borrowing costs for Americans. “I am not at all certain that even if they were to downgrade U.S. debt to double-A, it is not at all clear that would have a big impact on markets,” Ross told Reuters in a telephone interview late on Friday. “It depends to what level and how much markets really believed the downgrade,” he said. “At the end of the day who decides where paper trades and whether new issues are sellable is the market, not the rating agencies.” He said he expected the crisis to be over by the August 2 deadline after which the Treasury says the government would be barred from further borrowing. “If the U.S. solves its problem, as I believe and assume that it will, by August 2 … I think that crisis will be behind us,” Ross said. “I really don’t see default as such happening.” (Reporting by Conor Humphries; Editing by Catherine Evans) Copyright 2010 Thomson Reuters. Click for Restrictions .

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White House: Debt Ceiling Deal With Republicans Not Yet Final

July 31, 2011

WASHINGTON — A top White House official says “we don’t have a deal” between President Barack Obama and Republicans in Congress to avoid a crippling default. But senior White House adviser David Plouffe (pluhf) tells NBC’s “Meet the Press” that both sides are generally in agreement on an emerging package that would cut the deficit in two stages, with key details still being worked out. Plouffe suggests that negotiations are still focused on how to compel Congress to approve a deficit-cutting plan of tax and entitlement reform later this year. Obama is adamant that the nation’s debt limit be extended into 2013 without being tied to that vote. Republicans want the debt limit to be the “trigger” to force Congress to act.

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HSBC Heads For $11 Billion Profit As Revamp Takes Shape

July 31, 2011

LONDON (Steve Slater) – HSBC Holdings Plc (HSBA.L: Quote, Profile, Research, Stock Buzz) should unveil a half-year profit of near $11 billion on Monday, flat from a year earlier as weak investment bank trading and wobbly U.S. and European economies offset growth in Asia. New HSBC CEO Stuart Gulliver is overhauling Europe’s biggest bank by slashing costs by up to $3.5 billion, selling its U.S. credit card arm and other assets, and retreating from countries where it is sub-scale. The aim is to sharpen the focus on Asia and investors want to see progress made on that plan. HSBC is the first of Britain’s big banks to report and should show a pretax profit for the six months to the end of June of $10.9 billion, compared with $11.1 billion a year earlier, according to the average of forecasts from 12 banks and brokerages polled by Reuters. Earnings will be hurt by a slump in fixed income trading in the second quarter, which has hit rivals including Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz) particularly hard. Revenue from HSBC’s global banking and markets unit is likely to fall 8 percent on the year to $10 billion, analysts at Citi forecast. A stuttering U.S. economy could also slow the improvement in bad debts at HSBC’s U.S. consumer loans portfolio, which it is running down, analysts said. Gulliver unveiled his far-reaching plan in May to slash costs and cut back in retail banking to revive flagging profits and returns. Gulliver intends to sell HSBC’s U.S. credit card portfolio, which has more than $30 billion in assets, a move which would free up capital. Capital One Financial Corp (COF.N: Quote, Profile, Research, Stock Buzz) and Wells Fargo (WFC.N: Quote, Profile, Research, Stock Buzz) are among the bidders, sources have said. Another suitor could be Barclays (BARC.L: Quote, Profile, Research, Stock Buzz). HSBC is also looking to sell upstate New York branches as it shrinks its network of 475 U.S. branches. Altogether it is looking to sell, shut or slim down retail banking in 39 countries. So far, it has said it will exit Russia and Poland. The bank is likely to axe thousands of jobs as part of the overhaul, but it is probably too early to see an improvement in the cost line, analysts said. Pretax profit will include a negative adjustment on the value of debt the bank carries, expected to be around $600 million. Underlying profit of $11.5 billion would be up almost a fifth from a year ago. (Editing by David Holmes) Copyright 2010 Thomson Reuters. Click for Restrictions .

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Thousands Of Israelis Protest High Cost Of Living

July 31, 2011

JERUSALEM — Tens of thousands of Israelis took to the streets nationwide on Saturday to protest rising housing prices in the largest turnout since the grass-roots demonstrations began two weeks ago. The protests over housing costs have tapped into wider discontent among Israelis over the high cost of living and the growing gaps between rich and poor. Other protests include doctors striking over working conditions and pay, parents demonstrating against expensive child rearing costs and similar outpourings over increasing gas prices. Thousands thronged the streets of Jerusalem, Tel Aviv and other major cities and chanted, “The people demand social justice.” Protesters waved Israeli flags and placards that read: “work 3 jobs but don’t make ends meet,” “killing ourselves to live” and “social gaps are killing us.” Police spokesman Micky Rosenfeld said more than 100,000 people protested in 10 cities across the country from Beersheba in the south to Kiryat Shmoneh at the northern tip of the country Saturday night. Police closed major streets for the protesters to march. The demonstrations began two weeks ago in Tel Aviv, where young activists set up a small tent encampment in a central neighborhood to draw attention to the country’s housing crunch. The protests, inspired in part by unrest in neighboring Arab countries, have continued to gain steam and show no signs of slowing. “This is a great success; people are marching in the streets and living in the streets for the past two weeks,” Stav Shafir, one of the protest leaders, told Channel 2 TV. “Finally people are choosing to determine how they want to live. We want affordable housing, health, education and welfare.” The weeks of popular demonstrations are becoming a headache for Prime Minister Benjamin Netanyahu with polls showing a sharp drop in his approval ratings and strong support for the protesters. Netanyahu announced a package of reforms meant to lower housing prices last week but it did little to defuse the anger. In Jerusalem, thousands marched through the city center to the prime minister’s house. Protesters held up signs reading, “Netanyahu go home.” The protests have brought together people from diverse background and a wide range of political views. Recent demonstrations have included marches against the prices of gasoline, boycotts of expensive cottage cheese that forced manufacturers to lower prices and lengthy strikes by social workers and doctors over pay and working conditions. The average Israeli salary stands at about $2,500 per month, with key professions like teachers, civil servants and social workers typically earning less than $2,000 a month. Home prices jumped some 35 percent between December 2007 and August 2010 and rental rates have also risen steadily. Rent on a modest three-bedroom apartment in central Jerusalem can cost more than $1,000 per month and costs even more in Tel Aviv. A standard, 1,000-square-foot (100-square-meter) apartment can easily top $600,000 in metropolitan centers like Tel Aviv and Jerusalem, and $200,000 to $300,000 in second-tier areas.

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U.S. Unemployment Rate Probably Unchanged In July

July 31, 2011

The U.S. probably failed to create enough jobs in July to reduce unemployment, showing anxiety over government debt deliberations and a slowdown in consumer spending have shaken employer confidence, economists said before reports this week.

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AT&T to reduce browsing speed for unlimited plan users

July 31, 2011

(MENAFN) The Dallas-based AT&T Inc. said that it would reduce the browsing speeds for its customers who use the unlimited plan starting from October, and this reduction of speed would go on until …

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India’s Tata to appeal court ruling on returning land

July 31, 2011

(MENAFN) India’s Tata group, the car maker, said that it would appeal against a court verdict that rejected its plea for an interim stay on the government’s decision to return the 403 hectare plot …

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Nissan seeks higher global market share

July 31, 2011

(MENAFN) Nissan Motor’s Chief Executive, Carlos Ghosn, said that the carmaker would increase its share in the global auto market to eight percent as part of the company’s six year ambitious plan for …

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Republicans cling on to rejecting the debt-limit bill

July 31, 2011

(MENAFN) The Republican-led House decided to hold on to rejecting the senate democratic bill to raise the nation’s debt limit at a rare weekend session, where it took place just three days before …

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Venezuela seizes fuel smuggling gang

July 31, 2011

(MENAFN) Venezuelan Deputy Justice Minister Nestor Reverol said that authorities succeeded in busting a gang that smuggled subsidized diesel fuel out of the country to be sold with a high profit, …

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Great Wall Motor registers USD139.4m in Q1

July 31, 2011

(MENAFN) China’s Great Wall Motor Co Ltd said that its net profit reached USD139.4 million in the first quarter that ended on March 2011, compared with overall net profit of the year 2010 which …

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Petrobras eyes USD224.7 investments

July 31, 2011

(MENAFN) According to a securities filing, Petrobras would invest USD224.7 billion in a five-year program that aims at boosting oil exploration and production, reported Arab News. The company …

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Townsends shuts down plants leaving 1,000 jobless

July 31, 2011

(MENAFN) The News & Observer of Raleigh said that due to closure of the Townsends plants in Siler City and Mocksville, contracts with about 200 chicken farmers in four counties ended, and all North …

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ABM Resources NL (ASX:ABU) Announce Further Extensional Buccaneer Drill Results

July 31, 2011

http://www.abnnewswire.net/rss2/menafn/abn_menafn_en.asp ABM Resources NL (MENAFN)uccaneer Porphyry Gold Deposit located on the Company’s Twin Bonanza Gold Camp Project with highlights. – …

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Toro Energy Limited (ASX:TOE) Pilot Plant Testwork Program Commences for Wiluna Project

July 31, 2011

http://www.abnnewswire.net/rss2/menafn/abn_menafn_en.asp Toro Energy Limited (MENAFN)art of its continuing assessment of the Wiluna Uranium Project. The processing plant testwork involves the use …

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Asian Activities Report for August 1, 2011: Cullen Resources (ASX:CUL) Announce High-Grade Zinc Discovery at TL Property in Canada

July 31, 2011

http://www.abnnewswire.net/rss2/menafn/abn_menafn_en.asp Cullen Resources Limited (MENAFN)ive sulphide zone from the TL Property located in south-east metal district of British Columbia, Canada. …

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BP Accused Of Taking ‘Stranglehold’ On Iraqi Economy

July 31, 2011

BP has been accused of taking a “stranglehold” on the Iraqi economy after the Baghdad government agreed to pay the British firm even when oil is not being produced by the Rumaila field, confidential documents reveal.

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How Businesses Play Critical Role In Thwarting Terror

July 31, 2011

KILLEEN, Texas — Ultimately, it was the keen eye of a Texas gun shop clerk that helped authorities find an AWOL soldier who’d stashed bomb-making material in his nearby motel room for a planned attack on Fort Hood soldiers. The tip that led Killeen police to Pfc. Naser Abdo on Wednesday prevented what could have been the second terrorist attack on the Army post, following a 2009 shooting rampage in which an Army psychiatrist is charged with killing 13 people. Earlier this year in Texas, a shipping company that told the FBI about a suspicious order for a chemical explosive foiled an alleged plot to blow up former President George W. Bush’s Dallas home. The enduring lesson for a post-9/11 world: America’s work force plays a crucial role in preventing potential terror attacks. “A vigilant public and informed local law enforcement make it much more complicated for people wishing to carry out attacks to do so,” said John Cohen, principal deputy counterterrorism adviser at the Homeland Security Department. Federal and local law enforcement agencies have established programs over the past decade that encourage the public to report suspicious activity, and tips from businesses have led to multiple high-profile arrests. Abdo, 21, who went absent without leave from Fort Campbell, Ky., early this month, was arrested Wednesday at a motel outside Fort Hood and charged with possession of an unregistered destructive device. Police say he was perhaps only a day away from unleashing bombs in a restaurant frequented by soldiers and attacking the Army post. Abdo’s alleged plan was cut short when Guns Galore employee Greg Ebert became suspicious after the soldier acted oddly while purchasing smokeless gunpowder, shotgun ammunition and a semi-automatic pistol magazine. Ebert’s call to police and the soldier’s subsequent arrest was a proud moment for employees of the store – the same place Maj. Nidal Hasan bought a pistol used in the Fort Hood shooting spree two years ago. Store clerk Dave Newby said Hasan’s purchase, while legal, devastated store workers and put everyone on higher alert. “I think we all changed,” he said. “It was terrible. We thought about coulda, shoulda, woulda.” Ebert noted this week that although there was “nothing extraordinary” about Abdo, he saw just enough to make him suspicious. The retired police officer said Abdo arrived at the Killeen gun shop in a taxi – unusual for the Central Texas town – and proceeded to buy 6 pounds of smokeless gunpowder, while asking what it was. Abdo didn’t say much as he paid in cash, and he didn’t bother to collect his change or a receipt before returning to the waiting taxi. “Now, he hasn’t done anything unlawful – it doesn’t prevent me from being curious,” said Ebert, who retired from the police force last year. Federal authorities say actions like Ebert’s can keep America safe. “The willingness of an individual to contact law enforcement about an event or incident that may be indicative of a possible threat is vital to our mission,” FBI spokesman Paul Bresson said. “It may turn out not to be a threat but at least we have the opportunity to check it out.” Other business tips have been credited with preventing disaster. A clerk at a Circuit City store in New Jersey told police in 2006 that customers had asked him to make a DVD out of video footage of them firing assault weapons and screaming about jihad. The FBI later tracked six men, now known as the Fort Dix Six, who plotted to kill soldiers in a raid at the Fort Dix military base in New Jersey. Earlier this year, two companies – Carolina Biological Supply Co. in North Carolina and Con-way Freight in Lubbock – contacted federal and local authorities about suspicions each had surrounding a purchase by Khalid Ali-M Aldawsari, who has been charged with attempted use of a weapon of mass destruction and schedule for trial later this year. Federal authorities said Aldawsari bought explosive materials online and planned to hide them inside dolls and baby carriages to blow up dams, nuclear plants and Bush’s home. A former Texas Tech University chemical engineering student from Saudia Arabia, Aldawsari was arrested after the North Carolina company reported $435 in suspicious purchases to the FBI. The freight company notified Lubbock police and the FBI with similar suspicions because it appeared the order wasn’t intended for commercial use. Con-way Freight spokesman Gary Frantz said since Sept. 11, 2001, the company has worked with local, state and federal authorities to develop training programs employees participate in at least once a year. “I think we can be a force multiplied, which is a term often used by law enforcement, where private industry serves as additional eyes and ears to help authorities to uncover these activities to protect the public,” Frantz said. Carolina Biological Supply spokesman Keith Barker said his company has procedures to closely monitor orders involving “chemicals of a high degree of hazard.” “We’ve taken it upon ourselves to be vigilant,” Barker said. Meanwhile, “Operation Tripwire” is an FBI effort that asks certain businesses and industries – such as airlines and cruise ships – to look for and report suspicious behavior. The Department of Homeland Security has a national “If You See Something, Say Something” public awareness campaign that works with businesses and groups, such as the National Basketball Association, to promote public vigilance. Some local law enforcement agencies also have partnered with businesses. New York Police Department detectives have asked thousands of companies to be on the lookout as part of “Operation Nexus.” “In a sense we don’t know what we deter,” because people don’t commit crimes and get arrested, said Paul Browne, spokesman for the nation’s largest police department. “But by making these things harder, and by educating people who may become unwitting players in terrorist plots, we hope to have that deterrent impact.” The Los Angeles Police Department created “iWatch,” which uses brochures, public service announcements and meetings with community groups to provide advice on how to detect and report suspicious behavior. LAPD Cmdr. Blake Chow said the program is augmented by a web-based system that lets private businesses and security firms exchange information about suspicious activities. The intelligence gleaned with these systems, along with phone tips, has helped disrupt the financing of suspected overseas terrorist organizations, he said. “The general public is the ones that go to the same place every day to work, they know their neighbors,” Chow said. “We rely on them to tell us if they see something or an individual’s activities that seem out of place.” ___ Associated Press writers Betsy Blaney in Lubbock, Colleen Long in New York City, Eileen Sullivan in Washington and Thomas Watkins in Los Angeles contributed to this report.

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Harry Reid: GOP Leaders ‘Still Refuse To Negotiate In Good Faith’

July 30, 2011

Speaking on the Senate floor early Saturday evening, Senate Majority Leader Harry Reid dismissed a suggestion made just hours earlier by Senate Minority Leader Mitch McConnell that Democrats and Republicans were inching closer to striking a deal to raise the deficit limit. “It’s fair to say that the engagement there is not in any meaningful way,” Reid said. “Republican leaders still refuse to negotiate in good faith.” Reid said the notion both sides are making progress toward reaching an agreement is “not true.” “The Republican Leader says he’s engaged,” Reid said. “Fortunately, members of his caucus, at least as far as I’m concerned, are more engaged than he is. There are meaningful talks going on with some of his members with my senators.” Reid continued, “While the Republican leader is holding meaningless press conferences, his members are reaching out to me and other members, as I’ve just indicated. They’re coming forward with thoughtful ideas to try to move the process forward. I welcome their ideas and ask all members to continue these discussions.” He suggested that delaying tactics being exercised by his Republican colleagues are preventing a measure from advancing in the upper congressional chamber to raise the debt ceiling. The Democratic leader spelled out the word f-i-l-i-b-u-s-t-e-r to make his case. “You can put lipstick on it, a nice suit, even a skirt on it sometimes, it’s still a filibuster,” Reid said in comments directed at McConnell. The Nevada Democrat suggested that it’d be “unconscionable” for Republicans to use the maneuver to prevent a bill from passing to avert default. McConnell signaled he’s more optimistic about the prospect lawmakers in Washington will reach an agreement while speaking on the Senate floor. He said, however, that “the only way that can be done” is through talks with President Barack Obama. Below, video of Reid’s remarks on the Senate floor. Click here for more on the latest developments to unfold in the debt ceiling debate. WATCH: Visit msnbc.com for breaking news , world news , and news about the economy

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Democrats, GOP Have Now Rejected Each Other’s Debt Plans

July 30, 2011

WASHINGTON — With just three days left until the country is set to begin defaulting on its debt, the House rejected a debt proposal by Senate Majority Leader Harry Reid (D-Nev.) on Saturday — a move Republicans designed purely for theatrics to show the bill lacked the votes to pass. The bill was rejected by a vote of 173 to 246. Eleven Democrats joined all of the House Republicans in opposing Reid’s bill. The defecting Democrats included Reps. John Barrow (Ga.), Dan Boren (Okla.), Bruce Braley (Iowa), David Loebsack (Iowa), Jim Matheson (Utah), Mike McIntyre (N.C.), Collin Peterson (Minn.), Mike Ross (Ark.), Kurt Schrader (Ore.), Peter Visclosky (Ind.) and David Wu (Ore.). Reid and House Minority Leader Nancy Pelosi (D-Calif.) headed to the White House to discuss the state of play with President Barack Obama shortly after the bill went down. House Republicans pushed Reid’s bill through via a restrictive voting process: The measure was taken up on the suspension calendar, which requires a two-thirds vote to pass, bars amendments and limits debate to 40 minutes. Rep. James McGovern (D-Mass.), who sits on the House Rules Committee, called the day’s business “a joke,” “a disgrace” and “an insult to the American people.” The effect of taking up Reid’s bill on the suspension calendar — a move typically reserved for noncontroversial measures — is “a $2.5 trillion bill being brought up under the same process used for post offices,” McGovern said. House Republicans maintained that the action was necessary to show that the Democratic plan can’t pass and key to moving overall negotiations forward. The vote comes a day after the Senate voted down a GOP debt plan put forward by Speaker John Boehner (R-Ohio). So the result of Saturday’s vote is that the majority party in each chamber has rejected the other’s plan — and at least appeared to draw a line on what they won’t accept in a final deal. “This side of the aisle is committed to reaching a solution,” Rep. Scott Garrett (R-S.C.) said. “But at the of the day … let it be clear, with God as my witness, we will not compromise on our principles — our principles of defending the Constitution.” Partisan tensions boiled over at several moments in the debate. Pelosi said Boehner “chose to go to the dark side” by adjusting his debt proposal to win over conservatives. Rep. Michele Bachmann (R-Minn.), a GOP presidential candidate, accused President Barack Obama of having just “coolly stood on the sidelines” as Congress wrestled with a debt solution. At one point, Rep. Sander Levin (D-Mich.) started a shouting match with House Rules Chairman David Dreier (R-Calif.) over the point of holding Saturday’s doomed vote at all. “This is a disgraceful moment, Mr. Dreier,” Levin said. Dreier countered that the House vote will help move the process forward. The two went back and forth vying for recognition to speak until Levin stormed off after shouting into the microphone, “Mr. Dreier, that is pernicious nonsense!” For all the partisan sniping on Capitol Hill, the reality is that Reid’s and Boehner’s plans aren’t that far apart. Both make substantial spending cuts, both have some form of spending caps and both would establish a “super Congress” composed of 12 members from both parties and chambers that would be given the power to make major changes to entitlement programs. Most importantly, both allow for a debt ceiling increase before August 2, when the government is expected to run out of money to pay its bills and begin to default. There’s “not that much difference,” between the two, Rep. Jeff Flake (R-Ariz.) told The Huffington Post on Friday. Flake voted for Boehner’s bill and said he, for one, would have supported Reid’s plan if he attached it to a vote on a balanced budget amendment. But with both the Reid bill and the Boehner bill now off the table — at least in their current forms — House and Senate party leaders are heading back to the table to come up with another path forward. Some Democrats continued to call on Obama to go around Congress and use the Constitution to avert a debt default. “The president needs to pull the 14th Amendment,” Rep. Eliot Engel (D-N.Y.) said on the floor. “I think he should because the Republicans have shown no sign of compromise.”

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Geoffrey R. Stone: The Debt Ceiling Crisis: Approaching the Witching Hour

July 30, 2011

As the clock runs down toward the witching hour on August 2, I see three possible solutions to the crisis. First, the Republicans and Democrats in Congress can agree on a compromise plan that raises the debt ceiling for a reasonable period of time and deals with at least some of the issues of spending cuts and new revenues that have thus far so furiously divided the parties. I suppose this is still possible, but it seems unlikely. Second, the Republicans and Democrats in Congress can agree to increase the debt ceiling for a reasonable period of time without addressing any of the bitterly divisive spending and revenue issues . This is pretty much what has always happened in the past. Congress has separated the debt ceiling issue from the more difficult and more contentious issues of taxing and spending. At this point, that might be the best solution, but it too seems unlikely because of Republican intransigence. Third, Congress can remain paralyzed and simply do nothing. If they follow that approach, which now seems likely, the current debt ceiling will remain in place and as of August 2 the government will not be able to borrow any more money and thus will no longer be able to pay its bills — for the first time in American history. What happens then? The most obvious outcome is that for as long as that state of affairs exists, the president will have to decide which bills to pay and which to ignore. In other words, the president would have to decide whether to suspend Medicare payments, cancel Social Security payments, withhold the salaries of government employees (including the military), default on our debt obligations, etc. With each passing day, the spending cuts would need to be deeper and deeper. Some people have argued that, even if Congress does not raise the debt ceiling, these cuts and non-payments don’t have to happen, because the president can ignore Congress’ action and just keep on borrowing to pay the nation’s bills. Some have argued that a little-noticed provision in section 4 of the Fourteenth Amendment authorizes precisely this course of action. This provision states : “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.” This provision of the Fourteenth Amendment, which was enacted shortly after the Civil War, was intended, in part, to prevent the former Confederate states, when they resumed their positions in Congress, from attempting to cause the federal government to renege on the debts the Union incurred to put down the “rebellion.” A careful reading of the text, however, reveals that the provision goes well beyond that. It does not say that the validity of the public debt incurred to put down the rebellion “shall not be questioned,” but that the public debt more generally “shall not be questioned,” citing the Civil War issue as merely an illustration. So, what is the relevance of section 4 to the current crisis? What it seems to say is that the government must honor all public debt “authorized by law.” This suggests that non-payment of our existing debt is not a constitutionally-permissible option for the president. As a result, in making spending cuts beginning on August 2, the President apparently cannot constitutionally decide not to pay our outstanding debt. Rather, all of the cuts must come from ongoing expenditures. This would, of course, dramatically magnify the impact of the crisis on government programs, services and operations. Faced with this dilemma, what is the president to do? There are those who argue that this entire controversy is much ado about nothing, because the President can simply “raise the debt ceiling on his own.” They argue that, in light of “the president’s role as the ultimate guardian of the constitutional order,” President Obama should disregard Congress’ failure to authorize additional debt and assume the authority to do the “right thing” for the nation. As Justice Robert Jackson observed more than half a century ago, “the Constitution is not a suicide pact.” This is a dangerous argument. Its proponents point to the one dramatic instance in American history in which a president openly exercised this extraconstitutional authority. (President Bush II, by the way, attempted to exercise this authority secretly when he authorized the use of torture and the NSA surveillance program in violation of federal law.) But that earlier instance, involving President Abraham Lincoln, was quite a different situation. It arose at the very outset of the Civil War, when Union troops needed to get to the nation’s capital to protect it from possible Confederate attack. Confederate sympathizers in Maryland were tearing up the railroad tracks in order to prevent the Union troops from moving south to the capital. Because the local authorities, who were sympathetic to the Confederates, did nothing to prevent this interference, the only way to end the obstruction was for Lincoln to suspend the writ of habeas corpus and authorize the military to arrest and detain those who were preventing the army from reaching Washington. The problem was that the Constitution authorizes only Congress to suspend the writ of habeas corpus. But Congress was not in session, and in 1861 it could not be convened quickly. Faced with this crisis, historians and legal scholars agree that Lincoln was justified in doing what he did, even though it was not expressly authorized by the Constitution. Even if one thinks that the danger to the national interest today is comparable to that facing Lincoln in 1861, the situations are importantly different. Today, Congress is in session and is refusing the raise the debt ceiling, even though it could easily do so. Because the Republicans in Congress refuse to do this, President Obama (unlike Lincoln) is faced with a “decision” by Congress. It may be a reckless and irresponsible decision, but it is a decision and it is much harder to justify ignoring a decision than to act in a situation where no congressional action was possible. Having said this, I think the president is likely to (and should) take control of the situation and do the “right thing” for the nation, even though he has no express constitutional authority to do so. But to suggest that this crisis is much ado about nothing because the president can avoid a calamity by extra-constitutional means, and by doing something that no other president in American history has been called upon to do, is absolutely no excuse for the conduct of the Republicans in bringing us to this point. Moreover, even if the president does this, there may be serious repercussions. First, the Republicans in the House may well attempt to impeach the president for acting “unconstitutionally.” Even though this would go nowhere in the Senate, the very act of impeachment would exacerbate the dire state of politics in the United States today. Second, there will almost inevitably be litigation challenging the constitutionality of the president’s action. (Note that in 1861, Chief Justice Taney held Lincoln’s suspension of the writ of habeas corpus in Maryland unconstitutional and ordered him to lift the suspension. Lincoln ignored the Taney’s ruling.). Is that a crisis we want to repeat? The plain and simple reality is that unless the Republicans agree to raise the debt ceiling in the next two days, they will throw the nation into a constitutional and economic nightmare. If nothing else, they should have enough sense and self-discipline to know that they will pay dearly for this with the American people.

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New Dem Star Previews 2012 Argument In Debt Default Debate

July 30, 2011

WASHINGTON — The debt-ceiling battle may be a bitter fight in which the entire nation stands to lose, but Friday’s House vote also revealed that Democrats think it can hand them a winning political argument next year. They made that plain in their choice of a lawmaker to deliver the Democratic closing argument : newly-elected Rep. Kathy Hochul (D-N.Y.). Usually a party lion or leader offers the “motion to recommit” where the minority has its last chance (usually failing) to alter a bill it opposes. But Democrats went to Hochul to follow Speaker John Boehner (R-Ohio) on the floor instead of Minority Leader Nancy Pelosi (D-Calif.). The reason is simple: Hochul won a heavily Republican district last May in western New York by running hard against the Ryan budget — the spending blueprint passed last spring by the House Budget Committee’s chairman, Paul Ryan (R-Wis.), that would slash and privatize Medicare. It would cost Medicare recipients an extra $6,000 a year by 2021 if the measure passed the Senate, according to the Congressional Budget Office. Democrats think Hochul’s campaign is a model for 2012 — and they think the budget-cutting measure passed by the House Friday is an even better foil to run against. They’ve dubbed it the Ryan budget on steroids , estimating that it would cost people $2,500 more per year for Medicare than with Ryan’s plan. Further, Democrats argue Boehner’s debt bill could even kill Medicare. So when Hochul rose for permission to speak Friday and was asked by the chair if she opposed the Boehner bill, she answered with enthusiasm. “Oh, yes, I am opposed to this bill,” Hochul said. She then introduced her party’s attempt to modify it. It was an amendment that, like Hochul herself, embodied the Democratic argument that the super rich and corporations should give up some of their tax breaks before the government could cut things like programs for children and the elderly. “My amendment is a simple statement of America’s priorities,” Hochul said. “It says before we cut education for our children, we first must cut subsidies for big oil and corporate jets.” She used the phrases “big oil” and “corporate jets” repeatedly, in a sign Democrats see those talking points as effective. “I say slashing programs for seniors, young people, [the] middle class — all because we’re afraid of the influence of big oil — that is wrong on so many levels,” she said. And she lambasted Republicans for “playing chicken” with America’s economy by holding the raise in the debt limit captive to massive cuts in domestic spending. “Never, never in this history [of America] has there been an intentional disaster, perpetrated by the very people who were elected to be the caretakers of this country, and that is exactly what will happen if we refuse to take action, prevent default and pay our nation’s bills now,” Hochul said. Republicans on the floor did not appear impressed, and even could be heard laughing at Hochul — who has been in her office only since June — when she hit her time limit before finishing remarks about reaching out to the other side. But the National Republican Congressional Committee saw the campaign potential of her speech, and thought enough of it to blast right back with a statement that her charges were irresponsible and that Democrats would be to blame for default if they refused to accept the GOP spending priorities. “Kathy Hochul should take a serious look in the mirror because her ‘no’ vote stands in the way of forcing Washington to live within its means and preventing default,” said NRCC spokesman Tory Mazzola. “Hochul should be ashamed of herself for using such inflammatory rhetoric that’s not based in fact and puts party loyalty ahead of fixing our nation’s problems.” Hochul’s side, however, thought she got the message across. “Congresswoman Hochul has already distinguished herself as a member of Congress as an independent champion for the seniors and middle class families of upstate New York,” Pelosi spokesman Drew Hammill told HuffPost. “Democrats are united in opposition to the Republican Default Act and Congresswoman Hochul crystalized the concerns of her constituents with this motion on the House floor.”

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Apple Now World’s Largest Smartphone Maker

July 30, 2011

Apple has become the world’s biggest seller of smartphones, according to industry analysts. The US firm overtook both previous leader Nokia and Samsung in the second quarter of the year, when total smartphone sales hit a record 110m.

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11 Ways To Explain The Stakes Of A Debt Ceiling Debate

July 30, 2011

With the reported deadline to do raise the debt ceiling drawing ever closer, Washington has yet to come to terms on a deal to do so — this despite months of warnings from prominent politicians and businessmen alike, both of whom say not doing so could be potentially disastrous. No doubt the reasoning behind the invoked metaphors is to allow the involved parties to understand the stakes at hand. But throughout the months, a few particularly imaginative selections have stood out, either for the number of times used, or just sheer creativity. Indeed, the number of colorful metaphors sprinkling the political debate has now become no less than expansive. President Obama himself has referred to raising the debt ceiling as staving off “Armageddon.” Others, including Chinese officials, have described the entire decision to debate raising the debt ceiling as “playing with fire.” Some though, like Texas Governor Rick Perry, say the consequences of not raising the debt ceiling have been overstated. Below are prominent leaders who have predicted the consequences of not raising the debt ceiling and potentially defaulting:

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Answering The Big What-If Questions Of Debt Default

July 30, 2011

(Lauren Young) – The debt negotiations are getting down to the wire. Republican and Democratic lawmakers are scrambling to broker a deal to raise the country’s $14.3 trillion debt ceiling before Tuesday, when the Treasury will no longer be able to borrow funds to meet all of its obligations. It all means the United States could face the possibility of defaulting on its debt and losing its prized triple-A credit rating. What does that mean for consumers? Here are some answers we compiled from Reuters Money experts: 1. Should I be worried that I won’t receive my Social Security benefit in August? Perhaps not immediately. Social Security’s coffers should be full enough to make the August payments. And cash flow should be positive — the system generates more from current revenue than it spends on benefits and its own administrative costs. The main source of revenue is the payroll tax paid by employers and employees (the Federal Insurance Contributions Act, or FICA); other income sources include interest payments on bonds in the Social Security Trust Fund (SSTF) and taxes paid by higher-income beneficiaries. Last year, revenue totaled $781 billion, while outgo was $713 billion. And even if funds aren’t on hand in a given week to pay benefits for timing reasons, the SSTF can redeem bonds to make up the shortfall. But here’s the rub: the bonds are obligations of the U.S. Treasury back to the SSTF. A government debt default would put us in uncharted waters, and it’s entirely possible that the administration could refuse to redeem bonds or divert payroll tax receipts to meet other pressing obligations. Social Security advocates don’t agree on what might happen. “(Obama’s statement) was a foolish bluff,” says Eric Kingson, co-director of the Strengthen Social Security coalition. “There’s no excuse for checks not being issued, and the White House’s willingness to use the threat is symptomatic of their lack of regard for the institution. Their willingness to use it as a negotiating chip is unfortunate.” But Max Richtman, acting chief executive officer of the National Committee to Preserve Social Security and Medicare, worries that the government might decide not to fund the interest on Social Security’s bonds, which would leave the program short of funds. “We really don’t know — it’s completely uncharted territory. Social Security is cash flow-positive if you count interest on the bonds. But which obligations will the government put at top of list of priorities, and who decides that? Is it paying the interest on those bonds? Will it be paying the military? There’s so much uncertainty as to who gets paid, how much and when.” 2. What if I just filed for benefits, or plan to file next month? Could I lose my benefits in the event of a government default? No, but processing of your application could be delayed if the Social Security Administration is forced to lay off employees or shut down in the event of a government funding crisis. 3. Will interest rates on mortgages, car loans, student loans and credit cards rise? Yes. Like any average Joe or Jane who misses a credit card payment, the United States will be socked with higher borrowing costs if it defaults on its debt. If the country loses its coveted triple-A rating, which is expected to happen, the cost to service its debt will probably rise. And that will have a significant ripple effect. Greg McBride, senior financial analyst at Bankrate.com, says either a ratings downgrade or debt default would result in higher borrowing rates for consumers and businesses alike. “More of a concern is that a prolonged default could cause credit markets to freeze altogether, and we will have real problems,” he says. It’s impossible to speculate how much rates will go up, he says. “There are a lot of variables at play. The downgrade will lead to a more modest increase in rates. However, that increase would be permanent.” Folks who have variable debt such as a credit card balance or adjustable-rate mortgage can take a little comfort in this: “You are going to see higher interest rates eventually, anyway, because rates are so low,” McBride says. Alas, consumers won’t see higher rates on saving products, such as certificates of deposit or money market accounts. “Those products won’t improve until loan demand picks up; any downgrade or default will only hold back loan demand,” McBride says. 4. What’s the outlook for the U.S. dollar? Fear that the United States will lose its AAA credit rating or even default on its debt is driving foreigners away from U.S. assets, and the dollar is taking the biggest hit. Recent trading in currency markets indicates overseas investors have been voting with their feet. They have also been giving short shrift to recent Treasury auctions. Traders say Asian central banks, among the world’s biggest dollar holders, have been steady buyers of alternatives to the dollar such as the Singapore dollar and other Asian currencies as well as the Canadian, Australian and New Zealand dollars. “Foreigners are at the vanguard of the drop in the dollar,” says Dan Dorrow, head of research at Faros Trading, a currency broker/dealer in Stamford, Connecticut. “I don’t think anyone expects a catastrophic U.S. default. But a downgrade will make them more aggressive in moving away from the dollar.” If global investors lose faith in the dollar, that could weaken its dominant position in global trade and its role as the world’s reserve currency. Over time, diminished demand for dollars would make it harder for the United States to finance itself at low interest rates. The bottom line? It will be more expensive to travel overseas, drink French wine or buy Japanese cars. 5. What’s the outlook for U.S. Treasuries? The Treasury market has held up better than the dollar, but bonds haven’t been let off the hook entirely. Foreigners, who hold nearly half of outstanding Treasury debt, have been less active buyers at auctions this month. Still, the 10-year yield has held below three percent for most of July, less than a percentage point from its multi-decade low. That’s partly because domestic investors have picked up the slack in recent debt sales, suggesting they see no alternative to U.S. government bonds even in the face of a default or possible downgrade. Indeed, analysts say even with a downgrade, Treasuries would remain the benchmark for world fixed income markets, as Fitch Ratings noted this week. Terry Belton, global head of fixed income strategy at JPMorgan Chase, said a downgrade would probably add just five to 10 basis points to yields in the short run. But it could cost the U.S. government up to 70 basis points, or about $100 billion, in added borrowing costs over time as foreigners look to invest their money elsewhere. 6. Will we still pay our soldiers? While a group of Congressmen pushed forward a bill this week to ensure that the active military servicemen still get paid in the case of default, there’s no firm plan yet. The White House hasn’t made any assurances and either has the Treasury Department. Some financial organizations that service military clients, like USAA and the Andrews Federal Credit Union, have stepped up to say that they will advance pay if there is a default. “Rest assured, USAA has continued to manage its financial resources to meet our commitments to members in their moments of need,” says CEO Joe Robles in a statement. What will a default actually mean for military members and their families? “The bigger concern has got to be interest rates,” says Sarah Gilbert, the wife of an army reservist and a personal finance writer who was formerly an investment banker. She says military families have been through pay stoppages before – during the last government shut-down, they actually halted all military pay a week early – but what will really hurt is if interest rates go up even a little bit. “There’s no wiggle room,” she says. “Military families are so dependent on debt because they have to move so much, they are living on small budgets and they are mostly young families that don’t have a lot of established savings. If interest rates go up, you’re looking at foreclosures, collections and not being able to pay bills.” 7. Is there an upside to higher interest rates? Barry Glassman, president and certified financial planner at Glassman Wealth Services in McLean, Virginia, says higher interest rates are good for retirees and folks who have fixed mortgages. “I don’t know anyone with a five-year Treasury bond who doesn’t believe they won’t get their interest and principal back. If yields do jump, my clients would love 10- year Treasuries with a five percent coupon,” Glassman says. But McBride of Bankrate.com says it’s going to be a bumpy ride for most folks. “There are no winners here. Your best bet is to sit tight and pull the seat belt a little tighter,” he says. (With reporting from Mark Miller, Steven Johnson, Beth Pinsker and Linda Stern.) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Senate, House Race Against The Clock

July 30, 2011

WASHINGTON — The Republican-led House on Saturday rejected a Senate Democratic bill to raise the nation’s debt limit just three days before the deadline to avert an unprecedented U.S. financial default. President Barack Obama and lawmakers remained at loggerheads on any possible compromise. With tensions high at a rare weekend session, the legislation failed on a 246-173 vote that was largely symbolic. The Senate has yet to vote on the bill. Saturday’s result, however, could pave the way for negotiations on a compromise with Tuesday’s deadline on the government’s ability to pay its bills fast approaching. Senate Democratic Leader Harry Reid, D-Nev., and House leader Nancy Pelosi, D-Calif., were heading to the White House late Saturday. Obama, in his weekly radio and Internet address, warned that “there is very little time” and pleaded with both Republicans and Democrats to stop political gamesmanship. “The time for compromise on behalf of the American people is now,” Obama said. Pelosi, for her part, told the House it was “time to end this theater of the absurd. It’s time for us to get real.” Resolution remained elusive. Some 43 Senate Republicans said they opposed the Democratic bill by Reid. His alternative measure would raise the debt limit by $2.4 trillion while cutting spending by $2.2 trillion. In a letter to Reid, they wrote that the bill “fails to address our current fiscal imbalance and lacks any serious effort to ensure that any subsequent spending cuts are enacted.” The 43 are enough to block passage of Reid’s bill. Setting the stage for the high-stakes weekend, Senate Democrats late Friday killed a House-passed debt-limit increase and budget-cutting bill less than two hours after it squeaked through the House. Reid set up a test vote for the wee hours of Sunday morning to break a GOP filibuster on his own legislation. Saturday’s debate in the House was heated and sometimes nasty, with occasional efforts to shout down speakers. Rep. Sander Levin, D-Mich., railed against the “pernicious nonsense” from Republican Rep. David Dreier of California. Freshman Rep. Alan Nunnelee, R-Miss., said, “This Harry Reid plan offers no real solutions to the out-of-control spending problems.” Countered Rep. Jim Clyburn, D-S.C.: “The clock is ticking and Republicans are continuing to play political games.” Rep. Jerry Lewis, R-Calif., read a statement that then-Sen. Barack Obama had delivered years ago against raising the debt limit. House Democrats said they would put aside their resistance to legislation that makes deep spending cuts and back the measure in a show of strength that could improve Reid’s leverage in negotiations. “There are some misgivings, but it’s the only game in town,” said Rep. Gerald Connolly, D-Va., as he emerged from an hour-long closed door meeting. Democrats, Republicans and the White House, meanwhile, were expected to be deep in conversation in hopes of a potential compromise. Senate GOP leader Mitch McConnell of Kentucky was likely to play a pivotal role. The outcome of the weekend endgame was anything but clear as Democrats and Republicans remained at odds over how to force lawmakers to come up with additional budget savings later this year beyond the almost $1 trillion in agency budget cuts over the coming decade that they basically agree on. At the start of the Senate’s session Saturday, Reid appealed to Republicans to work with him on his proposal, particularly McConnell. “We’re willing to listen to Republican ideas to make this proposal better, but time is running short,” Reid said. McConnell said the Reid plan wasn’t “going anywhere. Senate Republicans refuse to go along with this transparently political and deeply irresponsible ploy to give the president cover to make our debt crisis even worse than it already is.” After a brutal week on Wall Street – investors lost hundreds of billions of dollars as the markets lost ground every day – pressure is intense to produce an accord before the Asian markets open on Sunday afternoon. The House measure squeaked through on a 218-210 vote, with 22 Republicans joining united Democrats in opposing the GOP measure, which pairs an immediate $900 billion increase in U.S. borrowing authority along with $917 billion in spending cuts spread over the coming decade. Friday’s roll call came after Boehner had been forced to call off a vote slated for Thursday in the face of tea party opposition to the measure. He added a provision requiring that a second, up to $1.6 trillion debt increase be conditioned on House and Senate passage of a balanced-budget amendment to the Constitution, which would require an unrealistic two-thirds vote by each chamber to send it to the states for ratification. Boehner’s move only cemented Democratic opposition to the measure and complicated prospects for a weekend compromise that could clear both houses and win Obama’s signature by next Tuesday’s deadline. And by appeasing the tea party by adding the balanced-budget amendment poison pill, Boehner seemed to hand endgame leverage to Reid and Obama. Boehner said the House bill – before the addition of the balanced-budget amendment – mirrored an agreement worked out with Reid last weekend. Still, as soon as the measure reached the Senate side of the Capitol, Senate Democrats scuttled it. The vote was 59-41, with all Democrats, two independents and six Republicans joining in opposition. Reid’s alternative measure would raise the debt limit by up to $2.4 trillion, enough to meet a demand by Obama that the increase be sufficient so that Congress doesn’t have to wrestle with it again until 2013. Administration officials say that without legislation in place by the end of Tuesday, the Treasury will no longer be able to pay all its bills. The result could inflict significant damage on the economy, they add, causing interest rates to rise and financial markets to sink. Executives from the country’s biggest banks met with U.S. Treasury officials to discuss how debt auctions will be handled if Congress fails to raise the borrowing limit before Tuesday’s deadline. ___ Associated Press writers Donna Cassata and David Espo contributed to this story.

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America’s Troubled Economy, Debt Ceiling Stalemate Worry Allies

July 30, 2011

BEIJING — America’s debt crisis and economic malaise are shaking confidence in its global leadership. Many governments see Washington’s paralysis as political theater ahead of a presidential election and wonder how American hardliners can be allowed to hold up a deal and bring a globalized economy to the brink. International bankers are concerned that a U.S. default would cause a crash of the dollar, the world’s reserve currency, battering economies from Asia to Africa and possibly sparking political unrest. Already, U.S. trade partners are worried about depending too heavily on one country and looking to diversify, just as China is expanding into Latin America and other markets historically dominated by the U.S. Across the globe, allies fear that the drama between Republicans and Democrats has eroded U.S. credibility, further weakening the superpower’s ability to exercise influence in the Middle East and other trouble spots. Officials interviewed around the world said the United States at the moment is failing to lead by word, deed and example. “You can’t put your house in order being the global economic power?” Ishrat Husain, former governor of the State Bank of Pakistan, asked rhetorically. “How can you expect others to do that?” Most officials and economic analysts who were interviewed expressed guarded optimism that American leaders would reach a last-minute agreement to raise Washington’s debt limit and avoid a government default by an Aug. 2 deadline. Most took for granted that the sheer size of the world’s biggest economy, together with U.S. military might and the fact that no other government is poised to take Washington’s place, means it will remain a leading power for the forseeable future. “I think nothing will shake the basis of our alliance,” said a South Korean deputy defense minister, Lim Kwan-bin, when asked whether Washington’s problems might weaken its 60-year military partnership with Seoul. This week, Secretary of State Hillary Rodham Clinton tried to reassure Asian governments during a trip to the region. In Hong Kong, she said the debt debate was “messy” but was the way a democracy reaches “the right solution.” Maybe so. But still few doubted that the debt crisis is taking its toll on U.S. prestige and influence. The showdown is playing out in a world that began to change in earnest with the U.S. financial crisis in 2008, when emerging economies such as China, Brazil and South Africa began to challenge Washington’s status as the lone superpower and to assume a greater voice in global affairs. Central banks around the world have been moving out of dollars and into other currencies, a trend that would likely accelerate if a U.S. debt crisis diminishes the status of Treasury debt, traditionally one of the lowest-risk investments. “The turmoil we’re seeing will pose the question of the (role of the) U.S. dollar in the international monetary system in a much more acute form than we’ve seen before,” said Said Nasser Saidi, a former Lebanese trade minister and chief economist for Dubai’s government-run Dubai International Financial Center. China, the largest foreign holder of U.S. Treasury debt, has appealed for Washington to act responsibly and protect investors. The Chinese government has stayed silent on the strategic implications of the U.S. financial struggles, perhaps because it is torn between its ambitions and economic necessity. Beijing wants Washington to reduce its military presence in Asia and has called for a global currency to replace the dollar. But China also depends on Americans to buy Chinese exports, and owns $1.1 trillion in Treasury debt, or about 8 percent of the total U.S. debt. “China has not made any linkage (between debt and other issues) to exert pressure against the United States,” said Shi Yinhong, director of the American Studies Institute at Beijing’s Tsinghua University. Nissan Motor Corp., meanwhile, unveiled an $8 billion plan this week to double annual sales in China and reduce reliance on the sluggish American market, just one of many companies shifting emphasis to fast-growing developing markets. Mexican Treasury Secretary Ernesto Cordero said that while the United States will always be one of his country’s primary economic partners, it is “simply a matter of economic common sense” that Mexico must continue diversifying its export markets. A delay in the U.S. economic recovery, he said in response to written questions, “would obviously imply that this process of diversification of Mexican exports would take place even more quickly.” Allies say it is not in anyone’s interest for the U.S. economy to tumble. Anti-terror partners in Pakistan worry about the loss of badly needed aid. Protagonists of the Arab Spring foresee political paralysis. Israelis and South Koreans fear that a weakened United States will relieve pressure on North Korea and Iran to rein in their nuclear ambitions. “It threatens the position the U.S. holds in the world,” said Israeli lawmaker Danny Danon, a member of Prime Minister Benjamin Netanyahu’s Likud party. If the United States “shows weakness, then it can cause other countries to take action. This can be a major issue with Iran and the terror organizations that it sponsors.” In Europe, whose financial markets are fragile after bailing out Greece, economic analysts warned that a U.S. debt default could lead to a broader crisis. “The risk is a very big increase in the rate of interest, and to destroy parts of the banking system,” said Charles de Courson, deputy chairman of the finance committee in the French National Assembly, its lower house of parliament. This could provoke “an economic crisis, and then a social crisis, and then a political crisis.” Historically, more debt means less influence in the world, de Courson added. “The country that has been dominant begins to be less dominant, then not dominant….It was true of Great Britain after the First World War. It was the case for France after the Second World War,” he said. The United States is a major market for European companies, and cooperation with Washington on security has been a pillar of European politics since the Cold War. Following the costly U.S. wars in Iraq and Afghanistan, Europeans already are shouldering more of the expense of global policing and security, such as enforcing a no-fly zone against Libyan leader Moammar Gadhafi and carrying out air strikes against his forces. Germany’s former finance minister, Hans Eichel, says the United States “owes itself and the world” a long-term, sustainable solution to its debt problems. “The irreconciliability of the political camps, the struggle with every means against an internationally respected president, increasingly endangers the position and influence of America in every area.” Eichel served in the left-of-center government of Social Democratic Chancellor Gerhard Schroeder at a time of strained relations with Washington over the 2003 Iraq invasion. He supports U.S. efforts to control its debt, but criticized Obama’s Republican opponents for opposing tax increases as too risky. A debt default “would mean that the USA is no longer seens as a reliable economic power – fatal for the global economy, since it concerns the biggest economy on Earth,” Eichel said. “And there’s nothing we need more in these times of crisis more than reliability and stability.” ___ Associated Press writers Adam Schreck in Dubai, Nahal Toosi in Islamabad, Kristen Gelineau in Sydney, Eric Talmadge and Yuri Kageyama in Tokyo, Ian Deitch and Aron Heller in Jerusalem, Hyung-jin Kim in Seoul, Teresa Cerojano and Jim Gomez in Manila, Yinka Ibukun in Lagos, Nirmala George in New Delhi, Sameer N. Yacoub in Baghdad, David McHugh in Frankfurt and Katherine Corcoran in Mexico City contributed.

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