polls

Fortune’s Stanley Bing: Good Census Makes Good Neighbors

March 25, 2010

When I was a kid, there was a concept that was taught to us in school. It was called Citizenship. It was part of an ideal of cordiality and common interest that held us together as a nation. Of course, much of it was bushwah. The world back then was just as full of injustice, prejudice and rotten losers who didn’t care about anyone but themselves as it is today. Perhaps we were just more cordial about it. There were several aspects to citizenship that were drummed into us. First, it carried with it a host of benefits. You were an American. Americans were part of a great, ongoing experiment that had something to do with personal freedom, opportunity for all, hot dogs and baseball, education as a common right, and something about lifting the lamp beside the golden door to all the tired and poor. No matter how we might disagree on a host of things, we were all citizens, and that, along with television, bound us together. Citizenship, it was quickly pointed out, came with certain responsibilities. You had to vote, for instance, when the Mayor, Governor, or Uncle Sam told you it was time to do so. Those who didn’t vote were not being good citizens. This being America, we weren’t going to punish them for not voting. But we didn’t appreciate them, either. As a citizen, you also were supposed to bring your library books back on time, obey rules about crossing the street and spitting in public places, not run people over on your bike, even if they were crossing in the middle of the block, and eat a good breakfast every day. These weren’t onerous obligations. They were just part of good Citizenship. And exercising them, it turned out, gave one a certain good feeling that was unlike any other. It was a little like collecting money for Unicef at Halloween, particularly if you actually gave the money you got for that exercise to the teacher on November 1. But it was a quieter feeling than that. I still get it when I vote, even though sometimes I feel like I’m choosing between a block of stinky cheese and an old sock whose mate was long ago lost in the laundry. This brings us to the Census form that came in the mail last week. It had been sitting on my kitchen table for a while and this morning I filled it out. It made me feel quite good in a way that transcends the kind of glow I get when the stock goes up a few points, or somebody tells me I look thinner. For a few minutes, as I checked off the boxes that told my Government a little bit about myself, I felt like I was part of the big collective American people in a way I haven’t for some time. For just a few minutes, I forgot about Wall Street and health care and unemployment and tea parties and people who think that those who work for social justice are Nazis, for God’s sake, or how the President is doing in the polls or whether Twitter is the new Facebook or vice versa. I felt like I was doing something nice with the rest of my neighbors. I’m aware that not everybody sees it this way. A few of my friends looked at me like I was slightly demented when I started talking about this stuff. And last year some idiots actually killed a census worker in what I guess they thought was some kind of twisted, anti-Government patriotism of some kind. Or maybe he just stumbled on their still. But me, I liked filling out my census form. Actually, it made me wonder what other good citizenship things are going on out there for me to do. Once you get started, the possibilities seem kind of endless. I’ll bet you could come up with a few. Although this might not be the proper venue for that discussion, being concerned with business and free enterprise and all.

Read the full article →

Obama Says Health-Care Plan Will Pass Congress as It’s `Right Thing to Do’

March 17, 2010

By Kate Andersen Brower March 17 (Bloomberg) — President Barack Obama said he’s confident his health-care plan will pass Congress because it’s “the right thing to do” for the country and that he isn’t concerned about criticism of Democratic legislative tactics. In an interview with the Fox News Channel as the House moves toward a crucial vote, Obama defended his plan, saying it embodies Republican ideas as well as Democratic proposals to revamp the U.S. health-care system. “We can fix this in a way that is sensible, that is centrist,” Obama said. “But what we can’t do is perpetuate a system in which millions of people day in and day out are having an enormously tough time and small businesses are sending me letters constantly saying that they are seeing their premiums increase 40, 50 percent.” Obama has been pushing for more than a year for action to cover tens of millions of uninsured Americans without adding to the deficit . Lawmakers, who face elections in November, are trying to complete their votes before they leave Washington for a two-week recess on March 26. The president dismissed criticism from Republicans over the way Democrats in Congress are moving forward in the legislative process. House Speaker Nancy Pelosi said this week she might use a parliamentary technique that would “deem” House members to have passed the Senate’s health-care plan by voting for a more politically palatable package of changes. “There are a lot more people who are concerned about the fact that they may be losing their house or going bankrupt because of health care” than are focused on legislative maneuvers, Obama said. Going for a Vote “The vote that’s taken in the House will be a vote for health-care reform, and if people vote ‘yes,’ whatever form that takes, that is going to be a vote for health-care reform, and I don’t think we should pretend otherwise,” Obama said. “If they vote against it, then they’re going to be voting against health- care reform and they’re going to be voting in favor of the status quo.” Lawmakers will be “judged at the polls” however they vote, he said. Asked about whether his presidency will be hobbled if the health-care bill isn’t passed, Obama said he’s more concerned about what the bill’s failure would do “to families out there who right now are getting crushed by rising health-care costs.” To contact the reporter on this story: Kate Andersen Brower in Washington at kandersen7@bloomberg.net ;

Read the full article →

Germany Seeks IMF Role for Greece in Reversal, CDU Lawmaker Meister Says

March 17, 2010

By Rainer Buergin and Brian Parkin March 17 (Bloomberg) — Greece should turn to the International Monetary Fund if it needs aid, the chief finance spokesman for German Chancellor Angela Merkel ’s party said, in a reversal that signals a rift with European leaders Jean-Claude Trichet , Jean-Claude Juncker and Nicolas Sarkozy . “We have to think about who has the instruments to push for Greece to restore its capital-markets access” if ultimately needed, Michael Meister , a lawmaker with Merkel’s Christian Democratic Union, said today in an interview in Berlin. “Nobody apart from the IMF has these instruments.” Attempting a Greek rescue “without the IMF would be a very daring experiment.” The German shift underscores Merkel’s attempts to steer clear of any commitment to a Greek bailout and risks scuttling European Union efforts to establish a contingency plan for the debt-strapped nation. Merkel used a budget speech in parliament in Berlin today to caution against “overly hasty” pledges of financial support. While EU leaders on Feb. 11 pledged coordinated action to safeguard financial stability in the euro area, they’ve yet to spell out aid plans for Greece. Juncker said March 15 that the euro-area group of finance ministers he heads “clarified the technical arrangements” to enable action. “The problem has to be solved from the Greek side and everything that is being considered has to be oriented in that direction,” Merkel told lawmakers. “There’s no alternative” to the Greek government’s measures to cut the deficit, she said. EU Warning Merkel was speaking as the EU warned that a dozen member governments, Germany among them, risk missing their deficit targets. Greek Prime Minister George Papandreou , whose government has pledged to narrow the euro-region’s biggest budget deficit, met with European Commission President Jose Barroso in Brussels today. Merkel is struggling with a euro-region aid decision for Greece as support for her coalition dips in the polls. While French President Sarkozy told Papandreou on March 8 that “we have measures, we are ready, we are determined,” German Foreign Minister Guido Westerwelle , who leads Merkel’s Free Democratic Party junior coalition partner, said seven days later that the Greek government can’t receive a “blank check” from European governments. “Greece is a member of the IMF and should avail itself of IMF aid first,” Frank Schaeffler , deputy finance spokesman in parliament for the Free Democrats, said in an interview. “I think this is the right instrument but it’s the Greeks who hold the key to it.” ‘Solve Their Problems’ Any IMF involvement would signal an about-face from Finance Minister Wolfgang Schaeuble ’s position of March 17, when the Welt am Sonntag newspaper cited him as saying that accepting IMF help would be an “admission that the euro countries can’t solve their problems by their own means.” Juncker, who is Luxembourg’s finance minister and prime minister, said March 5 after meeting with Papandreou that there’s a need for “technical assistance from the IMF” without the fund “taking the lead.” The previous day, European Central Bank President Trichet said “I don’t trust that it would be appropriate to have the introduction of the IMF as a supplier of help.” Standard & Poor’s affirmed Greece’s investment-grade BBB+ rating yesterday and dropped the country from “creditwatch negative,” saying the budget cuts “were appropriate to achieve” the goal of cutting the EU’s biggest deficit to 8.7 percent of gross domestic product this year from 12.7 percent. “The Germans see the same thing that all of us see: that at the end of the day, they’re going to be part of the solution and it’s going to cost them something,” said Paul Hofheinz , president of the Lisbon Council, a Brussels research group. “When push comes to shove, I don’t think anyone doubts that the Germans will be part of this settlement. But why should they play easy?” To contact the reporters on this story: Rainer Buergin in Berlin at rbuergin1@bloomberg.net ; Brian Parkin in Berlin at bparkin@bloomberg.net .

Read the full article →

Democrats’ Election-Year Jobs Push Recalls Nixon’s ’72 Toilet-Paper Gambit

March 12, 2010

By Brian Faler March 12 (Bloomberg) — In 1972, when he was trying to spur the economy to win re-election, President Richard Nixon ’s Defense Department bought a two-year supply of toilet paper. Nixon was participating in what economists call the political business cycle, election-year efforts by politicians to prod the economy before voters go to the polls. Almost 40 years later, Democrats are debating proposals aimed at cutting the nation’s 9.7 percent unemployment rate in time for the November congressional elections. Among them: tax breaks for companies to hire, infrastructure spending and expanding jobless benefits. Congress can do relatively little by then to reduce unemployment and the jobs talk has more to do with politics than economics, said Nariman Behravesh , chief economist at the Lexington, Massachusetts-based forecasting firm IHS Global Insight. “This is very much a question of Democrats being able to at least go out there, as they run for re-election, and say, ‘I voted for this,’” Behravesh said. “They can say, ‘We did something,’ but the reality of the effect on the economy is going to be minimal.” Even a $150 billion jobs bill approved in December by the House, he said, will only reduce unemployment by two-tenths of a percent, “three-tenths if we’re lucky.” ‘Grave’ Danger The issue threatens big losses for Democrats, likely to face voters with the second-highest Election Day unemployment rate in a half century. Charlie Cook , who publishes the independent Cook Political Report in Washington, said last month that Democrats are in “grave” danger of losing their House majority and could lose seven of the 59 seats they control in the Senate. Lawmakers are pushing a series of jobs bills, including an $18 billion plan offering companies a payroll tax break. The Senate this week approved plans to spend $100 billion to extend unemployment benefits and send aid to state governments to help prevent layoffs of public-service employees. Democrats said they don’t know how much more they will spend on job creation because it’s hard to predict what can pass the Senate, as illustrated earlier this month when Senator Jim Bunning , a Kentucky Republican, held up an extension of unemployment benefits. Senate Vote      “We’re all constrained by the votes in the Senate: you need 60 votes to go to the bathroom over there,” said Representative James McGovern , a Massachusetts Democrat. Facing continued questions from Republicans over whether last year’s $862 billion stimulus package was effective, Democrats are reluctant to estimate how many jobs any new measures would produce. “Hopefully, a good number,” said Senator Charles Schumer , a New York Democrat. “This is not just a game of statistics — these are individual people and any people that we can try to get back to work, so much the better.” No one in recent history went to greater lengths to prime the economy before an election than Nixon, historians said. In the run-up to the 1972 election, when unemployment reached as high as 6.1 percent , the Republican incumbent imposed wage and price controls, leaned on the Federal Reserve to cut interest rates, increased Social Security benefits and urged federal agencies to spend down their budgets, which led to the Pentagon’s toilet-paper stockpile. Order to Spend      “He lashed all the departments to spend as much as they could in the first six months of the year,” said Allen Matusow , a historian at Rice University in Houston and author of ‘Nixon’s Economy: Booms, Busts, Dollars and Votes.” “The economy tortured him for years, but in the year it really counted, everything worked.” The task facing Democrats this year is tougher. The Fed has already slashed rates, the unemployment rate is higher, and the deficit , estimated to reach a record $1.5 trillion this year, is deeper. In addition, stimulus spending takes time to take effect. Just one-third of the package approved in February 2009 was spent by the end of last year. The U.S. may add as many as 300,000 jobs in March, the most in four years, David Greenlaw , chief fixed-income economist at Morgan Stanley in New York, said in a Bloomberg Radio interview. Over a longer period, though, the jobless rate may move higher as the economy improves and discouraged workers, no longer counted in the labor force, begin searching again for work, said Mark Zandi , chief economist of Moody’s Economy.com . Bigger Measure      Zandi, who backs additional stimulus spending to prevent the economy from tipping back into recession, said he would want a jobs bill totaling about $200 billion. Even that wouldn’t trim the unemployment rate by more than a half-percentage point, he said. “I don’t think there’s any way to get it down below nine by Election Day,” he said. Lawmakers are at odds over how to boost the economy. Many House Democrats said the payroll-tax idea is likely to win approval less because it would create jobs than because it was able to win bipartisan support in the Senate. “It’s important for us to look like we’re doing something,” said Representative Lloyd Doggett , a Texas Democrat. “But we need to be thoughtful about whether the proposals we have will make any difference.” To contact the reporter on this story: Brian Faler  in Washington at bfaler@bloomberg.net .

Read the full article →

Iraqi Parliamentary Vote Result to Be Released as Coalition Haggling Looms

March 8, 2010

By Kadhim Ajrash, Caroline Alexander and Daniel Williams March 9 (Bloomberg) — The first official results from Iraq’s March 7 parliamentary elections will be released today as political leaders say they don’t expect a clear winner. Parties may spend months haggling over the makeup of a coalition government, said Wael Abdel Latif of the National Iraqi Alliance, a major Shiite Muslim bloc that competed against the Shiite-led group of Prime Minister Nouri al-Maliki . “The formation of the government may face big problems if the results are close and there is no clear winner,” Latif said in an interview yesterday in Baghdad. Preliminary results showed “a very close race,” he said. Polling sites will release results once officials have tallied at least 30 percent of the votes cast there, said Hamdiya Husseini, a member of Iraq’s Independent High Electoral Commission. Final results may not be known until the end of the month. Turnout was 62.4 percent, she said. The panel had put participation in the 2005 parliamentary election at 76 percent. Al-Maliki’s alliance was leading in nine of the country’s 18 provinces, Agence France-Presse reported, citing unofficial estimates by local officials. It said the key results weren’t yet available for Baghdad, where attacks yesterday killed 38 people. Violence may escalate if the country’s main ethnic and religious groups, the majority Shiites and the minority Sunni Muslims and Kurds, aren’t included in a coalition, said Ahmed Ali, an analyst at the Washington Institute for Near East Policy . That would thwart U.S. ambitions to leave a stable Iraq as it withdraws its troops. Violence ‘Remarkably Low’ The election showed democracy is firmly established in Iraq and unlikely to be crippled by delays in forming a new government, said the top United Nations envoy to Iraq, Ad Melkert of the Netherlands, who leads the UN Assistance Mission for Iraq . There were no indications of “massive” or “systemic” irregularities in the voting, and incidents of violence were “remarkably low,” he said. Iraqi security forces showed a steady increase in their ability to help run a national election, he added. Turnout ranged from 80 percent in Dohuk province, in the far north, to 50 percent in Maysan, in the southeast, while in Baghdad, 53 percent of registered voters cast ballots, and about 272,000 Iraqis abroad also voted, Husseini said yesterday. About 19 million of Iraq’s estimated 30 million citizens registered to cast ballots. The parliamentary vote was the second since Saddam Hussein’s overthrow by U.S. forces in 2003. More than 6,200 candidates competed for seats in the 325-member legislature. ‘All Components’ “We need about two months to form a majority government,” Abbas al-Bayati, a member of al-Maliki’s State of Law coalition, said yesterday in an interview in Baghdad. “We want a majority government that will include all the components of the nation.” Terrorist groups linked to al-Qaeda had vowed to attack voters on their way to the polls. Attacks were reported in Baghdad, Fallujah, Baquba and Samarra, AFP said. “There were security issues but they weren’t significant enough to derail the polls, or to affect the legitimacy, which is crucial for the incoming government,” Gala Riani , Middle East analyst for IHS Global Insight in London, said in a telephone interview. Voter registration was a bigger problem than security, said Ranj Alaaldin, a Middle East expert from the London School of Economics who monitored the election with the London-based Next Century Foundation , a conflict resolution advisory group. Some voters found that their names weren’t on the official registry, he said by e-mail. Oil Disputes The ruling coalition that emerges will have to resolve disputes over sharing oil revenue among regions and whether to include the oil-rich city of Kirkuk in the Kurdish autonomous region in the north, as well as cope with violence between Shiites and Sunnis. Iraq’s 115 billion-barrel oil reserves place it third behind Saudi Arabia and Iran. The country pumped about 2.4 million barrels a day last month, according to Bloomberg estimates. Iraq’s Kurds, who backed al-Maliki after the last election, have since feuded with him over oil money and control of Kirkuk. The main Kurdish parties, the Kurdistan Democratic Party and Patriotic Union of Kurdistan, formed an alliance that was challenged by a new party called Change. Al-Maliki predicted last week that no party would win a majority. A Shiite alliance that brought him to power in 2005 has disintegrated and his coalition was battling for Shiite votes with former allies now in the National Iraqi Alliance. Wooing Sunnis Sunnis, who boycotted the 2005 election, were wooed by an array of Islamic parties. Former Prime Minister Ayad Allawi is leading the Iraqiya party, which advocates non-sectarian politics. It could take more than six months to form a government, the Washington Institute for Near East Policy said in a March 3 report. U.S. troops have handed most security duties to Iraqi forces, and U.S. troop strength will shrink from 96,000 to 50,000 by Sept. 1, with all U.S. forces gone from Iraq by the end of 2011, under a schedule set last year by U.S. President Barack Obama . American officials insist the pullout will go ahead and Iraqi officials say they are taking over. To contact the reporters on this story: Kadhim Ajrash in Baghdad through the Dubai newsroom or mchmaytelli@bloomberg.net ; Caroline Alexander in London at calexander1@bloomberg.net ; Daniel Williams in Cairo at dwilliams41@bloomberg.net .

Read the full article →

Iraqis Face Months of Coalition Wrangling as Bombings Fail to Deter Voters

March 8, 2010

By Caroline Alexander and Daniel Williams March 8 (Bloomberg) — Vote-counting is under way in Iraq, where citizens defied bombs and mortar shells to get to the polls in yesterday’s national parliamentary election. They probably will face months of haggling by fractious leaders over the formation of a coalition government. Initial figures on turnout in the election, which was contested by 86 political blocs, are expected today. Sixty percent of voters may have taken part, and there were no complaints of major irregularities, said Amal Bairaqdar, a member of the Independent High Electoral Commission, in an interview. The 2005 turnout was more than 76 percent, the panel said. A final vote count may take until the end of the month. At least 36 people were killed yesterday in attacks, most in Baghdad, according to the Associated Press. Iraqi affiliates of al-Qaeda, the global terrorist network, had vowed to attack voters on their way to the polls. Violence may escalate if the vote doesn’t produce a coalition that includes the country’s main ethnic and religious groups, the majority Shiite Muslims and the minority Sunni Muslims and the Kurds. That would thwart U.S. ambitions to leave a stable Iraq as it withdraws its troops. Preliminary election results may be released in two or three days, Faraj al-Haidari, head of the electoral commission, said today in a televised interview from Baghdad. Oil Revenue The ruling coalition that emerges will have to resolve disputes over the sharing of oil revenue among regions, the borders of the Kurdish autonomous region in the north and whether it encompasses oil-rich city of Kirkuk, and the volatile relations between Shiites and Sunnis. Iraq’s 115 billion-barrel oil reserves place it third behind Saudi Arabia and Iran. The country pumped 2.3 million barrels a day last month, according to Bloomberg estimates. The violence in Iraq is “episodic, lethal, but ultimately incapable of derailing the political process,” said Reidar Visser , an Iraq analyst at the Olso-based Norwegian Institute for International Affairs . “The more fundamental question relates to the quality of the political process” and Iraq’s transformation to democracy which “remains highly tentative.” In Baghdad, voters had to endure grenade, mortar and bomb attacks. At least 19 people were killed when explosions struck two buildings in the northeastern part of the capital, AP said. The cities of Fallujah, Baquba and Samarra were also struck by mortars or bombs, many of them near polling stations, Agence France-Presse reported. Voters Undeterred “Despite the bombs that I heard on my way and the fact that I was stopped and searched three times, I insisted on voting,” Ali Salim, a 32-year-old teacher in Baghdad and a Shiite Muslim, said at a voting station. “I even put on my best suit and tie.” President Barack Obama called the election “an important milestone” and congratulated the Iraqis yesterday for not succumbing to intimidation. “I have great respect for the millions of Iraqis who refused to be deterred by acts of violence, and who exercised their right to vote,” he said in a statement issued by the White House. “There is no better rebuke to the violent extremists who seek to derail Iraq’s progress,” U.S. Secretary of State Hillary Clinton said in a statement. “We salute the determination of the Iraqi people to reaffirm their commitment to democracy and to chart their own future free of fear and intimidation.” Security Forces Defense Secretary Robert Gates said the top U.S. commander in Iraq, General Ray Odierno , had reported that “the Iraq Security Forces have performed superbly, and the turnout is as high, if not higher, than earlier expectations. So all in all a good day for the Iraqis and for all of us,” Gates told reporters traveling on his military plane. Prime Minister Nouri al-Maliki predicted last week that no one party would win a majority. A Shiite Muslim alliance that brought him to power in 2005 has disintegrated and his State of Law coalition was in a contest for Shiite votes with former Shiite allies now in the National Iraqi Alliance. Al-Maliki’s alliance was leading in nine of the country’s 18 provinces, AFP reported, citing unofficial estimates by local electoral officials. It said the key results for the Baghdad region weren’t yet available. Iraq’s Kurds, who backed al-Maliki after the last election, have since feuded with him over sharing oil revenue and control of Kirkuk. The main Kurdish parties, the Kurdistan Democratic Party and Patriotic Union of Kurdistan, formed an alliance that was challenged by a new party called Change. Sunni Muslims Sunni Muslims, who boycotted the 2005 election, were wooed by an array of Islamic parties, while former Prime Minister Ayad Allawi is leading the Iraqiya party, which advocates non- sectarian politics. “The fun and games will start after the votes are counted, and the parties have to form a coalition,” Qubad Talabani, the representative of Iraq’s Kurdish autonomous zone in Washington, said in a telephone interview before the election. “It will take time.” The vote was the second since Saddam Hussein ’s overthrow by U.S. forces in 2003. More than 6,200 candidates were competing for seats in the 325-member legislature. In the coming days, the focus will be on the vote count. “The great number of Iraqis who risked their safety to take part in these elections are watching,” Allawi said after the polls closed. Six Months Results may not be formally certified until the end of March. It could then take up to six months, or longer, before a government emerges, according to a March 3 report by the Washington Institute for Near East Policy . “The inevitable delays before the next Iraqi government forms will cause understandable anxiety within the Obama administration as it contemplates the appropriate speed for U.S. withdrawal,” the institute said. The U.S. is pulling its troops out of Iraq and has handed most security duties to Iraqi forces. Under a schedule set last year by Obama, U.S. troop strength will shrink from 96,000 to 50,000 by Sept. 1. All American forces are due to be withdrawn by the end of 2011. Over the past few months, violence has been periodic in Iraq, with deadly, sometimes multiple attacks separated by days of relative calm. American officials insist the pullout will go ahead and Iraqi officials say they are taking over. The withdrawal is “strongly on track,” White House Press Secretary Robert Gibbs told reporters in Washington on March 4. To contact the reporters on this story: Daniel Williams in Cairo at dwilliams41@bloomberg.net ; Caroline Alexander in London at calexander1@bloomberg.net .

Read the full article →

Investment Banks Raise Pay as U.K. Efforts to Cut Compensation Fall Flat

March 2, 2010

By Gavin Finch and Andrew MacAskill March 2 (Bloomberg) — Chancellor of the Exchequer Alistair Darling urged pay restraint and moderation from U.K. banks, and still they raised compensation. Barclays Capital, the investment-banking unit of Barclays Plc, increased its pay and bonuses per employee by about 93 percent in 2009, according to company filings. Royal Bank of Scotland Group Plc , the U.K.’s biggest government-owned bank, raised total compensation per employee by about 73 percent last year. Of the U.K.’s three largest banks, HSBC Holdings Plc was the only one where pay declined slightly in its investment bank. “The banks are just paying lip-service to what they think politicians and the public want to hear while carrying on as normal,” said Chris Roebuck , a visiting professor at Cass Business School in London. “The apparent changes they’ve made to compensation are just an exercise in smoke and mirrors.” Banks are under scrutiny from governments worldwide to reduce compensation amid public anger about trillions of taxpayer dollars used to bail out lenders during the credit crisis. In December, Darling introduced a one-time 50 percent levy on discretionary bank bonuses of more than 25,000 pounds ($37,500) to encourage banks to build up their capital. The Treasury, which initially said the tax would raise 550 million pounds, now estimates it may net as much as 2 billion pounds, according to a government official who declined to be identified. Barclays, HSBC, RBS and Lloyds Banking Group Plc alone said they will pay about 685 million pounds to cover the tax. CEOs Waive Bonuses In an attempt to diffuse anger about the size of bonuses, the chief executive officers of RBS, Lloyds and Barclays waived their bonuses for 2009. HSBC CEO Michael Geoghegan will also forgo his bonus, donating as much as 4 million pounds to educational charities. “From a public relations point of view, the bonus tax has been a partial success because it’s made the government look like it’s cracking down,” said Daniel Naftalin , a partner at law firm Mishcon de Reya in London. “The bonus tax failed in the sense that it doesn’t appear to have significantly reduced the size of the bonuses.” Barclays paid its investment-bank employees about 191,000 pounds each in 2009 compared with an average payout of 99,000 pounds for the previous year, the filings show. RBS set aside about 173,000 pounds last year in total compensation per employee, up from about 100,000 in 2008. HSBC awarded each employee an average of about $166,000 in 2009. The average compensation was calculated as a percentage of investment-bank revenue, or total staff costs at the individual banks, divided by the number of employees. Revenue Increases Pay increased in 2009 as investment-bank revenues rose. Pretax profit at Barclays Capital climbed 89 percent to 2.46 billion pounds after it absorbed 1.8 billion pounds of credit losses, the bank said. “The U.K.’s curbs on bonuses have gone further and faster than any other country,” said a Treasury spokesman, who asked not to be identified in line with departmental policy. “The bonus tax is intended to make banks think twice about paying large bonuses.” RBS CEO Stephen Hester defended the payment of bonuses, saying that his investment bank employees deserved the 1.3 billion pounds of payments, which was the “minimum necessary.” “We are treading an unenviable tightrope walk,” said Hester, who waived his right to a 1.6 million-pound bonus amid public anger about such payments. “We believe that within the context of the industry in which we operate we have been restrained and responsible.” Labour Party Gains Lloyds Chairman Win Bischoff said that while his bank is “sensitive” to the public debate about bankers’ pay, the responsibility for policing remuneration belongs with shareholders, not the government or the media. Executives should be allowed to accept bonuses without feeling pressure to waive them, he said. Lloyds declined to say how much it is paying in bonuses. The ruling Labour Party ’s attack on bankers’ pay has helped narrow the Conservative Party ’s lead in the opinion polls by shoring up the party’s core support, according to Anthony Wells at pollster YouGov Plc. Prime Minister Gordon Brown is on course to lead a minority U.K. administration after this year’s election with the polls the narrowest in more than two years, a YouGov poll found over the weekend. “Banker bashing is an easy crowd pleaser,” Wells said. “It has been an easy way for Labour to shore up their core vote. The polling shows that people don’t like bankers.” Banks including Barclays, Credit Suisse Group AG and UBS AG have raised investment bankers’ base salaries as a percentage of total pay. HSBC plans to increase salaries as a proportion of compensation, the bank said yesterday. Leaders of the Group of 20 nations agreed in September to adopt compensation guidelines for banks that discourage bonus guarantees extending more than one year, encourage companies to defer bonuses for senior executives and other key employees, and permit pay to be clawed back if losses occur later. To contact the reporters on this story: Gavin Finch in London at gfinch@bloomberg.net ; Andrew MacAskill in London at amacaskill@bloomberg.net

Read the full article →

Turkey Risks World’s Worst Currency Slump Amid Army Tension, Options Show

February 24, 2010

By Seda Sezer and Laura Cochrane Feb. 25 (Bloomberg) — Investors are betting political turmoil will weaken Turkey’s lira more than any other currency as the arrest of more than 40 army officers over an alleged coup plot raises tension between the government and the military. One-month put options that grant the right to sell the lira against the dollar have surged to a 3.4 percentage-point premium over equivalent call options to buy the currency. The gap, known as the risk-reversal rate, widened from 2.25 percentage points a week ago and is the highest of 48 currencies on Bloomberg. Turkey’s stocks, bonds and currency slumped this week as the detention of serving and retired officers reignited clashes between Prime Minister Recep Tayyip Erdogan and an army that ousted four governments since 1960. The selloff reversed a trend in which its stocks and bonds outperformed every European market during the height of the global credit crisis as Erdogan reduced debt and avoided an international bailout. “It’s a nauseous situation,” said Sinan Akiman , deputy chief executive at Garanti Asset Management, Turkey’s third- largest fund manager with the equivalent of $4.1 billion in assets. Akiman said he’s betting on the lira’s depreciation and stock declines on concern the clash may trigger early elections or push the courts to seek the closure of Erdogan’s Justice & Development Party. The dispute risks diverting the government’s focus from reviving the economy as it seeks to make constitutional changes, according to Christian Keller , an emerging Europe economist at Barclays Capital in London and former International Monetary Fund official in Turkey. The currency will weaken as much as 8 percent to 1.68 per dollar, Keller wrote in a research report yesterday. Default Swaps The lira has depreciated 2.1 percent against the dollar this week and the equity benchmark, the ISE National 100 index , lost 7 percent. Yields on two-year Turkish government bonds rose seven basis points to 9.01 percent yesterday, the biggest jump in three weeks. The cost of contracts to protect debt payments from Turkey rose 4 basis points to a two-week high of 202 basis points yesterday, credit-default swap prices from CMA Datavision show. Investors are selling Turkish assets after the country weathered the worst global recession since the 1930s better than some European Union members, as Hungary required a bailout and Greece’s and Spain’s borrowing costs soared. Turkey’s dollar bonds rallied 16 percent in the 12 months after the collapse of Lehman Brothers Holdings Inc. in September 2008, the biggest gain among European benchmarks. Turkey’s ISE shares index jumped 31 percent, the world’s fourth-best performing equity gauge for the period, Bloomberg data show. Military Probe The lira is likely to weaken at least 3 percent to 1.60 per dollar in the “near-term,” Bartosz Pawlowski , BNP Paribas SA’s senior emerging market strategist in London, said in an interview. Erdogan, 55, has chipped away at the military’s power since he was elected in 2002. He ended army control over the National Security Council in 2003 and called an early election in 2007 after the army criticized his choice of Abdullah Gul as president because of his Islamist past. Erdogan won that election by the biggest margin any Turkish party had drawn in almost 40 years. The arrests this week, the latest phase in a two-year investigation, follow a report in Taraf newspaper on Jan. 21 that army officers drafted a plan in 2003 to stage bombings in order to undermine confidence in Erdogan’s government. Rule of Law The arrests may be a positive development in establishing the rule of law in Turkey, said Ari Metso , chief executive officer of Helsinki-based fund manager Taaleritehdas East Asset Management, who helps oversee 1.2 billion euros ($1.6 billion) of assets including Turkish equities. He hasn’t changed his investments because of the detentions. “If somebody has committed a crime there should be punishment, for the long term it’s good that this can be investigated through the civil court,” said Metso. “At the same time we have seen quite promising developments on the economic side.” The government expects the economy to expand 3.5 percent this year, more than double the 1 percent growth rate the IMF forecasts for the EU. Growth of as much as 5 percent wouldn’t be a surprise, central bank Governor Durmus Yilmaz said on Jan. 20. Turkey avoided an international bailout after reducing debt to 47 percent of gross domestic product last year from 67 percent in 2003. ‘Extremely Dangerous’ Turkey’s top general Ilker Basbug will meet Erdogan and President Gul at 11 a.m. in Ankara, the NTV news channel reported yesterday. The meeting may help “normalize” the situation, Goldman Sachs Group Inc. economist Ahmet Akarli said. Opposition parties are calling for the government to go to the polls. Early elections are the only escape from the “extremely dangerous developments,” nationalist opposition leader Devlet Bahceli said in a statement published on his party’s Web site. “If both sides don’t soften the stress we may see some permanent damage on the markets,” said Hakan Kalkan , who helps manage about $600 million of assets at Autonomy Capital in London, including Turkish assets. “Early elections or a referendum would create disturbances in society and will of course weaken markets.” To contact the reporter on this story: Seda Sezer in Istanbul at ssezer2@bloomberg.net . Laura Cochrane in London at lcochrane3@bloomberg.net

Read the full article →

Obama Said to Be Considering Honeywell Chief David Cote for Deficit Panel

February 22, 2010

By Nicholas Johnston Feb. 22 (Bloomberg) — U.S. President Barack Obama is considering Honeywell International Inc. chief executive officer David Cote for the new federal deficit commission, an administration official said on the condition of anonymity because no decision has been made. Also under consideration are former Federal Reserve vice chairman Alice Rivlin and Andy Stern , president of the Service Employees International Union , the official said. Obama named former Democratic White House official Erskine Bowles and former Wyoming Republican Senator Alan Simpson to head the new 18-member bipartisan commission charged with suggesting steps to reduce the federal deficit , which was a record $1.6 trillion this year. Obama gets to select six members of the commission, with congressional Republicans and Democrats each getting to pick six. The commission’s recommendations are due Dec. 1. Simpson and Bowles, in an interview with Bloomberg Television’s “Political Capital with Al Hunt ,” said the panel would consider a consumption or value-added tax as a way of reducing the federal debt, as well as changes to the Social Security retirement system. “We’re going to have to slay sacred cows,” Simpson said. Report After Elections The panel might release some details of its conclusions before the November congressional elections. The full report won’t be made public until after voters go to the polls. Obama signed an executive order creating the panel on Feb. 18, after lawmakers from both parties said a special commission would be needed to tackle the problem of the budget deficit. Obama’s order can’t force Congress to vote on the recommendations. The commission’s goal is to bring the federal budget deficit down to 3 percent of the economy by 2015, and put the budget in balance except for payments on debt. This year’s budget deficit is 10.6 percent of the economy. Under current projections, the budget will show a deficit of $752 billion, accounting for 3.9 percent of the economy, in 2015. “Everything’s on the table, that’s how this thing’s going to work,” Obama said after creating the commission. To contact the reporter on this story: Nicholas Johnston in Washington at njohnston3@bloomberg.net

Read the full article →

Honeywell Chief David Cote Said to Be Considered for Obama’s Deficit Panel

February 21, 2010

By Nicholas Johnston Feb. 21 (Bloomberg) — U.S. President Barack Obama is considering Honeywell International Inc. chief executive officer David Cote for the new federal deficit commission, an administration official said on the condition of anonymity because no decision has been made. Also under consideration are former Federal Reserve vice chairman Alice Rivlin and Andy Stern , president of the Service Employees International Union , the official said. Obama named former Democratic White House official Erskine Bowles and former Wyoming Republican Senator Alan Simpson to head the new 18-member bipartisan commission charged with suggesting steps to reduce the federal deficit , which was a record $1.6 trillion this year. Obama gets to select six members of the commission, with congressional Republicans and Democrats each getting to pick six. The commission’s recommendations are due Dec. 1. Simpson and Bowles, in an interview with Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend, said the panel would consider a consumption or value- added tax as a way of reducing the federal debt, as well as changes to the Social Security retirement system. “We’re going to have to slay sacred cows,” Simpson said. Report After Elections The panel might release some details of its conclusions before the November congressional elections. The full report won’t be made public until after voters go to the polls. Obama signed an executive order creating the panel on Feb. 18, after lawmakers from both parties said a special commission would be needed to tackle the problem of the budget deficit. Obama’s order can’t force Congress to vote on the recommendations. The commission’s goal is to bring the federal budget deficit down to 3 percent of the economy by 2015, and put the budget in balance except for payments on debt. This year’s budget deficit is 10.6 percent of the economy. Under current projections, the budget will show a deficit of $752 billion, accounting for 3.9 percent of the economy, in 2015. “Everything’s on the table, that’s how this thing’s going to work,” Obama said after creating the commission. To contact the reporter on this story: Nicholas Johnston in Washington at njohnston3@bloomberg.net

Read the full article →

Obama’s Deficit-Cut Plans Will Be Tough Sell to Congress in Election Year

February 2, 2010

By Brian Faler Feb. 2 (Bloomberg) — President Barack Obama ’s budget request proposed modest reductions next year in the government’s yawning deficit. Even that may be too much for lawmakers in an election year, based on reaction to the plan. The administration, in the $3.8 trillion budget it released yesterday for fiscal 2011, called for freezing some non-defense discretionary spending and proposed a number of tax increases in order to reduce a budget deficit projected this year to reach $1.6 trillion. If the tax-and-spending plan were implemented exactly as written, it would still produce large deficits for years to come, with the 2011 shortfall pegged at $1.27 trillion. And many of the steps proposed by Obama to achieve even this reduction received a chilly welcome from many lawmakers wary of riling voters who will go to the polls in November’s midterm election. “Any sort of spending freeze is going to be tough in an election year, and the prospect of raising taxes is not going to play well with a slow economy,” said Bob Bixby , head of the Washington-based Concord Coalition, a nonpartisan budget watchdog group. “It is nowhere near what we would need to do to bring the deficit under control but even that is going to be very, very difficult to do because it involves drawing a line on programs that Congress likes to spend money on.” The budget was released just days after Doug Elmendorf , head of the nonpartisan Congressional Budget Office, warned lawmakers that the nation’s indebtedness is headed for territory “that we don’t see in many other developed countries.” ‘Disconnect’ Elmendorf said a “fundamental disconnect” exists “between the services that people expect the government to provide, especially for benefits to older Americans, and the tax revenue they’re prepared to send the government to finance those services.” He said the balance must be addressed “if the nation is to avoid serious long-term damage to the economy.” The $1.6 trillion deficit forecast for the current year represents 10.6 percent of the U.S. gross domestic product, which would be the biggest by that measure since World War II, according to administration figures. The White House goal has been to reduce the deficit to about 3 percent of GDP, which most economists say is sustainable. The budget, though, predicts it’ll average 4.5 percent over 10 years. White House Budget Office Director Peter Orszag said the administration is wary of cutting the deficit too quickly for fear of tipping the economy back into recession. He called the discretionary freeze a first step toward putting the government’s books in order. Immediate Protests Some of the proposed cutbacks produced immediate protests from lawmakers, including Republicans who have hammered away at the administration for what they contend has been excessive spending. The budget for the National Aeronautics and Space Administration “begins the death march for the future of U.S. human space flight,” said a news release from Senator Richard Shelby , an Alabama Republican, about the recommendation to scrap a Bush administration plan to return astronauts to the moon by 2020. The cuts would hit his home state. Obama threatened in his Jan. 27 State of the Union address to veto bills that exceed his spending request. “Like any cash- strapped family we will work within a budget to invest in what we need and sacrifice what we don’t — and if I have to enforce this discipline by veto I will,” Obama said. Defense Spending House Appropriations Committee Chairman David Obey , a Wisconsin Democrat, said he would abide by the spending freeze for domestic programs while seeking cuts in politically sensitive defense accounts. “We will also not exempt any department or activity from review, including foreign aid and the Pentagon because none of them are without waste,” he said. Such additional cuts may be a tough sell in the Senate, where Appropriations Committee Chairman Daniel Inouye , a Hawaii Democrat, pledged only to “closely review the president’s budget” and find “the best possible balance between investing in our economy in the near-term and putting our nation back on the path to fiscal responsibility.” As head of the appropriations subcommittee with jurisdiction over the Pentagon’s budget, Inouye is unlikely to agree to cut the defense request. As former President George W. Bush ’s second term was coming to an end, Democrats were able to circumvent his attempts to freeze discretionary spending by adding billions in funding for unrelated programs to “emergency” war-spending bills. Long-Term Commitment Even if the Obama administration was able to make its spending freeze stick for the 2011 budget, the discipline would have to be repeated for years to come in order to generate significant savings. The plan to save $250 billion in discretionary spending assumes that lawmakers will accept the freeze for three years and not allow such funding to grow by more than inflation until 2021. Such restraint by Congress has been rarely seen in recent decades. In the 2010 fiscal year, non-defense spending is projected to grow by 7 percent, which doesn’t include the cost of the stimulus package, according to the CBO. The growth figure jumps to 17 percent once the stimulus is included. The administration faces similar resistance on the tax side of the ledger. Even as administration officials briefed reporters yesterday on its proposed changes to international tax policies, Senate Finance Committee Chairman Max Baucus , a Montana Democrat, issued a statement saying he won’t consider them until Congress agrees to a comprehensive overhaul of the tax code. Senator Mary Landrieu , a Democrat, criticized the administration’s plans to raise $40 billion by ending tax breaks for the oil and gas industry that benefit her home state of Louisiana. “It is unfortunate the administration has chosen to escalate the cost of producing energy in America,” she said. “The result would be putting thousands more Americans out of work at a time when we should be creating, not eliminating, jobs.” To contact the reporter on this story: Brian Faler in Washington at bfaler@bloomberg.net .

Read the full article →

Democrats Will Regroup Before Attempting to Salvage Health-Care Overhaul

January 25, 2010

By Kristin Jensen and Brian Faler Jan. 25 (Bloomberg) — U.S. Democrats, who ran into what President Barack Obama called a “buzz saw” of opposition to their health-care plan, will regroup before trying to salvage what has been their top priority for the past year. The legislation is in peril because a Jan. 19 special election in Massachusetts deprived Democrats of the 60th vote they need in the Senate. House Speaker Nancy Pelosi says she doesn’t have the votes for the quickest fix — approving the Senate version of the bill — and the original option of passing a House-Senate compromise on party-line votes in each chamber is dead. While Democrats don’t want to face voters in November with nothing to show after months of health-care debate, they must focus on job growth and make clear they heard the discontent registered in the Republican upset win in Massachusetts. “We’re going to move on to some other things,” Senate Majority Leader Harry Reid , a Nevada Democrat, said on Jan. 22. He declined to estimate how long a break might last from the legislation, which calls for the most sweeping changes to the nation’s health-care system in more than four decades. Senator Tom Harkin , an Iowa Democrat who heads the chamber’s health committee, said Democrats would let the legislation “sit for a while” and then take it up “in a week or so.” Christopher Dodd , a Connecticut Democrat who helped shepherd the bill through the Senate, said the break might last as long as six weeks. ‘No One Knows’ “No one knows what to do,” Harkin said in a Jan. 22 interview. Lawmakers need a “breather” that would “let everyone calm down, get that panic out of their bodies” after Republican Scott Brown’s victory in the race to fill the seat held for almost half a century by the late Ted Kennedy . Democratic options include passing a series of smaller measures, starting again and trying to win Republican support, or using a budget process known as reconciliation that might result in a smaller bill yet would require just 51 votes in the Senate. If they opt to pass a slimmed-down bill, they may face opposition from labor groups. Andy Stern , the head of the Service Employees International Union, called that “fear masquerading as a strategy” in an interview with The Plum Line blog last week. Obama vowed to press on, telling an audience in Elryia, Ohio, on Jan. 22, “I’m not going to walk away just because it’s hard.” ‘An Ugly Process’ The president said he’d keep working with Democrats and “I hope” Republicans to complete legislation that would cover tens of millions of uninsured Americans and attempt to curb medical costs . “We’ve gotten pretty far down the road, but I’ve got to admit we had a little bit of a buzz saw this week,” Obama said. “I also know that part of the reason is, is that this process was so long and so drawn out. This is just what happens in Congress. It’s just an ugly process.” Obama has been making phone calls and having conversations “to try to see what the climate is, what’s the art of the possible,” Valerie Jarrett , senior adviser to the president, said yesterday on NBC Television’s “Meet the Press.” Lawmakers were days away from finishing work on the legislation when the polls in Massachusetts started turning against Democrat Martha Coakley . Senate Democrats need 60 votes to overcome the delaying tactics of Republicans, who are universally opposed to the bill. The party now can count on just 59 votes in the 100-member body. Seeking Changes Lawmakers emerged from a meeting with Reid on Jan. 22 saying they don’t know how they’ll proceed. In a sign of how swiftly things have changed, one of the Democratic architects of the Senate legislation called for major changes. North Dakota Senator Kent Conrad , who spent months negotiating with a group of senators on the finance panel for a bipartisan compromise, said lawmakers had to listen to voters. “The people we represent are sending us a loud and clear message that the package that’s there is not acceptable,” Conrad told reporters. “The first thing we’ve got to say to people is ‘we get it, we hear you loud and clear.’” All the options before Democrats have drawbacks. A group of 25 House Democrats led by New Jersey Representative William Pascrell is pushing for passage of a series of smaller bills to address costs, insurance practices and medical malpractice concerns. Interconnected Bill That approach would be difficult because so many parts of the bills are intertwined. New York-based Pfizer Inc. and other drugmakers agreed to help elderly people better afford prescription medicines, yet their support was contingent on gaining more insured customers. Limiting the bill to budget-related issues through reconciliation means it might not include provisions such as requiring insurers , including Minnetonka, Minnesota-based UnitedHealth Group Inc. , to accept all customers regardless of pre-existing conditions. And starting over might mean it never gets done. “The leader suggested we take a few days here to let things settle down,” Dodd said after meeting with Reid. “We have to find this way forward, and we’re probably going to do that in a calmer environment.” To contact the reporters on this story: Kristin Jensen in Washington at kjensen@bloomberg.net ; Brian Faler in Washington at   or bfaler@bloomberg.net

Read the full article →

Republican Brown Wins Democrat Kennedy’s Former Massachusetts Senate Seat

January 19, 2010

By Heidi Przybyla and John McCormick Jan. 19 (Bloomberg) — Republican Scott Brown won the Massachusetts Senate seat of the late Democrat Edward Kennedy, a political upset that imperils health-care legislation in Congress and sends a warning shot to Democrats ahead of November’s elections. Brown was leading Democratic state Attorney General Martha Coakley 52-47 percent with 92 percent of the state’s precincts reporting, according to the Associated Press, which projected Brown as the winner. Independent candidate Joseph Kennedy, no relation to the late senator, had about 1 percent of the vote. Brown, 50, a previously little-known state senator, cast himself as an independent voice who would help thwart President Barack Obama’s health-care plan and keep a check on Democrats in Congress, particularly on tax-increase proposals. Brown’s victory increases his party’s Senate numbers to 41, which would give Republicans enough members in the 100-person Senate to block votes on an overhaul of the U.S. health-care system, Obama’s top legislative goal. His victory, in a state Obama won by 26 percentage points in the 2008 election, is the third recent high-profile Democratic loss. In November, the president’s party lost the governor’s mansions in New Jersey and Virginia. It follows decisions by five House Democrats since November to retire instead of face potentially tough races later this year. Political ‘Tsunami’ The Massachusetts vote represents “a tsunami in American politics,” said Robert Blendon , a Harvard University pollster. The last Republican senator from Massachusetts was Edward Brooke , who was elected to the last of his two terms in 1972. Once Brown is sworn in, Democrats will lose the 60-vote super-majority that has allowed them to overcome often-unanimous Republican opposition to Obama’s legislative initiatives. Brown’s election comes just as Democratic congressional leaders are negotiating a final version of a health-care bill that many Democrats view as a tribute to Kennedy’s decades of work on the issue. Brown’s presence in the Senate will force Obama to “dramatically alter” his domestic agenda, Blendon said. Former Massachusetts Governor Paul Cellucci , a Republican, warned his party’s national leaders against interpreting the results as a wholesale movement toward Republicans. Brown described himself as independent-minded, and campaigned without deploying Republican heavyweights such as former vice presidential candidate Sarah Palin or Minnesota Governor Tim Pawlenty to stump for him. Pickup Truck Instead, he crisscrossed the state in a pickup truck and appeared days before the election with Boston Red Sox pitching legend Curt Schilling and John Ratzenberger , an actor who played a mail carrier on the “Cheers” television comedy. “The message for the national Republican Party should be, even though people aren’t happy with the Democrats right now, if we get back to power we can find ways to be independent and be bipartisan,” Cellucci said. “People are sick of this partisanship.” Brown will serve the rest of Kennedy’s term, ending in January 2013. He will replace Paul Kirk , a Kennedy friend and former head of the Democratic National Committee who was appointed by Governor Deval Patrick on Sept. 24 to temporarily fill the seat. Brown told CNN before the results were known that he would expect to take office quickly and already has made plans to travel to Washington on Jan. 22. As House and Senate Democrats seek to combine each chamber’s version of health-care legislation, Republicans want to avoid delays. Certification Process Massachusetts has up to 10 days after the election to send results to the governor and the governor’s council, which must certify the results. Brian McNiff , spokesman for the Massachusetts secretary of the commonwealth, said that gives cities and towns the chance to count ballots from the military and overseas. Brown’s election, in a state long considered a Democratic stronghold, could have an impact on Democrats and potential Republican competitors in closely divided districts across the country. “You’re going to see not only an infusion of real money, but also a lot of good-quality candidates come out and want to run — because they smell blood in the water,” said Republican strategist Scott Reed, who managed Bob Dole ’s 1996 presidential campaign. Once that happens, “the damage is already done,” even if economic conditions across the nation improve, said Ross Baker , a political science professor at Rutgers University in New Brunswick, New Jersey. The House and Senate are trying to reach a compromise on the U.S. health-care system’s largest revamp since the Medicare program for the elderly was created more than four decades ago. 60 Votes Coakley, 56, had said she would vote for health-care legislation while Brown vowed to block it. Democrats have controlled 60 of the Senate’s 100 votes, and needed all 60 to thwart Republican efforts to prevent a final vote of the chamber’s version of the bill in December. Senate Minority Leader Mitch McConnell of Kentucky has said the race shows the extent of popular opposition to Obama’s health plan. Thomas Mann , a congressional expert at the nonpartisan Brookings Institution in Washington, calls “a stretch.” “Residents of Massachusetts approve of their state plan, which is the model for the Obama plan,” said Mann. Democrats are likely to reject Republican calls to scrap the plan and start over. “Obama and the Democrat’s policy and political future depend upon banking health reform now and pivoting to aggressively engage Republicans on economic policy.” Massachusetts Bill In 2006, Brown voted as a state senator for a Massachusetts universal health-care bill that has been used as a model by the president’s administration. Massachusetts, in part due to Kennedy and his brother, former President John Kennedy , has long been regarded as among the most Democratic-leaning states. While Democrats outnumber Republicans by a margin of 3-to-1 on the state’s voter registration rolls, 51 percent of Massachusetts voters aren’t registered with either party. The state has a history of electing Republican governors, who held that post from 1991 to 2007. Still, all 10 of the Massachusetts House seats are held by Democrats. The last time Kennedy faced a competitive Senate race was 1994, when Republican Mitt Romney closed the gap in the polls before losing by 17 percentage points. That was the same year Democrats lost their congressional majorities as part of the so- called Republican Revolution. Unemployment Figures Coakley ran against political headwinds such as lingering high unemployment. The Massachusetts unemployment rate was 8.8 percent in November, down from a peak of 9.3 percent in September. Nationally, “until those numbers improve the outlook for the Democrats is very bleak,” said Baker. Local issues also influenced the Massachusetts race, including a recent state tax increase and abuse-of-power scandals surrounding the state’s Democratic Party. “It’s much more local,” said Jennifer Duffy , the Senate analyst at the nonpartisan Cook Political Report in Washington. Perhaps most importantly, the Coakley campaign failed to take the threat from Brown seriously. Coakley opened two district offices to Brown’s five and she kept a far lighter schedule of campaign events. “She thought the election was won,” said Edwin Betancourt, 39, a Boston Democrat who voted for Brown. Duffy said Coakley “wasn’t out there while Brown was running a sprint.” Kennedy, 77, died Aug. 25 after a 15-month battle with brain cancer. A Democrat, he had served in the Senate since 1962, when he won the seat once held by his brother John. To contact the reporters on this story: Heidi Przybyla in Washington at hprzybyla@blooomberg.net ; Brian K. Sullivan in Boston at bsullivan10@bloomberg.net

Read the full article →

For Obama, Message of Change in Massachusetts Vote Brings Threat to Agenda

January 19, 2010

By James Rowley and Julianna Goldman Jan. 20 (Bloomberg) — The calls for change that rallied independents to Barack Obama in 2008 and propelled him to the White House reverberated again in Massachusetts last night, now threatening the president’s agenda. With Republican Scott Brown ’s victory in a special election to fill the Senate seat that had been long held by the late Edward M. Kennedy , a Democrat, the president may have to scale back his second-year agenda, which includes overhauling immigration laws and financial regulations, analysts said. Brown’s defeat of Democrat Martha Coakley is “a body blow to Obama and other Democrats,” said Larry Jacobs , director of the Hubert Humphrey Institute of Public Affairs at the University of Minnesota in Minneapolis. “It’s a resounding message of rejection, disappointment and the loss of hope.” The White House is likely to focus now on salvaging health-care legislation and reclaiming populist ground on the economy and jobs. Obama’s advisers said the president is already moving to focus on those issues, along with deficit reduction, in his State of the Union address on Jan. 27 and the budget he submits to Congress Feb. 1. He’ll also keep up criticism of Wall Street and executive bonuses as he presses for new regulations. “What you will really see the Democratic leadership do is to pivot to job creation and deficit control,” Arizona’s Jon Kyl , the second-ranking Republican in the Senate, said yesterday. “They can read the polls, too.” Bigger Struggle Even with 60 seats in the Senate and 256 seats in the House, Obama, Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi struggled to steer the president’s agenda through Congress. That will become even more difficult with one less Senate vote and with lawmakers facing close re-election fights in November hearing echoes from the Massachusetts race. Some of Obama’s most ambitious initiatives, from climate- change legislation to closing the U.S. prison camp at Guantanamo Bay, Cuba, — already imperiled because of lukewarm support from Democrats — may have to be shelved, analysts and lawmakers said. “Normally, a junior senator winning doesn’t have a great effect,” said Robert Blendon , a professor of health policy and director of the Harvard Opinion Research Program. Brown’s victory will “dramatically alter President Obama’s domestic agenda for the rest of his term, or at least through 2010.” Connecticut Democratic Representative Joe Courtney said his party’s defeat in Massachusetts is reminiscent of Republican congressional gains during Bill Clinton ’s first term as president. Curtailed Agenda “We’ve sort of seen this movie before in the 1990s,” Courtney said. “It seems inevitable” that Obama’s “agenda will be curtailed or reduced.” Brown’s win in a state that gave Obama 62 percent of the vote in 2008 follows Democratic losses of governorships in Virginia and New Jersey last year. Obama won both those states as well. Before the Massachusetts results were in, White House press secretary Robert Gibbs described Obama as “surprised and frustrated” that Brown was able to overcome the lead Coakley had at the start of the campaign to replace Kennedy, who died of brain cancer in August. Gibbs yesterday declined to address questions about how the Massachusetts election would affect Obama’s agenda. He previewed how the administration would frame the results, saying the race reflected the “tremendous amount of upset and anger in this country about where we are economically.” Anger and Frustration That sentiment predates Obama taking office and “in many ways, we’re here because of that upset and anger,” Gibbs said. “The president understands there’s a lot of economic frustration out there,” he said. That means work on bringing down the unemployment rate , which stood at 10 percent last month, and boosting the economy, which is still pulling out from a recession that began in December 2007. “If we are not successful in establishing job growth and economic growth soundly we will not achieve any of our other objectives,” National Economic Council Director Lawrence Summers told reporters last week. “Priority number one has to be assuring rapid job growth.” The debate over financial regulation and Obama’s proposal to tax banks such as Citigroup Inc . and Bank of America Corp . that received government assistance after last year’s financial crisis, will give Obama a chance to focus public anger. Banks a Target Obama can “go down a very, very aggressive populist route,” said Ross Baker , a political scientist at Rutgers University in New Brunswick, New Jersey. “There is a preexisting attitude toward banking which he can tap into for sure.” David Plouffe , who was Obama’s campaign manager in the 2008 election and still serves as an outside adviser, said Obama will remain focused on moving his agenda forward. “That’s not going to be easy,” Plouffe said. Democrats still retain “big majorities” in both chambers, and advancing health-care legislation will be pivotal for the party’s efforts to keep control of Congress after the November election, he said. If Democrats step away, Plouffe said, “We’re going to have the worst of both worlds, which is you supported a bunch of stuff that has been demonized, you don’t have the opportunity to pass it and not just sell it but have voters experience the reality of it.” That may not be an easy task. Some Democrats last night already began backing away from Obama’s top legislative priority New York Democratic Representative Anthony Weiner said his party should suspend its push to pass health-care legislation and come back to it later. “We’ve got to recognize we’ve got a completely different situation.” To contact the reporters on this story: James Rowley in Washington at jarowley@bloomberg.net ; Julianna Goldman in Washington at jgoldman6@bloomberg.net

Read the full article →

Stocks Rise in U.S. as Treasuries Retreat, Stronger Dollar Sends Oil Lower

January 19, 2010

By Michael P. Regan and Rita Nazareth Jan. 19 (Bloomberg) — U.S. stocks rose, boosted by a rally in health companies on speculation Republicans will block an industry overhaul, while Treasuries fell and a stronger dollar sent oil lower. The Standard & Poor’s 500 Index added 0.9 percent at 10:51 a.m. in New York. Treasuries snapped two days of gains, sending the yield on the 10-year note up four basis points to 3.72 percent. The Dollar Index, which gauges the currency against six major U.S. trading partners, rallied 0.6 percent and crude retreated for a sixth day. Europe’s Dow Jones Stoxx 600 Index erased an earlier decline. British government bonds tumbled after the U.K. inflation rate increased by the most on record. “Money is finding its way out of Treasuries and into the stock market,” said Mark Bronzo , a money manager in Irvington, New York, at Security Global Investors, which oversees $22 billion. “Investors are expecting good earnings, especially from technology companies. In addition to that, health-care stocks are rallying because a Republican victory in Massachusetts might change the debate.” An index of health-care companies in the S&P 500 led the advance with a 1.8 percent rally. U.S. Democrats face the possibility of losing a Senate seat held for almost 47 years by the late Edward Kennedy as voters in Massachusetts go to the polls. A loss could also cost them their 60-vote Senate supermajority needed to help pass a health-care overhaul. Ciena Corp. rallied 9 percent to lead an advance in technology companies after Credit Suisse Group AG advised buying the shares on prospects for revenue growth. As many as 65 companies in the S&P 500 are scheduled to release quarterly results this week. Valuations Climb The biggest stock market rally since the Great Depression boosted the S&P 500’s price-earnings multiple to 25 last week from 10.1 in March, the lowest in a quarter-century, data compiled by Bloomberg show. The MSCI World Index of 23 developed markets added 0.3 percent after slumping 0.8 percent earlier. Companies in the measure are trading near the highest level compared with earnings since 2002, raising concern valuations may have outpaced profit growth. German investor confidence declined more than economists estimated in January as the economic recovery showed signs of losing momentum, an industry report showed. The Dow Jones Stoxx 600 Index added 0.9 percent, reversing an earlier 0.9 percent slump. German Confidence The ZEW Center for European Economic Research said its index of investor and analyst expectations in Europe’s largest economy, which aims to predict developments six months ahead, fell to 47.2 from 50.4 in December. Economists predicted a drop to 50, according to the median of 37 forecasts in a Bloomberg News survey. Cadbury Plc jumped 3.3 percent after Kraft Foods Inc. agreed to buy the chocolate maker for an increased $19.5 billion. The cost of insuring bonds sold by Uxbridge, England- based Cadbury with credit-default swaps fell 19.5 basis points to 57, the lowest level since November, according to CMA DataVision prices. The British pound strengthened against all 16 major counterparts, gaining 1.1 percent versus the Swiss franc and 0.9 percent against the euro. December consumer prices advanced 2.9 percent in the U.K. from a year earlier, one full percentage point more than in November, according to the Office for National Statistics. Gilts Slide U.K. government bonds tumbled after the report, sending the yield on the two-year note 11 basis points higher to 1.31 percent. The MSCI Asia Pacific Index declined 0.8 percent. Aluminum Corp. of China , known as Chalco, declined 0.2 percent in Hong Kong after saying it expects to post a net loss for 2009. Mitsubishi UFJ Financial Group Inc., Japan’s largest publicly traded bank, slipped 2.4 percent in Tokyo after Barclays Plc said banks’ income from lending may slump. Losses in Asia were limited after Hong Kong’s Hang Seng Index doubled its gain to 1 percent on a report in Caijing magazine that Shanghai, China’s financial hub, is considering allowing individuals to invest abroad. — With assistance from David Merritt , Justin Carrigan , Stuart Wallace , Paul Armstrong and Gavin Serkin in London. Editor: Chris Nagi To contact the reporters on this story: Michael P. Regan in New York at mregan12@bloomberg.net ; Rita Nazareth in New York at rnazareth@bloomberg.net .

Read the full article →

Foreign Investors in Real Estate Pledge Allegiance to U.S.

January 18, 2010

See more news releases in: Banking & Financial Services, Real Estate, Surveys, Polls and Research Is Strong Sentiment for Capital Appreciation Finally a “Buy” Signal? WASHINGTON, Jan. 18 /PRNewswire/ — Despite a lack of placement opportunities in 2009,

Read the full article →

Yen Carry Trade Shows Japan Losing Mojo With Collapsing Market Volatility

January 18, 2010

By Matthew Brown Jan. 18 (Bloomberg) — Currency strategists are more in sync than any time since the depths of the financial crisis, increasing incentives to bet against the yen after the carry trade lost money in December for the first time in 10 months. Forecasts for the euro, yen and Swiss franc from 61 Bloomberg survey contributors are within 9 cents of the mean on average, down from 11 cents a year ago. They haven’t been so unified since Lehman Brothers Holdings Inc.’s 2008 bankruptcy. The predictions’ so-called standard deviation fell 16 percent last quarter, the biggest drop in at least two years, after jumping 48 percent in the three months after Lehman’s demise. The growing consensus signals that foreign-exchange swings will decline, luring investors to sell currencies from countries with lower interest rates to buy higher-yielding ones. That may weaken the yen and franc, and rein in the resurgent dollar. Japan’s currency, which fell 6.6 percent since its 14-year high of 84.83 per dollar on Nov. 27, may be the biggest loser as Prime Minister Yukio Hatoyama fights deflation and a recession. Declining volatility and the rising U.S. currency means “people are thinking about alternatives to the dollar as a funding vehicle, and the yen is the obvious candidate,” said Richard Franulovich , a strategist in New York at Westpac Banking Corp., Australia’s second biggest bank. “Not only do they already have low rates, the authorities are talking about a new quantitative-easing program. There’s a big fiscal expansion playing out under the new government, and the currency had a big rally last year.” Carry Returns Westpac was one of 2009’s 10 best yen forecasters, data compiled by Bloomberg show. Selling yen to buy Australian and New Zealand dollars, Norwegian krone and Brazilian reais returned 33 percent last year. Using the dollar earned 31 percent. Funding the carry trade with the greenback lost money in December for the first time since February as the U.S. currency gained 4.8 percent against the euro amid growing confidence in the U.S. economy and expectations that the Federal Reserve will raise borrowing costs by June. Futures trading on Dec. 31 suggested a 62 percent chance the Fed would increase its benchmark to at least 0.5 percent by mid-year from a range of zero to 0.25 percent, up from 30 percent in November, Bloomberg data show. The Bank of Japan’s target rate is 0.1 percent. Buying and selling high- and low-yielding currencies to take maximum advantage of global rate moves gained 19 percent from February to November, the carry trade’s best nine months since 2003, a Royal Bank of Scotland Plc index shows. The index fell 0.9 percent in December. ‘U-Turn’ “The U-turn in the dollar led to a reverse carry trade in December where people were selling the commodity currencies,” said Theodore Chen , a quantitative analyst at RBS in London who oversees the index. Rapid exchange-rates swings tend to erode the carry trade’s profits. Greater certainty about the direction of currencies this year may help damp volatility, reducing the chances of a repeat of December’s turnabout. Risk returns have shifted in favor of the yen since late last year, as measured by the Sharpe ratio, a gauge of gains that takes volatility into account. In the year ending Nov. 30, selling the dollar versus the currencies of Australia, New Zealand, Norway and Brazil had a risk-premium ratio of 2.31, compared with 1.24 for the yen. Since then, the ratios are 2.71 for the yen and less than zero for the dollar. ‘Faster Pace’ “Yen volatility can come down at a faster pace than dollar or Swiss crosses, making it more useful as a funding source going forward,” said Paul Mackel , the director of currency strategy at HSBC Holdings Plc in London. “There’s going to be a reflating of the yen carry trade.” Analyst forecasts on the yen against the dollar varied from the mean by 9 cents at the end of last week, compared with 10 cents at the end of 2008, Bloomberg data show. Dollar forecasts against the euro also had a standard deviation of 9 cents last week, down from 12 cents. For the Swiss franc, the figure fell to 8 cents, from 11 cents. The Swiss National Bank’s key rate is 0.25 percent. JPMorgan Chase & Co.’s index of volatility in the Group of Seven currencies has fallen 12 percent this year, the most since the two weeks beginning March 27, 2009. Yen Forecasts Carry-trade returns will benefit this year from the yen dropping 7.3 percent to 98 per dollar from 90.84 today, according to the median forecasts in Bloomberg surveys. The franc is predicted to weaken 4.8 percent to 1.08 per dollar. The dollar has the least bearish outlook — a 1 percent decline to $1.45 per euro, from $1.4362. Bets on gains for the IntercontinentalExchange Inc.’s Dollar Index — a gauge against the euro, yen, pound, Canadian dollar, franc and Swedish krona – - outnumber bearish wagers by 6 to 1, the most since March. Even assuming stable currencies, buying 12-month bills in reais, kronor, Australian and New Zealand dollars with Japanese yen will return 5.2 percent more than holding equivalent- maturity Japanese bills, compared with 5 percent for the same trade with the dollars. ‘Disastrous Strategy’ Selling the yen against that basket of currencies lost investors 34 percent in 2008 as volatility on the Japanese currency against the dollar rose to 26 percent in December, the most since at least 1991. Using the dollar as the funding currency lost 17 percent. “The carry trade works under conditions of low volatility, which is why it was the most disastrous strategy in 2008,” said Stuart Thomson , a Glasgow-based fund manager at Ignis Asset Management, which oversees $100 billion. Yen volatility is likely to decline as the Bank of Japan keeps its benchmark rate on hold through next year as it battles deflation, according to median forecast of 28 economists. Japanese consumer prices are forecast to fall 1.3 percent in 2009, by the same amount in 2010 and a further 0.3 percent in 2011, according to median economist forecasts in Bloomberg surveys. The country’s economy will expand 1.4 percent in 2010, after contracting 5.3 percent last year, the estimates show. In Switzerland, inflation will hold at 0.6 percent through 2010, the Bloomberg survey shows. In the U.S., there is an 80 percent chance the Fed will raise its key rate to at least 0.5 percent by the end of the year, futures trading shows. The U.S. economy will grow 2.7 percent this year, according to the median of 57 economists’ forecasts compiled by Bloomberg. Brazil, Norway In Brazil, the central bank will increase its rate to 10.5 percent from 8.75 percent as growth accelerates to 4.75 percent from 0.2 percent in 2009, according to Bloomberg surveys. Norway will lift its rate to 3 percent from 1.75 percent, and Australia’s will rise to 5 percent from 3.75, the polls show. Japanese Finance Minister Naoto Kan said Jan. 14 there are “still various policy measures that can be taken,” signaling the Bank of Japan will take further action to aid the economy. Morgan Stanley, Goldman Sachs Group Inc. and Pacific Investment Management Co. analysts said this month the central bank may increase the amount of money it adds into the economy through purchases of government bonds to combat deflation. The Democratic Party of Japan’s popularity has slid since it came to power for the first time four months ago promising to end 20 years of economic stagnation. Prime Minister Hatoyama’s approval rating was at 56 percent this month, compared with 75 percent when he took office, the Yomiuri newspaper said Jan. 11, without giving a margin of error. Japanese Exporters A weaker yen will benefit Japanese exporters, including Toyota Motor Corp. , the world’s largest manufacturer of automobiles, and Sony Corp., which is forecasting a second annual loss. Japan exports more than it imports, giving it a current-account surplus every year since at least 1986, when Bloomberg began collecting the data. Exports accounted for 14 percent of Japanese gross domestic product in the third quarter, compared with 11 percent in the U.S. The policies of the government and central bank are “a signal to the market, saying ‘Hey, use the yen as a carry trade because we’ll be back into the market printing lots of yen to push the currency lower,” said Axel Merk , president of Merk Investments LLC in Palo Alto, California, and manager of the $477 million Merk Hard Currency Fund. Some analysts predict the yen will rise against the dollar as the U.S. currency suffers more from a global slowdown. Eisuke Sakakibara , formerly Japan’s top currency official, said the global recovery may slow in the second quarter, pushing Japan into a double-dip recession and weakening the dollar to 85 yen from 90.85 today. “Should the U.S. experience a relatively weak rebound from spring to summer there’s a high possibility the dollar will drop,” said Sakakibara in a Jan. 15 interview in Tokyo. To contact the reporter on this story: Matthew Brown in London at mbrown42@bloomberg.net .

Read the full article →

Real Estate Professionals Prepare Clients for Commercial Property Collapse

January 10, 2010

See more news releases in: Banking & Financial Services, Real Estate, Commercial Real Estate, Residential Real Estate, Surveys, Polls and Research Mortgage Brokers Consider Preemptive Actions to Shelter Commercial Property Owners Against Effects of

Read the full article →

British Election Pits Brown’s Rhododendrons Against Cameron’s Wellington

January 8, 2010

By Robert Hutton and Farah Nayeri Jan. 8 (Bloomberg) — While Prime Minister Gordon Brown and opposition leader David Cameron clash on how to revive the economy, the first overhaul after this year’s British election may be more about fine art than finance. Eight hours after John Major lost power in 1997, the former premier’s handpicked paintings were being removed from his office. With Brown’s Labour Party trailing in the polls to Cameron’s Conservatives for the past year, the curators of the U.K.’s official art collections are gearing up for another swift change of décor. The vote must happen by June. “Usually a new minister will want to make a change to the works in their office,” said Penny Johnson, director of the U.K.’s Government Art Collection . “It looks like they’ve made a change — more quickly than they can make other changes.” British government handovers take place within hours rather than days, and premiers see their choice of artworks as a way of reflecting their politics and interests, according to Johnson. Margaret Thatcher , who won the 1979 election and saw off Argentina during the war over the Falkland Islands, had a penchant for military figures and hung a portrait of Winston Churchill on the wall. Major, a cricket fanatic, liked portraits of players when he took over in 1990. Tony Blair , who was the youngest prime minister since 1812, swept in seven years later with more contemporary works. “I’m sure some masterful practitioners of the craft of politics choose what they want to hang to show an image of themselves that they want to portray,” said Conservative lawmaker Hugo Swire , who is chairman of parliament’s advisory committee on works of art. Stairway to Cameron At election time, the prime minister’s office , the Treasury, and government buildings undergo the biggest art swaps. Parliament’s paintings don’t change, though an exception is the stairway to the office of the leader of the opposition. There, Cameron has on show 14 pictures of 18th- and 19th- century prime ministers, including Pitt the Younger , the Duke of Wellington and Robert Peel , all Tory figures. Should Brown lose the vote and become opposition leader, curators will face the challenge of finding substitutes. While the Tories trace their roots to landed gentry supporting the monarchy in the 17th century, the Labour Party was born out of the blue-collar union movement prior to World War I. “We couldn’t do the staircase in Labour politicians,” said Melanie Unwin, deputy Curator of the Parliament collection, whose team looks after 7,000 artworks shown in the House of Commons and the House of Lords. “The problem we have with the early Labour Party is that they didn’t come from the sort of homes that would require paintings of them to hang on walls.” Blair Years At the Government Art Collection , Johnson is in charge of 13,500 works destined for offices worldwide. Major was on his way to a final interview with Queen Elizabeth II when Johnson took down a portrait of English cricketing hero W.G. Grace, a bearded Victorian, from 10 Downing Street, the prime minister’s official residence in London. When Blair took office at age 43, a set of Anish Kapoor drawings labeled “Untitled” from 1986-87 headed to Downing Street from the Tate Gallery and monotypes by Sean Scully , Therese Oulton and Mark Francis were put up. His wife, Cherie, asked for female achievers to be shown. Up went portraits of Queen Elizabeth I, Mary Queen of Scots, painter Angelica Kauffmann and Ada Lovelace , a scientist credited with helping invent the first computer and who was the daughter of poet Lord Byron. ‘Rescued Rhododendrons’ Brown, now 58, moved into 11 Downing Street as Chancellor of the Exchequer from 1997 to 2007 and oversaw “wholesale change” at the Treasury, said Johnson. “Works of art came out from the Treasury that had been on display for many, many years,” she said. “There were portraits of previous chancellors. Some, if not all, were replaced with 20th-century landscapes.” When he moved next door in June 2007 and took over from Blair, Brown kept the contemporary art. In the antechamber to the “war room,” where he sits with senior aides, is a series of photographs by the 2005 Turner Prize winner Simon Starling, “Rescued Rhododendrons.” Brown now is more concerned with rescuing himself. Just as his election campaign begin in earnest, two former cabinet ministers this week called for a secret ballot on whether to keep him as prime minister ahead of the vote. Hogarth, Hockney The collection was set up in 1898. In 1907, money was allotted to buy paintings for London buildings, and in 1935, for diplomatic posts. It has an annual budget of 551,000 pounds ($877,000), 200,000 pounds of which is for buying works. It includes work by British artists, or ones with strong British connections, such as William Hogarth, Lucian Freud and David Hockney . Andy Warhol is one anomaly. His 1985 screen prints of Queen Elizabeth hang in U.K. government buildings in New York and Washington. Faced with taking over record debt and an economy limping out of recession, any prime minister will have more on his mind than the taste in art, said Swire. “I hope there will be wonderful views of rural England and traditional sports,” he said. To contact the reporters on this story: Robert Hutton in London at rhutton1@bloomberg.net ; Farah Nayeri in London at farahn@bloomberg.net .

Read the full article →

Dodd, Dorgan Departures in U.S. Senate Fuel `Vicious’ Election-Year Cycle

January 7, 2010

By Heidi Przybyla Jan. 7 (Bloomberg) — Senator Christopher Dodd’s retirement may offer Democrats their best chance to hold onto a seat in Congress they were in danger of losing. The party’s overall prospects this election year remain gloomy. The announcement by Dodd, a Connecticut Democrat trailing in the polls, opened the way for Richard Blumenthal , one of the state’s best-known Democratic officials, to declare his Senate candidacy. Still, it came a day after North Dakota Democrat Byron Dorgan said he would give up his seat, now likely to go to a Republican. That followed a string of retirement decisions by party lawmakers from vulnerable House districts, including John Tanner and Bart Gordon of Tennessee, Brian Baird of Washington and Dennis Moore of Kansas. And Alabama Representative Parker Griffith said last month he was defecting to the Republicans. “The key thing is the psychological element,” said Charlie Cook , publisher of the Cook Political Report. “It’s like a vicious cycle of bad news that feeds on itself,” he said. “It makes other wavering incumbent Democrats contemplating retirement look at it even more closely.” In the immediate term, the Dodd and Dorgan announcements are unlikely to change the equation for Democrats. While Blumenthal, Connecticut’s attorney general, may secure Dodd’s seat for the party, the likely loss of Dorgan’s slot means “it’s now actually a wash,” said Jennifer Duffy , Senate analyst for the nonpartisan Cook Report. Supermajority Imperiled The broader picture in the Senate is cloudy for President Barack Obama’s Democratic Party. Democrats will now probably lose at least a couple of seats in the chamber, said Nathan Gonzales , political editor of the Rothenberg Political Report. That would end their 60-vote Senate supermajority that helps them circumvent Republican stalling tactics on major legislation such as health care. The most imperiled Democratic seats are those of Senate Majority Leader Harry Reid of Nevada, and Senators Blanche Lincoln of Arkansas and Arlen Specter of Pennsylvania. Democrats are also defending open seats in Illinois and Delaware, where Republicans enjoy strong prospects. While Republican retirements are outpacing those of Democrats by a 14-10 margin, only three of the Republican seats are in competitive districts, compared with four for the Democrats, said Cook. Dodd, 65, a five-term senator, said yesterday he was in the “toughest political shape” of his career and that while he still has “important work to do” in the Senate, it was time to leave. ‘My Moment’ “In the long sweep of American history, there are moments for each elected public official to step aside and let someone else step up,” he said at a press conference outside his home in East Haddam, Connecticut. “This is my moment.” Blumenthal, saying yesterday he will run for Dodd’s seat, vowed to “be a fighter in Washington for change.” Blumenthal, 63, intends to advocate on behalf of consumers and favors a consumer financial protection agency, he said in a telephone interview with Bloomberg News yesterday before his press conference. “What this does is allow someone to run who will be a draw for the ticket instead of a drag on the ticket,” said Ed Marcus , a former Connecticut Democratic Party chairman and one- time state senate majority leader. “It would have been a really rough campaign” for Dodd, said U.S. Representative Joe Courtney of Connecticut, a Democrat who spoke with the senator yesterday. Countrywide Loan Dodd, chairman of the Senate Banking Committee , saw his popularity wane after Portfolio magazine reported in 2008 that he and Senator Kent Conrad , a North Dakota Democrat, received discounts on home loans from Countrywide Financial Corp., now part of Bank of America Corp. Both senators said they were unaware they were receiving preferential treatment. Both were cleared in August by the Senate Ethics Committee. A Nov. 3-8 Quinnipiac University poll showed Dodd trailing former Connecticut Republican Congressman Rob Simmons by 11 percentage points in a hypothetical contest for the 2010 Senate race. The poll of 1,236 registered Connecticut voters had a margin of error of plus or minus 2.8 percentage points. According to Cook, polling shows that Republican Linda McMahon , a former chief executive officer of World Wrestling Entertainment Inc. , had a 2-point advantage over Dodd. A Nov. 12 Quinnipiac poll showed state voters disapprove of the job Dodd is doing by a 54 percent to 40 percent margin. Dodd has had a leading role in crafting an overhaul of U.S. financial rules, and he’s a top Senate negotiator on legislation that would expand health-care coverage. Credit-Card Fees Blumenthal told CNBC he opposed recent increases in rates and fees imposed by banks on credit cards. He said the banks have essentially “sought a second rescue” through those increases and the government should roll them back. Dorgan, 67, said in a statement Jan. 5 that he wants to teach, write and work on “energy policy in the private sector.” “Although I still have a passion for public service and enjoy my work in the Senate, I have other interests and I have other things I would like to pursue outside of public life,” Dorgan said. The Cook Political Report in Washington said in an update of its 2010 campaign analysis that Dorgan’s announcement “hands Republicans one of their best opportunities to pick up a Democratic-held seat” and “greatly diminishes the odds that Democrats can hold” their 60-vote mark in the Senate. To contact the reporter on this story: Heidi Przybyla in Washington at hprzybyla@blooomberg.net .

Read the full article →

Democrat Dodd Won’t Seek Re-election to U.S. Senate After 29-Year Career

January 6, 2010

By John Brinsley and Michael Forsythe Jan. 6 (Bloomberg) — Senator Christopher Dodd , a five-term Connecticut Democrat trailing in the polls, will not run for re- election in November, according to a congressional aide familiar with the matter. Dodd, 65, will hold a press conference today to announce his decision, the aide said, speaking on condition of anonymity. Dodd spokeswoman Justine Sessions was unavailable for comment. The Washington Post reported the retirement plan earlier. Connecticut Attorney General Richard Blumenthal , a Democrat, told Bloomberg News that he will run for Dodd’s seat. He plans to hold a news conference today at 2:30 p.m. in Hartford. Blumenthal, a Democrat, said he favors a consumer financial protection agency and would focus on jobs and the economy. “We need financial regulatory reform and stronger advocacy and protection for consumers,” Blumenthal, 63, said in a telephone interview. “I’m going to fight for economic recovery relentlessly and tirelessly.” Dodd, as chairman of the Senate Banking Committee , has had a leading role in crafting an overhaul of U.S. financial rules, and last month he supported Federal Reserve Chairman Ben S. Bernanke for a second term. He is also a top Senate negotiator on legislation that would expand U.S. health-care coverage. Dorgan Announcement Dodd’s announcement would come a day after North Dakota Democratic Senator Byron Dorgan said he won’t seek re-election. The party is bidding to maintain its control of 60 votes in the 100-member chamber, the number needed to cut off stalling tactics that can be used to thwart legislation. Dorgan, 67, said in a statement yesterday that he wants to pursue other interests, including teaching, writing and working on “energy policy in the private sector.” “Although I still have a passion for public service and enjoy my work in the Senate, I have other interests and I have other things I would like to pursue outside of public life,” Dorgan said. Dorgan’s decision is a boost for Republicans. The nonpartisan Cook Political Report in Washington said in an update of its 2010 campaign analysis that his announcement “hands Republicans one of their best opportunities to pick up a Democratic-held seat” and “greatly diminishes the odds that Democrats can hold” their 60-vote mark in the Senate. Trailing in Poll A Nov. 3-8 Quinnipiac University survey showed Dodd trailing former Connecticut Republican Congressman Rob Simmons by 11 percentage points in a hypothetical contest for the November Senate race. The poll of 1,236 registered Connecticut voters had a margin of error of plus or minus 2.8 percentage points. Dodd’s popularity waned after Portfolio magazine reported in 2008 that he and Senator Kent Conrad , a North Dakota Democrat, received discounts on home loans from Countrywide Financial Corp., now part of Bank of America Corp. Both senators said they were unaware they were receiving preferential treatment. Dodd made a failed bid for his party’s nomination in the 2008 presidential election, moving his family to Iowa, where the first balloting was held. Not ‘Right Answer’ Dodd didn’t offer support last month for a proposal by Senator John McCain , an Arizona Republican, and Maria Cantwell , a Washington Democrat, to reinstate the Depression-era Glass- Steagall Act that split commercial and investment banking. The plan, which would require New York-based JPMorgan to split from Chase and would require Bank of America and Merrill Lynch & Co. to separate, was proposed to rein in Wall Street firms in response to the financial crisis. “There are other things we can do to break them up, but I’m not sure that’s the right answer,” Dodd said in a Dec. 16 interview. During his last re-election contest in 2004, Dodd counted employees of Bear Stearns Cos. and Citigroup Inc. as his top donors , according to the Washington-based Center for Responsive Politics, which tracks political donations. For his 2008 presidential bid, executives at the hedge fund SAC Capital Advisors LP, based in Stamford, Connecticut, were Dodd’s biggest backers, donating a combined $248,200, according to the center’s figures. Dodd served in the Peace Corps in the Dominican Republic in the 1960s and is a fluent Spanish speaker. His father, the late Thomas Dodd, was also a Connecticut senator. The elder Dodd also faced controversies and was censured by the Senate for ethical problems. To contact the reporters on this story: John Brinsley in Tokyo at jbrinsley@bloomberg.net ; Michael Forsythe at mforsythe@bloomberg.net

Read the full article →

Dodd Said to Not Seek Re-election, Joining Fellow Democrat Senator Dorgan

January 6, 2010

By John Brinsley Jan. 6 (Bloomberg) — Senator Christopher Dodd , a five-term lawmaker from Connecticut trailing in the polls, will not run for re-election in November, according to a Congressional aide familiar with the matter. Dodd, 65, will hold a press conference later today to announce his decision, the aide said, speaking on condition of anonymity. Dodd spokeswoman Justine Sessions was unavailable for comment. The Washington Post reported his retirement earlier. The announcement would come a day after North Dakota Democratic Senator Byron Dorgan said he won’t seek re-election, complicating the party’s chances of retaining 60 votes in the 100-member chamber. Democrats need that number to cut off stalling tactics that can be used to thwart major legislation. As chairman of the Senate Banking Committee , Dodd has a leading role in crafting an overhaul of U.S. financial rules and last month supported Federal Reserve Chairman Ben S. Bernanke for a second term. Dodd is also the chief negotiator from the Senate’s health panel for legislation that would expand U.S. health-care coverage. Dodd saw his popularity decline after Portfolio magazine reported in 2008 that he and Senator Kent Conrad , also a North Dakota Democrat, received discounts on home loans from Countrywide Financial Corp., now part of Bank of America Corp. Both senators said they were unaware they were receiving preferential treatment. A Nov. 3-8 Quinnipiac University poll showed Dodd trailing former Connecticut Republican Congressman Rob Simmons by 11 percentage points in a hypothetical contest for the November election. The poll of 1,236 registered Connecticut voters had a margin of error of plus or minus 2.8 percentage points. Dodd made a failed bid for his party’s nomination in the 2008 presidential election, moving his family to Iowa, where the first balloting was held. For Related News and Information: Stories on Congress: CNG Today’s top financial stories: FTOP Top Stories: TOP

Read the full article →

Pat Choate: Dear Fellow Owners

December 30, 2009

I never wanted to own part of a bank, insurance company, or automaker. But now I do. If you are a U.S. citizen, you do too. Collectively, we now own America’s largest insurance company (AIG), the largest mortgage companies (Fannie Mae and Freddie Mac), the largest domestic automobile maker (GM), and major stock positions in two of the largest banks (CITI and Bank of America), among many other investments. I also never wanted to be a co-signer on a loan made to organizations whose top executives are reckless speculators and give themselves salaries and bonuses so disproportionate to their contributions that the act itself is nothing less than legalized theft. But thanks to our federal government, we are now also co-signers for an estimated $17 trillion of direct loans, indirect loans, guarantees, general backing, subsidization, and help to government subsidized entities. As Nomi Prins and Christopher Hayes explain in a recent article (” Meet the Hazzards ,” The Nation , September 23, 2009), regardless of the name or form of these transactions, it all depends on guarantees of payment by us. In addition, the U.S. Treasury is giving indirect help in the form of vast tax breaks to these failed institutions. One given in late 2008 allows those corporations that purchase a failing bank to use the losses to offset their tax on profits for up to 20 years. On December 16, the New York Times reported that the Treasury has also issued a special ruling that allows these bailout companies that are repaying their loans and buying back their stock to use their massive losses to offset taxes on profits that they make over the next two decades. For all other corporations, this tax break does not exist when there is a change of ownership, which happened when the government acquired large blocks of the banks’, GM and AIG stock. On Christmas Day 2009, the New York Times also reported that the Obama Administration would release more than $280 billion of the $400 billion of aid promised to Fannie Mae and Freddie Mac, the failed mortgage giants. Since the banks are withholding mortgage loans, the federal government is trying to rescue the housing industry with this money. A bailout of $17 trillion is an enormous commitment. For those who have trouble grasping just how much, as I do, a useful metric is that the Gross National Product of the United States for 2009 will be about $14.3 trillion. Thus, the amount of public aid required to bailout our financial industry is roughly equivalent to the value of the entire production of every person and every company in the U.S. for all of 2009 and the first two months of 2010. Put another way, you and I are each on the line for about $56,000 of guarantees to pay for this bailout. And when it comes time to collect whatever we owe, the IRS will not be understanding. But the money is just part of the cost. A double-digit unemployment rate and the joblessness of 27 million Americans is another. The loss of production because of idle workers will also be in the trillions of dollars. The loss of homes, careers, businesses, educational opportunities, and dreams will further extend the cost. For many people, their lives will be destroy and for most it will far less than it would have been if only our government had done its job and looked out for our interests, instead of rolling over for Wall Street. As we have come to understand, stupidity, greed and ideology are the roots of this crisis. So too is massive financial fraud. It is a reasonable demand of us taxpayers, and now we involuntary stockholders and guarantors, that our government and elected representatives take steps to prevent such a massive economic failure to ever occur again. Yet, more than a year and a half into this debacle, financial re-regulation legislation is months away from a final vote in the Congress, if ever. What we are getting is the political equivalent of a dinner guest shifting tasteless broccoli around on their plate. The legislative drafts being considered, moreover, are largely political placebos that leave in place the institutions and regulations that failed, and worse the same executives and board members. And for all the talk about holding accountable those who created this mess, the Obama Administration did not get around to creating a Financial Fraud Enforcement Task Force until mid-November 2009. It, moreover, is understaffed. During the Savings and Loan crisis of the late 1980s and early 1990s – a much smaller disaster – the Federal Bureau of Investigation was given 1,000 agents. The Obama Administration and Congress, however, are providing only 300 agents to deal with this collapse. Of course, Wall Street is not displeased with the political paralysis in Washington. Indeed, it is buying inaction through massive political contributions, which are reported to the Federal Election Commission. Think of it as “publicly-reported, legalized graft.” But we taxpayers (shareholders) are not helpless. Far from it. In the 2010 and 2012 elections, we will be able to hold the slacker elected officials accountable at the polls. As the 2006, 2008 and off-year 2009 elections illustrated, massive political contributions and vast personal wealth are meaningless when confronted by a public that believes its wishes and interests are being ignored. Trust me, this prospect is much on the mind of many a Senator and Member of Congress this holiday, even those of Presidential advisers. And, Dear Fellow Stockholders, if this financial crisis, and the way our government is handling it, makes you as angry as it does me, many of today’s elected federal officeholders should be preparing themselves for a return to private life. While many of those tossed from office will go to work for those that they coddled so richly, the prospect of removal from power can be a strong deterrent to their making us stockholders through more government bailouts.

Read the full article →

Charles Gasparino: New York Needs Wall Street

December 28, 2009

David Paterson hasn’t fared well over the past two years as governor of New York State: unemployment is high, taxes are out of control and the state’s budget is a mess. As Michael Barone pointed out in a recent column, people continue to flee the state in droves. But I give Paterson an “A” for honesty. He’s possibly the only liberal politician willing to admit publicly that the greed merchants on Wall Street are a necessary evil for big government liberalism to survive. It is, of course, very fashionable to beat up on Wall Street these days, particularly for those on the left. President Obama went on 60 Minutes to call the CEOs of the biggest banks “fat cats,” feasting off of government bailout money as unemployment remains high, before he herded them into a room in the White House (or at least most of them; the flights for the CEOs of Goldman, Morgan Stanley and the chairman of Citigroup, were delayed so they attended via a conference call) and asked that they start extending more loans to small business and not pay themselves too much. But Obama, unlike Paterson, is being disingenuous; aside from a few snotty remarks, the president hasn’t done much to get the banks lending right now. In fact, his policies have fostered an environment that allows Wall Street to make money — bundles of it as demonstrated by Goldman Sachs’ $20 billion bonus pool — at the expense of helping Main Street. Obama has supported Fed Chairman Ben Bernanke’s near-zero interest rate policy; he’s basically declared every big bank Too Big To Fail, meaning the federal government will save the likes of Goldman Sachs if it should somehow bet wrong in the trading markets, as it did last year. That means the banks can borrow cheaply in the open market, and in a pinch from the Federal Reserve itself, to finance not lending but their trading in bonds. Why would any bank need to take a chance by lending money to a struggling small business when it can take almost no risk and earn countless billions by simply borrowing at next to nothing, buying a bond and pocketing the difference? My guess is that Obama is allowing Wall Street to make such easy money, doing as Goldman CEO Lloyd Blankfein calls “God’s Work”, because the president knows that there’s a limit to the amount of debt the Chinese will buy to expand all the socialism he’s unleashing on the American people — from stimulus packages that don’t stimulate to health care reforms that make a bad situation even worse. At some point, he will need Wall Street to step in and buy those Treasury bonds the Chinese may soon refuse to buy. In the meantime, small businesses get the shaft so Goldman Sachs can make money to finance big government. The president wont tell you this because he knows that large portions of the electorate don’t agree with Obamanomics (check out his floundering poll numbers) so in order to get his agenda through, he spins a class warfare tale about Main Street versus Wall Street even as he uses Wall Street to advance his big government agenda. Paterson, on the other hand, is fessing up to this unholy alliance. It began a couple weeks ago when he took a not-so-veiled shot at one of his likely challengers, state attorney general Andrew Cuomo, who has continued the office’s Wall Street bashing tradition that began under another AG who became governor, Eliot Spitzer. Cuomo has been investigating Wall Street’s huge bonuses; he once threatened to go public with the names of executives earning huge bonuses at AIG, the large insurer that was bailed out by the government last year, if they didn’t return the money. Cuomo’s Wall Street attacks have earned him huge recognition, and at least according to the polls, a large lead over Paterson in a Democratic primary. Paterson, however, believes the attacks are counter productive; politicians in Iowa don’t go around attacking the agriculture industry, and they don’t attack big oil in Texas. So why are so many NY Pols attacking the investment banks that feed the monster of big government in New York State that they created and sustain? It was, of course, a great question, whether you agree with New York’s big government or not (I don’t). Cuomo, to his credit, has spoken about the need to cut taxes and slash the state’s bureaucracy, though I find it hard to believe he’s about to kill the monster his father helped create (Andrew is, of course, the son of former NYS Gov. Mario Cuomo) Over the weekend I interviewed Paterson on WABC radio (I was filling in for the regular host, Larry Kudlow) and he made the following point: Because of all the class warfare from the likes of Obama and Cuomo, the $20 billion in bonus money that Goldman has amassed will probably be handed out to executives not in cash but mostly in restricted stock (the decision to be announced shortly), which the state can’t get its grubby hands on. For all his negatives so far, Paterson’s logic on this issue appears to be resonating, at least with Cuomo. As the New York Post reported, the AG seems to be backing off his threat to publicly chastise the AIG bonus babies. He knows he will need them if and when he becomes governor.

Read the full article →

Dean Baker: The Budget Deficit Crisis: The Blame Is Bipartisan

November 23, 2009

The country is being bombarded with stories claiming that record budget deficits threaten our children’s future and jeopardize the credibility of the dollar. These stories are a serious problem – they have hugely confused the public about the nature of the country’s economic crisis. And both parties share the blame. Starting with the reality behind the scare stories – trillion-dollar deficits are really huge relative to the money that any of us will ever see in our lifetime. But this is an absurd measure. The United States is a country with more than 300 million people. It doesn’t matter than a trillion dollars is a huge amount to any of us individually. What matters is the size of the deficit and the debt relative to the size of the economy. Only people who want to deceive the public would talk about the deficit or debt in “trillions” of dollars. This is a very simple lie-detector test since honest economists and policy analysts always refer to these sums relative to the size of the economy. Relative to the size of the economy, the deficits that we are running are large and the debt that we are projected to incur is substantial, but the deficit level is still not coming close to the levels hit in World War II. Nor is the debt level projected to reach post-war peaks or the levels sustained by countries like Italy and Japan. The idea that we are near some debt-driven crisis is absurd on its face. The United States had the strongest period of growth in its history in the three decades following World War II. This undeniable fact should put to rest the idea that our debt levels will threaten the prosperity of future generations. We hand our children a whole economy and society. If we give them a bad education, a decayed infrastructure, a ruined environment, then we will be jeopardizing our children’s economic well-being. However, the debt levels we are currently projecting aren’t even large enough to make it to the list of serious problems. The claim that the dollar faces an imminent crisis because of the budget deficit or national debt is readily refuted by the example of Japan. Japan already has a debt to GDP level that is far larger than we are projected to have by the end of the next decade. In spite of this debt burden, investors are willing to hold ten-year Japanese government bonds at just a 1.5 percent interest rate. If these debt burdens are supposed to make Japan a high risk, someone forgot to tell the people who are putting billions of dollars on the line by holding Japanese government bonds. There is another side of this Japan story that makes the idiocy of the deficit scare stories even more apparent. According to the deficit fear mongers, the dollar has been falling in recent months because investors are becoming increasingly worried about the US government’s ability to pay off its debt. But one of the currencies that the dollar has fallen against is the yen. Are investors who are worried about the US government’s ability to pay off its debt selling dollars to buy the bonds of the Japanese government, which has an even higher debt burden? Let’s face it: The deficit hawks will say anything to advance their agenda. Even worse, the media will print it. This deficit nonsense should have been put to rest long ago, but both parties have hyped it to advance their ends. Currently, the Republicans are making headway in the polls by blaming the Obama administration for a deficit that is primarily the result of economic mismanagement during the Bush years. But Republicans don’t have a monopoly on demagoging the deficit. During the Bush years, many Democrats spoke of the Bush deficits in cataclysmic terms. This was absurd. The deficits were larger than was desirable during part of the Bush administration (large deficits in 2002 and 2003 were helpful in boosting the economy), but they were not hugely out of line. There is certainly no story that can pass the laugh test in which these deficits are responsible for the collapse of the housing bubble and subsequent recession. There were plenty of grounds to attack President Bush for the economy’s performance under his watch. Most importantly, he let an $8 trillion-dollar housing bubble grow unchecked, and giving big tax cuts to the wealthy is not the way to create an educated workforce and a modern infrastructure. But the Democrats often hyped the deficit – it was the easiest way to score political points. That helped to give us a situation in which tens of millions of people somehow think the deficit is the cause of the economy’s problems when in reality it is the only thing keeping it afloat. In short, the Democrats are paying the price of their own political opportunism. Unfortunately, so is the rest of the country.

Read the full article →

Republicans Ride Economic Woes to Wins in Two States

November 4, 2009

By Heidi Przybyla Nov. 4 (Bloomberg) — Republicans swept governors’ races in New Jersey and Virginia as voters concerned about rising jobless rates and record home foreclosures punished Democrats. New Jersey’s Democratic Governor Jon Corzine , a 62-year-old former co-chairman of Goldman Sachs Group Inc. , lost to Republican Christopher Christie , 47. In Virginia, Republican Bob McDonnell , 55, beat Democrat Creigh Deeds , 51, by a 17-point margin. In a congressional race in New York that took on national significance, Democrat Bill Owens defeated Conservative Party candidate Doug Hoffman . Republicans said the results were a sign the electorate is looking more favorably at their party one year after President Barack Obama’s election. “It’s great news,” said David Carney , a political director for former President George H.W. Bush . “When we’re like us, we win; when we’re like them, we lose,” said Republican Dick Armey , the former House majority leader from Texas, who now chairs FreedomWorks, a group that has aligned with conservative activists. Armey is on one side of a debate among Republicans over whether the party’s response to losses in the 2006 and 2008 elections should be to move further to the political right. In New York, that strategy may have backfired as Republicans including Armey and 2008 Vice-Presidential candidate Sarah Palin endorsed Hoffman, 59, a conservative who ran as a third-party candidate. They chose Hoffman over the pick of local party leaders, Dede Scozzafava , 49, who dropped out last weekend. The split vote handed Democrat Owens a narrow victory in a district that has been represented by a Republican since the Civil War. Unemployment In Detroit, voters approved a $500.5 million school bond proposal for a district that considered filing for bankruptcy. The election also resulted in Ohio becoming the 13th U.S. state to allow casinos, as voters approved gaming halls in Cleveland, Columbus, Cincinnati and Toledo. The elections came as the national unemployment rate reached 9.8 percent in September, and 937,840 U.S. homes received a default or auction notice or were repossessed by banks in the third quarter, a 23 percent increase from a year earlier, RealtyTrac Inc. said Oct. 15. The U.S. dollar has dropped 12 percent in the past year against a basket of six major currencies, even as stocks in the S&P 500 have rallied 55 percent from a 12-year low in March. ‘Frugal Government’ Speaking to supporters in Richmond, Virginia, Governor- elect McDonnell pledged “a wise and frugal government” and to keep taxes, regulation and litigation “to a minimum.” “Tomorrow begins the task of fixing our broken state,” said Christie, who pledged to cut regulations and spending and “get government back under control.” The Republican wins in two out of three races could embolden conservative activists seeking to promote rivals for the seats of party lawmakers and officials such as Florida Governor Charlie Crist who supported Obama’s $787 billion economic stimulus. The results in New York, in particular, will stoke a debate in the Republican Party over its direction, said former Republican Representative Tom Davis of Virginia. He said his party must develop a message that goes beyond opposition to Obama’s agenda by offering alternatives to his policies. “You’ve got to be able to mold that discontent into majorities,” said Davis, who led his party’s recruitment efforts in Congress. Mayoral Races In New York City, Mayor Michael Bloomberg , an independent, was elected to a third term, beating Democrat William Thompson , the city’s comptroller, by a 5-point margin. Bloomberg, who becomes the first three-term chief executive of the biggest U.S. city by population since 1989, is founder and majority owner of Bloomberg News parent Bloomberg LP. In Boston, Mayor Thomas Menino won an unprecedented fifth consecutive four-year term, and in Detroit, Dave Bing , a former NBA star, won re-election. In Miami’s mayoral race, Tomás Regalado defeated Joe Sanchez. In Maine, voters repealed a state law that would allow gay and lesbian couples to marry. Final results for a similar proposal in Washington state were not available. Exit polls indicated the gubernatorial and House races weren’t referenda on the president’s job performance, though Democrats learned the possible limits of gains made in last year’s election, when Obama became the first in his party to win Virginia since 1964. ‘Local Issues’ Obama’s spokesman said the gubernatorial elections in New Jersey and Virginia turned on the economy and “local issues that didn’t involve the president.” “The economy was on people’s minds in these elections,” White House press secretary Robert Gibbs said. The president plans to call McDonnell and Christie today, Gibbs said. Obama talked with Corzine and Deeds last night. The administration is “not concerned” that the results will make it more difficult to keep Democrats representing Republican- leaning districts on board with the president’s agenda, he said. Still, the outcome in Virginia and New Jersey may be unreliable barometers of how the elections next year will play out, with local issues such as taxes and transportation driving much of the debate. Virginia hasn’t elected a governor from the party that holds the White House since 1973. McDonnell’s election ends an eight-year streak of Democratic governors. Virginia Campaign Deeds trailed McDonnell for much of the race, except in the weeks after a thesis paper McDonnell wrote more than 20 years ago calling working women “detrimental” was publicized. McDonnell recovered in the polls after his campaign ran a television ad that showed Deeds equivocating on whether he would raise taxes. Yesterday, McDonnell won 58.7 percent to 41.3 percent, with the support of many of the independent and female voters who backed Obama a year ago. In New Jersey, Christie started the campaign with a lead in polls that reached 12 percent in July and fell as Corzine aired a series of television ads attacking his driving record, ethics and opposition to abortion. Christie won 49 percent to 45 percent. The last time a Republican won a statewide election in New Jersey was 1997, when incumbent Governor Christine Whitman defeated challenger James McGreevey in a tough campaign. Whitman’s 1993 campaign, in which she defeated James Florio amid voter outrage over $2.8 billion in tax increases he pushed through in his first term, marked the only defeat of a sitting New Jersey governor in a general election. Independent Voters In Virginia, 65 percent of independents cast their ballots for McDonnell and in New Jersey, Christie took 60 percent of the independent vote, according to CNN’s early exit polls . The economy and jobs were the most important issue to voters in both states, with 32 percent of New Jersey voters and almost half of Virginia voters saying so. Six in ten New Jersey voters and 55 percent of Virginians said Obama had no effect on their vote. The data refute the arguments of Republicans who said the races were referenda on Obama, said David Plouffe , the president’s former campaign manager. “These are local races,” he said in an interview yesterday on Bloomberg Television. “By Thursday or Friday the remnants of this will be forgotten.” Tom Reynolds , a former congressman from New York and head of the National Republican Congressional Committee , agreed. “It probably will have little to do with next year’s outcome,” he said. “Whether it is who wins the House baseball game or a fight in the off-year, people are wanting to take credit.” Turnout While voters in Virginia said the race wasn’t a referendum on Obama, the low turnout among blacks and young voters was a failure of his grassroots campaign machine , said Jennifer Duffy , an analyst at the Cook Political Report in Washington. “Looking to 2010, it’s a good lesson to relearn,” she said. “It’s not going to be the silver bullet for Democrats.” Amo Houghton , a former New York congressman and founder of the Republican Main Street Partnership , which promotes centrist Republicans, said the ouster of Scozzafava by Hoffman could be a bad omen for the party. Hoffman had assailed Scozzafava’s support for the stimulus, gay marriage and abortion rights. Owens had 49 percent of the vote, compared with 45.6 percent for Hoffman. “It’s tragic,” he said. “You don’t turn on your own people if you believe in the country and the two-party system.” Armey said Republicans would have won if they “had nominated a true conservative from the outset.” John Lapp, who was the director of the Democratic Congressional Campaign Committee in 2006 under then Illinois Representative Rahm Emanuel , said the results last night could impair Republicans chances in swing districts, such as the Northeast, where there are only two Republican senators, Olympia Snowe and Susan Collins of Maine. “There has been a purist civil war, revolution for the heart and soul of the party and the moderates have lost,” Lapp said. To contact the reporter on this story: Heidi Przybyla in Washington at hprzybyla@bloomberg.net .

Read the full article →

Republicans Ride Economic Woes to Wins in Virginia, New Jersey Contests

November 3, 2009

By Heidi Przybyla Nov. 4 (Bloomberg) — Republicans swept governors’ races in New Jersey and Virginia as voters worried about jobs and the economy punished Democrats. New Jersey’s Democratic Governor Jon Corzine , a 62-year-old former co-chairman of Goldman Sachs Group Inc. , lost to Republican Christopher Christie , 47. In Virginia, Republican Bob McDonnell , 55, beat Democrat Creigh Deeds , 51, by a 17-point margin. In a congressional race in New York that took on national significance, Democrat Bill Owens defeated Conservative candidate Doug Hoffman , the Associated Press reported. Republicans said the results were a sign the electorate is leaning back toward their party one year after President Barack Obama’s election. “It’s great news,” said David Carney , a political director for former President George H.W. Bush . “When we’re like us, we win; when we’re like them, we lose,” said Republican Dick Armey , the former House majority leader from Texas, who now chairs FreedomWorks, a group that has aligned with conservative activists. Armey is on one side of a debate among Republicans over whether the party’s response to losses in the 2006 and 2008 elections should be to move further to the political right. In New York, Republicans including Armey and 2008 Vice-Presidential candidate Sarah Palin endorsed Hoffman, 59, a Conservative who ran as a third-party candidate, over the choice of local party leaders, Dede Scozzafava , 49, who dropped out last weekend. Late last night, Democrat Owens narrowly won in a district that has been represented by a Republican since the Civil War. ‘Frugal Government’ Speaking to supporters in Richmond, Virginia, Governor- elect McDonnell pledged “a wise and frugal government” and to keep taxes, regulation and litigation “to a minimum.” “Tomorrow begins the task of fixing our broken state,” said Christie, who pledged to cut regulations and spending and “get government back under control.” The Republican wins in two out of three races could embolden conservative activists seeking to promote rivals for the seats of party lawmakers and officials such as Florida Governor Charlie Crist who supported Obama’s $787 billion economic stimulus. The results in New York, in particular, will stoke a debate in the Republican Party over its direction, said former Republican Representative Tom Davis of Virginia. He said his party must develop a message that goes beyond opposition to Obama’s agenda by offering alternatives to his policies. “You’ve got to be able to mold that discontent into majorities,” said Davis, who led his party’s recruitment efforts in Congress. Mayoral Races In New York City, Mayor Michael Bloomberg , an independent, was elected to a third term, beating Democrat William Thompson , the city’s comptroller, by a 5-point margin. Bloomberg is founder and majority owner of Bloomberg News parent Bloomberg LP. In Boston, Mayor Thomas Menino won an unprecedented fifth consecutive four-year term, and in Detroit, Dave Bing , a former NBA star, won re-election. In Miami’s mayoral race, Tomás Regalado defeated Joe Sanchez. Final results weren’t available for proposals in Maine and Washington state to roll back rights extended to gay and lesbian couples, particularly those affirming marriage laws that granted the same status to gays as those given to heterosexual marriages. Exit polls indicated the gubernatorial and House races weren’t referenda on the president’s job performance, though Democrats learned the possible limits of gains made in last year’s election, when Obama became the first in his party to win Virginia since 1964. Unreliable Barometers Still, the outcome in Virginia and New Jersey may be unreliable barometers of how the elections next year will play out, with local issues such as taxes and transportation driving much of the debate. Virginia hasn’t elected a governor from the party that holds the White House since 1973. McDonnell’s election ends an eight-year streak of Democratic governors. Deeds trailed McDonnell for much of the race, except in the weeks after a thesis paper McDonnell wrote more than 20 years ago calling working women “detrimental” was publicized. McDonnell recovered in the polls after his campaign ran a television ad that showed Deeds equivocating on whether he would raise taxes. Yesterday, McDonnell won 58.7 percent to 41.3 percent, with the support of many of the independent and female voters who backed Obama a year ago. In New Jersey, Christie started the campaign with a lead in polls that reached 12 percent in July and fell as Corzine aired a series of television ads attacking his driving record, ethics and opposition to abortion. Christie won 49 percent to 45 percent. New Jersey The last time a Republican won a statewide election in New Jersey was 1997, when incumbent Governor Christine Whitman defeated challenger James McGreevey in a tough campaign. Whitman’s 1993 campaign, in which she defeated James Florio amid voter outrage over $2.8 billion in tax increases he pushed through in his first term, marked the only defeat of a sitting New Jersey governor in a general election. In Virginia, 65 percent of independents cast their ballots for McDonnell and in New Jersey, Christie took 60 percent of the independent vote, according to CNN’s early exit polls . The economy and jobs were the most important issue to voters in both states, with 32 percent of New Jersey voters and almost half of Virginia voters saying so. Six in ten New Jersey voters and 55 percent of Virginians said Obama had no effect on their vote. The data refute the arguments of Republicans who said the races were referenda on Obama, said David Plouffe , the president’s former campaign manager. ‘Local Races’ “These are local races,” he said in an interview yesterday on Bloomberg Television. “By Thursday or Friday the remnants of this will be forgotten.” Tom Reynolds , a former congressman from New York and head of the National Republican Congressional Committee , agreed. “It probably will have little to do with next year’s outcome,” he said. “Whether it is who wins the House baseball game or a fight in the off-year, people are wanting to take credit.” While voters in Virginia said the race wasn’t a referendum on Obama, the low turnout among blacks and young voters was a failure of his grassroots campaign machine , said Jennifer Duffy , an analyst at the Cook Political Report in Washington. “Looking to 2010, it’s a good lesson to relearn,” she said. “It’s not going to be the silver bullet for Democrats.” Amo Houghton , a former New York congressman and founder of the Republican Main Street Partnership , which promotes centrist Republicans, said the ouster of Scozzafava by Hoffman could be a bad omen for the party. Hoffman had assailed Scozzafava’s support for the stimulus, gay marriage and abortion rights. Owens had 49 percent of the vote, compared with 45.6 percent for Hoffman. ‘Tragic’ “It’s tragic,” he said. “You don’t turn on your own people if you believe in the country and the two-party system.” Armey said Republicans would have won if they “had nominated a true conservative from the outset.” John Lapp, who was the director of the Democratic Congressional Campaign Committee in 2006 under then Illinois Representative Rahm Emanuel , said the results last night could impair Republicans chances in swing districts, such as the Northeast, where there are only two Republican senators, Olympia Snowe and Susan Collins of Maine. “There has been a purist civil war, revolution for the heart and soul of the party and the moderates have lost,” Lapp said. To contact the reporter on this story: Heidi Przybyla in Washington at hprzybyla@bloomberg.net .

Read the full article →

Kerry Signals Renewed Confidence in Karzai, Downplays Brother’s CIA Link

October 30, 2009

By Viola Gienger Oct. 30 (Bloomberg) — Senator John Kerry said Afghan President Hamid Karzai is willing to make Cabinet changes to bolster his government’s credibility, and expressed skepticism the beleaguered leader’s brother has links to the CIA. Kerry, who spoke to Karzai by telephone this morning and had lunch with CIA Director Leon Panetta yesterday, said he doesn’t believe the president’s brother has a “direct relationship” with the CIA, as reported earlier this week in the New York Times. Kerry expressed confidence in Karzai’s ability to recover from allegations that his government is corrupt and engaged in fraud in the first round of elections Aug. 20. “I think he is prepared to embrace reforms,” Kerry, 65, said in an interview for Bloomberg Television’s “Political Capital With Al Hunt ,” airing this weekend. The Massachusetts Democrat also distanced himself from Secretary of State Hillary Clinton’s public questioning of whether some Pakistani officials know the whereabouts of al- Qaeda during her visit to the country this week. The Obama administration has said a central question is whether the Afghan government can be a capable partner and take over the country’s security and manage its development after eight years of war. President Barack Obama is weighing strategy on Afghanistan and whether to send as many as 40,000 more troops that his top commander there, General Stanley McChrystal , has requested. ‘Too Far, Too Fast’ Kerry said he didn’t know what Obama would decide and couldn’t confirm whether the decision might veer close to the senator’s position. In addition to linking U.S. aid to the Afghan government’s performance, Kerry has left open the possibility of sending more U.S. troops while saying McChrystal’s approach “reaches too far, too fast.” Kerry, the 2004 Democratic nominee for the U.S. presidency and chairman of the Senate Foreign Relations Committee, said he doesn’t know when Obama will announce his decision on the strategy. Obama is scheduled to leave for a trip to Asia within days after Afghan voters go to the polls Nov. 7 for a presidential runoff election. Kerry helped persuade Karzai to agree to the rematch during a visit to Afghanistan last week, and the president is favored to defeat his challenger, former Foreign Minister Abdullah Abdullah . Credibility Question The timing of a decision on strategy depends in part on whether Obama feels he has enough information to judge the prospects for an Afghan government that can govern with credibility and handle civilian development efforts, Kerry said. “I suspect he will make the decision sometime very soon,” Kerry said. “What’s important to us is that we get legitimacy out of this election at the highest level, and then we can work downwards and deal with the issues of individual governors or individual relationships.” Kerry cited “serious questions” about links between Karzai’s brother, Ahmed Wali Karzai, and the Central Intelligence Agency. The New York Times reported this week that he has received regular payments from the agency for much of the past eight years in exchange for services including helping recruit an Afghan paramilitary force. Ahmed Wali Karzai said that, while he cooperated with American civilian and military officials, he didn’t receive payments from the CIA. He also denied allegations that he was involved in the drug trade. Lunch With Panetta “We’re asking questions,” Kerry said, citing his lunch with Panetta and a group of other senators. “I’m not at liberty to talk about it, but I don’t believe there is a direct relationship” with the CIA. Hamid Karzai is prepared to confront “reasonable” issues where evidence indicates joint efforts to stabilize Afghanistan are at risk, Kerry said. Still, Karzai questioned whether the news reports related to his brother indicate an effort in Washington to undermine him, the senator said. Repairing such rifts with leaders in Afghanistan and Pakistan will be essential to a successful effort to defeat al- Qaeda, Kerry said. The war in Afghanistan can’t distract the U.S. from a simultaneous focus on Pakistan, he said. “Pakistan is the center of the al-Qaeda presence,” Kerry said, citing the danger of rising extremism and the country’s nuclear weapons. “If we keep our eye on Pakistan, I believe Afghanistan will flow more easily out of that.” He said he couldn’t judge Clinton’s timing for raising the question of Pakistani officials’ knowledge of the whereabouts of al-Qaeda militants, which U.S. officials believe are hiding near the Afghan border. “How you raise those issues, where you raise those issues is obviously a matter of personal preference or I suppose diplomatic policy,” Kerry said. “I think that, at this particular moment, what we’re trying to do is build our relationship and trust with the Pakistanis.” To contact the reporter on this story: Viola Gienger in Washington at vgienger@bloomberg.net .

Read the full article →

Corzine Seeks Presidential Aura to Lure Democrats in N.J. Governor’s Race

October 22, 2009

By Terrence Dopp Oct. 22 (Bloomberg) — New Jersey Governor Jon Corzine has stood beside President Barack Obama in Hackensack and Holmdel. He shared a stage with Vice President Joseph Biden in Philadelphia this summer and again this week in Edison. Even former President Bill Clinton got called in. With less than two weeks until the state’s gubernatorial election, Corzine is counting on the star power of the national Democratic leadership to attract the 23 percent of Democrats who said they remain undecided in an Oct. 14 Quinnipiac University poll. Obama stumped for Corzine yesterday at Fairleigh Dickinson University in Hackensack. “He’s one of the best partners I have in the White House,” Obama said during a 27-minute speech in which he said Corzine assisted in the crafting of economic stimulus legislation. “New Jersey needs to give Jon Corzine four more years.” Democrats outnumber Republicans by more than 720,000 voters across the most densely populated area in the country, where residents haven’t elected a Republican to statewide office since 1997. Corzine, 62, is the only U.S. governor seeking re-election this year, as voters blame him for a variety of fiscal woes. Until this month, Corzine trailed Republican Christopher Christie in polls. The governor caught Christie after launching ads attacking the Republican’s support for ending health insurance mandates and his links as a fundraiser for former President George W. Bush . In the spots, Corzine questioned Christie’s driving record following a 2002 traffic accident in which Christie turned the wrong way down a one-way street, hit a motorcyclist and wasn’t issued a ticket; and his ethics for giving a loan to a subordinate who worked for him when he was U.S. Attorney for New Jersey. Obama Factor Corzine, former chairman of Goldman, Sachs & Co., tied with Christie , each with about 40 percent, in this month’s Quinnipiac poll, which had a margin of error of 2.8 percentage points. Two days before the president’s July 16 visit, the incumbent trailed Christie, 41 percent to 53 percent, in a poll that had an error margin of 2.5 percentage points. Sixty-one percent of voters approved of Obama in that July poll; among Democrats, the president got a 90 percent rating. In an August poll, Obama’s approval was 56 percent, while 89 percent of Democrats liked his performance. “The tactical edge Corzine wants here is mobilization,” said Peter Woolley , director of Fairleigh Dickinson’s PublicMind polling center. “The Democratic game plan seems to be simply to outmuscle the Republicans and convince their strong and broad base of voters to stick with the party.” Biden, Clinton Earlier this week, Biden told a cheering crowd in a gymnasium at Middlesex County College in Edison that he trusted Corzine’s views on the economy so much that he had sought out the governor’s opinion on how to handle the recession. “It’s great to be here with one of the best partners that Barack and I have in the country,” Biden said. Clinton, speaking Oct. 20 to South Jersey Democrats at a ballroom in Collingswood, said Corzine’s re-election was important for the country and the state. Clinton joined the first-term governor for a second rally later that day at Rutgers University in New Brunswick. Obama rallied 3,500 Democratic voters yesterday, telling them that Corzine extended unemployment benefits for 600,000 jobless and added more than 100,000 children to health-care rolls. The campaign distributed tickets to the event. During his address delivered as the local evening news was being broadcast, Obama said he wasn’t speaking solely to those in attendance. Rather, he said, he was aiming his remarks at “all of those watching out there,” motioning to television cameras assembled on a riser. ‘Motivating Folks’ “Motivating folks to get to the polls and vote is going to be part of what we have to do,” said Joseph Cryan , head of the Democratic State Committee and an assemblyman from Union. “We do that well, but the president can always help us do it better.” Adenah Bayoh, 31, who owns an International House of Pancakes restaurant in Irvington, said she was undecided before attending the rally. She voted for the governor in 2005. Bayoh, a Fairleigh Dickinson alumnus who was drawn to the event by Obama, said she’s behind Corzine now. “Obama made some great points in that right now, people everywhere are losing their jobs and the economy is bad,” she said in an interview. “I’ve always been a Democrat, but I haven’t been that inspired in this election.” Overcoming Indifference Krishna Yalla, 24, said he was indifferent before attending the rally. Yalla, who’s unemployed after graduating from the university in May with an economics degree, said the event energized him. “For me, it was Obama,” Yalla said as he filed out of the auditorium. “To have a public endorsement from the president, who I support, is a huge push.” Christie released a Web video yesterday ahead of Obama’s visit titled “Yes We Can,” which features the president talking about the need for change. “If you want real change, start by changing governors,” Christie’s campaign said in the video description. Corzine has spent at least $16.8 million on the race, more than triple Christie’s $5.4 million, according to campaign finance data released Oct. 7. Christie, who is accepting public matching funds, has said he expected to be outspent by the governor, who is not taking public funds. The Republican is limited under state public-finance laws to $10.9 million for the campaign. Corzine spent a total of $100 million on his runs for U.S. Senate and his first race for governor four years ago. “You’ve got a lot more Democrats in New Jersey” said Maurice Carroll , director of the Quinnipiac polling institute in Hamden, Connecticut. “Are they all going to be swayed by Obama and Biden? Probably most aren’t. But some are.” To contact the reporter on this story: Terrence Dopp in Trenton, New Jersey, at tdopp@bloomberg.net .

Read the full article →

Bernstein Says Financial Turmoil Showed Denmark’s Need for Safety of Euro

September 30, 2009

By Tasneem Brogger and Gelu Sulugiuc Sept. 30 (Bloomberg) — Danish Central Bank Governor Nils Bernstein said Denmark would have been hurt less by the financial crisis had it adopted the euro, calling the common European currency an “insurance policy” for the economy. “The crisis has shown us this is not just a political problem,” Bernstein, 66, said in an interview in Copenhagen on Sept. 28. “The crisis has shown that we can manage economically outside the euro, but it has also demonstrated that there are big advantages during a crisis to be inside and much more protected against turmoil and to have access to the euro system’s facilities.” Denmark pegged the krone to the euro in 1999, obliging the central bank to use policy to steer the currency. Nationalbanken raised the benchmark rate to 5.5 percent in October as policy makers defended the krone from a sell-off while the European Central Bank cut its main rate. That led to higher mortgage payments for Danish holders of adjustable-rate loans and increased the euro’s appeal among voters. “The big interest rate differential we had last year wouldn’t have been necessary had we been inside the euro zone,” Bernstein said. “We were under pressure.” Denmark would have had earlier access to dollars had it been a member of the common European currency, he said. In September last year, Nationalbanken was one of several central banks outside the euro zone to receive swap lines with the U.S. Federal Reserve. ‘Safe Harbor’ “We had to make an agreement with the Fed and a euro agreement with the ECB to help us through our problems, which demonstrates that in a storm it’s better to be in a safe harbor than alone at sea,” Bernstein said. Momentum in favor of switching to the common currency has ebbed as the crisis abated and the Danish central bank cut its lending rate to a record low of 1.25 percent on Sept. 24. After rising to a three-year high of 53.4 percent in November, Danish voter support for the euro fell to 48.9 percent of respondents, a poll commissioned by Danske Bank A/S showed this month. The government will probably break its pledge to hold a referendum on joining the euro this electoral term, which ends in 2011, as polls show dwindling support, government officials, who spoke on condition of anonymity because an official announcement has yet to be made, said this month. Economists have said if Danes rejected the euro for a third time, after votes in 1992 and 2000, the issue could be sidelined for at least 15 years. “My expectations are that there won’t be a referendum until we are sure to get a ‘yes’,” Bernstein said. “But the polls fluctuate a lot and are not very convincing. We’ve lost before, and you can’t try too often. It’s the government’s job to convince the voters.” Former Prime Minister Anders Fogh Rasmussen , who has said not having the euro “damages” Danish interests, handed the premiership to Lars Loekke Rasmussen in April. The former promised a vote by 2011; his successor has gone on the record to say setting a deadline is “impossible,” though he’s stopped short of officially canceling Fogh Rasmussen’s pledge. To contact the reporter on this story: Gelu Sulugiuc in Copenhagen at gsulugiuc@bloomberg.net

Read the full article →

Merkel, Steinmeier Make Final Pitches as German Election Campaign Tightens

September 26, 2009

By Tony Czuczka and Brian Parkin Sept. 26 (Bloomberg) — German Chancellor Angela Merkel and challenger Frank-Walter Steinmeier make their final appeals before tomorrow’s election, as polls show her bid to form a coalition with the pro-business Free Democrats in jeopardy. Merkel, who took 48 hours out from the campaign trail to attend the Group of 20 summit in Pittsburgh, heads straight to her closing rally at a Berlin concert hall today. Steinmeier, the Social Democratic foreign minister, stumps at a party event in the eastern city of Dresden . While all surveys show Germany’s first female chancellor headed for re-election, a Forsa poll yesterday showed support for her favored coalition with the Free Democrats sliding to 47 percent, the lowest since October last year. About a quarter of the electorate remains undecided. “The election is too close to call,” Gary Smith , director of the American Academy in Berlin, a trans-Atlantic research institute, said in an interview. “We might end up with another not-so-grand coalition, which will be in a way deeply problematic for both parties.” After four year of compromise in a so-called grand coalition of their two parties, Merkel, 55, and Steinmeier, 53, are offering competing visions of how to maximize growth after Europe’s largest economy emerged from recession in the second quarter, sooner than economists forecast. Merkel favors across-the-board tax cuts of 15 billion euros ($22 billion) that Steinmeier says Germany can’t afford. He favors a minimum wage and wants to raise the top tax rate to 47 percent from 45 percent. Crisis Vote “The shorter the crisis lasts, the more people vote for the Social Democrats,” said Uto Baader , chief executive officer of Baader Bank AG , which is based in Unterschleissheim. A rerun of the coalition between Merkel’s bloc and the Social Democrats is “priced into the market,” Baader said. If there’s a Merkel- Free Democrat tie-up, “I believe the market will jump.” In the Forsa poll released yesterday, the Christian Democrats and their Bavarian sister party, the Christian Social Union, slipped 2 points to 33 percent, their lowest score since March. The Social Democrats lost a point to 25 percent. The Free Democrats gained a point to 14 percent, the Left rose two points to 12 percent and the Greens declined 1 point to 10 percent. Forsa polled 2,001 voters on Sept. 21-24 with a margin of error of as many as 2.5 percentage points. Clawed Back “We’ve clawed our way back, we’re fighting for every vote until Sunday, 6 p.m.,” when the polls close, Steinmeier told supporters at a rally late yesterday at Berlin’s Brandenburg Gate. “The CDU is getting more nervous by the day.” Steinmeier urged his backers to get friends and neighbors out to vote to keep a CDU-FDP coalition out from power. Party vans on the square had phone numbers to dial for bringing elderly and handicapped to the polling booths. Steinmeier says that a CDU-FDP coalition would trim social- welfare programs, widen the rich-poor gap, and make it easier to fire workers. They’d promote “the old greed,” he said at a Sept. 15 rally in Erfurt. He pledges 4 million new jobs, partly by promoting green technology. Merkel’s supporters are hitting the phones and going door to door to try and reach an estimated 1.5 million voters and bolster turnout. An alliance with the Free Democrats “can best steer a way out of the economic slump to growth and employment,” Merkel told the Frankfurter Rundschau newspaper on Sept. 24. A grand coalition “should remain the political exception.” Avoiding Repeat Merkel is seeking to avoid a repeat of the 2005 election, when then-Chancellor Gerhard Schroeder hauled the Social Democrats back into contention in the final week after trailing by as many as 20 percentage points. Merkel’s victory by a single point forced her into coalition with her traditional rivals. “It’s going to be a thriller,” Peter Loesche , a political scientist at Goettingen University, said in a phone interview. “It’s 50-50. A shift of two or three percentage points to the Social Democrats and you could get a situation like 2005.” Merkel wants to extend the lifespan of nuclear-power plants by as many as 15 years, while Steinmeier backs a law he helped negotiate as Schroeder’s chief of staff that will shut them by about 2021. At stake are stations run by Dusseldorf-based E.ON, RWE AG of Essen, Sweden’s Vattenfall AB and Karlsruhe-based EnBW Energie Baden-Wuerttemberg AG that generated 23 percent of Germany’s electricity last year. Germany, the world’s biggest exporter , was worse hit than other major economies as the global recession hurt foreign sales. Merkel and Steinmeier responded with stimulus spending of 85 billion euros and a 102 billion-euro government- backed rescue of Munich-based lender Hypo Real Estate Holding AG . “The grand coalition has been better than most people have claimed,” Eberhard Sandschneider , director of studies at the German Council on Foreign Relations in Berlin, said in an interview. “Merkel is well-suited to lead such a government again if that’s the result on election day.” To contact the reporters on this story: Tony Czuczka in Berlin at aczuczka@bloomberg.net ; Brian Parkin in Berlin at bparkin@bloomberg.net

Read the full article →

Afghan Election Panel Cites Fraud, Orders Presidential Ballots Recounted

September 8, 2009

By James Rupert Sept. 8 (Bloomberg) — Afghanistan’s U.N.-backed Election Complaints Commission ordered a recount of some ballots in the Aug. 20 election, saying it had found “clear and convincing evidence of fraud” in the polls. The order came as results released by the country’s election authority showed President Hamid Karzai nearing the majority of votes required — 50 percent plus one vote — to be elected. Karzai’s backers in his political stronghold, the ethnic Pashtun south, stuffed ballot boxes in regions where violence by Taliban guerrillas had kept turnout low, say his rivals. The Election Complaints Commission ordered the election authority, called the Independent Election Commission, to recount ballots from any polling place where the turnout appeared to equal or exceed 100 percent. Recounts also were ordered for any polling place that received as many as 100 votes if any candidate got more than 95 percent of them. The order was signed by commission chairman Grant Kippen , a Canadian elections specialist appointed by the United Nations to help ensure a credible vote result. — Editor: Mark Williams . To contact the reporter on this story: James Rupert in New Delhi at jrupert3@bloomberg.net

Read the full article →

Sunil Chacko: Japan’s New Era

September 5, 2009

The landslide victory of Dr. Yukio Hatoyama’s Democratic Party of Japan (DPJ) has given a once-in-a-lifetime opportunity to effect change. Dr. Hatoyama will become the Japanese Prime Minister this month. The overwhelming electoral success comes at a time when the Japanese people have grown weary of the political and bureaucratic dithering that characterized much of the past 20 years. Even today, Japan remains the world’s second-largest economy – larger than Germany and Britain. However, starting in 1989, a gradual economic decline has led many in Japan to question the future. But, just next door, China and India have been growing rapidly, albeit with transient slowdowns, in addition to other Asian nations such as South Korea and Vietnam. Asia’s share of the world’s GDP will be over 40% in another decade, and already, 50% of Japan’s trade is with Asia as compared to 20% with the US. Further, Japan has been a beacon for quality engineering of consumer-friendly high technology. It brings a smile to see octogenarians play back .mpg files on their pocket cameras of musical recitals at the most exquisite Japanese Buddhist temples – and those occasions remind of the sometimes-forgotten but unbreakable links with India and China going back to the sixth century. Further, today, Japan is a leading innovator in the green economy, on quality food and nutrition and the bio-sciences. India’s software and China’s hardware are poised to provide the fillip to the remarkable possibilities. Through extensive links that already exist with Asia, Prime Minister Dr. Hatoyama’s new government can unleash the great potential for broader Japan-Asia cooperation that he has already highlighted when he called for a more unified market and currency in Dr. Hatoyama’s article in the Huffington Post . Innovative structures in Asia need to be created to build on that vision. Merely linking bureaucracies as was done in the past, in multilateral or bilateral bureaucrats-only structures, is so passé and indeed that is precisely what Dr. Hatoyama repeatedly condemned in every one of his hundreds of campaign stops as he traversed the nation by train, van, car, and plane while campaigning for the 300 single-seat and 180 proportional representation constituencies that went to the polls on August 30. Dr. Hatoyama emphasized new modalities and a new beginning. In the just-dumped era, an “iron triangle” had ensnared the bureaucracy, industry and politicians, and nothing entrepreneurial was possible. As an example, I had suggested an innovative way for Japan to move actively as an investor nation in Asia as demographic realities may necessitate so that Japanese debt-outstanding with Asia, such as the $24 billion external debt outstanding with India, can be converted into more productive equity investments in Asian enterprise and innovation. Indeed this is continuation of work that I led as Project Director and Research Faculty at Harvard University (see here and here ), including initiating, facilitating and organizing the world’s first debt-for-health research swap with a former Japanese Foreign Minister, Dr. Saburo Okita, who served in the cabinet of Prime Minister Mr. Masayoshi Ohira. Dr. Okita had been a young economist in the era of Mr. Ichiro Hatoyama, then-Prime Minister and Dr. Hatoyama’s grandfather. Mr. Ichiro Hatoyama had been falsely accused by certain Machiavellian elements in the then political establishment and had been purged the day he was to take up the position of the first elected post-war Prime Minister in 1946. It took almost 9 years for the error to be rectified, and Mr. Ichiro Hatoyama later served thrice as Japanese Prime Minister. Indeed, closer ties with Asia are what Mr. Ichiro Hatoyama had himself proposed five decades ago. Also, related to this, Stanford University and its endowment have benefitted tremendously from the conversion of obligations into equity. Dr. Hatoyama did his doctorate from Stanford in engineering management. Google founders Sergey Brin and Larry Page used the computer labs of Stanford when they were graduate students there and Stanford wisely took equity in Google rather than cash payments from the budding entrepreneurs so as to realize profits in the hundreds of millions of dollars later that now go to providing scholarships at Stanford. I was privileged to be a plenary speaker at Stanford University’s International Health Conference . Beyond its manifesto, DPJ could also look at emphasizing prevention of chronic diseases like cardiovascular, metabolic syndrome/diabetes, cancers and chronic respiratory diseases to prevent or delay their onset thus saving many billions of dollars-equivalent in yen. In the US the expensive long-term treatment of chronic diseases is the cause of 60% of US personal bankruptcies. Just two cardiac procedures, angioplasty & stents and coronary bypass operations, are costing $100 billion every year. Thus, emphasizing prevention programs would be refreshing, when in the past 95 cents of every dollar in health care costs had gone for treating disease after it had already occurred. Fierce resistance is predicted by some who are so ingrained in the status-quo. But, most of us have hope that with this new beginning, a new upward era may well have come for Japan.

Read the full article →

Japan Set to Vote as Polls Predict Opposition to Unseat LDP

August 29, 2009

By Sachiko Sakamaki Aug. 30 (Bloomberg) — Japan’s voters go to the polls today with surveys predicting the Liberal Democratic Party will lose power for only the second time since 1955. Yukio Hatoyama’s Democratic Party of Japan may win more than 300 of the 480 seats in the lower house of parliament, the Yomiuri newspaper, the country’s biggest daily, said on Aug. 28. The Yomiuri quoted Prime Minister Taro Aso a day earlier as saying “criticism has been building” toward the LDP. Hatoyama’s party says Aso hasn’t done enough to address problems that include record unemployment, soaring welfare costs and a declining, aging population. Aso has committed 25 trillion yen ($267 billion) to revive an economy that is just emerging from its worst recession since World War II. “The LDP has become so lazy and inert by staying in power too long,” Tokyo resident Hiroko Yoshida, 75, said at an Aug. 25 rally for Hatoyama. “Times are tough now, and politicians also need to work hard.” Some long-time LDP lawmakers are facing serious challenges for their seats. Finance Minister Kaoru Yosano said this month he’s in the toughest election fight of his career. Others who may lose include three former prime ministers: Yasuo Fukuda , Yoshio Mori and Toshiki Kaifu . No ex-premier has lost his seat since Tanzan Ishibashi in 1963. Family Rivals The Liberal Democrats have dominated Japan’s postwar political landscape, governing the country for all but 10 months since being formed in 1955. The party’s first premier was Ichiro Hatoyama, grandfather to the man now aiming to break the LDP’s stranglehold. Ichiro was a rival of Shigeru Yoshida , prime minister from 1948-1954 and Aso’s grandfather. Aso is the fourth prime minister since the last lower house election in September 2005. Then-premier Junichiro Koizumi led the ruling party to a landslide victory, securing with coalition partner New Komeito a two-thirds majority. In September 2006 he handed the reins to Shinzo Abe , who stepped down a year later pleading ill health. His successor, Yasuo Fukuda , also lasted a year before quitting amid political deadlock and party disarray. Since taking office in September 2008, Aso has had three cabinet ministers resign due to scandal. He has faced criticism from Koizumi and other members of his party, some of whom tried to have him replaced before he dissolved parliament last month and called the election. Funding Scandal Hatoyama took over as head of the opposition in May after Ichiro Ozawa was forced to step down over a campaign-funding scandal. Hatoyama kept Ozawa, the DPJ’s main strategist, on as a senior party executive and he has orchestrated most of the regional campaigning. The LDP held 303 of the 480 seats in the lower house before Aso dissolved parliament and three legislators have since left. The DPJ, which is already the biggest party in the less-powerful upper house, held 112 seats when parliament was dissolved and has added three. LDP coalition partner New Komeito holds 31 seats. The remaining seats are divided among smaller parties and independents. A total of 1,374 candidates are running for 300 single-seat constituencies and 180 seats divided into 11 regional blocks that are distributed to parties based on their proportional share of the vote. Japanese cast two votes: one for a person and one for a party, and parties can put favored candidates who lost in their constituency into a proportional seat. The eligible voting age in Japan is 20, and about 104 million people can vote. To contact the reporter on this story: Sachiko Sakamaki in Tokyo at Ssakamaki1@bloomberg.net .

Read the full article →

Tokyo Voters Seek Change in Japanese Election, Favor Opposition Over LDP

August 28, 2009

By Sachiko Sakamaki Aug. 29 (Bloomberg) — Tokyo voters like Yoshitaka Sakata have run out of patience with the ruling Liberal Democratic Party , which bodes well for the opposition Democratic Party of Japan’s chances in tomorrow’s parliamentary election. “I want a change in government,” Sakata, 38, a kitchen- facility salesman, said while watching DPJ leader Yukio Hatoyama at an Aug. 25 rally in Tokyo. “It’s half expectation and half gamble, but I don’t see any hope that the LDP can improve the situation any longer.” Hatoyama spoke before a crowd of about 1,500 people at the rally on behalf of first-time candidate Takako Ebata , 49, who is running against former LDP Defense Minister Yuriko Koike . Prime Minister Taro Aso ’s party is trailing in the polls nationally as well as in Japan’s biggest city. The LDP, which has governed Japan for all but 10 months since 1955, has struggled to overcome Aso’s plummeting approval ratings. The world’s second-largest economy last quarter emerged from its worst recession since World War II and still faces record unemployment and welfare costs that account for a quarter of this year’s 88.5 trillion yen ($944 billion) budget. Polls show the DPJ leading the ruling party in Tokyo. Only three LDP candidates are favored to win their races in the city, compared with 17 DPJ hopefuls, the Yomiuri newspaper said on Aug. 21, citing its own polls. Up For Grabs There are 42 seats up for grabs in the city; 25 from single constituencies and 17 determined by proportional representation. Four years ago, DPJ Vice-President Naoto Kan was the only party member to win a single-seat constituency in Tokyo, when then- premier Junichiro Koizumi led the LDP to a landslide victory. Koizumi stepped down a year later and Aso, who took office in September 2008, is the fourth prime minister since the last lower house election. Now, Koike, a Koizumi protege, is one of his “children” who may be defeated as their standard-bearer retires. Voters at the Aug. 25 rally cheered Hatoyama, shouting “prime minister, hang in there” and taking pictures with their cell phones. The DPJ is fielding a record 330 candidates nationwide, of whom 164 are new, compared with the LDP’s 326. The average age of LDP candidates is 55.5 years old, while that of the DPJ is 49.3 years old. Desire for change is strong even among LDP supporters. Noboru Morita, a 65-year-old retiree, said he’ll vote for Ebata even though he’ll cast a separate ballot for the LDP in the proportional representation as he’s done for many years. Japanese cast two votes: one for a single-seat constituency and one for a party’s proportional representation, and parties can put favored candidates who lose in their constituencies into proportional seats. “I’ve been supporting the LDP, but Prime Minister Aso is an embarrassment,” Morita said. “We need a change.” To contact the reporter on this story: Sachiko Sakamaki in Tokyo at Ssakamaki1@bloomberg.net .

Read the full article →

Merkel Campaign Turns to East German Homeland to Swing September Election

August 28, 2009

By Tony Czuczka and Rainer Buergin Aug. 28 (Bloomberg) — Chancellor Angela Merkel brings her re-election campaign to the formerly communist east of Germany today before three state votes, seeking to shore up support in a region she lost to the Social Democrats in 2005. Merkel, the first chancellor to grow up in East Germany, needs to win in the east to head the coalition of her choosing in Sept. 27 elections. Votes in the eastern states of Thuringia and Saxony on Aug. 30 — plus one in western Saarland — mark the last major test of her appeal before the national contest. “This is one of the few events scheduled in the campaign that could still have an impact,” Holger Schmieding , chief European economist at Bank of America-Merrill Lynch in London, said in a phone interview on Aug. 26. “Opinion polls suggest it’s her election to lose,” yet “it could go either way. The potential for surprises in the eastern states is bigger.” Nineteen years after a wave of East German voters helped re-elect Christian Democratic Chancellor Helmut Kohl in reunified Germany’s first ballot in 1990, the East is again an election battleground. Both Merkel and her Social Democratic rival for the chancellery, Frank-Walter Steinmeier , are contesting eastern electoral districts and have drawn up special campaign pledges to appeal to eastern voters. Merkel, who served in Kohl’s Cabinet from 1990 to 1998, was forced into a coalition with the Social Democrats at the last election in 2005 after her Christian Democratic Union won in Germany’s nine western states yet was beaten into third place in the six eastern states. Capitalist Challenge The latest polls show the CDU leading the Social Democratic Party by as many as 15 percentage points nationwide; in the east the lead is half that amount. Oskar Lafontaine ’s anti-capitalist Left Party, which includes remnants of the old East German Communist Party, makes it a three-way race. “In the DDR we grew used over decades to deciding as little as possible for ourselves,” Merkel said in an interview with Emma magazine published Aug. 24, referring to East Germany by its acronym. “I can only keep encouraging people to take control of their own lives.” Eastern Germans are swing voters because political allegiances, irrelevant under communism, remain weaker than in the west, said Everhard Holtmann, a political scientist at Martin Luther University in the eastern city of Halle , about 170 kilometres (100 miles) southwest of Berlin. Marginal Seats “It’s not wrong to say that the east helped decide the last election and the one before that,” said Holtmann. “We’ve got a whole bunch of marginal seats” that can change hands with “even moderate swings, let alone major shifts.” Polls for this weekend’s state elections suggest the CDU may retain control of Saxony and be able to ditch their current Social Democratic coalition partner in favor of allying with the Free Democrats, mirroring Merkel’s plans nationally. The CDU may lose control of the second eastern state, Thuringia, as well as Lafontaine’s home state of Saarland, the polls show. Economically, the east has a way to go to catch up with the west. More than 1 trillion euros ($1.4 trillion) in transfers from west to east in the 20 years since the fall of the Berlin Wall on Nov. 9, 1989, has failed to bridge the divide. Unemployment was 13.1 percent in July, almost double the west’s 7 percent, while per-capita disposable income is about 80 percent of the western level, according to the Halle-based IWH economic institute. The east has lost almost 4 million people since 1989: the population will drop to an estimated 13 million this year out of Germany’s total of 82.5 million. Gap Is Narrowing Yet the gap is narrowing as the east’s lower dependence on industrial goods and foreign markets shields it from the worst of the global recession, the IW said Aug. 4. Unemployment, which has risen in the west by 92,000 since April, fell by 8,000 in the east over the same period. Polls suggest that’s helping Merkel. Backing for her CDU is 30 percent, up from 25.3 percent in 2005, an Infratest poll of eastern voters showed Aug. 21. The Social Democrats have 22 percent, down from 30.5 percent, while the Left has 23 percent after 25.4 percent in 2005. Infratest conducted the poll Aug. 18-19 without saying the sample. The margin of error was as much as 3.1 percentage points. The Christian Democrat platform calls for bringing the east to “self-sustaining economic development” and raising retirement benefits to western levels. SPD proposals include a nationwide minimum wage to help raise eastern pay to western levels. Eastern Germans are “more careful in their evaluations,” Merkel told Emma magazine. They’re “not so easily enthused.” To contact the reporters on this story: Tony Czuczka in Berlin at aczuczka@bloomberg.net ; Rainer Buergin in Berlin at rbuergin1@bloomberg.net .

Read the full article →

`Koizumi Children’ Facing Rout in Japanese Election as He Leaves Politics

August 23, 2009

By Sachiko Sakamaki Aug. 24 (Bloomberg) — Four years after Junichiro Koizumi won a landslide election in Japan by handpicking scores of new candidates to shake up his party, many of them face defeat and the former prime minister is leaving politics. Of the 83 lawmakers known as “Koizumi children” after winning their first election in 2005, 10 are either not running in the Aug. 30 race for parliament or have left the Liberal Democratic Party . The remaining 73 are struggling against poll numbers that show the opposition Democratic Party of Japan likely to take power for the first time. “The situation is completely reversed from the last election,” said Seiichiro Shimizu, 62, who decided against seeking re-election after riding Koizumi’s coattails in 2005. “We may be witnessing the disintegration of the LDP.” Shimizu, whose Tokyo office is adorned with calligraphy written by Koizumi saying “win at any cost,” left the party on Aug. 10 and sought to represent the DPJ, which decided not to endorse him. He predicted in an interview that only 13 first- term LDP lawmakers will be re-elected. Under Koizumi, the ruling party and its coalition partner won 327 of 480 seats in the lower house . When he stepped down in September 2006, Japan was in the midst of its longest period of growth in six decades. Since then, the party and country have gone through three leaders without going to the polls. Prime Minister Taro Aso abandoned Koizumi’s pledges to balance the budget by 2011 and cut spending to reduce the world’s largest debt. The economy is just emerging from its worst recession since World War II and polls show the LDP may lose power for the second time since 1955. Dormant Policies “Fewer than half of the Koizumi children are likely to return to parliament,” said Tokyo-based political analyst Hirotada Asakawa . “His policies will remain dormant until the economy recovers and it may be take two or three more prime ministers before the government is able to tackle reducing the fiscal deficit.” The DPJ, which currently has 112 seats in the lower house, may win more than 300 in the election, while the LDP, may go from 300 to around 100, Kyodo News said yesterday, citing its own poll. The news organization surveyed 155,100 voters between Aug. 20-22; no margin of error was given. Yukari Sato , 48, became famous in 2005 when she left her job as a chief Japan economist at Credit Suisse First Boston to become one of Koizumi’s “assassins” to take down his party rivals. Koizumi expelled 12 lawmakers from his party for opposing his signature policy of privatizing Japan’s postal system, and picked Sato to run against Seiko Noda . First-Time Candidates Others first-time candidates drafted by Koizumi at the time included Internet entrepreneur Takafumi Horie, 36, who was later convicted of insider trading, Finance Minster bureaucrat and ex- model Satsuki Katayama, and cookbook author Makiko Fujino. Katayama, 50, and Fujino, 59, won, while Horie lost. The relative youth of many of the “assassins” at the time highlighted an issue both parties are grappling with: attracting young people to politics. About 45 percent of Japanese voters in their twenties voted in the 2005 lower-house election , about half as many as those in their sixties. At an Aug. 17 rally, Sato said she is feeling “a major headwind” in her re-election efforts. Stumping for Votes “I’m walking about 10 kilometers every day on a concrete road” stumping for votes, Sato said. Aso, who vows to achieve a 2 percent economic growth rate by 2011, took office in September 2008. He has failed to replicate the personal charisma of Koizumi, who led Japan for more than five years and endeared himself to voters with his love for Elvis Presley and vows to “destroy” the LDP in order to rebuild it. Koizumi publicly criticized Aso in February and suggested the ruling party would lose the election. More recently, he has panned the opposition’s policy platform and sarcastically suggested he would welcome a DPJ government. The Democrats’ platform calls for spending 16.8 trillion yen ($180 billion) in tuition aid and child support while lowering gasoline taxes and eliminating national highway tolls at a time when the deficit is more than three percent of gross domestic product. “What kind of magic is the DPJ going to use to fund their random spending?” Koizumi said on Aug. 17 in an appearance in support of Sato before an audience of more than 1,200 people. “Honestly, I’d like to let the DPJ govern and see.” To contact the reporter on this story: Sachiko Sakamaki in Tokyo at Ssakamaki1@bloomberg.net .

Read the full article →

Karzai, Abdullah Urged to Stop Claiming Lead in Afghan Election Amid Count

August 21, 2009

By James Rupert Aug. 21 (Bloomberg) — Afghanistan President Hamid Karzai is leading as votes are counted from yesterday’s election and is confident of winning, an aide said. Low voter turnout may mar any victory. “Initial figures from the count show that President Karzai is in the lead and we are sure that he will win,” said spokesman Sediq Seddiqui. “We will have to wait for the official count and announcement of the election commission,” before victory can be declared, he said. As days of ballot-counting began, residents and polling station monitors said the vote lacked the lengthy lines and public celebrations of the last election because of Taliban intimidation. The election may have failed to deliver the increased turnout sought by Afghan and U.S. officials, hindering efforts to win a broader mandate for the government as it battles Taliban militants. A spokesman for Abdullah Abdullah , Karzai’s chief challenger, said the opposition candidate was leading the vote count. Abdullah, Karzai’s former foreign minister, “is far ahead in the vote count in 17 provinces” out of 34, Fazl Sangcharaki said by telephone from Kabul. “He has about 60 percent of the vote, and we believe he is going to win.” Turnout Drops The election authority said turnout was between 40 percent and 50 percent, down from 70 percent five years ago, Agence France-Presse reported. Counting has been completed and results will be released early next week, it said. For the past eight years, Karzai and his international backers have failed to contain the fighting or fulfill Afghans’ aspirations for an economic recovery from three decades of war. Measured by income, life expectancy and literacy, Afghanistan is the world’s fifth-poorest country , according to a 2007 report by the Afghan government and the United Nations. The Taliban conducted 73 attacks during election day across 15 of the country’s 34 provinces, Karzai told reporters in Kabul yesterday, without giving details. Twenty to 30 people died in voting day attacks, according to counts by international and Afghan news organizations. “The streets were eerily quiet” in the southern city of Kandahar, where drummers and dancers performed outside polling stations in 2004, said Hardin Lang , a monitor with Democracy International Inc ., a Washington-based organization. “The turnout appeared rather low in comparison to the last time.” Runoff Possible The unenthusiastic turnout raised speculation Karzai would fail to win 50 percent of the vote, which would put him in a runoff against his leading challenger, said Abubakar Siddique, an Afghan political analyst. “The early information is that the turnout was very low in some provinces and at best was fair in others,” said Haroun Mir , director of Afghanistan’s Center for Research & Policy Studies . Two opinion surveys this month show that Karzai’s top rival is Abdullah, who draws his main support from the ethnic Tajik regions of north Afghanistan. Afghan news reports spoke of a higher turnout in many northern provinces than in the south, which may benefit Abdullah. While the election showed the Taliban’s ability to disrupt a nationwide vote, it also was a “a considerable blow to the Taliban, who were not able” to stop it, Siddique said. Karzai and the Obama administration hailed the vote. “The successful conduct of elections” is “a propitious sign for establishing a democratically elected government and promoting democracy in the country,” the Afghan president told reporters after the polls closed. U.S. Praise “Lots of people have defied threats of violence and terror to express their thoughts about the next government,” said Robert Gibbs , a White House spokesman. As the Obama administration shifts America’s national security focus — and U.S. troops — from Iraq to Afghanistan, it needs a stronger Afghan government to confront Taliban militants whose attacks are killing record numbers of foreign troops and Afghan civilians. In the 65,000-strong U.S.-led coalition , 283 troops have been killed this year, a rate 50 percent higher than last year, and setting a record, according to the monitoring group iCasualties . The coalition said a U.S. soldier died yesterday in a mortar attack in the east of the country. More than 1,000 civilians were killed through June, 20 percent more than last year’s record high, United Nations figures show. Voter Registration While Afghan officials set no specific measurements for success in the vote, they touted a yearlong increase in voter registration, from about 10 million to 15 million, as a sign the election would bring increased participation and a stronger democratic base to the next government. Though the election commission said earlier this month that it hoped to open as many as 7,000 polling stations, it said yesterday only 6,200 had actually operated. Many of the closures of planned polling stations came in the ethnic Pashtun south, where the Taliban are most active, Afghanistan’s Pajhwok news agency said. Guerrillas patrolled the highway between Kabul and Kandahar, stopping traffic in Ghazni province to warn people not to vote, Pajhwok reported. The Taliban warned in leaflets distributed in southern Afghanistan that it would cut off people’s index fingers if they were marked by the ink used by polling officials to show they had voted, according to local residents. Two voters were hanged in Kandahar, the New York Times reported, citing unidentified witnesses. An April security map prepared by the Afghan government and UN agencies showed that the Taliban either control or pose a “high risk” of attack in 40 percent of Afghanistan, according to Peter Bergen, a senior fellow at the Washington-based New America Foundation . To contact the reporter on this story: James Rupert in Kabul at jrupert3@ bloomberg.net.

Read the full article →

Video: The Currency Report – Japanese Yen

August 21, 2009

High Hopes for Japanese Yen – Parliamentary Election on August 30th, Polls Show DPJ Likely to Win, Could End Yen Intervention Policy; According to Japanese Strategists, Exporters Expecting Stronger Yen (Bloomberg News)

Read the full article →

Karzai Leads in Afghan Election as Low Turnout May Fail to Bolster Mandate

August 21, 2009

By James Rupert Aug. 21 (Bloomberg) — Afghan President Hamid Karzai is leading in early returns from yesterday’s election and is confident of victory, a campaign aide said. “Initial figures from the count show that President Karzai is in the lead and we are sure that he will win,” said spokesman Sediq Seddiqui. “We will have to wait for the official count and announcement of the election commission,” before victory can be declared, he said. As days of ballot-counting began, residents and polling station monitors said the vote lacked the lengthy lines and public celebrations of the last election because of Taliban intimidation. The election may have failed to deliver the increased turnout sought by Afghan and U.S. officials, hindering efforts to win a broader mandate for the government as it battles Taliban militants. A spokesman for Abdullah Abdullah , Karzai’s chief challenger, told Agence France-Presse that the opposition candidate was leading the vote count. A separate AFP report cited the election authority as saying turnout was between 40 percent and 50 percent, down from 70 percent five years ago. Counting has been completed and results will be released early next week, it said. For the past eight years, Karzai and his international backers have failed to contain the fighting or fulfill Afghans’ aspirations for an economic recovery from three decades of war. Measured by income, life expectancy and literacy, Afghanistan is the world’s fifth-poorest country , according to a 2007 report by the Afghan government and the United Nations. 73 Attacks The Taliban conducted 73 attacks during election day across 15 of the country’s 34 provinces, Karzai told reporters in Kabul yesterday, without giving details. Twenty to 30 people died in voting day attacks, according to counts by international and Afghan news organizations. “The streets were eerily quiet” in the southern city of Kandahar, where drummers and dancers performed outside polling stations in 2004, said Hardin Lang , a monitor with Democracy International Inc ., a Washington-based organization. “The turnout appeared rather low in comparison to the last time.” The unenthusiastic turnout raised speculation Karzai would fail to win 50 percent of the vote, which would put him in a runoff against his leading challenger, said Abubakar Siddique, an Afghan political analyst. “The early information is that the turnout was very low in some provinces and at best was fair in others,” said Haroun Mir , director of Afghanistan’s Center for Research & Policy Studies . Karzai, Abdullah Two opinion surveys this month show that Karzai’s top rival is his former foreign minister, Abdullah, who draws his main support from the ethnic Tajik regions of north Afghanistan. Afghan news reports spoke of a higher turnout in many northern provinces than in the south, which may benefit Abdullah. While the election showed the Taliban’s ability to disrupt a nationwide vote, it also was a “a considerable blow to the Taliban, who were not able” to stop it, Siddique said. Karzai and the Obama administration hailed the vote. “The successful conduct of elections” is “a propitious sign for establishing a democratically elected government and promoting democracy in the country,” the Afghan president told reporters after the polls closed. “Lots of people have defied threats of violence and terror to express their thoughts about the next government,” said Robert Gibbs , a White House spokesman. As the Obama administration shifts America’s national security focus — and U.S. troops — from Iraq to Afghanistan, it needs a stronger Afghan government to confront Taliban militants whose attacks are killing record numbers of foreign troops and Afghan civilians. Troop Deaths In the 65,000-strong U.S.-led coalition , 283 troops have been killed this year, a rate 50 percent higher than last year, and setting a record, according to the monitoring group iCasualties . The coalition said a U.S. soldier died yesterday in a mortar attack in the east of the country. More than 1,000 civilians were killed through June, 20 percent more than last year’s record high, United Nations figures show. While Afghan officials set no specific measurements for success in the vote, they have touted a yearlong increase in voter registration, from about 10 million to 15 million, as a sign the election would bring increased participation and a stronger democratic base to the next government. Zekria Barakzai, an election commission official, said the turnout might reach 50 percent, Agence France-Presse reported earlier, meaning a total of 7 million to 8 million votes cast. That would be similar in number to the 8 million who voted in 2004, though it would represent a decline in the percentage of eligible voters taking part, from 70 percent five years ago. Closed Booths While the election commission said earlier this month that it hoped to open as many as 7,000 polling stations, it said yesterday only 6,200 had actually operated. Many of the closures of planned polling stations came in the ethnic Pashtun south, where the Taliban are most active, said reports from Afghanistan’s Pajhwok news agency. Guerrillas patrolled the highway between Kabul and Kandahar, stopping traffic in Ghazni province to warn people not to vote, Pajhwok reported. The Taliban warned in leaflets distributed in southern Afghanistan that it would cut off people’s index fingers if they were marked by the ink used by polling officials to show they had voted, according to local residents. Two voters were hanged in Kandahar, the New York Times reported, citing unidentified witnesses. An April security map prepared by the Afghan government and UN agencies showed that the Taliban either control or pose a “high risk” of attack in 40 percent of Afghanistan, according to Peter Bergen, a senior fellow at the Washington-based New America Foundation . To contact the reporter on this story: James Rupert in Kabul at jrupert3@ bloomberg.net.

Read the full article →

Afghan Reports of Low Voter Turnout May Hurt Karzai Bid for Wider Mandate

August 20, 2009

By James Rupert Aug. 21 (Bloomberg) — Voters in Afghanistan’s presidential election may have failed to deliver the increased turnout sought by Afghan and U.S. officials, hindering efforts to win a broader mandate for the government as it battles Taliban militants. As days of ballot-counting began, residents and international election monitors in several provinces said yesterday’s election lacked the lengthy voter lines and public celebrations of the presidential vote five years ago. The Taliban conducted 73 attacks during the day across 15 of the country’s 34 provinces, President Hamid Karzai told reporters in Kabul, without giving details. Twenty to 30 people died in voting day attacks, according to counts by international and Afghan news organizations. “The streets were eerily quiet” in the southern city of Kandahar, where drummers and dancers performed outside polling places in 2004, said Hardin Lang , a monitor with Democracy International Inc ., a Washington-based elections organization. “The turnout appeared rather low in comparison to the last time,” said Lang. “There was no anecdotal evidence of enthusiasm.” Monitoring groups including Democracy International said they will release preliminary assessments of the election, addressing voter turnout and the degree of fraud, in the next two days, and it was unclear how long it will take for voting results to be published. ‘Fair’ at Best “The early information is that the turnout was very low in some provinces and at best was fair in others,” said Haroun Mir , director of Afghanistan’s Center for Research & Policy Studies . The unenthusiastic turnout may increase the chances that Karzai will fail to win 50 percent of the vote, which would put him in a runoff against his leading challenger, said Abubakar Siddique, an Afghan political analyst. Two opinion surveys this month show that his top rival is his former foreign minister, Abdullah Abdullah , who draws his main support from the ethnic Tajik regions of north Afghanistan. Afghan news reports spoke of a higher turnout in many northern provinces than in the south, which may benefit Abdullah. While the election showed the Taliban’s ability to disrupt a nationwide vote, it also was a “a considerable blow to the Taliban, who were not able” to stop it, Siddique said. ‘Propitious Sign’ Karzai and the Obama administration hailed the vote. “The successful conduct of elections” is “a propitious sign for establishing a democratically elected government and promoting democracy in the country,” the Afghan president told reporters after the polls closed. “Lots of people have defied threats of violence and terror to express their thoughts about the next government,” said Robert Gibbs , a White House spokesman. As the Obama administration shifts America’s national security focus — and U.S. troops — from Iraq to Afghanistan, it needs a stronger Afghan government to confront Taliban militants whose attacks are killing record numbers of foreign troops and Afghan civilians. In the 65,000-strong U.S.-led coalition , 283 troops have been killed this year, a rate 50 percent higher than last year, and setting a record, according to the monitoring group iCasualties . The coalition said a U.S. soldier died yesterday in a mortar attack in the east of the country. More than 1,000 civilians were killed through June, 20 percent more than last year’s record high, United Nations figures show. Increased Registration While Afghan officials set no specific measurements for success in the vote, they have touted a yearlong increase in voter registration, from about 10 million to 15 million, as a sign the election would bring increased participation and a stronger democratic base to the next government. Zekria Barakzai, an election commission official, said the turnout might reach 50 percent, Agence France-Presse reported, meaning a total of 7 million to 8 million votes cast. That would be similar in number to the 8 million who voted in 2004, though it would represent a decline in the percentage of eligible voters taking part, from 70 percent five years ago. While the election commission said earlier this month that it hoped to open as many as 7,000 polling stations, it said yesterday only 6,200 had actually operated. Many of the closures of planned polling stations came in the ethnic Pashtun south, where the Taliban are most active, said reports from Afghanistan’s Pajhwok news agency. Taliban Warning Guerrillas patrolled the highway between Kabul and Kandahar, stopping traffic in Ghazni province to warn people not to vote, Pajhwok reported. The Taliban warned in leaflets distributed in southern Afghanistan that it would cut off people’s index fingers if they were marked by the ink used by polling officials to show they had voted, according to local residents. Two voters were hanged in Kandahar, the New York Times reported, citing unidentified witnesses. For the past eight years, Karzai and his international backers have failed to contain the fighting or fulfill Afghans’ aspirations for an economic recovery from three decades of war. Measured by income, life expectancy and literacy, Afghanistan is the world’s fifth-poorest country , according to a 2007 report by the Afghan government and the United Nations. An April security map prepared by the Afghan government and UN agencies showed that the Taliban either control or pose a “high risk” of attack in 40 percent of Afghanistan, according to Peter Bergen, a senior fellow at the Washington-based New America Foundation . To contact the reporter on this story: James Rupert in Kabul at jrupert3@ bloomberg.net.

Read the full article →

Afghan Police Battle Gunmen in Kabul as Taliban Keeps Voters Off Streets

August 19, 2009

By James Rupert and Viola Gienger Aug. 19 (Bloomberg) — Taliban guerrillas attacked a bank in the Afghan capital and a rocket was fired into a district near Kabul’s center on the eve of a presidential election that a resurgent Taliban has threatened to disrupt. Shops in nearby markets were mostly shuttered and downtown Kabul was unusually empty, partly because of the country’s independence holiday, and partly out of fear of further violence in the last few hours before voting begins. “People are afraid. The Taliban cannot capture Kabul, but they can kill people if they want, and we don’t know what they will do,” said Ruhollah Gul, 19, a tailor in a downtown market. Gul said he is not planning to vote in the election. Tomorrow’s vote, the second since U.S.-led forces ousted the Taliban regime in late 2001, is central to the U.S. and international efforts to build an Afghan government able to combat Islamic extremism and promote democracy. Police blamed today’s bank raid on Taliban militants and said officers had killed three attackers, Agence France-Presse reported. Zabiullah Mujahid, a Taliban spokesman, earlier told the Associated Press that 20 suicide attackers wearing explosive vests had entered Kabul and five of them were fighting police. Late in the morning, a rocket landed east of Kabul’s center in an area of residential neighorhoods, police said. No casualties were reported. Suicide Bombers Extending a campaign of violence ahead of voting, a suicide bomber yesterday detonated explosives in a vehicle on a busy street in Kabul. It killed one member of the international force as well as seven Afghan civilians and two United Nations employees, said Canadian Brigadier General Eric Tremblay, a spokesman for the International Security Assistance Force . The government of President Hamid Karzai , whose palace was targeted in a rocket attack yesterday, asked news organizations not to report election-day violence in an effort to ensure voters turn out for tomorrow’s ballot. Karzai is competing for re-election against three dozen candidates, led by Abdullah Abdullah , a former foreign minister. Domestic and international media should refrain from broadcasting suicide bombings and other violence between 6 a.m. and 8 p.m. local time “in view of the need to ensure the wide participation of the Afghan people” in the vote, the New York Times cited the Foreign Ministry as saying. The Taliban has regrouped, challenging the authority of the government and prompting President Barack Obama to deploy more troops to help stabilize the country for the vote. Militant Threats Militants have threatened to attack ballot booths during the election, which also includes provincial councils. Newly trained Afghan police and soldiers will aim to show progress toward self-sufficiency as they take the lead in providing security for the elections. With about 6,500 polling places to protect, the Afghan National Police and the Afghan National Army will be the most visible security presence, said Australian Brigadier General Damian Cantwell, chief of the election task force for the NATO- led coalition force in Afghanistan. Foreign troops will keep their distance, monitoring from the air and providing backup on the ground as needed, he said. “I think it is a critical step in the development of both the Afghan Security Forces but also the country as a whole for the people to see and develop trust and confidence in their own security agencies,” Cantwell told reporters at the Pentagon yesterday via video link from Kabul. Al-Qaeda The Afghan forces will try to protect an estimated 15 million registered voters across a country almost the size of Texas. Taliban militants who sheltered al-Qaeda before the Sept. 11, 2001, terrorist attacks on the U.S. have stepped up their campaign of violence leading up to the election. The insurgents clearly intend “to disrupt and discredit the process wherever possible,” Cantwell said. “For that very reason, I think it’s critical that the Afghan security forces are seen by their people as a credible response.” The number of militant attacks in Afghanistan has risen from an average of 32 a day in the past 10 days to 48 in the past three to four days, Tremblay said during the joint briefing with Cantwell. Statistically, “they’re not going to be able to attack even 1 percent of the entire polling sites in this country,” Tremblay said. Even with an increase in foreign forces in Afghanistan this year to quell a growing insurgency, the 63,000 U.S. troops and 40,500 others will hang back out of sight in a “low-profile but agile posture,” Cantwell said. Tiered Security Afghan police will provide the most close-in security at each polling site, with the army securing nearby neighborhoods and roads. International forces will serve as the third and fourth tiers of security. The international force is counting on the security plan, multiple checkpoints approaching the polls and scenario rehearsals to mitigate the inexperience of the 92,000 Afghan troops and 80,000 police officers trained thus far. “We recognize that, as security agencies, they have some way to develop and mature,” Cantwell said. “They are very aggressive once on the ground to ensure they’re doing the very best mission they can.” Election security should be sufficient to provide “reasonable access” for 85 percent to 90 percent of registered voters, Cantwell said. To contact the reporters on this story: Viola Gienger in Washington at vgienger@bloomberg.net . James Rupert in Kabul at jrupert3@ bloomberg.net.

Read the full article →

Japan’s Youth Fuel Pension Time Bomb by Shunning Politics Aimed at Elderly

August 18, 2009

By Anna Kitanaka and Momoko Nishijima Aug. 19 (Bloomberg) — Sho Sogame, like many young Japanese, says he doesn’t plan to vote in this month’s national election because politics is dominated by old men with no interest in him. “It’s such an old person’s society,” said Sogame, a 25- year-old Tokyo hairdresser who didn’t vote in the 2005 contest. “If they had straightforward policies aimed at young people, I’d pay more attention.” Campaigning for Japan’s Aug. 30 election kicked off yesterday, with polls showing the ruling Liberal Democratic Party may lose power for just the second time since 1955. While youth apathy isn’t unique to Japan, the stakes are higher in a nation with the longest life expectancy and lowest birth rate among major economies. Sogame is among a growing number of people not paying into a failing pension plan that will need to support almost a quarter of the population by 2014. “The current system will definitely go bankrupt and our generation will definitely lose out,” said Kensuke Harada, 23, president of ivote , a student organization that encourages young people to vote. “Policies needs to be enacted that take into consideration my age-group as well as Japan’s decreasing birthrate and falling pension payments.” Japanese in their sixties cast almost twice as many votes as those in their twenties at the last lower-house election , creating an incentive for politicians to court older voters. More than 10 percent of lawmakers are aged 70 or older. Workplace Laws Workplace laws are one example of how policies favor the elderly to the detriment of society, said Robert Feldman , head of Japan economic research at Morgan Stanley in Tokyo. Because companies can’t fire older workers even when they’re unproductive, young people are increasingly relegated to temporary positions without benefits. “Privileges for the older people in society are coming at the expense of the young,” he said. “If I were a young Japanese I would be furious about the way older workers are protected at my expense.” The unemployment rate for people between the ages of 15 and 34 is 7.7 percent in Japan compared with 4.4 percent for those between 45 and 64, according to government data . With fewer younger people holding down full-time jobs, the pension system is under stress, and Japan’s Health Ministry projects a 20 percent cut in benefits by 2038. About 50 percent of people in their 20s were contributing to the system in 2008, down from 55.4 percent in 2001, according to a government report . Japanese companies automatically deduct pension contributions from a full-time worker’s salary. Part-time and self-employed workers are asked to make a premium payment on their own, sometimes allowing them to skirt it. Youth Voters Given the apathy of young voters, more needs to be done to attract them to the polls, including changing election laws dating back to the 1950s, said Kan Suzuki , 45, an upper house lawmaker with the opposition Democratic Party of Japan. The law bans promotional literature and images once the campaign begins, meaning lawmakers can’t communicate via e-mail and the Internet, he said. Almost 60 percent of people between the ages of 23 and 28 get political information from the Internet, according to a survey of 120,000 people conducted by MDN Net Survey System . “It’s an obvious fact that Japanese politicians have placed a disproportionate weight on older people’s opinions simply because of their high turnout in the election,” said Zenko Kurishita , a 26-year-old DPJ member who last month became the youngest person to be elected to the Tokyo legislature. Defeating Incumbent Kurishita, who defeated a 70-year-old incumbent after declaring his candidacy nine days before the vote, said his success shows young people can participate. “Before I decided to become a politician, I also felt politics wasn’t related to me at all,” he said. About 45 percent of young people voted in Japan in 2005, while about 49 percent voted in the 2008 U.S. presidential election, according to data from Japan’s Association for Promoting Fair Elections and the U.S. Census Bureau . Older voters turn out in far larger numbers in Japan; about 82 percent of those between 65 and 74 cast ballots in Japan’s last lower- house election compared with 70 percent in the 2008 U.S. presidential race. “Politicians can’t help but make policies that favor old people,” said Yuko Kitajima, 26, vice-director of Dot JP , a non-profit organization that seeks to encourage young people to become active by finding them internships with politicians. “Policies that affect younger people always end up being postponed or given smaller budget allocations.” Drinking Parties Established last year, ivote, which is run by 11 students from institutions including Tokyo and Chuo Universities, aims to make voting “cool.” It has organized drinking parties with politicians, signing up close to 1,000 people for e-mail alerts. The Tokyo election board printed election schedules on paper fans and toilet paper as a gimmick to attract young people. Other local authorities distributed coasters to bars that displayed voting instructions. Attracting young people to politics is essential as Japan gets older. At the current rate the nation’s labor force will shrink 16 percent by 2030 from 66.6 million workers in 2006, according to the health ministry. “With the emphasis only on policies aimed at the elderly, more and more young people will ultimately end up feeling disillusioned with politics, said Yuriko Koike , 57, a lawmaker and former LDP defense minister. “This is a vicious cycle that we’re falling into,” she said in a column on her Web site. To contact the reporter responsible for this story: Anna Kitanaka in Tokyo akitanaka@bloomberg.net ; Momoko Nishijima in Tokyo at mnishijima@bloomberg.net

Read the full article →

Afghanistan’s Election Security Tests Police, Army as U.S. Forces Lay Low

August 18, 2009

By Viola Gienger Aug. 19 (Bloomberg) — Newly trained Afghan police and army soldiers will aim to show progress toward self-sufficiency as they take the lead in providing security for tomorrow’s presidential and provincial elections. With about 6,500 polling places to protect, the Afghan National Police and the Afghan National Army will be the most visible security presence, said Australian Brigadier General Damian Cantwell, chief of the election task force for the NATO- led coalition force in Afghanistan. Foreign troops will keep their distance, monitoring from the air and providing backup on the ground as needed, he said. “I think it is a critical step in the development of both the Afghan Security Forces but also the country as a whole for the people to see and develop trust and confidence in their own security agencies,” Cantwell told reporters at the Pentagon yesterday via video link from Kabul. The Afghan forces will try to protect an estimated 15 million registered voters across a country almost the size of Texas. Taliban militants who sheltered al-Qaeda before the Sept. 11, 2001, terrorist attacks on the U.S. have stepped up their campaign of violence leading up to the election. A suicide bomber detonated an explosive in a vehicle on a busy street in Kabul yesterday. It killed one member of the international force as well as seven Afghan civilians and two United Nations employees, said Canadian Brigadier General Eric Tremblay, a spokesman for the force. More than 50 Afghans and two civilian employees of the International Security Assistance Force were injured. Disrupt, Discredit The insurgents clearly intend “to disrupt and discredit the process wherever possible,” Cantwell said. “For that very reason, I think it’s critical that the Afghan security forces are seen by their people as a credible response.” The number of militant attacks in Afghanistan has risen from an average of 32 a day in the past 10 days to 48 a day in the past three to four days, Tremblay said during the joint briefing with Cantwell. That number is low in comparison to the number of polling locations nationwide, he said. Statistically, “they’re not going to be able to attack even 1 percent of the entire polling sites in this country,” Tremblay said. At least 13 politics-related killings and at least 10 abductions of Electoral Commission officials, candidates and campaign workers occurred between April 25 and Aug. 1, according to New York-based Human Rights Watch. “The overall security situation is considerably worse than during the last elections” in 2004 and 2005, the group said in a statement this week. ‘Agile Posture’ Even with an increase in foreign forces in Afghanistan this year to quell a growing insurgency, the 63,000 U.S. troops and 40,500 others will hang back out of sight in a “low-profile but agile posture,” Cantwell said. Afghan police will provide the most close-in security at each polling site, with the Afghan army securing nearby neighborhoods and roads. The international forces will serve as the third and fourth tiers of security. The international force is counting on the security plan, multiple checkpoints approaching the polls and scenario rehearsals to mitigate the inexperience of the 92,000 Afghan troops and 80,000 police officers trained thus far. “We recognize that, as security agencies, they have some way to develop and mature,” Cantwell said. Among the weaknesses he cited was the lack of a “long-range planning culture.” “They are very aggressive once on the ground to ensure they’re doing the very best mission they can,” he said. Election security should be sufficient to provide “reasonable access” for 85 percent to 90 percent of registered voters, Cantwell said. Long Haul President Barack Obama , who earlier this year authorized 17,000 more combat troops and 4,000 additional trainers to augment Afghan security personnel, has tried to prepare Americans for a long haul in Afghanistan. “This will not be quick,” he told a Veterans of Foreign Wars convention in Phoenix yesterday. “This will not be easy.” Security for the election is “as good as one can expect in a country where you still have an active insurgency,” said Mark Schneider , senior vice president for the International Crisis Group , a Brussels-based nonprofit policy organization. The Afghan security forces are “much stronger” than they were during the last presidential election in 2004, he said. Their training period is short, just eight weeks for the police, for example. “The level of competence is pretty low,” Schneider said. Use of Donkeys Afghanistan’s Independent Election Commission , which registered 4.7 million new voters this year, illustrates the security challenges in its own plans, which call for more donkeys than cars to ferry supplies such as voter screens and tables and chairs to polling stations. The commission will use 3,039 cars, three helicopters and 3,171 donkeys, according to a July 29 statement outlining preparations. Security has declined in western Afghanistan since 2005, according to World Vision , an international aid group that works in three provinces. With the biggest U.S. and coalition military efforts concentrated in the country’s volatile east and south, development assistance has followed to those areas, and the west receives relatively little security or aid by comparison, said Christine Beasley, World Vision’s country program manager. The fear among Afghans in provinces such as Herat and Badghis and Ghor has spilled over to the election season. “What we’re seeing in our areas is lots of concern about the safety of voting,” said Beasley, who returned from Afghanistan in late June. World Vision, which lost four Afghan staff in two attacks in 2006, evacuated its foreign workers last week until after the election. To contact the reporter on this story: Viola Gienger in Washington at vgienger@bloomberg.net .

Read the full article →

Japan’s Economic Recovery May Falter as Companies Cut Investment, Payrolls

August 17, 2009

By Jason Clenfield and Tatsuo Ito Aug. 18 (Bloomberg) — Japan’s 3.7 percent economic expansion last quarter ended the country’s worst postwar recession. The bounce may be as good as it gets. Growth will slow to an annual 2.9 percent pace in the three months ending Sept. 30, according to the median forecast of 10 economists surveyed after yesterday’s gross domestic product report. Falling business investment and rising unemployment may hamper a recovery that has been fueled by $2.2 trillion in emergency spending by governments worldwide. Companies including Nikon Corp. and NEC Electronics Corp. are cutting costs and firing workers to narrow losses. Japanese will head to the polls for a general election on Aug. 30 against a backdrop of unemployment approaching a record high and a public debt that’s almost twice the size of the economy. “We have our doubts about the durability of this,” said Robert Feldman , head of economic research at Morgan Stanley in Tokyo. “There’s isn’t enough demand to get us back on a very strong recovery path. We don’t see a huge downside, but nevertheless the upside is pretty limited.” The Nikkei 225 Stock Average plunged the most in four months yesterday on concern growth will falter once the effects of government stimulus packages start to fade. Japan joins France and Germany in being the first Group of Seven economies to climb out of the global recession. Polls show Prime Minister Taro Aso’s ruling Liberal Democratic Party is likely to lose the lower house election to the opposition Democratic Party of Japan, which has never held power before. The DPJ would inherit an economy that after last quarter’s expansion is still at its 2004 size. ‘Temporary Factors’ “We’ve only recouped about a tenth of what we lost in the last year and what’s driving the recovery at the moment is essentially temporary factors,” said Hiroshi Shiraishi , an economist at BNP Paribas in Tokyo. Economists surveyed last month said growth will slow in each of the next three quarters and come to a near standstill in the three months to June 2010. Japan’s first expansion in five quarters was driven by exports that jumped 6.6 percent, led by demand from China, yesterday’s report showed. At home, Aso’s 25 trillion yen ($264 billion) in stimulus helped consumer spending rise 0.8 percent and government investment climb 8.1 percent. The sustainability of Japan’s recovery hinges largely on its overseas markets. A report last week showed confidence among U.S. consumers unexpectedly fell in August on concern over jobs and wages. Half the Pace Bank of Japan Governor Masaaki Shirakawa said last week that demand for the country’s products and services may not gain momentum. The central bank estimates Japan’s potential growth rate has fallen to about 1 percent, about half the pace achieved during the country’s six-year expansion through 2007. “It’s very simple: domestic demand is very, very weak and that’s about 70 percent of the economy,” said Seiji Shiraishi , chief economist at HSBC Securities Japan Ltd. in Tokyo. “Once the fiscal stimulus fades, the underlying trend will emerge, which is basically weak income and weak consumption.” A lack of demand is already weighing on prices, sparking concern that deflation may once again become entrenched in the economy. Consumer prices plunged a record 1.7 percent in June and yesterday’s GDP report showed wages fell a record 4.7 percent from a year earlier. “It’s going to be very hard to shake off the deflation,” said Richard Jerram , chief economist at Macquarie Securities Ltd. in Tokyo. “You don’t want to be too much of a spoilsport when there’s quite good headline growth numbers, but at the same time you can’t really ignore that prices are falling.” Being Cautious Businesses are also being cautious. Capital spending, which accounts for about 15 percent of the economy, fell 4.3 percent last quarter. A survey published this month by the Development Bank of Japan showed companies will cut fixed investment 9.2 percent this fiscal year. Reductions by manufacturers will be the steepest since 1993. Nikon, which is cutting 1,000 jobs, this month forecast a record 28 billion yen annual loss as customers scale back orders for semiconductor equipment. NEC Electronics is predicting its fifth straight year of losses and eliminating 1,200 jobs. Spending by companies “is likely to remain weak for at least another year,” said Julian Jessop , chief international economist at Capital Economics Ltd. in London. “A robust V- shaped recovery remains unlikely.” To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net ; Tatsuo Ito in Tokyo at tito2@bloomberg.net

Read the full article →

Video: Ballots And Bullets

August 14, 2009

Afghanistan’s future in on the line as voters head for the polls next week and coalition forces clash with Taliban fighters. (Political Capital)

Read the full article →

Americans Concerned That Health Plan May Erode Quality of Care, Poll Finds

July 30, 2009

By Heidi Przybyla July 30 (Bloomberg) — The prospect of a government-created system that provides health care to all Americans raises concerns among the public about quality of care, costs, and the effect on medical options, a New York Times/CBS News poll found. A Wall Street Journal/NBC News survey, meanwhile, found that more people disapprove of the way President Barack Obama is dealing with the health-care issue than approve of his efforts. According to the poll, 46 percent disapprove of his handling of the matter while 41 approve. The two polls were conducted as Congress struggled to craft legislation that would meet Obama’s goals of expanding health care to most of the estimated 46 million Americans without health insurance while not increasing the federal budget deficit

Read the full article →

Germany Asserts Right to Reject Buyer for GM’s Opel Unit, Risking Clash

July 29, 2009

By Tony Czuczka and Andreas Cremer July 29 (Bloomberg) — Germany’s government asserted its right to reject any buyer for General Motors Co .’s Opel unit, increasing the risk of trans-Atlantic friction as Chancellor Angela Merkel seeks to protect jobs before September elections. A successful bid needs the backing of Germany’s federal government and the four German states where Opel has plants, because without German aid “the sale is not sustainable,” Ulrich Wilhelm , Merkel’s chief spokesman, told reporters in Berlin today. “An agreement by GM with one of the two remaining investors would not be enough,” Wilhelm said.

Read the full article →

Next Entries →