NEWS,21.12.2012

Obama nominates Kerry for Secretary of State

President Barack Obama has announced the nomination of US Senator John Kerry to replace Hillary Clinton as Secretary of State, calling him the "perfect choice" to guide American diplomacy in the years ahead.Obama settled on Kerry, chairman of the Senate Foreign Relations Committee and the 2004 Democratic presidential candidate, after UN Ambassador Susan Rice withdrew from consideration last week.He said he expected quick Senate confirmation of the Massachusetts lawmaker."As we turn the page on a decade of war, he understands that we have to harness all elements of American power," Obama said at the White House.Even as Obama put in place one important piece of his revamped national security team, he held off on naming a new defense secretary.The delay comes in the face of a growing backlash from critics of former Republican Senator Chuck Hagel, considered a leading candidate to replace Leon Panetta at the Pentagon.Kerry, 69, a stalwart Obama supporter known to have long coveted the job of America's top diplomat, will take over from Clinton, who has been consistently rated as the most popular member of the president's cabinet.But he will also have to pick up the pieces after a scathing official inquiry found serious security lapses by the State Department in the deadly September 11 attack on the US consulate in Benghazi, Libya a report that has tarnished the final days of Clinton's tenure.Kerry's nomination follows a political firestorm that engulfed Rice, seen as the early favorite for the State job, spearheaded by Republicans fiercely critical of her role in the administration's early explanations for the Benghazi assault.Rice, defended by Obama, said last Thursday she was withdrawing her name from consideration to avoid a potentially lengthy and disruptive confirmation process.Kerry, known nationally through his presidential run and for his role as a Democratic power broker in the Senate, offers no such challenges.The selection of Kerry sets a pragmatic tone as Obama begins reshaping his national security team, which will include a new CIA director.Kerry will be the leading Cabinet member charged with tackling a range of thorny global challenges, including Middle East upheaval, Iran's nuclear standoff with the West and winding down the war in Afghanistan all at a time of fiscal austerity at home. 

US economy showing 'surprising' signs of resilience

The US economy showed surprising signs of resilience in November despite the approach of the so-called fiscal cliff, as consumer spending rose by the most in three years and a gauge of business investment jumped. Consumer spending rose 0.6% when adjusted for inflation, while new factory orders for capital goods outside the defence and aerospace sectorsa proxy for business spending plans jumped 2.7%, the Commerce Department said today.Economists had pinned earlier weakness in investment plans on worries lawmakers and the White House might fail to strike a deal to avoid the brunt of tax hikes and government spending cuts scheduled to begin in January.They also worried consumers would hold back as the end-of-the-year deadline approached with both parties far apart on how to avoid the potential hit to the economy. But today's data suggests both consumers and businesses had mostly shrugged off the cliff, at least in November."It appears that the looming fiscal cliff hasn't been nearly as disruptive as we had feared," said Paul Ashworth, an economist at Capital Economics in Toronto. Still, another report provided ample reason for caution as US consumer sentiment slumped in December, with households apparently rattled by on-going negotiations to lessen the fiscal tightening that could easily trigger a recession next year. The Thomson Reuters/University of Michigan's final index of consumer sentiment in December tumbled more than expected to 72.9 from 82.7 a month before. US stocks fell sharply after a Republican proposal for averting the fiscal cliff was abandoned late yesterday, eroding optimism that a deal could be reached quickly. At the same time, US government debt prices rallied and the dollar gained ground as investors sought a safe haven. Economists still expect economic growth to cool in the fourth quarter as companies slow the pace at which they have been re-stocking their shelves, but the data suggests consumers are offsetting some of that drag. Consumer spending is on track to grow at a 2.2% annual rate in the fourth quarter, faster than during the prior three months, said Michael Feroli, an economist at JPMorgan in New York. Forecasting firm Macroeconomic Advisers raised its forecast for fourth-quarter economic growth by four tenths of a point to a 1.4% annual rate. In the third quarter, the economy expanded at a 3.1% rate. "The economy is holding in here at the end of the year despite the concerns about the fiscal cliff," said Gary Thayer, an economic strategist at Wells Fargo Advisors in St. Louis. Those concerns are not going away. In November, many analysts on Wall Street said they expected Washington would largely avert the fiscal cliff, and optimism had grown over the last week that a deal was within reach. Since Wednesday, however, negotiations have fallen into disarray. If Congress and the White House do not reach a deal in time, taxes will go up for all Americans beginning in January and the government will cut spending on a host of programs. Running off the fiscal cliff would slash the nation's trillion-dollar budget deficit nearly in half in just one year. The impact would only come gradually, but economists expect it would be enough to knock the country into recession in the first half of the year. So far, uncertainty over the talks appears to have had only a limited impact on the economy. New orders for durable goods, items meant to last three years or more, rose a greater-than-expected 0.7% in November due to gains in machinery, fabricated metal products, and computer and electronic products. Those increases were offset by a decline in volatile aircraft orders. The report also showed a rise in shipments, brightening the prospects for fourth-quarter economic growth. Shipments of non-defence capital goods orders excluding aircraft, used to calculate equipment and software spending in the government's measures of gross domestic product, gained 1.8%, after rising by a softer 0.6% in October.

Brazil to privatise airports

Brazilian President Dilma Rousseff on Thursday announced that airports in Rio and Belo Horizonte, two host cities for the 2014 World Cup, will be privatized during a September 2013 auction."International experience shows that airports are good business," Rousseff said, recalling that last February, 20-year concessions were granted to manage three airports, two in Sao Paulo and one in Brasilia.Brazil, a continent-sized country of 194 million people, is seeking to upgrade its creaking infrastructure ahead of the 2014 World Cup.The previously granted concessions, valued at a total of $14bn, will upgrade congested terminals in preparation for handling the tens of thousands of tourists expected for the World Cup. Rousseff said Thursday that any private entities participating in the September auctions will have to include at least one international partner "with experience in running an airport handling at least 35 million passengers a year."This operator must have "at least a 25% stake" in the consortium.Companies with majority stakes in operations of other airports will not be allowed to take part in next year's auction. Rousseff said Brazil was now a "middle class country" in which more and more people will fly, including many of the "40 million Brazilians lifted out of poverty over the past decade".Civil Aviation Minister Wagner Bittencourt said the government hopes to raise $5.7bn through the concessions: $3.3bn for Rio's Tom Jobim airport and $2.4bn for Belo Horizonte's Confins airport.Brazil has announced huge investments in airport, highway and rail projects in partnership with the private sector to modernize its creaking infrastructure and jumpstart a sluggish economy expected to grow a mere one percent this year.Bittencourt said that in an initial phase, the government plans to invest $3.6bn to modernize 270 small airports. The longer term objective is to upgrade 689 public airports, he added.Experts meanwhile warn that the aviation sector has to contend with higher taxes and fuel costs, inadequate infrastructure and a leveling-off of demand."2012 can be seen as the worst year for commercial civil aviation," Paulo Kakinoff, president of Gol, the country's second biggest airline, said last week."This is due to a series of factors: a nearly 60 percent hike in fuel costs, the 10% depreciation of the real in relation to the dollar, higher taxes and new taxes."