Showing posts with label capitol hill. Show all posts
Showing posts with label capitol hill. Show all posts

Saturday, July 27, 2013

NEWS,27.07.2013



Obama marks Korean war truce


US President Barack Obama is marking the 60th anniversary of the end of the Korean War.

Obama is delivering remarks on Saturday at a commemorative ceremony at the Korean War Veterans Memorial on the National Mall.

The 1950 - 1953 Korean war pitted North Korean and Chinese troops against US-led UN and South Korean forces. It ended on
27 July 1953 - 60 years ago on Saturday - with the signing of an armistice.

But a formal peace treaty was never signed, leaving the
Korean Peninsula in a technical state of war and divided at the 38th parallel between its communist north and democratic south.

At least 2.5 million people were killed in the fighting.

In a proclamation declaring on Saturday as National Korean War Veterans Armistice Day, Obama said the anniversary marks the end of the war and the beginning of a long and prosperous peace.

In the six decades since the end of hostilities, Obama said,
South Korea has become a close US ally and one of the world's largest economies.

He said the partnership remains "a bedrock of stability" throughout the Pacific region, and gave credit to the
US service members who fought all those years ago and to the men and women currently stationed there.

Japan military plan worries China


China's Defence Ministry on Saturday urged international vigilance of Japan's military plans after it unveiled an interim report calling for strengthened armed forces, including the possible acquisition of the ability to hit enemy bases.

Japan's proposal  its latest step away from the constraints of its pacifist constitution  is part of a review of defence policy by Prime Minister Shinzo Abe's government, which released an interim report on the issue on Friday. Final review conclusions are due by the end of the year.

Japan's Defence Ministry also said it would consider buying unmanned surveillance drones, create a force of Marines to protect remote islands, such as those disputed with China, and consider beefing up the ability to transport troops to far-flung isles.

"The sections about
China in this report by Japan are playing on the same old themes, exaggerating the military threat from China, and have ulterior motives," China's Defence Ministry said in a statement on its website.

"This year,
Japan has come up with all kinds of excuses to continue to expand its armaments... creating tensions in the region. These moves deserve the highest vigilance from neighbouring countries in Asia and from the international community," it said.

Security environment

The hawkish Abe took office in December for a rare second term, pledging to bolster the military to cope with what
Japan sees as an increasingly threatening security environment including an assertive China and an unpredictable North Korea.

Abe called on Friday for a leaders' summit or a foreign ministers' meeting between his country and
China as soon as possible.

But Abe's appeal drew a cool reaction from
China which accused Japan of lacking sincerity.

Over the past year,
China's stand-off with Japan over a string of uninhabited rocky islands in the East China Sea known as the Senkaku in Japan and Diaoyu in China has become more acrimonious.

China also believes that Japan has never properly atoned for its brutal invasion and occupation of parts of the country before and during World War Two.

Europe's Incomplete One-Year Anniversary


Exactly a year ago when Mario Draghi, the well-respected president of the European Central Bank (ECB), made his now-famous "whatever it takes" remarks.
Twelve months later, this stands out as the boldest and most successful initiative in the history of modern central banking. Yet the durability of the benefits is undermined by Europe's frustratingly slow progress in getting to grips with its growth and employment deficits.
Europe's economic context was a daunting one that sunny day in London.
The Eurozone's financial system was fragmenting and deposits were fleeing struggling banks. Credit intermediation was coming to a complete stop, starving companies of working capital and putting investment plans on hold. Financial markets were in turmoil, with surging borrowing costs threatening sovereign creditworthiness and eroding liquidity.
In essence, Europe stood on the verge of a great depression, facing an immediate future of serial bankruptcies and massive unemployment.
In a conference organized by the British government, Mr. Draghi took the stage for a panel of central bankers' panel. In addition to those in the room attending the "Global Investment Conference," the event was well covered by the media and simultaneously streamed to nervous world markets.
Mr. Draghi totally upstaged his colleagues on the panel. He directly and frankly addressed the what, how and why of Europe's enormous financial strains. Comparing the Eurozone to a bumble bee that is able to fly despite seemingly-irregular aerodynamic properties, he confidently and calmly re-assured all that were listening that "the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough."
It was an extremely bold step.
Mr. Draghi courageously placed the ECB front and center in what were (and still are) complicated and stressful political interactions among the 17 member governments of the Eurozone. He seemingly did so without fully consulting with his colleagues on the central bank's governing council. And he put forward ambitious claims without concrete measures to back them as yet. (These came later, culminating in a dramatic ECB announcement in September.)
It also turned out to be an extremely successful step.
Without spending a single Euro, Mr. Draghi calmed markets, reversed the bank deposit flight and allowed the financial system to partially heal. In the process, he managed to unify a governing council that could have easily disintegrated into one big national political mess - thus bringing an important element of coherence to often-erratic cross-border and regional interactions.
Yet I suspect that the one-year celebration will not be an entirely satisfactory one for Mr. Draghi and his ECB colleagues.
While they brilliantly delivered and did so by literally making it up as they went along national and regional politicians have lagged. As such, the financial improvement has not been accompanied by a meaningful change in what matters most: namely, the ability to generate economic growth, create jobs and arrest excessive income and wealth inequalities.
Europe's incomplete anniversary speaks to a broader phenomenon that serially frustrates the global economy from recovering fully from the shock of the 2008 global financial crisis: Politicians have failed to exploit the window offered by experimental central bank policies, and continue to do so.
In Europe, national governments still differ on the causes of the region's malaise; and if you cannot agree on history or at least put it aside it is hard to press forward with a unified and credible vision that gets sufficient buy-in from naturally-skeptical citizens.
In the United States, a polarized Congress has undermined virtually every policy step proposed by the Obama Administration to bring the economy closer to escape velocity for economic growth and job creation; and Capitol Hill has done so regardless of merit and need. As such, the Federal Reserve has felt compelled to venture deeper and deeper into experimental policies, raising concerns about collateral costs and unintended consequences.
In celebrating the one-year anniversary, the West would be well advised to look beyond the great success of a courageous (and extremely cost effective) policy measure.
We should also think in terms of foregone opportunities. And we should constantly remember the millions of unemployed, the alarmingly high joblessness among the young, the struggles that too many face in securing their families wellbeing, and the growing number of retirees that are legitimately worried about their pensions.
They all serve as a vivid reminder of an incomplete success. Hopefully, they will also add to the calls for more comprehensive and durable actions.

Israel's Cabinet To Vote On Freeing Palestinian Prisoners Ahead Of Peace Talks

In April 1993, Omar Masoud and three accomplices broke into a European aid office in Gaza City, grabbed a young Israeli lawyer working there and stabbed him to death.
Israel arrested Masoud a month later and sentenced him to life, meaning he was doomed to die in prison one day for killing the lawyer in the name of the Popular Front for the Liberation of Palestine, a small PLO faction.
Now Masoud, along with dozens of other long-term Palestinian prisoners, is up for release as part of U.S. Secretary of State John Kerry's attempt to restart Israeli-Palestinian talks after five years of diplomatic paralysis.
Israel's Cabinet is being asked to approve a prisoner release in principle on Sunday, as part of a Kerry-brokered deal to get the two sides back to the table.
The Cabinet vote would pave the way for a preliminary meeting of Israeli and Palestinian negotiators in Washington on Tuesday, followed by up to nine months of talks in the region on setting up a Palestinian state alongside Israel. Such a deal has eluded Israelis and Palestinians for two decades and they have low expectations.
The fate of those held in Israeli jails is an emotionally wrought issue for Palestinians, who view the prisoners as heroes who made personal sacrifices in the struggle for statehood.
A prisoner release particularly of lifers with "blood their hands" would go a long way toward giving Palestinian President Mahmoud Abbas a popular mandate to give talks another shot, even if many Palestinians believe Israel's hardline prime minister, Benjamin Netanyahu, is not serious about a deal.
Israelis tend to view the prisoners as cold-blooded terrorists, and early releases of security prisoners in previous swaps elicited vociferous objections from the public, including Supreme Court appeals.
For Israel's government, approving the release of prisoners it refused to free in the past even if in stages and linked to progress in talks poses the most difficult test so far of its professed willingness to reach a peace deal.
In a statement late Saturday, Netanyahu said that a decision to release prisoners is "painful to the bereaved families, painful to the people of Israel and very painful for me."
Yet, he said, prime ministers "are required from time to time to take decisions that are against public opinion if it is important to the state," signaling he is pushing for Cabinet approval of the release.
Abbas, meanwhile, briefed reporters on the terms of the upcoming negotiations, based on what he said were Kerry's assurances to him. He said the American invitation would state that the talks will be about establishing a Palestinian state next to Israel, based on the 1967 borders and with mutually agreed upon land swaps.
The Palestinians want to set up a state in the West Bank, Gaza and east Jerusalem lands Israel captured in 1967. In previous negotiations, Abbas offered to trade 1.9 percent of West Bank land for the same amount of Israeli territory, a swap that would enable Israel to keep some of the dozens of Jewish settlements it has built since 1967.
Israeli officials have declined comment on the negotiations. Netanyahu refused in the past to accept the 1967 lines as a starting point, and it's not clear whether his position has changed.
Abbas said the situation would become clearer after Sunday's Cabinet meeting.
A senior Palestinian official said the Palestinians would go to talks without Israel having agreed to a freeze of settlement building in the West Bank and east Jerusalem. Nearly 600,000 Jews already live there, and thousands of homes are under construction.
In guidelines for the talks requested by the Palestinians, Kerry stipulated earlier this month that both sides have to refrain from unilateral steps, according to the Palestinian official, who spoke on condition of anonymity because of a gag order the U.S. secretary of state slapped on the negotiators.
The Palestinians understand this to mean that Israel will slow down settlement construction and refrain from provocative steps, such as announcing new projects, the official said. The Palestinians, in turn, will suspend plans to seek further recognition at the U.N. General Assembly, which last year recognized a state of Palestine in the 1967 borders. Israel fears further international isolation as a result of Palestinian activity at the U.N.
Abbas has argued he would need either a settlement freeze or Israeli recognition of the 1967 lines as a baseline to be able to resume negotiations.
In Sunday's Cabinet meeting, ministers will be asked to vote on a number of fateful issues, an official in Netanyahu's office said, speaking on condition of anonymity in line with briefing regulations.
The ministers will be asked to authorize the resumption of talks with the Palestinians and appoint a team reportedly the premier and three ministers to oversee the negotiations.
They will be asked to approve an amended bill that would require a national referendum on any partition deal with the Palestinians.
Netanyahu's decision to fast-track the referendum bill has prompted contradictory speculation. Some say this shows the lifelong hawk is serious about a deal this time and wants to silence opposition by ultra-nationalists in his Likud party and his coalition from the outset. Others suspect he is trying to create new obstacles to any agreement.
The Cabinet ministers would also have to approve, in principle, a release of Palestinian prisoners who were arrested before the start of the so-called Oslo talks on interim peace deals in the early 1990s.
Abbas gave Kerry a list of 104 names, including that of Omar Masoud who is No. 77, ranked by seniority. The two longest-held at the top of the list are cousins Karim and Maher Younis, imprisoned since 1983 for kidnapping and killing an Israeli soldier, Palestinian officials said.
When Israeli media reported last week that Israel would only release 82 and that Palestinians from Israel and east Jerusalem would not be freed, Abbas asked Kerry for clarifications.
The U.S. diplomat gave Abbas to understand that all 104 would be freed, said a Palestinian official, also speaking anonymously to avoid violating Kerry's call for discretion. The prisoners are to be released in four stages over six months, beginning a month after the resumption of talks, the official said.
As of late June, nearly 5,000 Palestinians were being held by Israel.
Masoud's mother, 70-year-old Tamam, said she is optimistic.
"I hope everything will work out between Jews and Arabs," she said, speaking in her shack in the Shati refugee camp. Abbas "took a good step by talking about releasing prisoners," she said.
Omar Masoud's family was evasive when asked about the killing, portraying it as the rash act of an immature youth. A recent prison photo of him showed a balding middle-aged man who his mother says often cooks for other prisoners because of his work experience as a teenager in an Israeli restaurant.
Despite considerable opposition in Israel to prisoner releases, polls indicate a majority support a resumption of peace talks. Yuval Diskin, former head of Israel's domestic security agency Shin Bet, expressed that ambivalence.
He noted that he opposed a 2011 swap in which Israel agreed to free some 1,000 Palestinians for an Israeli soldier held by Gaza militants, but that the upcoming round of talks may be the last chance for a deal.
"We need to understand that the negotiations cart is stuck in very, very deep mud," he told Israel TV's Channel 10 on Friday. "And there are some very painful things that will need to happen in order to get that cart out of the mud."

Monday, December 31, 2012



US fiscal cliff facts


The so-called fiscal cliff is a combination of dramatic spending cuts and tax increases mandated to take effect beginning in January if President Barack Obama and Republicans cannot bridge their differences on how best to reduce the nation's budget deficit and debt.To add to a drama that could reverse the slow US recovery and impact the global economy, the United States is also about to reach its borrowing limit, so Congress will also be asked to raise the government's debt ceiling.

What is the fiscal cliff?

The Budget Control Act of 2011 codified in law a grudging political compromise forcing the government to slash spending by $1.2 trillion over 10 years from January 1 2013. Next year's cuts, called "sequestration," would be about $109bn.Also on that date, a package of tax reductions and an extension of unemployment benefits will expire, meaning taxes will rise significantly for most Americans.

Why will this happen?

Democrats and Republicans have long been deadlocked over whether to address a $1 trillion-plus annual budget gap with higher taxes or lower spending.The Budget Control Act was a poison pill deal designed to force them to find a less austere compromise, but political wrangling and dysfunction meant no deal was done, and the deadline is now looming.

What happens if the cliff is not avoided?

Together, higher taxes and lowered spending could slice the $1.1 trillion deficit racked up in fiscal 2012 (ended September 30) by almost $500bn next year, according to the Congressional Budget Office, vastly improving the government's financial picture .But the CBO estimates the shock treatment would send the country back to recession and push the unemployment rate to 9.1%.Deep cuts would come to both defence and non-defence spending. Government suppliers and contractors would lose business, and temporary furloughs could be in store for tens of thousands of federal employees.Taxes and automatic paycheck deductions would increase for most Americans, reducing the cash they have for spending, and taxes on capital gains and dividends would rise, hitting investors.

What is the debt ceiling?

The US government will hit its statutory $16.39 trillion debt limit on Monday, according to Treasury Secretary Timothy Geithner. The limit is set by Congress, and if it is not raised, the United States will not be able to borrow any more money and would, in theory, be forced to slash spending to make ends meet. Possible, but desperate, remedies would include halting pay to the military, retirement health benefits, social security, and failing to pay government debts.

Will the US default on its debt?

Not immediately. The Treasury has various extraordinary measures in its armory, including halting the issuance of securities to state and local governments, which could buy about two months of leeway.

What would a default mean?

No one is sure: the dollar, and Treasury bonds, are the primary currency of global finance, and holders do not really have any alternatives. And most believe that eventually the US government would make good on its debts. However, the country's credit rating could be further downgraded, likely pushing up its borrowing costs over the medium term and possibly diminishing the dollar's cachet in world finance.

What will Congress do?

Eventually, Congress is likely to raise the debt ceiling but Republicans who run the House of Representatives will use the showdown as leverage to demand spending cuts from Obama in return. It is uncertain how high the raised borrowing limit will be, and any resolution will likely trigger a new confrontation between Obama and Republicans the next time around.

Talks stall as fiscal cliff looms

Two days of last-gasp talks produced no deal on Sunday between US political leaders struggling to averting a fiscal calamity due to hit the American and world economy within hours.Party leaders in the US Senate groped for a compromise to head-off a punishing package of spending cuts and tax hikes that is due come into force on January 1 and which could roil global markets and plunge the US into recession.Senate Republican minority leader Mitch McConnell warned that, despite through-the-night talks, negotiators were still a long way from success, as they raced against the ebbing 2012 calendar in search of a compromise.McConnell said he received no response to a "good faith offer" to Senate Democrats and had spoken twice by telephone with his old friend and sparring partner Vice President Joe Biden in the hope of breaking the stalemate.Senate Democratic Majority Leader Harry Reid agreed that talks were at a standstill, and warned that Americans could ring in the New Year with no deal to avert a budget disaster known as the "fiscal cliff.""There is still significant distance between the two sides, but negotiations continue," Reid told the Senate, after huddling for nearly two hours with his Democratic caucus on one of the latest December Senate workdays in 50 years."There is still time left to reach an agreement, and we intend to continue negotiations," he said, as he ordered the Senate back into session at 11:00am (16:00 GMT) Monday, New Year's eve and the last day before the deadline.Reid said Democrats were unwilling to brook talk of social security cuts."This morning, we have been trying to come up with some counteroffer to my friend's proposal," Reid told the Senate. "We have been unable to do that."The already tense mood on Capitol Hill had soured during Sunday's confusing hours, when some lawmakers tossed out varying versions of what may or may not be in Democratic and Republican offers. "I'm incredibly disappointed we cannot seem to find common ground. I think we're going over the cliff," Republican Senator Lindsey Graham said on Twitter.Moderate Democrat Clair McCaskill was also pessimistic."This is definitely not a kumbaya moment," she said.Earlier, President Barack Obama accused Republicans of causing the mess, saying they had refused to move on what he said were genuine offers of compromise from his Democrats."Now the pressure's on Congress to produce," Obama said, in an interview with NBC's "Meet the Press" that was recorded on Saturday, a day after he expressed modest optimism that a deal could be reached.Obama said it had been "very hard" for top Republican leaders to accept that "taxes on the wealthiest Americans should go up a little bit, as part of an overall deficit reduction package."But Republicans were irked by Obama's tone. "I don't know if this is the president saying $250 (thousand) or 'Go to hell'," Graham told reporters, referring to Obama's insistence that taxes rise on households income greater than a quarter million dollars per year.The Senate's number two Democrat, Dick Durbin, said Republicans want the tax threshold be raised to $550 000 per household and that Democrats might counter with $450 000, considerably higher than the president's $250 000.But Reid warned: "We're still left with a proposal they've given us that protects the wealthy and not the middle class. I'm not going to agree to that"If no deal is reached, a package of tax cuts for all Americans that was first passed by then-president George W. Bush will expire on January 1.All American workers will see their own paycheck hit and the broader economy will suffer from massive automatic spending cuts across the government.Experts expect the US economy to slide into recession if the standoff is prolonged, in a scenario that could cause turmoil in stock markets and hit prospects for global growth in 2013.The president won re-election partly on a platform of raising taxes on the rich, but Republicans who run the House of Representatives oppose tax hikes as a point of principle and claim Obama is addicted to runaway spending.Any deal must pass the Senate, before going to the House, where such is the power of the conservative bloc of the Republican Party, it is unclear whether any solution backed by Obama can win majority support.If leaders fail to find agreement, Obama has demanded a vote on his fallback plan that would preserve lower tax rates for families on less than $250 000 a year and extend unemployment insurance for two million people.Republicans admitted such an option could emerge on Monday.


Spain faces €207bn headache in 2013


Spain defied the markets by averting a sovereign bailout this year but high interest rates could yet force Madrid to its knees as the nation confronts a €207bn financing headache in 2013.The eurozone's fourth-biggest economy has skirted a rescue so far even after slipping into a recession in mid-2011 that has sent the unemployment rate soaring to 25%, the highest in Spain's modern history.Prime Minister Mariano Rajoy's government reached out in June for a eurozone rescue loan of up to €100bn to fix the balance sheets of Spanish banks, crushed by bad loans since a 2008 property crash.But even as investors fled Spain, sending its 10-year-bond yield above 7% mid-year as they watched Madrid struggle to curb soaring public debt, Rajoy managed to swerve the politically costly option of pleading for international help.European Central Bank chief Mario Draghi gave decisive support in September when he announced the bank's readiness to buy an unlimited sum of bonds to curb borrowing costs for member states that accept strict conditions.The prospect of such intervention alone was enough to calm the selling of Spanish debt securities.A grateful Rajoy says he can get by for now without even seeking the ECB's bond-buying intervention.Spain's 10-year bond yields were trading below 5.3% in the past week.In his final news conference of the year, the prime minister warned that Spain's economy faced a "very tough" year ahead."Today we are not thinking of asking the European Central Bank to intervene to buy bonds on the secondary market but that is a very useful instrument that is available to all countries of the union," he added."If Spain and its government believe that it is necessary to use it, let there not be the least doubt that we will do so. But in principle today we are not thinking of doing it," the premier said on Friday.That could change, analysts say.Spain's budget for 2013 anticipates that the Treasury will have to issue €207.2bn in gross debt in 2013, almost all through bonds and bills, to cover debt repayments and new financing needs.That compares to the €186.1bn in gross debt that last year's budget previewed for 2012."The country is heading in the right direction in reducing its deficit. But in the end, it will all depend on the markets," said Rafael Pampillon, head of economic analysis at Madrid's IE Business School.Concern over a shift in Italian economic policy with February 24-25 elections on the horizon, and doubts over Spain's ability to finance its debts or meet its deficit-cutting targets could yet push up Spanish borrowing costs, he said.At one point in mid-summer, investors in Spanish 10-year bonds demanded a premium of 600 basis points in annual return over the safe-bet German equivalent. Since Monti's offer to intervene, that has fallen to around 400 points, still a significant extra cost.Most economists now believe Spain can skirt a rescue at least in the immediate future.A sovereign rescue is not impossible, said Edward Hugh, economist based near Barcelona in the northeastern region of Catalonia."But they will definitely put it off for as long as they can, and at the moment it seems that they can put if off for quite a long time," he added.In the meantime Spain still faces steep financing costs, said Jesus Castillo, economist at French investment bank Natixis.The Spanish 10-year bond yield affected not only the state's borrowing cost but also that of many households and businesses, Castillo said.The risk premium charged on Spanish debt, even now, was "not viable over the long term", he warned."If the Spanish economy is being strangled today it is because a high interest rate is killing off investment plans as they are born," he said.It is an argument that seems to plead for a bailout.If the ECB could bring down interest rates, some say, it would breathe new life into the economy, which is expected to shrink 1.5% this year. Next year, the government tips a further 0.5% slump and most private forecasters are expecting a much sharper decline.But Spaniards themselves seem to be divided over a bailout, even as they suffer an unprecedented programme of austerity measures designed to bring the public deficit under control.A survey by Madrid pollster InvyMark for a Spanish television channel this month found 54.5% of those asked believed Rajoy should not ask for a sovereign bailout, against 31.5% who were in favour.More than two-thirds - 69.1% - said they thought such aid from Europe would not be positive for hard-hit Spaniards.

Merkel challenger remarks spark outrage


Chancellor candidate Peer Steinbrueck was widely criticised on Sunday, even by his own centre-left Social Democrats (SPD), for saying German leaders are underpaid. Steinbrueck has struggled to gain ground against Chancellor Angela Merkel ahead of next September's election, in part due to lingering criticism over him earning €1.25m as an after-dinner speaker in the past three years.The remarks from the former finance minister about what he called the inadequate compensation for the chancellor drew speedy rebukes across the country's political spectrum, including from the last SPD chancellor Gerhard Schroeder."A German chancellor does not earn enough based on the performance that is required of her or him compared with the jobs of others who have far less responsibility and far more pay," Steinbrueck, 65, was quoted on Sunday by the Frankfurter Allgemeine Sonntagszeitung newspaper saying. "Nearly every savings bank director in North Rhine-Westphalia earns more than the chancellor does," Steinbrueck said of his home state. Merkel's pay is set to rise by €930 per month to €17 106 in 2013 along with pay rises for her ministers and members of parliament, increases that have been criticised by some for sending the wrong signal in an era of austerity. "Some of the debates kicked up by the 'guardians of public virtue' are grotesque and are harmful for anyone considering getting involved in politics," Steinbrueck said. ElectionThe SPD trails Merkel's conservatives by 10 points in opinion polls, but, with its Greens allies, it does have a chance of winning power in September because of the prolonged weakness of Merkel's Free Democrat (FDP) coalition partners. Steinbrueck, whose blunt talk makes him popular among some voters despite him never winning a major election and him being defeated as state premier in North Rhine-Westphalia in 2005, said there were times in his career when he was not as well off and admitted he was now a "wealthy Social Democrat". Schroeder, chancellor from 1998 to 2005, has endorsed Steinbrueck to lead his party against Merkel but distanced himself from Steinbrueck's views on pay."In my view politicians in Germany are adequately compensated," Schroeder told Bild am Sonntag newspaper. "I was certainly always able to live off the pay. And anyone who doesn't feel it's enough pay can always look for another job."Other SPD leaders indirectly criticised Steinbrueck. Dieter Wiefelspuetz, a top SPD member of parliament, said politicians were misguided if they compared their wages to private industry."To serve as chancellor is a fascinating job and the pay is definitely not shabby," he said.Steinbrueck was once seen as the centre left's best hope of winning back the chancellorship. He was popular as the no-nonsense finance minister and the SPD hoped he would siphon centrist voters away from the conservatives. But the controversy over his earning €1.25m for 89 speeches will not go away and his campaign has been marred by setbacks and awkward comments. Analysts say he is also struggling to win over female voters, many of whom are put off by his combative style. "Merkel is popular due to a 'woman's bonus' that she gets," Steinbrueck told the paper.

Monday, November 26, 2012

NEWS,26.11.2012



Obama drafts Geithner to crack budget


US President Barack Obama has made Treasury Secretary Timothy Geithner lead White House negotiator in budget talks with Congress aimed at averting the fiscal cliff, a report said Monday The Wall Street Journal said Geithner was viewed on Capitol Hill as a straight-shooter who had a better chance of brokering a deal than Jacob Lew, Obama's former budget chief who has burnt his bridges with some Republicans.If no deal is reached before the end of the year, a poison pill law of tax hikes and massive spending cuts, including slashes to the military, comes into effect with potentially catastrophic effects for the fragile US economy.The report said Geithner, who is preparing to leave his post as treasury secretary early in Obama's second term, has spent months already preparing for the fiscal talks, which will begin this week in earnest in Washington.Geithner will be joined by White House budget and tax experts, including Lew, now Obama's chief of staff, and National Economic Council Director Gene Sperling, the Wall Street Journal said.They will try to hammer out an elusive compromise with congressional aides but final decisions will be made by political leaders such as Obama and Republican House Speaker John Boehner, the report said.In recent days, several leading Republicans have indicated a willingness to accept a deal that includes more revenue from ending loopholes in the tax code in return for cuts in funding to Democrats' beloved welfare programs.Geithner, 51, is not affiliated with any party and has spent his career in government finance and on the political sidelines.He first joined the Treasury at age 27. When George W. Bush became president in 2001, he went to work for the Council on Foreign Relations and the International Monetary Fund.At 42, he was tapped to be head of the Federal Reserve Bank of New York, considered the Fed's second-most influential post because the New York bank interacts directly with a powerful constituency that includes Wall Street.Despite holding high office in the years leading up to the 2008 financial collapse, when regulatory authorities are accused of having been asleep at the wheel, he was tapped by Obama to lead the recovery.Upon assuming office in early 2009, he was charged with overseeing two major bailout packages worth more than $1.5 trillion and aimed at shoring up the country's distressed banking sector.The administration has said that the stimulus, while costly, averted another Great Depression, while conservative critics have branded it a costly expansion of government that has failed to revive the economy.

 

Medvedev does not rule out Kremlin return


Prime Minister Dmitry Medvedev said he is not ruling out a return to the Kremlin after his 2008-2012 single term as Russian head of state but was happy working as premier under his mentor Vladimir Putin."If I have sufficient strength and health, if our people trust me in the future with such a position, then of course I do not rule such a turn of events," Medvedev said in an interview with Agence France-Presse and Le Figaro when asked if he had the ambition for another Kremlin term.Medvedev, who on Monday embarks on a working visit to France, served as president after Putin stepped aside following the maximum two consecutive terms allowed by the constitution after his 2000-2008 stint.But Putin, aged 60, stayed on as a powerful prime minister and Medvedev, aged 47, never fully emerged from the shadow of his fellow Saint Petersburg native, an impression strongly reinforced when Putin returned to the Kremlin in May 2012.Medvedev, who in turn was then appointed prime minister in May, failed to bring about lasting change through a much-trumpeted modernisation programme in his one term as president.But in his interview with AFP, he revealed he had not lost his political ambition. "This returning to the presidency depends on a whole range of factors." "Never say never, especially as I swam in that river once and this is a river that you can swim in twice," he said.Russia will only go to the polls to vote for a president again in March 2018 and in the next half decade society is expected to see major change as the middle class grows and internet use explodes. Putin has also not ruled out standing again.This year's tightly choreographed job swap was criticised for being played out far from the public, and frustration over the return of Putin to the Kremlin fuelled the opposition protests that rocked Russia in the last year.Medvedev acknowledged the protests that began last December had shown a transformation in Russian society that the authorities could no longer ignore."Our society changed, it had become more active and the authorities needed to take account of this and react," said Medvedev, saying the government had done this by introducing electoral reform.Some of Medvedev's supporters who saw him as a possible champion of a refreshed, innovative and more pro-Western Russia were hugely disappointed by his apparent surrender of the Kremlin back to Putin.But Medvedev played up the tight links between the two men, saying he would find it impossible to work under anyone else."I would hardly have become prime minister under another president, I cannot imagine it at all," he said."If there is someone you can work with comfortably as prime minister after being president it is just one person, Vladimir Putin."However Medvedev has distanced himself from Putin on some issues, notably the case of feminist punk rockers Pussy Riot, two of whom have been sent to prison camps for performing a song against the Russian strongman in a church.Reaffirming his belief that they should be released, he said: "I think they have already tasted what prison is... So further punishment in the form of prison is not necessary. This is my personal position."On the case of Russia's best known prisoner, the former tycoon Mikhail Khodorkovsky, Medvedev said court decisions had to be respected but noted that the convict had never made a bid for clemency from the Kremlin.Medvedev admitted that his modernisation drive had so far fallen short but expressed hope there was still time to put his ideas into place."It's true that for the moment modernisation has not turned into a national idea and there has been no kind of radical progress reached."

 

Euro zone to seek Greek aid deal without write-off


Euro zone finance ministers and the International Monetary Fund made their third attempt in as many weeks to agree on releasing emergency aid for Greece today, with policymakers saying a write-down of Greek debt is off the table for now.Greek Finance Minister Yannis Stournaras said he was confident the ministers would reach a deal after Greece fulfilled its part of the deal by enacting tough austerity measures and economic reforms."I'm certain we will find a mutually beneficial solution today," he said on arrival for what was set to be another marathon meeting.Greece, where the euro zone's debt crisis erupted in late 2009, is the currency area's most heavily indebted country, despite a big "haircut" this year on privately-held bonds. Its economy has shrunk by nearly 25% in five years.EU Economic and Monetary Affairs Olli Rehn said it was vital to disburse the next 31 billion euro tranche of aid "to end the uncertainty that is still hanging over Greece". He urged all sides to "go the last centimetre because we are so close to an agreement".Negotiations have been stalled over how Greece's debt, forecast to peak at 190-200% of GDP in the coming two years, can be cut to a more sustainable 120% by 2020.Without agreement on how to reduce the debt, the IMF has held up payments to Athens because there is no guarantee of when the need for emergency financing will end.The key question is: Can Greek debt become sustainable without the euro zone writing off some of the loans to Athens?IMF Managing Director Christine Lagarde said on arrival that the solution must be "credible for Greece".A source familiar with IMF thinking said the global lender was demanding immediate measures to cut Greece's debt by 20 percentage points of GDP, with a commitment to do more to reduce the debt stock in a few years if Greece fulfills its programme.Under the source's scenario, Greece's debt could be reduced to around 125% of GDP by 2020 using a variety of methods including a debt buyback, reducing the interest rate on loans and returning euro zone central bank 'profits' to Greece, but further steps would still be needed to hit the 120% goal.The ministers took an extended break in mid-afternoon while experts worked on how to formulate a link between short-term measures and a credible assurance of eventual debt relief.Germany and its northern European allies have so far rejected any idea of forgiving official loans to Athens.German Finance Minister Wolfgang Schaeuble told reporters on arrival that a debt cut now was legally impossible, not just for Germany but for other euro zone countries, if it was linked to a new guarantee of loans."You cannot guarantee something if you're cutting debt at the same time," he said. That might not preclude debt relief at a later stage if Greece has completed its adjustment programme and no longer needs new loans.The source familiar with IMF thinking said a loan write-off once Greece has established a track record of compliance would be the simplest way to make its debt viable, but other methods such as foregoing interest payments, or lending at below market rates and extending maturities could all help.The German banking association (BDB) said a fresh "haircut" or forced reduction in the value of Greek sovereign debt, must only happen as a last resort.Two European Central Bank policymakers, vice-president Vitor Constancio and executive board member Joerg Asmussen, said debt forgiveness was not on the agenda for now.Asmussen told Germany's Bild newspaper the package of measures would include a substantial reduction of interest rates on loans to Greece and a debt buy-back by Greece, funded by loans from a euro zone rescue fund.So far, the options under consideration include reducing interest on already extended bilateral loans to Greece from the current 150 basis points above financing costs.How much lower is not yet decided - France and Italy would like to reduce the rate to 30 basis points (bps), while Germany and some other countries insist on a 90 bps margin.Another option, which could cut Greek debt by almost 17% of GDP, is to defer interest payments on loans to Greece from the EFSF, a temporary bailout fund, by 10 years.The European Central Bank could forego profits on its Greek bond portfolio, bought at a deep discount, cutting the debt pile by a further 4.6% by 2020, a document prepared for the ministers' talks last week showed.Not all euro zone central banks are willing to forego their profits, however, the German Bundesbank among them.Greece could also buy back its privately-held bonds on the market at a deep discount, with gains from the operation depending on the scope and price. Officials have spoken of a 10 billion euro buy-back at around 30 cents on the euro, that would retire around 30 billion euros of debt, although since the idea was raised the potential gain has fallen as prices have risen.But the preparatory document from last week said that the 120% target could not be reached in 2020, only two years later, unless ministers accept losses on their loans to Athens, provide additional financing or force private creditors into selling Greek debt at a discount.The latest analysis for the ministers showed the debt could come down to 125% of GDP in 2020, one euro zone official with insight into the talks said.