NEWS,23.09.2012

Obama, Romney tussle over economics

Republican challenger Mitt Romney, slipping in the polls in critical battleground states, opens an intense campaign focus in three of them on Sunday with a rally in Colorado, before heading to Ohio for a three-day bus tour and ending with a stop in Virginia.President Barack Obama, who was not campaigning on Sunday, won all three of those states in the 2008 election that swept him into the White House.With about six weeks remaining before the 6 November election, the handful of so-called swing or battleground states appear likely to determine the outcome of what has been an extremely close contest between Obama and Romney. Those states become even more critical to the Republican candidate as recent polling shows Obama opening a lead in many of them.The president is not chosen by the nationwide popular vote but in state-by-state contests. While most states reliably vote for the candidate of one party or the other, swing states like Colorado, Ohio, Virginia and five others are seen as toss-ups.Obama enters the weekend with polls showing him in a near tie with Romney nationally, but a new Wall Street Journal/NBC News/Marist Poll shows the president with leads among likely voters of 8 percentage points in Iowa and 5 points each in Colorado and Wisconsin, all battleground states. Polls published last week pointed to leads for Obama in Virginia and Ohio. While he and Romney are neck-and-neck in North Carolina, Obama has an edge in Florida and New Hampshire.With those factors pressing hard on Romney, he is intensifying his swing-state campaigning to counter criticism from Republican heavyweights that his bid for the nation's highest office is mismanaged and misdirected.PressureWall Street columnist Peggy Noonan, a former speechwriter for President Ronald Reagan, wrote recently: "The Romney campaign has to get turned around."I called it incompetent, but only because I was being polite. I really meant 'rolling calamity." Romney's evening rally at a Denver-area high school represents his first public event of the weekend.As the November vote draws near, he also is facing pressure to spend less time raising money and more time explaining his plans to voters in swing states.The schedule shift comes in the last full week before the presidential debates move the campaign into a new phase - one which Romney advisers suggest could prove pivotal following several weeks marked by negative attention, missteps and Republican concerns.Already facing reports of internal finger-pointing and foreign policy questions, Romney suffered another setback a few days ago when a secretly recorded video surfaced showing the Republican standard bearer declaring that almost half of Americans are dependent upon government and see themselves as victims.He released his 2011 tax returns on Friday, showing income of $13.6m, largely from investment income. He paid federal income tax at a 14.1% rate, lower than that of most middle-income Americans.That feeds on the Obama message that Romney is among America's super-wealthy and out of touch with the concerns of average voters.In an interview set to air Sunday night, Romney told CBS television his campaign is moving in the right direction."It doesn't need a turnaround. We've got a campaign which is tied with an incumbent president to the United States," Romney says, according to remarks released in advance by CBS.Romney spent much of his weekend in high-dollar fundraisers in southern California, a state that has gone Democratic in the last five presidential elections.As the Republican courted wealthy donors at the Beverly Hills Hilton on Saturday, Obama worked to squash Republican hopes for a resurgence in Wisconsin, where the president assailed Romney's economic approach before an energised gathering of 18 000 in Milwaukee, Obama's biggest crowd of the campaign.Obama faulted Romney for advancing a top-down economic approach that "never works.""The country doesn't succeed when only the folks at the very top are doing well," Obama told the massive crowd."We succeed when the middle class is doing well."

America's hidden unemployed

 

When Daniel McCune graduated from college three years ago, he was optimistic his good grades would earn him a job as an intelligence analyst with the government.With a Bachelor of Science degree from Liberty University in Virginia, majoring in government service and history, McCune applied for jobs at the National Security Agency, the Federal Bureau of Investigation and other agencies.But after a long hunt that yielded only two interviews, the 26-year-old threw in the towel last fall, joining millions of frustrated Americans who have given up looking for work. There’s nothing out there and there probably won’t be anything for a while,” said McCune, from New Concord, Ohio. He has moved back home to live with his parents, who are helping him pay off his college debt of about $20 000.“I don’t like it, it’s embarrassing. I don’t want to be a burden to my parents,” said McCune, adding that he felt like a high school dropout.Economists, analysing government data, estimate about 4 million fewer people are in the labour force than in December 2007, primarily due to a lack of jobs rather than the normal aging of America’s population. The size of the shift underscores the severity of the jobs crisis.If all those so-called discouraged jobseekers had remained in the labour force, August’s jobless rate of 8.1% would have been 10.5%. The jobs crisis spurred the Federal Reserve last week to launch a new bond-buying program and promise to keep it running until the labour market improves. It also poses a challenge to President Barack Obama’s re-election bid.The labour force participation rate, or the proportion of working-age Americans who have a job or are looking for one has fallen by an unprecedented 2.5 percentage points since December 2007, slumping to a 31-year low of 63.5%.“We never had a drop like that before in other recessions. The economy is worse off than people realise when people just look at the unemployment rate,” said Keith Hall, senior research fellow at the Mercatus Center at George Mason University in Arlington, Virginia.The participation rate would be expected to hold pretty much steady if the economy was growing at a normal pace. Only about a third of the drop in the participation rate is believed to be the result of the aging US population.Slow progressThe economy lost 8.7 million jobs in the 2007-09 recession and has so far recouped a little more than half of them.Economists say jobs growth of around 125 000 per month is normally needed just to hold the jobless rate steady. Given the likelihood that Americans will flood back into the labour market when the recovery gains traction, a pace twice that strong would be needed over a sustained period to make progress reducing the unemployment rate.Last month, employers created just 96 000 jobs. Roslyn Swan lost her job in 2007 as a portfolio associate at a financial firm in New York. After submitting hundreds of applications, the 44-year-old is taking a break.“Maybe after the elections,” Swan said of her next attempt to get work. “I know that I will be employed again. I don’t know when, but I know it will happen.”Americans of all ages are leaving the workforce, but the problem is most acute in the 20-24 age group, where the participation rate has plunged by 4.4 percentage points since December 2007.Many Americans typically start working in their teens, taking part-time jobs after school and over summer vacations, a tradition that is supposed to instill a work ethic.With many failing to secure jobs after graduating from high school and college, analysts worry about US competitiveness."Because of delays to their career, the skills set accumulation that normally happens in the first or third job is not happening,” said Paul Conway, president of Generation Opportunity in Washington, a non-profit, non-partisan organisation that works with 18- to 29-year-olds on economic issues.Tough on young workersLast month, the proportion of 20- to 24-year-olds in the labour force was its lowest since 1972. Other age categories are faring little better. The 25-54 age group has seen a decline of 1.8 percentage points since December 2007. Some, like 27-year-old Casey Potts, have gone back to school. She is studying nursing in Kentucky after losing her medical sales job.“If I had stayed in medical sales, I would be job searching now,” said Potts.But separate surveys by the Economic Policy Institute (EPI) and Generation Opportunity found little evidence that young people were going back to school when unable to land a job.One deterrent is the rising cost of education and record levels of student debt. About two-thirds of 2012 college graduates left school in debt, owing on average $28 700 in student loans, according to Mark Kantrowitz, publisher of FinAid.org. “Young people dropping out of the labour force to go back to school would be a silver lining if it were true,” said Heidi Shierholz, a senior EPI economist, adding that enrollment had gradually been increasing for decades.A Generation Opportunity survey published in August showed a third of young people were putting off additional training and post-graduate studies because of the sour economy.“This is significant. People are making the decision to put those off because the assurance of a return to investment is not there,” said the non-profit’s Conway, a veteran observer of the labour market as a former Department of Labour chief of staff.He said his organisation found that young people were doing unpaid internships at nonprofit groups and businesses to prevent their skills from atrophying. Others were joining the military.Some economists say the participation rate does not paint a true picture because people find work in the informal sector, ranging from legal activities such as child care to crime in some cases“People are picking a buck here and there and not being reported in anybody’s payroll,” said Patrick O’Keefe, head of economic research at JH Cohn in Roseland, New Jersey.“They will say they are not doing anything, even as they have a job and are being paid under the table,” said O’Keefe, a former deputy assistant secretary at the Labour Department. “We do not know to what extent that is going on.”

France backs more time for Greece

Greece should be allowed more time to meet deficit targets set by international lenders provided it is sincere about reforming its economy, French Prime Minister Jean-Marc Ayrault said on SundayNear-bankrupt Greece needs the European Union and International Monetary Fund’s blessing on spending cuts worth nearly €12bn ($16bn) to unlock its next tranche of aid, without which it faces default and a potential exit from the euro zone. The answer must not be a Greek exit from the euro zone,” Ayrault said in an interview with news website Mediapart. “We can already offer it more time... on the condition that Greece is sincere in its commitment to reform, especially fiscal reform.”Tough fiscal medicine prescribed by Greece’s international lenders has provoked widespread popular anger there that forms part of a broader backlash - spearheaded by French President Francois Hollande - against German-led austerity measures across Europe.So far, Greek officials have said agreement on €9.5bn of the €11.5bn package of spending cuts had been reached.That includes €6.5bn in cuts to wages, pensions and benefit payments and a further €1.1bn in savings planned from an increase in the retirement age.Responding to doubts over Hollande’s ability to deliver on his pro-growth, anti-austerity platform, Ayrault told Mediapart that a planned €120bn ($155.87bn) European Union stimulus package for the bloc as a whole was one of his successes - but that even this should only be a first step."We need to go further...120bn is not enough,” he said. “But it is better than nothing.”A poll released earlier on Sunday showed that Hollande’s approval ratings had tumbled to their lowest level since he took office in May, reflecting French impatience with his perceived inability to fight the crisis and stop job cuts. At a European level, the European Central Bank could do more to help growth, added Ayrault. “We would like to see (the ECB) go further...in playing the role of a real central bank,” he said.The ECB has over the past year brought out extra firepower in a bid to calm financial markets and spur growth in Europe, including the issuance of some €1 trillion in cheap funds to the banking sector and its recent announcement of a government-bond purchase programme.

NEWS, 01.06.2012.

Irish say yes to EU pact, now seek EU growth deal

 

Ireland's voters have agreed to ratify the European Union's deficit-fighting treaty with a resounding 60.3 percent "yes," vote final referendum results Friday showed, but government leaders and pro-treaty campaigners alike expressed relief rather than joy because of the stark economic challenges ahead.The treaty's approval, after weeks of nervousness in Dublin and Brussels, relieves some pressure on EU financial chiefs as they battle to contain the eurozone's debt crisis. But critics said the tougher deficit rules would do nothing to stimulate desperately needed growth in bailed-out Ireland, Portugal and Greece, nor stop Spain or Italy from requiring aid too.And a stern-faced Irish Prime Minister Enda Kenny agreed, stressing in his victory speech that Ireland's decision would strengthen his hand as he seeks, with many other European nations, to shift Germany in its stubborn resistance to more aggressive measures to boost growth through government spending."I have consistently argued that budget rules alone will not be enough to overcome the economic crisis that faces Europe. They must go hand in hand with a real and concrete growth program for Europe," Kenny said in a nationally televised press conference on the steps of his central Dublin office.Kenny said EU and European Central Bank chiefs must agree on a European-wide new system for managing the toxic banking debts that brought Ireland to the edge of bankruptcy in 2010 and now threaten to do the same to Spain. Ireland long has pressed EU partners, particularly Germany, in vain to permit partial writedowns of Irish banking debts that could ultimately cost Irish taxpayers an estimated (EURO)68 billion ($85 billion) and have already given Ireland the worst deficits in Europe.Kenny later spoke with German Chancellor Angela Merkel, Europe's leading champion of austerity. Merkel welcomed Ireland's willingness to vote yes to more cuts as an outcome that "deserves particular recognition and respect." And she mirrored Kenny's call for new growth initiatives, saying debt and deficit reduction "must go hand in hand with the strengthening of forces for growth and competitiveness in the economies of the eurozone. "German Foreign Minister Guido Westerwelle said all EU nations should follow Ireland's example and speedily ratify the treaty, which 25 nations signed in February and which is supposed to come into force by early 2013."The fiscal compact stands for long-term financial policy good sense. If all of Europe decisively commits itself to this course, we will be rewarded with new confidence," he said.The result of Thursday's referendum represented a surprisingly strong victory for Kenny, who courted unpopularity by insisting that Ireland already four years into a brutal austerity program that has slashed 15 percent from many workers' incomes had no choice but to vote in support of yet more cuts and tax hikes.And when the official result was announced in Dublin Castle, victorious campaign officials engaged in none of the cheers, shouts and hugs normally associated with the occasion."There was nobody from the `yes' camp jumping up and down," observed Gerry Adams, leader of the Irish nationalist Sinn Fein party, which campaigned against the deal.Government ministers emphasized that voters' anxiety about the parlous state of the economy with unemployment stuck on 14.3 percent and hundreds of thousands of households trapped in negative equity colored their every step on the campaign trail."The astonishing thing about this campaign was that lots of people voted yes with a heavy heart, and many voted no with a heavy heart. Both sides were really concerned about growth and employment," said Ireland's minister for social protection, Joan Burton, who has overseen cuts in many welfare payments.

Overall, about half of Ireland's 3.13 million registered voters participated in Thursday's referendum, a typical turnout in an officially neutral country that is constitutionally required to hold a referendum on each European treaty.Public rejection could have blocked Ireland from receiving new EU loans once its 2010 bailout money runs out next year. It also would have sent political shockwaves through other eurozone members, where anger against austerity and bank bailouts runs similarly high but citizens are denied the chance to vote on the treaty. The other 24 signatories are ratifying it through their parliaments.During the campaign, Kenny warned that rejection would mean even worse austerity, because Ireland would suffer more credit downgrades and lose its key EU source of funding.The treaty proposes that all members who ratify it should reduce their annual deficits to no more than 0.5 percent of gross domestic product. The current eurozone limit is 3 percent of GDP. Ireland is committed to cutting its way back to that level by 2015.Opponents of the treaty argued that the new 0.5 percent deficit limit would force Ireland to keep cutting until perhaps 2020, when greater state investment to stimulate the economy was required. The government countered that much would depend on whether Ireland could keep growing its economy against the tide of austerity.Ireland, unlike much of Europe, has recorded a faint pulse of growth over the past year thanks to strong exports by nearly 1,000 foreign high-tech companies based in Ireland. But the domestic economy  with consumers reducing their own debts and salting away savings after a decade of Celtic Tiger extravagance  has shrunk for four straight years.Ireland has posted the EU's worst deficits since 2009, including an EU-record 32.4 percent in 2010 and 13.1 percent last year. Both figures were greatly inflated by the exceptional costs of Ireland's decision to nationalize five of its six banks rather than see any collapse. That debt burden overwhelmed Ireland's national finances and pushed the nation into the bailout zone in 2010. Ireland's expected repayments to international bondholders and central banks, plus decades of related interest charges, represent (EURO)19,000 ($23,500) for every man, woman and child.

NEWS,14.05.2012.

How Will the French and Greek Elections Change the Direction of Europe?

 

 

As French and Greek voters make their feeling about spending cuts loud and clear, we ask ourselves: why has there been such a strong swing to anti-austerity/pro-growth, how does this threaten the survival of the euro and is a Greek default still possible? The deepening slump has dampened deficit reduction, the fiscal treaty hangs in the balance and patience is wearing thin. Crucially, according to voters and investors, time is running out.Growth vs. Austerity: Deepening Slump Dampening Deficit ReductionFrancois Hollande's victory in the French elections marks a significant change of focus in European politics. In contrast to the rhetoric delivered up to this point, Hollande wants emphasis of policy to be on growth instead of austerity. Why does he want this? Because the situation is deteriorating. Unless a country grows, their debt burden, as a percentage of a decreasing national output, grows and is therefore harder to manage. As iterated by French Socialist lawmaker Arnaud Montebourg, in an interview with BFMTV, "Austerity is everywhere and it's a complete shipwreck".Portugal and Spain are prime examples. While the Portuguese economy is expected to contract by 3.3% this year, the deepening slump is dampening deficit reduction. In fact, the deficit almost tripled in the first couple of months of this year alone. Spain, similarly, is struggling with a deteriorating debt situation. As almost 1 in 4 are without jobs, unemployment is boosting defaults. Bad loan ratios have reached a 17-year high. Survival of the Euro Threatened However, such a drastic change of attitude could damage the Franco-German Alliance, political progress and the very survival of the euro. This is because for Hollande to promote growth, he is threatening the fiscal treaty, perceived as crucial for keeping the euro together in its current form. The Treaty would create closer consolidation within the European union. Handing over authority for National Budgets to a Supra-National entity could ensure the various moving parts of the region interact better as a whole. However, Hollande disagrees with the primary focus on debt and deficit limits, without any pro-growth measures. Whilst the German Finance Minister Wolfgang Schaeuble is ready to discuss initiatives to boost economic growth, Merkel has said she will not renegotiate the pact. As her spokesperson asserted, it "has already been signed by 25 out of 27 EU countries." Instead the likelihood may be a growth pact attached to the fiscal pact. Nevertheless, the problems don't end there. Firstly, Hollande will have his work cut out for him in an economy that is barely growing, with jobless claims at their highest in 12 years and a rising debt load that keeps France vulnerable. Secondly, can both sides agree what they mean by growth?Growth by any other name... France and Germany disagree strongly on how to achieve growth. Merkel maintains it is through structural reforms -- making it easier to fire workers, which would encourage employers to hire, certainly a key aim for the Italian government. However, Hollande is hesitant and instead wants growth via infrastructure spending. But Germany won't agree to spending funded by borrowing -- exactly opposite to their deficit reduction targets. Therefore, again although rhetoric can be applauded, practical plans remain elusive. A Greece Default Still PossibleUncertainty continues to be a key challenge for Greece as voters in a similar move to the French, overwhelmingly rejected mainstream candidates supporting spending cuts. Crucially, these cuts were aimed at securing bailouts and avoiding a default. Instead, 70% of voterssupported parties that promised to tear up the bailout and attempts may be made to negotiate a gradual ''disengagement'' from the harshest austerity measures of Greece's €130 billion ($168 billion) bailout. This keeps the possibility of a Greek default firmly in the picture and until a coalition is formed, a new election next month is possible.Is time running out?Will there be enough time for political leaders to regain credibility and encourage Eurozone growth? As confidence wanes, borrowing costs rise and debt burdens risk becoming unsustainable. Worryingly, therefore, patience is running thin. Echoing Margaret Thatcher's thoughts on a unified Europe as "the vanity of intellectuals, an inevitable failure: only the scale of final damage is in doubt," the German paper Die Welt wrote after the French and Greek elections: "In the end the results are proof that Europe doesn't work."

NEWS.04.03.2012.

Putin always wins

Vladimir Putin has won a resounding victory in Russia's presidential election, exit polls show. He has secured a new six-year term in the Kremlin and a mandate to deal with opposition protests after a vote that opponents said was marred by fraud. Two television exit polls, released after voting ended on Sunday, forecast the former KGB spy would win 59.3% and 58.3% of the votes, enough to make a runoff against the second-placed candidate unnecessary. His nearest rival, communist Gennady Zyuganov, fell short of 20% in both polls.Putin's opponents said voting in many parts of the vast country was skewed to help him return to the presidency after four years as prime minister and vowed to step up the biggest protests since he rose to power 12 years ago. But although they portray him as an authoritarian ruler who is out of touch, his victory had not been in any doubt. The main challenge for Putin, credited by many Russians credit with rebuilding the country's image and overseeing an economic boom, was to win outright in the first round.” I think the elections will be legitimate, fair, and Putin will win in the first round, unless the court rules otherwise," Putin's spokesman, Dmitry Peskov, was shown saying on internet and cable television channel TV Dozhd before voting ended.Putin was likely to portray the victory as strong backing against the opposition protesters, although he has promised not to crack down on them. He is also expected to return to the Kremlin with tough fighting talk against the West, a trademark of his first presidency and election campaign. Some voters expressed anger at being offered no real choice in a vote pitting Putin against four others - communist Zyuganov, nationalist Vladimir Zhirinovsky, ex-parliamentary speaker Sergei Mironov and billionaire Mikhail Prokhorov.Others said Putin, 59, who has portrayed himself as a man of action and guardian of stability, was the tough national leader the world's biggest country and energy producer needed.” I voted for Putin because he was a good president and our children were looked after and that's all. That's how I feel," said Maria Fedotova, a 92-year-old grandmother wrapped up in fur coat and hat, flanked by relatives.

 Putin has remained Russia's dominant leader and its most popular politician since stepping aside in 2008 to make way for his ally, Dmitry Medvedev, because he was barred from a third straight term by the constitution. But some voters are tired of his macho antics, such as horse riding bare chested, and a system that concentrates power in his hands. They fear he could win two more terms, ruling until 2024 - almost as long as Soviet dictator Josef Stalin. Vote monitors from the opposition and bloggers posted allegations of election rigging across the country of 143 million. Golos, an independent monitoring group, said it had registered at least 2,283 reports of violations nationwide. An Interior Ministry spokesman denied there had been any major violations. Election officials also dismissed reports of widespread fraud in a parliamentary election on December 4 which triggered the opposition protests. Thousands of opposition activists as well as an international observer mission were also monitoring the polls. The opposition protests were sparked by the disputed Dec. 4 election, but anger was focused at Putin, who bungled the September 24 announcement of his presidential bid by appearing simply to inform Russians that he would rule for another six years..