NEWS,26.10.2012

If Obama Wins, Clinton Will Stay At His Side: Countdown Day 11

Presidents Barack Obama and Bill Clinton are turning into the most watchable buddy-buddy road show since "Starsky and Hutch." All they're missing are platform shoes and a Gran Torino Next week they will travel together to Florida, Ohio and Virginia, as Clinton tries to infuse his explanatory magic into Obama's campaign-trail pitch in the final days of a grueling 2012 race.But as attention turns even before Election Day to the dreaded "fiscal cliff" looming at year's end, it's becoming clear that Clinton's sidekick duties will not be over on November 6 if Obama wins.If the current president gets the chance to try to fashion a post-election deal, he'll need Clinton's help in selling it to fellow Democrats.White House staffers are already working overtime on the details of various potential deals; corporate America is begging for demanding prompt action to avoid massive tax increases and draconian "sequestered" spending cuts on January 2.Administration officials argue that they will be in a better position to make a deal with the post-election Congress than a Romney proto-presidency would be.Obama long ago signaled willingness to take on his own party by countenancing entitlement cuts. Romney and his running mate, Rep. Paul Ryan (R-Wis.), are irrevocably committed to not raising income tax rates on anyone, and not raising the overall tax burden.Since the essence of any deal would be concession on both sides of the ledger, Romney's first act as president-elect would require picking a tax fight with the Tea Party and perhaps Ryan.Meanwhile, Obama's staff and advisers inside and outside the White House many of them former staffers for Bill Clinton are looking at options. If their boss wins, talks will begin immediately."I don't see Clinton sitting in on the negotiations," said a source who is very close to both men. "Budget talks are incredibly detailed and exhausting. You have to be totally immersed, and the president has to take the lead. I don't see Clinton in that process."But if we get a tentative agreement, I expect that the former president will be asked to help sell it, and I am sure that he will," said the source, who asked for anonymity to frankly discuss both men. "Nobody could do it better."Clinton has done it before. In December 2010, Obama was forced to accept an extension of the Bush-era tax cuts in exchange for a deal to extend unemployment insurance, an extension of the payroll tax cut and other items on the Democrats' agenda.As it happened, a meeting with Clinton was already on the president's schedule that day. After the two met privately in the Oval Office, Clinton suggested off-the-cuff that they both go to the briefing room, where Clinton gave a ringing defense of the deal.A planned and elaborate version of the same thing could happen this December, if the president is reelected and can fashion a tentative agreement.Obama would need the help. He is not on good terms with members of Congress in general even, if not especially, with members of his own party, some of whom regard him as aloof to the point of condescension. There are some key Democrats in the House with whom he has never had a serious and extended conversation.The president has already indicated and indicated again recently in his interview with the Des Moines Register editorial board hat he is open to a deal that would include substantial new cuts to entitlement programs, an idea that is anathema to much of his party.Selling that part of the deal to constituencies such as labor, the Congressional Black Caucus and teachers groups, to name a few, would be Clinton's brief. As for family self-interest, there would be plenty. Most economists and business experts think that a real, substantive budget deal one that, for example, would save the $4 trillion suggested by the Simpson-Bowles Plan would boost both the psychology and reality of the American, and thus the global, economy.Four good years of Democratic-led U.S. economic growth would set things up nicely for current Secretary of State Hillary Rodham Clinton in 2016.There's never been a TV show like it, but "The Good Husband" might sell.

 

Powell endorsed Obama

An outspoken surrogate for Mitt Romney's White House campaign suggested late on Thursday that race was a factor in former secretary of state Colin Powell's endorsement of President Barack Obama.Former New Hampshire governor John Sununu told CNN that the re-endorsement of Obama by Powell - a Republican who served in both Bush presidencies but backed Obama in 2008 - was possibly due to both men being African-Americans."Frankly, when you take a look at Colin Powell you have to wonder whether that's an endorsement based on issues or whether he's got a slightly different reason for preferring President Obama," Sununu told CNN host Piers Morgan."When you have somebody of your own race that you're proud of being president of the United States, I applaud Colin for standing with him."The remarks by Sununu, a prominent and often flamboyant supporter of Romney, could inject race into a campaign the Republican challenger has tried to keep focused on the sluggish US economy.The remarks came just two days after Republican Senate candidate Richard Mourdock, explaining his anti-abortion stance, sparked controversy by saying that pregnancies caused by rape are "something God intended to happen".Distracting from Republican argumentThose remarks threatened to slow Romney's progress in winning over vital women voters in key swing states and gave Obama an opening to brand Republicans as extremists when it comes to women's rights.Sununu's remarks could prove less damaging as Obama already enjoys overwhelming support among African-American voters but may further distract from Republicans' central argument against the president's economic policies.The two presidential candidates are locked in a virtual tie less than two weeks ahead of the 6 November election, with Romney enjoying a slight lead in national polls but Obama holding a narrow edge in vital battleground states.Powell, who served as chairperson of the Joint Chiefs of Staff under President George H W Bush and secretary of state under President George W Bush, is a moderate Republican once seen as a promising presidential prospect.In his re-endorsement of Obama on Thursday, Powell credited the president with recent improvements in the economy and praised him as a steely commander-in-chief who had wound down the wars in Iraq and Afghanistan.

 

US consumers boost economic growth

US economic growth picked up in the third quarter as a late burst in consumer spending offset the first cutbacks in investment in more than a year by cautious businesses.The stronger pace of expansion, however, fell short of what is needed to make much of a dent in unemployment, and offers little cheer for the White House ahead of the closely contested November 6 presidential election.Gross domestic product expanded at a 2% annual rate, the Commerce Department said on Friday, accelerating from the second quarter's 1.3% pace. A pace in excess of 2.5% is needed over several quarters to make substantial headway cutting the jobless rate.Economists polled by Reuters had expected a 1.9% growth pace in the third quarter. The report comes a little more than a week before the election in which President Barack Obama is trying to fend off Republican challenger Mitt Romney.Since climbing out of the 2007-09 recession, the economy has faced a series of headwinds from high gasoline prices to the debt turmoil in Europe and, lately, fears of US government austerity. It has struggled to exceed a 2% growth pace and remains about 4.5 million jobs short of where it stood when the downturn started. Consumers, however, largely shrugged off the impending sharp cuts in government spending and higher taxes, which are due at the start of the year absent congressional action. Indeed, they went on a bit of a shopping spree as the quarter wound down, buying a range of goods - including automobiles and Apple's iPhone 5.Consumer spending, which accounts for about 70% of US economic activity, grew at a 2% rate after increasing 1.5% in the prior period.Spending despite income squeezeHigh stock prices and firming house values have made households a bit more willing to take on new debt, supporting consumer spending. However, incomes were squeezed in the last quarter, causing households to save less to fund their purchases.The amount of income available to households after accounting for inflation and taxes rose at a tepid 0.8% rate in the third quarter, slowing for a brisk 3.1% pace the prior period. The saving rate slowed to a 3.7% rate after increasing 4% in the second quarter.The faster pace of spending was achieved despite a spike in inflation pressures as gasoline prices rose. A price index for personal spending rose at a 1.8% rate, accelerating from the second quarter's 0.7% pace. But a core inflation measure that strips out food and energy costs slowed to a 1.3% rate after rising 1.7% in the prior quarter, suggesting the increase in overall price pressures will be temporary. With about 23 million Americans either out of work or underemployed, there are fears the current pace of spending will not be sustained, especially if gasoline prices maintain their recent upward march and families get a higher tax bill in 2013.The automatic tax hikes and government spending cuts, known as the "fiscal cliff," will drain about $600bn out of the economy next year absent congressional action.Fiscal cliff fears have already hammered business spending, which dropped at a 1.3% pace in the third quarter, falling for the first time since the first three months of 2011.Part of the drag in business investment, which had been a source of strength for the economy, came from equipment and software, where outlays were the weakest since the second quarter of 2009.Spending on nonresidential structures contracted after five straight quarters of growth.In contrast, home building surged at a 14.4% rate, thanks in large part to the Federal Reserve's ultra accommodative monetary policy stance, which has driven mortgage rates to record lows.Inventories were a drag on growth because of a drought in the country's Midwest, which has decimated crops. Farm inventories cut 0.42 percentage point from GDP growth. In addition, slowing global demand, particularly weakness in Europe and China, caused US exports to contract for the first time since the first quarter of 2009. That left a trade deficit that weighed on GDP growth.But there was surprisingly good news on government spending, which snapped eight straight quarters of declines on a strong rebound in defense outlays.

China: $4 Trillion in Dirty Money Should Worry Us All

Global Financial Integrity's new report on illicit financial flows from China showed some of the worst numbers that we've ever estimated. Crime, corruption, and tax evasion cost the world's largest country and second-largest economy $3.79 trillion from 2000-2011. To make matters even darker, illicit capital flight is intensifying. In 2011 alone, China lost over $600 billion more than any other single country lost over a ten year period when Global Financial Integrity estimated illicit financial flows from 2000-2009.At first glance, these numbers are so big that it can be difficult to wrap your head around them. Even for a country the size of China, $3.79 trillion is a lot of money. What does this look like in the concrete example? A story in The New York Times this morning reported that close family members of Wen Jiabao, the outgoing Premier of China, have accumulated $2.7 billion in wealth much of it housed offshore. His immediate family was awarded tremendous amounts of money in government contracts. This comes not long after The Wall Street Journal exposed that the wife of Bo Xilai, a rising star governor who was on the verge of being promoted to China's powerful Politburo, was responsible for the murder of a British citizen who helped her family smuggle as much as $1 billion to offshore tax havens and secrecy jurisdictions.Illicit financial flows on a massive scale as captured in the GFI study are how these corrupt billionaires hoard their money. Global Financial Integrity's new report found that in 2010 alone, $213.7 billion of foreign direct investment flowing into China was officially reported to come from the British Virgin Islands population 28,000. This is likely the result of round tripping where Chinese elites launder money through secrecy jurisdictions and back into China in order to disguise its source and is what you would expect wealthy Chinese elites to do if their wealth was earned illegally. However, massive amounts of money are indeed leaving China and not returning. Our report found that of the $2.83 trillion that flowed out of China since 2005, almost $600 billion wound up as deposits or liquid assets in tax havens.This has tremendous implications for the Chinese economy. Our report found that illicit financial flows are increasingly driving inequality in China, and may reflect recent concerns about Chinese elites wishing to leave the country. At some point, something has to give. Crime, corruption, and tax evasion will threaten China's economy, and as a result, the global economy if this trend continues. In the words of our Lead Economist, Dev Kar, "[China's] social, political, and economic order is not sustainable in the long-run given such massive illicit outflows."China has seen massive, world-changing, economic growth over the past three decades. However, corruption is undermining much of this growth. The infrastructure that China is building right now should drive growth, and therefore raise living standards for the Chinese people for a century to come. However, many of the brand new bridges, roads, and modern buildings in China have been plagued by shoddy quality and massive amounts of corruption. Our research suggests that much of this money is flowing out of China.I spent most of my professional life as an entrepreneur in Nigeria, and lived there for 15 years. Despite massive oil wealth and a vibrant, young population, 45% of the population lives below the poverty line. Per-capita GDP has barely risen since I first set foot there in the 1960s. I know far too many people living worse off today than they did decades ago. This is not because the Nigerian economy lacks promise it has huge oil exports, and the country is filled with good, ambitious,entrepreneurial people but because crime, corruption, and tax evasion have torn the country apart.When China is growing at close to 10% every year, China's median citizen sees their life improving despite endemic corruption and illicit outflows. However, there are serious questions for the political and social stability of China's economy if growth slows. Will the median citizen continue to tolerate obvious and tragic corruption on the scale that we are seeing when more modest growth is not improving their living standards? When we say that illicit flows drive inequality, it is because money moved illegally out of the economy hurts your average person. That money can't be spent on schools, infrastructure or basic services. To make matters worse, our prior research finds that illicit flows drive underground economies, resulting in more organized crime, smuggling, and other factors that undermine the Chinese economy.A recent Pew poll suggests the average citizen may be getting restless.  The study released last week found that roughly half of the Chinese public now see corruption and inequality as "very big problems" in their country, a significant spike from 2008 when the poll was last conducted.Still, the world needs to do something about this. Potential political unrest in China affects us all. We make it far too easy for wealthy elites all over the world to stash their money in tax havens, including the United States. The world cannot afford to let China collapse into a pit of corruption and civil unrest.  The result would be a disaster.

NEWS 21.01.2012

Britain admits 'fake rock' plot to spy on Russians

Tony Blair's former aide Jonathan Powell says UK was behind plot to spy on Russians with device hidden in fake plastic rock Britain was behind a plot to spy on Russians with a device hidden in a fake plastic rock, a former key UK government official has admitted. Jonathan Powell, former chief of staff to prime minister Tony Blair, admitted in a BBC documentary that allegations made by the Russians in 2006 - dismissed at the time - were in fact true.” The spy rock was embarrassing," he said in the BBC2 documentary series, Putin, Russia and the West. "They had us bang to rights. Clearly they had known about it for some time and had been saving it up for a political purpose.” A diplomatic row was sparked six years ago after Russian state television broadcast a film claiming British agents had hidden a sophisticated transmitter inside a fake rock left on a Moscow street. It accused embassy officials of allegedly downloading classified data from the transmitter using palm-top computers. The TV report showed a video of a man slowing his pace and glancing down at the rock before walking quickly away; another man was shown kicking the rock, while another walked by and picked it up. The Russian security service, the FSB, broadcast X-rays of a hollowed-out rock filled with circuitry and accused four British men and one Russian of using it to download information. The FSB alleged that British security services were making secret payments to pro-democracy and human rights groups.

Soon after the incident, then President Vladimir Putin forced the closure of many non-governmental organisations (NGOs) after introducing a law restricting them from receiving funding from foreign governments.” We have seen attempts by the secret services to make use of NGOs. NGOs have been financed through secret service channels. No one can deny that this money stinks," said Putin. "This law has been adopted to stop foreign powers interfering in the internal affairs of the Russian Federation.” Britain’s ambassador in Moscow at the time, Tony Brenton, denied the government had been involved in covert activities.” All of our activities with the NGOs were completely above board," he said. "They were on our website, the sums of money, the projects. All of that was completely public.” The revelation comes at a sensitive time, with Putin renewing attacks on human rights and opposition activists as hostility to his premiership grows. He has repeatedly accused the west, namely the US, of using activists to plot to bring regime change to Russia."Putin, as a former spy and KGB agent, is trying to discredit us with the only methods he knows," said Lev Ponomaryov, a prominent human rights activist. "For any thinking person this rock meant nothing – it was simply a provocation, a cheap trick used by a former KGB agent."At the time Blair attempted to play down the allegations, and the Foreign Office denied any irregular relations with Russian NGOs. When asked about the incident, Blair smiled as he told journalists: "I think the less said about that, the better."

'Fake rock' Russian spy plot: anti-Putin activists left between rock and hard place

Russian leader Vladimir Putin previously exploited spy caper to discredit non-governmental organisations

An image broadcast by Russian state-run Rossiya TV in January 2006 shows an x-ray image of the rock, with transmitter. It was the moment that British spycraft became the laughing stock of Russia. The decision by MI6 to place a fake rock rigged with a hidden transmitter to communicate with agents in Moscow was more Johnny English than James Bond, with Russian state-run television airing a programme dissecting the rock with x-rays and showing grainy footage of British diplomats giving it a gentle kick when it seemed to be out of order.
Thursday's admission by Jonathan Powell, former chief of staff to the then prime minister, Tony Blair, that the rock was indeed the work of British intelligence might seem like a small footnote in history to a forgotten scandal. But inside Russia there was a bigger game at play."The spy rock was embarrassing … they had us bang to rights," Powell told BBC2 in its new documentary series Putin, Russia and the West. The Kremlin had known about the rock "for some time, and had been saving it up for a political purpose", he added.That political purpose emerged two days after the scandal came to light when Vladimir Putin, then president, said: "It has now become clear to many why Russia passed a law regulating NGO activities."Less than two weeks earlier Putin had quietly signed a new law tightening state control over non-governmental organisations, including clauses that gave the government power to shut them down and force greater monitoring of foreign funding. The new regulations followed pro-democracy revolutions in neighbouring Georgia and Ukraine, which Russia argued were orchestrated by the west via foreign-funded NGOs.The new law, Putin explained, was "designed to block foreign governments from interfering in the internal politics of the Russian Federation". Critics said it was the latest step in Putin's growing authoritarianism, a further crackdown on Russia's struggling civil society. International organisations loudly condemned the law. That’s when the rock dropped into the narrative. According to the Kremlin, a British diplomat used communications technology in the fake rock to send and receive information and had dealings with Russian NGOs; ergo, went the Kremlin's argument, the west was funding NGOs to cause the downfall of the Putin regime. A justification for Putin's new law had been found. Since the law was implemented thousands of NGOs have been harassed, denied registration or shut down, according to Human Rights Watch. The climate of suspicion has only intensified, particularly in the past month as Putin battles a growing movement against his rule as he seeks to return to the presidency in March.In the lead-up to Russia's parliamentary election on 4 December, Putin said again outside powers were seeking to use NGOs to subvert the country. Within days of his remarks an all-out campaign had been launched against Golos, an independent election-monitoring group that receives foreign funding – bureaucratic investigations, a smear campaign in the press, the hacking of employees' email accounts. When tens of thousands of Russians began taking to the streets in the wake of the vote – spurred on by widespread allegations of fraud of the type Golos was designed to monitor – Putin promptly accused them of being agents of the west. That’s what for some Russians makes the timing of Powell's revelation so precarious. "I would not be surprised if Putin and his team actually used it again to assert their old platitudes discrediting leading human rights activists," said Tanya Lokshina, of Human Rights Watch Russia.