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,13.03.2012.

EUROPE FINANCE ministers several NEW conditions fOR Spain

Eurozone finance ministers gave their final approval to a second bailout for Greece yesterday (12 March) and turned their attention on Spain, demanding that it adopt tougher deficit targets this year in order to get back on track in 2013.Greece, the main source of the currency bloc's debt crisis, swapped its privately held bonds  last week for new, longer maturity paper with less than half the nominal value, a move that cut its debt by more than  €100 billion. The exchange paved the way for eurozone ministers to give the final political go-ahead to a €130 billion package that aims to finance Athens until 2014. The decision will be formalised on Wednesday.” As agreed, new official financing of €130 billion will be committed by the euro area and the IMF for the period 2012-2014," Jean-Claude Juncker, who chairs the Eurogroup of finance ministers, told a news conference. Thanks to a high acceptance of the bond swap offer, Greece's debt would fall below a target of 120% of GDP in 2020, reaching 117%, from 160% now, he said.As Greece's financial problems have lost some urgency, Spain has raised a new challenge. After announcing the previous government had missed its 2011 budget deficit target by a significant margin, the new administration said it would not meet the EU-agreed deficit goal for this year either. Spain was supposed to cut its deficit to 4.4% of gross domestic product this year, but said it would only aim for 5.8% as it heads into recession. Its deficit in 2011 was 8.5%, far above a 6% goal. In a statement, the Eurogroup said Spain should strive for a 5.3% deficit target this year, cutting it some slack from the initial goal but keeping the pressure on.

” The Spanish government expressed its readiness to consider this in the further budgetary process," it said. The eurozone is keen that Spain, a far bigger economy than Greece which has so far avoided the need for a bailout, gives the financial markets no whiff of backsliding after Athens has been taken off the critical list, at least for now.” It will be the responsibility of the Spanish authorities to choose the initiatives that will have to be taken in order to bring down the budgetary deficit in 2012, what is most important is what is the target for 2013," Juncker said.” What is less important, but nevertheless important, are the avenues chosen in 2012."Madrid pledged it would cut the deficit to 3% of GDP next year, in line with the agreed final deadline, but wanted the higher starting point and slower economic growth to be taken into account in determining the path in 2012."Spain's position is that two things have changed. The first: last year there was a deviation of 2.5% in the public deficit and the second: that the circumstances in terms of economic growth have changed significantly," Spanish Economy Minister Luis de Guindos said.” Spain’s commitment to the fiscal rules is absolute.” The European Commission expects Spain's economy to contract 1% this year after growth of 0.7% in 2011, a sharp downward revision from the last forecast for 0.7% growth. Several other eurozone countries have committed themselves to meeting budget targets. Belgium said at the weekend it was sticking to its deficit goals and came up with nearly €2 billion of extra spending cuts to make the target - a move that could add to pressure on Spain to stick to its agreed plan. Portugal and the Netherlands are also fixed on meeting their targets. A stricter EU Stability and Growth Pact, which came into force in December, envisages fines for eurozone countries like Spain which are already running deficits above the 3% of GDP ceiling and missing their deficit reduction targets.