]]> http://economicsurveys.com/market-volatility-prompts-warning-from-japan-to-s-korea-bloomberg/feed/ http://economicsurveys.com/clinton-debt-deal-should-be-top-campaign-issue/ http://economicsurveys.com/clinton-debt-deal-should-be-top-campaign-issue/#comments Wed, 16 May 2012 20:03:53 +0000 Town http://economicsurveys.com/clinton-debt-deal-should-be-top-campaign-issue/ President Bill Clinton on Tuesday said those running for office should make reaching a debt deal the top campaign issue in the fall’s elections.

"I think this budget issue should become front and center in this election, Clinton said on Tuesday at a fiscal summit sponsored by the Peter G. Peterson Foundation.

"As soon as this election is over, I think the incentives will be there for both parties to make more compromises than they have in the past," Clinton added later.

However, he still has some convincing to do. House Majority Leader John Boehner is expected to say later in the afternoon that he won’t allow another increase in the debt ceiling without more spending cuts.

At issue is how to address some $7 trillion in tax increases and spending cuts that will kick in at year’s end if Congress does not act. The combination of cuts and tax hikes could upend the economic recovery, experts say.

Looming battle over investment taxes

Clinton said he doubted that Congress would come to a budget deal before the elections. And he said he’s worried the defeat of centrist Republicans, like Indiana Republican Sen. Dick Lugar, could make compromise impossible.

Clinton decried politicians who have a mindset of, "I’m just against compromise, and our world views are irreconcilable, and we have to force people to choose between us."

Clinton said he would like to see a "very tough deficit-reduction plan," that wouldn’t kick in until the economy has reached 3% growth for a few consecutive quarters.

He warned that if leaders don’t reach a budget deal before the economy starts growing, Americans will regret it.

"If we don’t deal with it, we will have growth come back and interest rates will go up so fast you won’t be able to catch your breath," Clinton said. "And everybody will say, ‘Why didn’t we do this earlier?’" 

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Coty announced its decision in a letter to Avon’s board a day after Avon said it would consider the offer. The letter was made public late Monday.

Avon’s response Sunday came two months after Coty made its original offer and Avon executives asked for an additional week to weigh the bid.

Coty says Avon has had ample time and is not seriously considering the deal.

Privately held Coty is a beauty-products maker whose brands include Davidoff and Sally Hansen. Founded in 1886, Avon became a fixture in households across the country as its legions of “Avon ladies” went door to door selling makeup to family members, friends and acquaintances.

Both companies are based in New York.

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The Thomson Reuters/University of Michigan preliminary sentiment index for May climbed to 77.8, the highest since January 2008, from 76.4 the prior month. The gauge was projected to drop to 76, according to the median forecast of 68 economists surveyed by Bloomberg News. For the first time since monthly data began in 1978, it advanced for a ninth-straight time.

A jobless rate that has dropped to the lowest level in three years and a housing market that shows signs of stabilizing may be helping lift Americans

But despite the prospect of an embarrassing loss for her conservatives, Merkel still looks unlikely to join French ally Nicolas Sarkozy any time soon in the parade of European leaders booted out by voters weary of Berlin-backed austerity. Merkel’s stance is widely shared by German voters nationally.

Sunday’s state election in North Rhine-Westphalia, a western region of some 18 million people, was called in March after its minority government, made up of Germany’s main national opposition parties, narrowly failed to get a budget passed.

Opposition leaders declared that it would send an important signal ahead of national elections due in late 2013. Merkel said it offered an opportunity for the region to elect a government that wouldn’t take on “ever more debt.”

That line of attack looks unlikely to bear fruit: polls suggest the state government of Social Democrats and Greens led by popular governor Hannelore Kraft has a good chance of emerging strengthened, with a majority in the state legislature.

But Sunday’s election won’t change the balance of power nationally whatever the outcome. Gero Neugebauer, a political scientist at Berlin’s Free University, said Merkel should be able to continue with “business as usual.”

Merkel’s national center-right coalition has become notorious for infighting over issues ranging from tax cuts to planned benefits for stay-at-home parents since it took power in late 2009. It has performed badly in several state elections over the past year.

The squabbling, and the Free Democrats’ weakness in polls, has long fed periodic speculation that the government might fall apart before national elections are due in September next year. But it has held on _ and Neugebauer said he expects it to serve the full term.

When the national election comes, Merkel’s chances of holding power look decent, though perhaps with a new coalition partner.

North Rhine-Westphalia is a traditional center-left stronghold, though Merkel’s Christian Democrats and their partners in the current national government, the pro-market Free Democrats, ran it for five years until 2010.

The Christian Democratic candidate, federal Environment Minister Norbert Roettgen, hasn’t looked seriously likely to win it back during an underwhelming and at times gaffe-prone campaign Business Card Holders. And the struggling Free Democrats’ main aim is to win the 5 percent of votes needed to retain their seats.

This week, Roettgen irritated fellow conservatives by declaring that Sunday’s election would decide “whether Angela Merkel’s course in Europe is strengthened or whether it is weakened by the re-election of a pro-debt government in Germany.”

Merkel shot back in a regional newspaper interview that “the election on Sunday is an important state election for North Rhine-Westphalia _ no more and no less.” And Roettgen downplayed his remarks, insisting he meant only to target the current state government.

Merkel’s center-left predecessor, Gerhard Schroeder, engineered early national elections which led to his defeat after his party lost its four-decade grip on North Rhine-Westphalia in 2005.

Merkel made no such dramatic move after her coalition’s defeat there two years ago, which cost her government its majority in Parliament’s upper house.

Current national polls consistently show Merkel’s conservatives as the biggest party, though they forecast a parliamentary majority neither for her center-right coalition nor for the Social Democrats and Greens, who ran Germany from 1998 to 2005.

The upstart Pirate Party, which has surged in recent months with a platform of near-total transparency and Internet freedom but lacks policies on many issues _ including the debt crisis _ so far seems to have hurt the center-left most.

Merkel’s personal popularity remains high nearly seven years into a chancellorship in which she has repeatedly displayed a knack for riding out crises. And whether or not campaigning against higher debt helps this weekend, a poll published this week suggested Germans are still broadly on her side.

The survey of 1,003 people by Forsa for Stern magazine, conducted May 3-4, found that 59 percent rejected the idea of stimulating growth by running up new debt.

Sixty-one percent believed Merkel should stick to her tough stance _ which she has done since French and Greek voters punished pro-austerity parties last weekend. But officials are hopeful of reconciling Berlin’s desire for budget discipline with incoming French President Francois Hollande’s push for growth.

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But the world’s most influential bond investor thinks it won’t work.

Bill Gross, manager of Pimco’s $252 billion Total Return Fund, the largest mutual fund, says that countries can’t simply cut their way out of the debt crisis. That’s bound to backfire, he says.

The countries that use the euro reduced their budget deficits last year, but their economies shrank, too. As a result, their debt increased as a share of their annual economic output. Eight of the 17 euro countries are in recession.

Meanwhile, unemployment in the so-called eurozone is almost 11 percent and rising. Outrage over spending cuts led voters last weekend to oust leaders in Greece and France who had promoted cuts as a way out of the crisis.

Some questions and answers with the man sometimes called the bond king:

Q: What do you make of the backlash in Europe against deep spending cuts? They were supposed to lure investors like you into buying government bonds from Greece, Portugal, Spain and the like. It doesn’t seem to be working.

A: We do look at the debt levels. It matters. But a bond investor has to look at economic growth, too. If a country can’t grow its way out of its predicament, we won’t go there. That’s why we’ve stayed out of Europe for the most part.

Q: So the so-called austerity approach _ tightening government budgets through spending cuts and tax increases _ isn’t enough for you. A country can’t keep cutting spending and hope that prosperity eventually shows up?

A: No, that doesn’t work guaranteed high risk personal loans. Eliminating a budget deficit won’t produce growth. It really requires a delicate combination of growth and budget discipline over the longer term. Policymakers have it tough.

Q: Paul Krugman, the economist and columnist for The New York Times, has been saying this for years. It’s the lesson of the Great Depression: Tightening budgets in the face of an economic slump only makes the slump worse.

A: I’m not a big Krugman advocate. But I agree that you don’t cut everything and hope the private markets reward you for it. It has to be a balance. What Europe really needs is to get the private market back in there. They’re trying to convince the Pimcos of the world to return (by having the European Central Bank lend to banks), but all the efforts so far use public money. The global marketplace is privately funded. And if the private markets can’t be convinced, this crisis is going to be with us for a very long time.

Q: What would it take to convince you to buy bonds from one of the troubled countries?

A: It takes economic growth, honestly. And it also takes policies that last longer than one or two months. We haven’t avoided Europe, entirely. We invest in Germany and France. But we avoid the bad boys and girls because there doesn’t appear to be a growth solution to these countries’ problems.

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The Labor Department says employers advertised 3.74 million job openings in March. That’s up from a revised 3.57 million in February. The March figure was the highest since July 2008, just before the financial crisis erupted that fall.

The 4.8 percent increase in openings suggests job growth could pick up in May. It usually takes one to three months for employers to fill openings.

Still, more than 12.7 million people were unemployed in March. That means an average of 3.4 people competed for each open job. In a healthy job market, the ratio is usually around 2 to 1.

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A Hollande victory could change how Europe tackles its debt crisis _ with more stimulus and less austerity.

With about half of the nationwide votes counted in Sunday’s race, official results showed Hollande with 50.8 percent to 49.2 percent for Sarkozy.

The CSA, TNS-Sofres and Ipsos polling agencies made projections based on the vote count at select voting stations around the country. They predict that Hollande will win with 51.8 percent to 53 percent, compared with 47 percent to 48.2 percent for Sarkozy.

Hollande would be France’s first Socialist president since Francois Mitterrand, leader from 1981-1995 fast payday loan.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

PARIS (AP) _ Polling agency projections suggest Socialist Francois Hollande has won France’s presidential election against conservative incumbent Nicolas Sarkozy. A Hollande victory could change how Europe tackles its debt crisis _ with more stimulus and less austerity. Partial official results also showed Hollande ahead.

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The deal would mark a decisive move toward construction of a landmark pipeline crossing the four nations that backers hope will meet energy demands across the region.

Two high-ranking officials, who cannot be named as they are not authorized to speak with the media, told The Associated Press this week they expect the agreement to be signed at an energy conference in Turkmenistan late May.

Progress on the project has to date been delayed by disagreement among participant nations on transit fees and the price for the gas.

It has been widely assumed that gas for the more than 1,000-mile (1,600-kilometer) pipeline will be sourced from the Dauletabad field in southern Turkmenistan.

An official from the state gas company said, however, that a portion of the fuel will eventually be drawn from the vast and yet-to-be developed South Yolotan field near the Afghan border.

Independent British auditor Gaffney, Cline & Associates estimates that South Yolotan may hold up to 21.2 trillion cubic meters of gas, potentially making it second largest reserve of gas in the world after the South Pars field, shared between Iran and Qatar.

Another top Turkmen energy industry official told the AP that the first gas is expected to be drawn from South Yolotan in 2013, but that the date could be brought forward to the end of this year in the best-case scenario.

The gas pipeline across Afghanistan, projected to ship 33 billion cubic meters a year, has been actively backed by the United States. It would give Turkmenistan a further export route for its copious energy reserves and generate revenue for Afghanistan. It currently exports to Russia, Iran and China, and also harbors ambitions of selling directly to Europe.

Turkmen President Gurbanguli Berdymukhamedov has said Afghanistan could stand to earn more than $1 billion annually in transit fees. Afghan leader Hamid Karzai predicts maintaining the pipeline could provide employment for 50,000 people in Afghanistan alone.

But many observers remain concerned about the security risks of laying a pipeline across some of the most dangerous parts of Afghanistan and Pakistan’s unruly tribal areas.

No details have been disclosed about the selling price for Turkmenistan’s gas, but media in Pakistan cited the country’s petroleum minister as saying the gas would cost less than was being paid for gas imported from Iran.

While pursuing plans to open up new markets on its immediate border, Turkmenistan is also pushing ahead with expanding capacity for gas transportation routes to China, which traverse neighboring Uzbekistan and Kazakhstan.

Turkmenistan began supplying gas to China through a newly completed pipeline in late 2009. That pipeline and a second route that came online in June is expected to bring full annual capacity to 40 billion cubic meters by 2015.

A Turkmen energy official told the AP this week that third pipeline to China is already in the works, which will enable Turkmenistan to meet the commitments made in 2011 to gradually boost natural gas deliveries to China to 65 billion cubic meters annually.

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