Wednesday, November 3, 2010
Bush tax cuts: Obama seeks compromise
NEW YORK (CNNMoney.com) -- A day after Republicans won control of the House of Representatives, President Obama said that he is willing to negotiate to ensure the Bush tax cuts are extended for the middle class by Jan. 1.
"How that negotiation works itself out, I think it's too early to say. But, you know, this is going to be one of my top priorities," Obama said during a press conference Wednesday. (7 key money issues facing the lame-duck Congress)
The president had been saying publicly that he only wanted the cuts extended permanently on income up to $250,000 for married couples and $200,000 for single filers. Under his proposal, the portion of the cuts that apply to income over $250,000 would expire after Dec. 31.
Republicans, meanwhile, have been pushing for a permanent extension of the cuts for everyone regardless of income.
Both parties have expressed concern that raising taxes on the majority of Americans would harm the economic recovery.
"[M]y hope ... is that given [that] we all have an interest in growing the economy and encouraging job growth that we're not going to play brinkmanship but instead we're going to act responsibly," Obama said.
A few key Democrats -- such as Senate Budget Chairman Kent Conrad -- have said they could support extending the tax cuts temporarily for upper-income households. Others, including Senate Banking Chairman Christopher Dodd, have called for pushing the $250,000 threshold higher.
The look of compromise
So what could both parties live with?
Two Washington tax policy analysts -- Clint Stretch of Deloitte Tax LLP and Anne Mathias of MF Global's Washington Research Group -- believe the most likely compromise will be a temporary extension for everyone for one or two years.
Mathias believes Obama "will not veto a bill that extends them for all."
Stretch said that a temporary extension for all carries less political risk for Republicans than other scenarios floated, such as a permanent extension for the middle-class but a temporary one for the rich.
"If the Republicans really care about high-income taxpayers, they can't let them get separated from the middle class," Stretch said.
Democrats, meanwhile, can frame a temporary extension as a way to give everyone time to figure out how to slow growth in the U.S. debt, much like what House Majority Leader Steny Hoyer suggested this summer, Stretch said.
In June, Hoyer made news when he said Congress needed "to have a serious discussion" about whether the country can afford a permanent extension "before we have a real plan for long-term deficit reduction."
The Treasury Department estimates the cost of making the tax cuts permanent for all income below $250,000 would cost $3 trillion over a decade; the cost of making them permanent for upper-income households would cost $700 billion over the same period.
Deficit hawks have been arguing that making any of the tax cuts permanent will make it infinitely harder to ever put the federal budget back on a more sustainable track -- a stated goal of all parties.
Mathias estimates that a one-year extension for everyone will cost between $250 billion and $350 billion.
QE2: Fed pulls the trigger
NEW YORK (CNNMoney.com) -- In its latest move to jump start the sluggish recovery, the Federal Reserve announced it will pump billions into the economy.
The central bank will buy $600 billion in long-term Treasuries over the next eight months, the Fed said Wednesday. The Fed also announced it will reinvest an additional $250 billion to $300 billion in Treasuries with the proceeds of its earlier investments.
The bond purchases aimed at stimulating the economy -- a policy known as quantitative easing -- will total up to $900 billion and be completed by the end of the third quarter of 2011.
Ever since the Fed first signaled back in August that it was considering a second round of monetary stimulus, dubbed QE2, investors have been preoccupied with speculating on how much the Fed would buy.
Now the verdict is in, and is roughly in line with forecasts. Mainstream estimates had predicted a total between $500 billion and $1 trillion.
It was all largely as expected," said Calvin Sullivan, chief strategy officer at Morgan Keegan. "The markets are responding as one would expect."
Stocks seesawed between gains and losses, as investors digested the news. The real surprise was in the bond market, where yields on the longer term 10-year and 30-year rose, after traders realized the Fed's plan called for 91% of its purchases at shorter maturities than expected.
Read the Fed statement
The Fed also reiterated its bearish view on the stalling economy, saying "the pace of recovery in output and employment continues to be slow."
Amid sluggish consumer spending, businesses have been reluctant to hire and the economy has grown at a snail's pace. At the same time, inflation is dangerously low, causing some economists to warn that the United States may even be flirting with deflation -- a debilitating drop-off in prices and demand.
The Fed has already kept the federal funds rate, a benchmark for interest rates on a variety of consumer and business loans, at historic lows near zero since December 2008. The Fed said Wednesday that it would continue to hold the rate at "exceptionally low levels" for an "extended period."
The federal funds rate is the central bank's key tool to spur the economy and a low rate is thought to encourage spending by making it cheaper to borrow money.
When already low rates failed to get consumers and businesses to spend, the Fed decided to resort to the more unconventional tool of quantitative easing, to lower interest rates even further.
But critics of QE2, including some Fed members, believe that too much monetary stimulus might lead to runaway inflation that could derail the economy, or future asset bubbles that could endanger economic stability over the long term.
The most outspoken voting member of the Fed, Kansas City Fed President Thomas Hoenig, was once again the lone dissent among policymakers, saying he believed the risks of additional securities purchases outweighed the benefits.
Other opponents have argued that it simply won't work. The Fed already made nearly $2 trillion in similar purchases during the Great Recession, and current low interest rates have not jolted spending, they say.
"I don't think this is going to make any difference at all," said Paul Ashworth, senior U.S. economist with Capitol Economics, who feels the plan is too small. "This is a slippery slope. Once you're on it, it's very hard to get off."
He predicts a repeat of what happened with the first round of quantitative easing two years ago. The Fed initially announced a $600 billion program in November 2008, but then four months later, increased that to $1.8 trillion, when it wasn't enough.
The central bank will buy $600 billion in long-term Treasuries over the next eight months, the Fed said Wednesday. The Fed also announced it will reinvest an additional $250 billion to $300 billion in Treasuries with the proceeds of its earlier investments.
The bond purchases aimed at stimulating the economy -- a policy known as quantitative easing -- will total up to $900 billion and be completed by the end of the third quarter of 2011.
Ever since the Fed first signaled back in August that it was considering a second round of monetary stimulus, dubbed QE2, investors have been preoccupied with speculating on how much the Fed would buy.
Now the verdict is in, and is roughly in line with forecasts. Mainstream estimates had predicted a total between $500 billion and $1 trillion.
It was all largely as expected," said Calvin Sullivan, chief strategy officer at Morgan Keegan. "The markets are responding as one would expect."
Stocks seesawed between gains and losses, as investors digested the news. The real surprise was in the bond market, where yields on the longer term 10-year and 30-year rose, after traders realized the Fed's plan called for 91% of its purchases at shorter maturities than expected.
Read the Fed statement
The Fed also reiterated its bearish view on the stalling economy, saying "the pace of recovery in output and employment continues to be slow."
Amid sluggish consumer spending, businesses have been reluctant to hire and the economy has grown at a snail's pace. At the same time, inflation is dangerously low, causing some economists to warn that the United States may even be flirting with deflation -- a debilitating drop-off in prices and demand.
The Fed has already kept the federal funds rate, a benchmark for interest rates on a variety of consumer and business loans, at historic lows near zero since December 2008. The Fed said Wednesday that it would continue to hold the rate at "exceptionally low levels" for an "extended period."
The federal funds rate is the central bank's key tool to spur the economy and a low rate is thought to encourage spending by making it cheaper to borrow money.
When already low rates failed to get consumers and businesses to spend, the Fed decided to resort to the more unconventional tool of quantitative easing, to lower interest rates even further.
But critics of QE2, including some Fed members, believe that too much monetary stimulus might lead to runaway inflation that could derail the economy, or future asset bubbles that could endanger economic stability over the long term.
The most outspoken voting member of the Fed, Kansas City Fed President Thomas Hoenig, was once again the lone dissent among policymakers, saying he believed the risks of additional securities purchases outweighed the benefits.
Other opponents have argued that it simply won't work. The Fed already made nearly $2 trillion in similar purchases during the Great Recession, and current low interest rates have not jolted spending, they say.
"I don't think this is going to make any difference at all," said Paul Ashworth, senior U.S. economist with Capitol Economics, who feels the plan is too small. "This is a slippery slope. Once you're on it, it's very hard to get off."
He predicts a repeat of what happened with the first round of quantitative easing two years ago. The Fed initially announced a $600 billion program in November 2008, but then four months later, increased that to $1.8 trillion, when it wasn't enough.
Anbaa Moscu unveils mega Russo-Emirati deals
CAPITALS: Anbaa Moscu newspaper reveals Russian eagerness to further enhance political, economic and cultural collaboration with the UAE.
Moscow regards the Emirates as enjoying a unique position in the world on many fronts including: oil, international trade and tourism, and politics, due to its unique standing on the political scene in the Arab and Islamic world and its strategic position at international levels. This was stated in a press release on Wednesday.
Uri Zinin, renowned diplomat and expert in Middle East affairs, believes that Russia is ready and keen to work with the Gulf Cooperation Council (GCC) states with the participation of both the public and private sectors. He added that the time is ripe for the two powers to collaborate, investing Russian expertise in oil, aquatic wealth, atomic power and outer space and to taking advantage of the natural wealth and resources in the GCC countries.
Russian interest and involvement is already firmly established in the UAE, with some 500 Russian companies, 200 Russo-Emirati companies and 80 Russian companies in the free zone at present. The UAE leads the field in joint projects, with 124 ongoing at the moment.
In addition to this, the Russian Petroleum Company has won a contract for constructing an oil refinery in Al Fujairah and Limitless LLC, a Dubai company is executing an extensive Russian Real Estate Project, to be called Domodevodo City, on the outskirts of Moscow, valued at 11 billion US dollars.
Emirati companies' interest in investing in Russia is not new. Gulftainer (a subsidiary of the Crescent Group) of the Emirates concluded a $500 million strategic partnership agreement with the massive Russian State-owned Prominvest and seeks management and investment projects in both Russia and independent Commonwealth states (CIS). The Emirati heavy-weight Lamnalco Group won an international tender to manage Novosibirsk oil port and oversee maintenance work on the main oil pipeline from Kazakhstan to the port.
Local enthusiasm for closer cooperation is already evident in several fields, and the proposed construction of a 'super-highway' between Russia, Iran and India, with access from the Emirates, is creating a considerable buzz.
Moscow regards the Emirates as enjoying a unique position in the world on many fronts including: oil, international trade and tourism, and politics, due to its unique standing on the political scene in the Arab and Islamic world and its strategic position at international levels. This was stated in a press release on Wednesday.
Uri Zinin, renowned diplomat and expert in Middle East affairs, believes that Russia is ready and keen to work with the Gulf Cooperation Council (GCC) states with the participation of both the public and private sectors. He added that the time is ripe for the two powers to collaborate, investing Russian expertise in oil, aquatic wealth, atomic power and outer space and to taking advantage of the natural wealth and resources in the GCC countries.
Russian interest and involvement is already firmly established in the UAE, with some 500 Russian companies, 200 Russo-Emirati companies and 80 Russian companies in the free zone at present. The UAE leads the field in joint projects, with 124 ongoing at the moment.
In addition to this, the Russian Petroleum Company has won a contract for constructing an oil refinery in Al Fujairah and Limitless LLC, a Dubai company is executing an extensive Russian Real Estate Project, to be called Domodevodo City, on the outskirts of Moscow, valued at 11 billion US dollars.
Emirati companies' interest in investing in Russia is not new. Gulftainer (a subsidiary of the Crescent Group) of the Emirates concluded a $500 million strategic partnership agreement with the massive Russian State-owned Prominvest and seeks management and investment projects in both Russia and independent Commonwealth states (CIS). The Emirati heavy-weight Lamnalco Group won an international tender to manage Novosibirsk oil port and oversee maintenance work on the main oil pipeline from Kazakhstan to the port.
Local enthusiasm for closer cooperation is already evident in several fields, and the proposed construction of a 'super-highway' between Russia, Iran and India, with access from the Emirates, is creating a considerable buzz.
Russian weapons shifting balance of forces in ME
Thursday,04 November 2010
Source : Agencies
JERUSALEM: Military cooperation between Moscow and Damascus is shifting the balance of forces in the Middle East "back to the '70's," when Israel was close to being defeated by Syria, outgoing chief of Israel's military intelligence said.
Israeli media quote Maj.-Gen.Amos Yadlin as saying at a closed session of the parliament's Foreign Affairs and Defense Committee that Russia was providing Syria with portable, state-of-the-art anti-aircraft systems.
"These are fairly inexpensive missiles compared to the S-300 but they are no less lethal or effective," the Ynet News portal quoted the official as saying.
Russian specialists are involved in upgrading old Syrian weapons systems, Yadlin added.
"Syria is engaged in a very intense campaign to procure highly advanced weapons; so advanced in fact that anything that comes off the Russian assembly lines ends up in Syria," he said on Tuesday at his last meeting with lawmakers before retirement.
The official also warned that Hezbollah could easily get all the most advanced weapons systems possessed by Syria simply by asking for them.
"If it wanted to, Hezbollah could take over Lebanon in a matter of hours. This is not very likely but there is no military force that can stand up to Hezbollah in Lebanon," he said.
According to the official, a new conflict, if emerges, is likely to be far deadlier than Israel's last two military conflicts - the 2006 Israeli-Hezbollah war in Lebanon and the offensive on Gaza in late 2008 - early 2009.
"The next round won't be focused on one theater but rather, will incorporate two or three," he said. "One cannot predict the future according to what happened during Operation Cast Lead or the Second Lebanon War. It will be much bigger, much wider in scope, and with many more casualties."
Israel's enemies "believe that the only way to overcome Israel's deterrence is through long-range missile fire and improving air defense capabilities," the Jerusalem Post quoted Yadlin as saying.
On the other hand, Russian arms exporter denies MiG-31 fighter contract with Syria
Russia does not have a contract to supply MiG-31 Foxhound fighter jets to Syria, the head of the Russian state-run arms exporter Rosoboronexport said on Wednesday.
Media rumors about the sales of at least six MiG-31 aircraft to Damascus under a 2007 contract sparked criticism in the West and Israel, which consider arming Syria a threat to regional security.
"The existence of a contract on the delivery of MiG-31 interceptors to Syria is a journalistic hoax," Rosoboronexport General Director Anatoly Isaykin told reporters at the Euronaval 2010 exhibition in Paris.
The MiG-31 Foxhound is a two-seater supersonic interceptor aircraft developed to replace the MiG-25 Foxbat. It is equipped with two D-30F6 turbofan two-shaft engines with a common afterburner and a variable supersonic nozzle, which allow the aircraft to fly at supersonic speeds of up to Mach 2.83.
The interceptor also features unique air-to-air missiles capable of hitting targets at ranges exceeding 200 kilometers (125 miles), including aircraft with stealth capabilities, cruise missiles, and supersonic aircraft.
Source : Agencies
JERUSALEM: Military cooperation between Moscow and Damascus is shifting the balance of forces in the Middle East "back to the '70's," when Israel was close to being defeated by Syria, outgoing chief of Israel's military intelligence said.
Israeli media quote Maj.-Gen.Amos Yadlin as saying at a closed session of the parliament's Foreign Affairs and Defense Committee that Russia was providing Syria with portable, state-of-the-art anti-aircraft systems.
"These are fairly inexpensive missiles compared to the S-300 but they are no less lethal or effective," the Ynet News portal quoted the official as saying.
Russian specialists are involved in upgrading old Syrian weapons systems, Yadlin added.
"Syria is engaged in a very intense campaign to procure highly advanced weapons; so advanced in fact that anything that comes off the Russian assembly lines ends up in Syria," he said on Tuesday at his last meeting with lawmakers before retirement.
The official also warned that Hezbollah could easily get all the most advanced weapons systems possessed by Syria simply by asking for them.
"If it wanted to, Hezbollah could take over Lebanon in a matter of hours. This is not very likely but there is no military force that can stand up to Hezbollah in Lebanon," he said.
According to the official, a new conflict, if emerges, is likely to be far deadlier than Israel's last two military conflicts - the 2006 Israeli-Hezbollah war in Lebanon and the offensive on Gaza in late 2008 - early 2009.
"The next round won't be focused on one theater but rather, will incorporate two or three," he said. "One cannot predict the future according to what happened during Operation Cast Lead or the Second Lebanon War. It will be much bigger, much wider in scope, and with many more casualties."
Israel's enemies "believe that the only way to overcome Israel's deterrence is through long-range missile fire and improving air defense capabilities," the Jerusalem Post quoted Yadlin as saying.
On the other hand, Russian arms exporter denies MiG-31 fighter contract with Syria
Russia does not have a contract to supply MiG-31 Foxhound fighter jets to Syria, the head of the Russian state-run arms exporter Rosoboronexport said on Wednesday.
Media rumors about the sales of at least six MiG-31 aircraft to Damascus under a 2007 contract sparked criticism in the West and Israel, which consider arming Syria a threat to regional security.
"The existence of a contract on the delivery of MiG-31 interceptors to Syria is a journalistic hoax," Rosoboronexport General Director Anatoly Isaykin told reporters at the Euronaval 2010 exhibition in Paris.
The MiG-31 Foxhound is a two-seater supersonic interceptor aircraft developed to replace the MiG-25 Foxbat. It is equipped with two D-30F6 turbofan two-shaft engines with a common afterburner and a variable supersonic nozzle, which allow the aircraft to fly at supersonic speeds of up to Mach 2.83.
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