President Barack Obama said Wednesday he believes Democrats and Republicans will reach agreement on reasonable spending cuts and an end to tax cuts for the superwealthy and flourishing oil companies, avoiding a looming and potentially catastrophic American default on its debt.
The deadline for Congress to agree to raising the U.S. debt limit is less than two months away and the International Monetary Fund, reporting on the same day that Obama spoke at a White House news conference, warned that inaction could lead to a spike in interest rates that would harm the U.S. economy and world financial markets.
The debt limit is the amount the government can borrow to help finance its operations. The United States reached its $14.3 trillion borrowing limit in May. It is at risk of defaulting on its debt if it doesn’t raise that limit by Aug. 2.
Obama insists that Republicans, in blocking a deal on raising the debt limit, are threatening U.S. financial stability by refusing to end tax breaks for “millionaires and billionaires and oil companies and hedge fund managers and for corporate jet owners.”
He said Democrats were willing to make painful cuts in government spending and that the Republican position, that insists on cuts in government sponsored medical insurance for the poor and elderly but no increase in tax revenue, was not sustainable.
Obama said both parties must be prepared to “take on their sacred cows” as part of the deficit-reduction negotiations.
The IMF urged lawmakers to raise the debt limit, now $14.3 trillion, and warned that failure to do so could produce a spike in interest rates and “severe shock to the economy and world financial markets.”
It recommended a long-term strategy for reducing debt, warning that cutting deficits too quickly could slow the weak recovery of the U.S. economy.
The budget deficit is projected to reach a record $1.4 trillion for the current fiscal year, which ends Sept. 30.
In his opening remarks at Wednesday’s news conference, Obama also called on lawmakers to renew a Social Security payroll tax cut that took effect on Jan. 1, identifying it as one of several measures lawmakers could approve to help create jobs. Social Security is the federal pension program for retired Americans and has been in effect for more than 70 years, dating back to the 1930s Great Depression.
He also urged passage of trade agreements with Panama, South Korea and Colombia, and an overhaul of the nation’s patent laws.
Obama’s last previous full-fledged news conference was in March. In the intervening months, the economic recovery has slowed, the president has announced a plan to begin withdrawing U.S. combat troops from Afghanistan and the administration has joined an international military coalition working to prevent the rout of rebels hoping to topple Libyan leader Moammar Gadhafi.
Obama responded at length to claims by many in Congress, members from both parties, that he was in violation of the post-Vietnam War Powers Act by engaging in operations to protect Libyan civilians and overthrow Gadhafi.
He said the operation was limited in scope and did not involve American troops on the ground in Libya and therefore was not covered by the law, which requires the president to seek congressional approval before the country goes to war.
On Afghanistan, Obama said the U.S. mission can be successful, but he is not ready to declare victory just yet. He said the mission, as the United States begins withdrawing troops next month, is narrowly focused on making sure al-Qaida cannot attack the U.S. and helping Afghans maintain their own security. Obama said he believes the U.S. will succeed in those objectives because of the “extraordinary work” of the U.S. military.
Obama said the progress the military has made so far is allowing him to begin bringing troops home. Last week he announced plans for the 33,000 surge forces he sent to Afghanistan to leave the country by the end of next summer. The first 10,000 troops will come home by the end of this year.
ST. LOUIS
There hasn’t been a good reason to own a money market mutual fund for four years. These days, most funds are yielding under 0.1 percent. You can receive 1 percent in an online bank savings account, and get FDIC insurance to boot.
Nonetheless, the funds are still holding $2.7 trillion in investors’ money. That speaks to their reputation as a liquid, very-low-risk place to park cash while waiting for something better to come along.
Now it seems they may not be as safe as we thought. The problem is Greece.
Fitch Ratings reported last week that American money funds have half their money invested in European banks. European bankers, meanwhile, are very nervous about what might happen if the Greek government stiffs its creditors.
To understand why, imagine today’s financial system as a big house of cards. A card or two might tip over without any damage. But if the wrong ones slip, especially while a breeze is blowing, the chain reaction can bring the house down in a heap.
Back in 2008, the Treasury Department thought it could let Lehman Brothers fall without much danger. We saw what happened instead.
All this explains why the rich nations of Europe are resigned to bailing out the profligate, rioting Greeks
Regulators have rejected a Pfizer Inc. pain drug that is designed to discourage abuse.
The New York drugmaker said the Food and Drug Administration asked for more information about the drug, called Remoxy. In May it said approval of Remoxy could be delayed because of issues with the manufacturing part of its application. Pfizer did not say Friday if the FDA’s decision was related to those problems. Its shares slipped 8 cents to $20.57 in premarket trading.
Shares of Pfizer’s partners on Remoxy, Pain Therapeutics Inc. and Durect Corp., both plunged. Durect shares dropped 89 cents, or 29 percent, to $2.20. Pain Therapeutics stock gave up $4.83, or 52 percent, to $4.41.
Remoxy is similar to Purdue Pharma LP’s pain drug OxyContin. Both drugs contain an extended-release version of the drug oxycodone and both are intended to treat severe pain. OxyContin is one of the most frequently abused prescription drugs, and Remoxy is designed to be more difficult to abuse. The oxycodone in Remoxy is in a thick liquid form, which is designed to make it hard to crush and snort, or be injected, or dissolved in alcohol. Remoxy is a key part of Pfizer’s $3.6 billion acquisition of King Pharmaceuticals, which closed in March.
Purdue began selling a new tampering-resistant version of OxyContin last year. The time-release formula in the original version could be avoided if the drug was crushed or dissolved, which delivered the full dose quickly and created a high similar to heroin.
The FDA has long been concerned about abuse of prescription pain drugs, and in May, the agency called a meeting with drug companies who were studying extended-release opioid pain drugs. They discussed ways to train prescribers and reduce the risks of the drugs. Pfizer said those issues could also complicate approval for Remoxy.
The agency also delayed approval of Remoxy in December 2008, saying it needed more data.
Remoxy was developed by Durect, which licensed it to Pain Therapeutics in 2002. Pain Therapeutics later sublicensed the rights to King Pharmaceuticals, which was acquired by Pfizer.
AMR Corp.’s American Airlines, the operator of an all-Boeing Co. jet fleet, is in talks with Airbus SAS about buying at least 100 narrow-body planes, two people familiar with the matter said.
A decision by the board of the third-largest U.S. carrier may come as soon as July, said one of the people. The jets from Airbus’ A320 series would replace less-efficient aircraft such as Boeing 757s and MD-80s, the people said.
An order from American would boost Airbus as it tries to crack Boeing’s hold on new single-aisle plane purchases by the biggest U.S. airlines. It would also add to the pressure on Boeing as it decides between following Airbus in offering new engines on its narrow-body 737 or waiting to develop a new plane by 2020 with more fuel savings.
“We’ll do everything we can to retain American Airlines as a Boeing customer,” Marlin Dailey, Chicago-based Boeing’s sales chief, said Wednesday at the Paris Air Show. “I wouldn’t say they’re drawn more to Airbus. They obviously are seriously evaluating their options.”
An A320 has a list price of $85 million, giving a potential American order a value of about $8.5 billion. Airlines typically buy planes at a discount.
Airbus, based in Toulouse, France, and AMR, based in Fort Worth, Texas, refused to comment.
American’s 216 twin-engine MD-80s are among the oldest jets at major U.S. airlines, with many logging more than 20 years of service, and burn more fuel than the 737s the company now has on order no fax payday loan. American has 124 757s, according to its website.
Neither the MD-80 nor the 757 is still in production. The single-aisle 737 is the world’s most widely flown airliner and competes with the A320 family in the biggest segment of the civil airline market.
“We understand the challenge we’ve been given,” Boeing’s Dailey said when asked about the status of the talks with American, adding that it wouldn’t be appropriate to discuss details about a sales campaign.
Captain John Hale, American’s chief pilot, said he couldn’t confirm or deny whether the carrier had already chosen a supplier for new narrow-body jets.
“We’re always going to look at every opportunity to create value for our airline, our shareholders and our customers,” Hale said Wednesday at the air show. “We’re very measured, and we do our homework before we do anything.”
Airbus and Boeing have an almost equal share of the global single-aisle market, and Airbus has sought to extend its position by offering new engines on its A320 by the end of 2015.
The A320neo was the best-selling aircraft at this year’s Paris Air Show, which runs through this weekend.
Striking Canada Post workers had to be legislated back to work or this year
Spanish protesters of all stripes _ young and old, working and unemployed _ marched Sunday in Madrid to drive home their anger over high unemployment, bleak economic prospects and politicians they see as inept.
Similar demonstrations were being held later in other cities including northern Barcelona, eastern Valencia and southern Seville. Police were out in force after a Wednesday protest in Barcelona turned violent.
Prime Minister Jose Luis Rodriguez Zapatero said he expected the protests to be peaceful.
“A sacred rule of democracy is that in the exercise of rights you do so peacefully,” he said.
Nearly two years of recession have left Spain with a 21.3-percent unemployment rate _ the highest in the 17-nation eurozone _ and saddled with debt. The jobless rate, which has more than doubled since 2007, jumps to 35 percent for people aged 16 to 29. Many young, highly educated Spaniards can’t find jobs as the eurozone’s No. 4 economy struggles with low growth.
Protests began May 15 and spread to cities across the country, striking a chord with hundreds of thousands fed-up with the wage cuts and tax hikes needed to resolve a financial crisis they see as created by banks and wealthy developers free credit report and score.
Protester Antonio Cortes, 58, said Spain’s workers were being asked to bear the brunt of the financial crisis.
“This crisis was created by the capitalist financial system and we are paying for it. All the cuts shouldn’t be aimed at the working class,” he said.
Marchers departed from six points around Madrid bearing banners saying “Let’s march together against the crisis,” heading to Neptuno square near the country’s parliament building.
Zapatero’s government has tackled the crisis by cutting government spending, freezing pensions, raising the retirement age and making it easier and cheaper for companies to lay people off.
Spain slipped into recession in 2008 after a real estate bubble burst, halting a credit-fueled consumer spending spree.
It has not needed or sought an international bailout like fellow eurozone members Greece, Ireland and Portugal, but its financial troubles strike fear in other European capitals due to the sheer size of its economy.
CREVE COEUR
Gov. Nikki Haley has told a congressional committee that the National Labor Relations Board complaint against Boeing has the potential to affect workers across America.
Haley testified Friday in North Charleston before the U.S. House Committee on Oversight and Government Reform. The panel wrapped up the hearing after more than three hours of testimony.
The NLRB has sued Boeing, saying it built a $750 million assembly plant in South Carolina in retaliation against Washington state workers who went on strike three years ago.
Haley says the complaint could chill the ability of companies to expand from state to state and make foreign companies think twice before bringing jobs to America.
South Carolina Attorney General Alan Wilson told the panel the complaint is the shot heard round the business world.
The stock market was poised for a flat opening Thursday as investors weighed a report on the labor market against continuing concerns about Greece’s debt.
A slightly better than expected report on the job market reversed earlier losses in stock market futures. The number of people who applied for unemployment benefits for the first time fell last week to 414,000, a decline from a revised 430,000 applications the previous week. Economists had predicted the number to fall to 420,000. Applications have been over 400,000 a week since April, a rate that suggests that job growth continues to be weak.
Ahead of the opening bell, Dow Jones industrial average futures were up 6, or less than 0.1 percent, to 11,837. S&P 500 futures were up 1, or 0.1 percent, to 1,261. Nasdaq 100 futures added 3, or 0.1 percent, to 2,207.
Stock futures do not always accurately predict how prices will change once the market opens.
After the market opens, the Philadelphia Fed will release its closely-watched report on manufacturing activity in its region. A similar report from the New York region helped send the stock market lower Wednesday after it was weaker than expected. The Dow fell nearly 180 points following weaker economic data and unrest in Greece.
In company news, supermarket chain Kroger Co. rose 5 percent in pre-market trading after the company said its first quarter earnings rose as shoppers paid more for groceries and gas. Retailer Pier 1 Imports gained 2.5 percent in pre-market trading after it said its first quarter earnings nearly doubled. Research in Motion will report earnings by the end of the day.
Global stock markets tumbled for a second straight day because of fears that Greece will be forced to default on its bonds, an event that could trigger another financial crisis. The Euro Stoxx 50, an index of blue chip companies in countries that use the euro, fell 1 percent. Benchmark indexes in Japan and China each closed with losses of more than 1.5 percent.
Powered by WordPress -- XHTML 1.0