Wolf’s Finance World

New orders for factory goods rose solidly in November, but business spending on capital is cooling, a government report showed on Wednesday.

The Commerce Department said orders for manufactured goods increased 1.8 percent, snapping two consecutive months of declines, as demand for transportation equipment surged.

It was the largest rise since July.

October’s orders were revised to show a much smaller 0.2 percent fall, which was initially reported as a 0.4 percent drop. Economists had expected orders to increase 1.7 percent in November.

Orders excluding transportation rose 0.3 percent in November after advancing 0.4 percent the prior month.

Orders for non-defense capital goods excluding aircraft - seen as a measure of business confidence and spending plans - fell 1.2 percent after declining 0.9 percent in October.

The closely tracked shipments for this category fell 0.8 percent after dropping 0 fast cash advance loan.9 percent in October, indicating businesses’ appetite for capital spending may be waning. November marked the third straight month of declines.

Business spending had risen sharply since the end of the 2007-09 recession and was one of the drivers of the recovery from the longest downturn since the 1930s.

Unfilled orders of non-defense capital goods rose 0.9 percent after increasing 1.0 percent in October.

Data on Tuesday showed manufacturing activity grew at its fastest pace in six months in December, indicating underlying strength in the sector. But slowing global growth could take some edge of U.S. factories this year.

The Commerce Department report showed orders for transportation equipment jumped 14.7 percent in November as demand for civilian aircraft soared 73.9 percent.

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Egyptians lined up in front of polling centers in nine provinces to cast their ballots Tuesday in the third round of the country’s first parliamentary elections following the ouster of Hosni Mubarak.

Some 14 million voters in a third of Egypt’s 27 provinces are to elect 150 members of parliament. The two-day balloting is taking place in areas known as strongholds of Islamist parties and is unlikely to change the outcome of the elections.

Islamist parties are expected to consolidate their gains from the first two rounds and win the majority in the 498-seat lower house. An alliance led by the most influential Islamic group, the Muslim Brotherhood, and the ultraconservative Salafi group have gained nearly 70 percent of the vote in the first two stages.

Liberal and secular groups that led the uprising that forced Mubarak from power have performed poorly in the staggered elections, which started Nov payday loans. 28.

The exact numbers of seats won by each group so far could not be known because of the complicated voting system Egypt is using.

Some seats are determined in a direct race between candidates, while others are divvied out in proportion to each party’s acquired percentage of overall votes. The election commission is to announce the actual numbers of seats at the end of the entire process. Final election results are due to be announced Jan. 13.

One of the parliament’s first tasks will be to select a 100-member panel to draft the country’s new constitution.

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Australian manufacturing (AIGPMI) expanded for the first time in six months in December, driven by gains in basic metals, transport and publishing, a private survey showed.

The manufacturing index (AIGPMI) was 50.2 last month compared with 47.8 in November, the Australian Industry Group and PricewaterhouseCoopers said in a survey released today. It was the third reading for 2011 that was above 50, the dividing line between expansion and contraction.

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Iran test-fired a surface-to-surface cruise missile on Monday during a drill that the country’s navy chief said proved Tehran was in complete control of the strategic Strait of Hormuz, the passageway for one-sixth of the world’s oil supply.

The missile, called Ghader, or Capable in Farsi, was described as an upgraded version of a missile that has been in service before. The official IRNA news agency said the missile “successfully hit its intended target” during the exercise.

No other details were released about Ghader. An earlier version of the same cruise missile had a range of 124 miles (200 kilometers) and could travel at low altitudes. There were suggestions it could counter the U.S. naval presence in the Persian Gulf.

Iran’s 10-day navy drill, which ends Tuesday, was Tehran’s latest show of strength in the face of mounting international criticism over its nuclear program. The exercise came amid conflicting comments from Iranian officials over Tehran’s intentions to close the Strait of Hormuz, and U.S. warnings against such an ominous move.

“The Strait of Hormuz is completely under our control,” Iran’s navy chief Adm. Habibollah Sayyari said after Monday’s test. “We do not allow any enemy to pose threats to our interests.”

The latest version of the Ghader was delivered in September to the naval division of Iran’s Revolutionary Guard, which is assigned to protect Iranian sea borders. At the time, Tehran said the missile is capable of destroying warships.

“In comparison with the previous version, the highly advanced Ghader missile system has been upgraded in terms of its radar, satellite communications, precision in target destruction, as well as range and radar-evading mechanism,” said Rear Adm. Mahmoud Mousavi, a spokesman for the drill.

State TV showed footage Monday depicting the launch of two missiles, which were fired into the sky and which the TV said could hit targets “hundreds of kilometers (miles) away” from the point of origin guaranteed pay day loans. The broadcast said two more missiles, with a shorter range, were also tested Monday.

“We conducted the drill … to let everybody know that Iran’s defense and deterrence powers on the open seas and the Strait of Hormuz are aimed at defending our borders, resources and our nation,” said Sayyari, the navy chief.

The testing comes a day after Iran test-fired an advanced surface-to-air missile called Mehrab, or Altar in Farsi, which was described as medium-range.

Iran had said the sea maneuvers would cover a 1,250-mile (2,000-kilometer) stretch of water beyond the Strait of Hormuz at the mouth of the Persian Gulf, as well as parts of the Indian Ocean and the Gulf of Aden.

A leading Iranian lawmaker said Sunday the maneuvers served as practice for closing the Strait of Hormuz if the West blocks Iran’s oil sales. After top Iranian officials made the same threat a week ago, military commanders emphasized that Iran has no intention of blocking the waterway now.

Mousavi on Sunday also emphasized that Iran has no plan to choke the strait. “We won’t disrupt traffic through the Strait of Hormuz. We are not after this,” the semiofficial ISNA news agency quoted him as saying.

Mousavi said the drill was “tactical” and meant to show Iran was capable of assuming full control over the strait in case this became necessary.

The West fears Iran’s program aims to develop atomic weapons _ a charge Tehran denies, insisting it’s for peaceful purposes only.

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Boarding an airplane has never been safer.

The past 10 years have been the best in the country’s aviation history with 153 fatalities. That’s two deaths for every 100 million passengers on commercial flights, according to an Associated Press analysis of government accident data.

The improvement is remarkable. Just a decade earlier, at the time the safest, passengers were 10 times as likely to die when flying on an American plane. The risk of death was even greater during the start of the jet age, with 1,696 people dying _ 133 out of every 100 million passengers _ from 1962 to 1971. The figures exclude acts of terrorism.

Sitting in a pressurized, aluminum tube seven miles above the ground may never seem like the most-natural thing. But consider this: You are more likely to die driving to the airport than flying across the country. There are more than 30,000 motor-vehicle deaths each year, a mortality rate eight times greater than that in planes.

“I wouldn’t say air crashes of passenger airliners are a thing of the past. They’re simply a whole lot more rare than they used to be,” says Todd Curtis, a former safety engineer with Boeing and director of the Airsafe.com Foundation.

The improvements came even as the industry went through a miserable financial period, losing $54.5 billion in the past decade. Just to stay afloat, airlines eliminated meals and added fees for checked luggage.

But safety remained a priority. No advertisement of tropical beaches can supplant the image of charred metal scattered across a field.

There are still some corners of the world where flying is risky. Russia, the Democratic Republic of the Congo and Somalia have particularly high rates of deadly crashes. Russia had several fatal crashes in the past year, including one that killed several prominent hockey players. Africa only accounts for 3 percent of world air traffic but had 14 percent of fatal crashes.

Still, 2011 was a good year to fly. It had the second-fewest number of fatalities worldwide, according to the Flight Safety Foundation, with 507 people dying in crashes. Seven out of 28 planes in fatal crashes were on airlines already prohibited from flying into European Union because of known safety problems. (There were fewer fatalities in 2004 _ 323 _ but there were also fewer people flying then.)

There are a number of reasons for the improvements.

_ The industry has learned from the past. New planes and engines are designed with prior mistakes in mind. Investigations of accidents have led to changes in procedures to ensure the same missteps don’t occur again.

_ Better sharing of information. New databases allow pilots, airlines, plane manufactures and regulators to track incidents and near misses. Computers pick up subtle trends. For instance, a particular runway might have a higher rate of aborted landings when there is fog. Regulators noticing this could improve lighting and add more time between landings.

_ Safety audits by outside firms. The International Air Transport Association, an industry trade group, started an audit program in 2003. Airlines prove to the industry and each other that they have proper maintenance and safety procedures. It’s also a way for airlines to seek lower insurance premiums, which have also dropped over the past 10 years.

_ An experienced workforce. Air traffic controllers, pilots and maintenance crews _ particularly in North America and Europe _ have been on the job for decades. Their experience is crucial when split-second decisions are made and for instilling a culture of safety in younger employees. Former US Airways Capt. Chesley “Sully” Sullenberger _ who spent three decades as an airline pilot _ was praised for his skill after safely ditching a plane in the Hudson River in 2009. Both engines died because of a bird strike but all 155 passengers and crew survived.

_ Luck. Safety experts discount the effect of chance. However, it takes just one big accident _ especially now with mega-jets such as the Airbus A380, which is able to carry up to 853 passengers _ to ruin an otherwise good period for safety.

“Was Chesley Sullenberger lucky or skillful?” says Perry Flint, a spokesman with the International Air Transport Association. “It was luck that it was daylight, but how many geese do you know that are flying south in the pitch black of two in the morning? So it was also luck that he hit them. Bad luck.”

The most recent fatal U.S. crash was Colgan Air Flight 3407, a regional flight operating under the name Continental Connection. The 2009 crash killed all 49 people on board and a man in the house the plane hit.

In fact, all fatal crashes in the U.S. in the past decade occurred on regional airlines, which are separate companies flying smaller planes under brands such as United Express, American Eagle and Delta Connection. The most recent deadly crash involving a larger airline was American Airlines Flight 587 in 2001. It crashed moments after taking off from New York, killing 265.

There have been some near misses.

In April, a Southwest Airlines aircraft had a rapid loss of cabin pressure after part of the fuselage ruptured, leaving a five-foot-long hole in the ceiling. There were no serious injuries.

The prior year, a Southwest jet came within 200 feet of colliding with a small Cessna at a California airport. In December 2009, an American Airlines jet landing in the rain in Jamaica was unable to stop on the runway, crashing through an airport fence, crossing a street, finally stopping on a beach. And in December 2005, a Southwest jet skidded off a Chicago runway. No passengers died, but a 9-year-old boy riding in a passing car was killed.

A poor economy might also have improved safety.

Bill Voss, president of the Flight Safety Foundation, says that during a boom period, airlines tend to quickly grow. That, he says, can mean weaker standards for safety and for pilots.

“We tend to see people being pushed forward perhaps a little too early, before they’re ready,” Voss says. “There’s not as much time for captains to create new captains by tapping a guy on the shoulder and telling him when he’s out of line.”

___

Freed reported from Minneapolis.

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ST. LOUIS • Patient No. 28665 was helping a Chesterfield company test a drug dubbed the “female Viagra” but stopped showing up for exams in December 2007.

That didn’t stop a staffer of the company, PPS Clinical Research STL, from claiming that six months later the patient came in for an exam, was diagnosed with medical conditions, had undergone tests and even had given a urine sample.

That admission was made in the company’s guilty plea to a federal felony charge of obstructing a proceeding of a federal agency. The drug the company helped test, aimed at women who suffered from an unexplained lack of sexual desire, never made it to market.

As part of the plea, PPS admitted that it “corruptly influenced, obstructed, and impeded” an inspection by the Food and Drug Administration by providing false patient records in May 2010.

Federal prosecutors went further in court documents filed as part of the plea.

During the trials, the drug’s manufacturer faulted PPS for failing to have a trained investigator conduct some exams, for backdating records and for failing to properly oversee one patient’s selection for the study, according to prosecutors.

PPS staffers reported the falsification of patient visits to the drug manufacturer in 2009, and the company called in the Food and Drug Administration five days later.

In 2010, FDA investigators found falsified records about multiple patient exams that never occurred, and conflicts between what patients reported about “their interactions with PPS versus what PPS’ patient records purported to document.”

The FDA investigation determined that a former ’study coordinator” had doctored the records and failed to properly store medications at PPS’ office.

That study coordinator was not named.

As part of the criminal case, the company agreed to a $68,000 fine and to forfeit $7,000. In a civil settlement with the federal government signed the same day — Dec. 16 — PPS and its president, Dr. Richard C. “Rick” Muckerman II, do not admit liability. But they acknowledge that the FDA is still investigating and that the investigation could result in Muckerman’s being disqualified from participating in future clinical pharmaceutical trials.

U.S. Attorney Richard Callahan said that the admissions the company made in the plea “certainly would have great bearing” on disqualification proceedings.

The company also agreed to pay $206,000 in the civil settlement.

Jim Crowe III, a lawyer representing both Muckerman and the company, said that the study coordinator, whom he also would not name, had been ’separated by PPS.” Crowe said that worker suffered ’serious health issues that led her to not perform her job properly and (she) did some things that rendered (her actions) difficult to detect.”

Crowe summed up the case by saying, “PPS is being held liable for the conduct of this former employee.”

Crowe said that he was not aware of any criminal action’s being taken against the staffer, speculating that her health factored into that decision.

Callahan did not dispute that, saying that the plea and civil settlement ’settle the matter.”

No patients were harmed, and Crowe and Callahan both said that they did not believe that the PPS testing affected the overall testing of the drug, which was being conducted at multiple sites.

Crowe stressed that Muckerman was named in the settlement only because of his position as president.

“Beyond that, PPS continues to make contributions in research for the benefit of women’s health,” he said.

He also said that the company had put controls in place to prevent any similar problems.

Muckerman was a co-founder of the St. Louis Women’s Healthcare Group, which is based in the same building as PPS. The office website says he “is an expert in general obstetrics with an emphasis on high-risk pregnancy” and “has delivered close to 7,000 babies.”

PPS recruited area women for two trials testing the drug, Flibanserin, which was aimed at women who suffered from what is known as hypoactive sexual desire disorder.

The drug and German drug manufacturer Boehringer Ingelheim were not named in the criminal court documents but were named in the parallel civil settlement.

Crowe said that Boehringer terminated PPS from the study after the problems surfaced.

Although the company said that the drug increased sexual desire in premenopausal women, the FDA’s reproductive health advisory committee voted 10-1 in June 2010 that the drug was not significantly more effective than a placebo.

Less than four months later, Boehringer announced that it was discontinuing the development of the drug.

Boehringer did not respond to emails seeking comment.

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The U.S. economy will grow faster in 2012 _ if it isn’t knocked off track by upheavals in Europe, according to an Associated Press survey of leading economists.

Unemployment will barely fall from the current 8.6 percent rate, though, by the time President Barack Obama runs for re-election in November, the economists say.

The three dozen private, corporate and academic economists expect the economy to grow 2.4 percent next year. In 2011, it likely grew less than 2 percent.

The year is ending on an upswing. The economy has generated at least 100,000 new jobs for five months in a row _ the longest such streak since 2006.

The number of people applying for unemployment benefits has dropped to the lowest level since April 2008. The trend suggests that layoffs have all but stopped and hiring could pick up.

And the economy avoided a setback when Obama signed legislation Friday extending a Social Security payroll tax cut that was to expire at year’s end. But Congress could agree only on a two-month extension.

The economists surveyed Dec. 14-20 expect the country to create 177,000 jobs a month through Election Day 2012. That would be up from an average 132,000 jobs a month so far in 2011.

Dean Maki, chief U.S. economist at Barclays Capital, says the U.S. economy remains vulnerable to an outside shock. A big threat is the risk that Europe’s debt crisis will trigger a worldwide credit freeze like the one that hit Wall Street in late 2008.

A shock to the U.S. economy, he says, might not be as dangerous if it were growing at a healthier 4 percent to 5 percent annual pace. But when growth is stuck at 2 percent or 3 percent, a major global crisis could stall job creation and raise unemployment.

Beyond Europe, troubles in other areas could also upset the U.S. economy next year, the economists say. Congressional gridlock ahead of the 2012 elections and unforeseen global events, like this year’s Arab Spring protests, could slow the U.S. economy. Three economists said rising nuclear tensions with Iran are a concern.

Even without an outside jolt, the economists expect barely enough job creation in 2012 to stay ahead of population growth and the return of discouraged workers into the labor force.

“I just don’t know if it’s going to be enough to bring the unemployment rate down,” says Chad Moutray, chief economist for the National Association of Manufacturers.

The AP economists expect the unemployment rate to be stuck at a recession-level 8.4 percent when voters go to the polls in November. Unemployment was 8.6 percent in November.

A majority (56 percent) of the economists say the economy will get a lift from Federal Reserve policies. The Fed has said it plans to keep short-term interest rates near zero through at least mid-2013 if the economy remains weak. The central bank also has begun a campaign to try to push down mortgage rates and other long-term interest rates through next June.

Those surveyed also think the economy is strong enough to withstand higher oil prices. At near $100 a barrel, oil prices are up 10 percent from a year ago. But only two of the economists AP surveyed expect the higher prices to slow the economy “a lot.”

The economists expect the European economy to shrink 0.5 percent in 2011 _ and fall into a recession. Europe is slowing as heavily indebted countries slash spending and banks exposed to government debt curtail lending.

Among the gravest fears is that a major country like Italy will default on its debt, wiping out some banks with large holdings of European government bonds. A worldwide credit crunch like the one that followed the 2008 failure of Lehman Bros could follow.

Twenty-one of the economists listed Europe as a threat to the U.S. economy next year.

“If it were a big enough downturn, given the size of Europe, it could bring the world economy down into recession,” says Allen Sinai, president of Decision Economics.

But overall, the economists see only an 18 percent chance that Europe’s debt troubles will cause a recession in the United States.

The economists are divided over which one step European policymakers should take now to bolster the 17-country eurozone.

More than one-fourth say the European Central Bank should aggressively try to lower the borrowing costs of the Italian and Spanish governments by buying their bonds.

Nearly one-fifth say European countries should jointly issue “Eurobonds” to help finance weaker countries.

And 17 percent say European governments should slash spending.

Still, the economists expect European policymakers to find a way to prevent the crisis from escalating into a global financial panic.

If Europe can stabilize its economies, the U.S. stock markets would rally sharply, economists say, and prospects for U.S. economic growth would brighten.

“Europe appears to be the only real impediment to keeping this recovery from happening,” said Joel Naroff, president of Naroff Economics.

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Egypt’s benchmark stock index dropped to its lowest level in over a year on Thursday as a deepening political crisis in the Arab world’s most populous nation clouded its political future and prompted Moody’s Investors Service to push the government’s bond rating deeper into junk status.

The Egyptian Exchange’s EGX30 index closed 2.3 percent lower, to 3,616 points, its lowest level since mid-2009, according to data on the exchange’s Web site. The index is down almost 50 percent so far this year as investors fled the market amid the unrest stemming from the protests that toppled former President Hosni Mubarak in mid-February and have continued on a near daily basis since then.

The decline came even as the country’s military-appointed prime minister called for national dialogue to end the clashes and protests that have crippled the country’s economy and cast a pall on its transition to democracy.

The festering unrest prompted Moody’s to cut Egypt’s government bond rating to B2 from B1, with the agency on Wednesday citing, among its reasons for the downgrade, what it described as the “continued unsettled political conditions” that have led to the installation of the country’s fourth transitional government since the start of the Jan. 25 uprising.

Moody’s said that the “repeated changes in government leadership have resulted in ineffective and unpredictable economic policies.”

It also cited the deterioration in the country’s external payments position since the uprising, with net international reserves dropping about 44 percent since the end of December to $20.2 billion by the end of November. A portion of that has gone to propping up the Egyptian pound, which has seen its value fall relative to the dollar.

The near-daily protests since Mubarak handed over power to the military in mid-February have crippled the economy. Tourism and foreign direct investment _ two of the country’s foreign currency mainstays _ have been decimated while manufacturing and productivity have been hard hit by the demonstrations guaranteed approval cash loans.

The pound was trading at about 6.0295 on Thursday, according to forex Web site XE.com, but analysts worry that the depletion in foreign exchange reserves could lead to an even sharper depreciation that, in turn, would bring about a spike in the inflation rate.

In addition, while tens of billions of dollars have been pledged by foreign donors and institutions, Prime Minister Kamal El-Ganzouri said Thursday that only $1 billion had been delivered so far. Rounding off the country’s litany of fiscal woes is that it has been wary of turning to the International Monetary Fund for a $3 billion loan.

“Moody’s believes that the Central Bank of Egypt will find it increasingly difficult to maintain adequate international liquidity in the months or year ahead, raising the risk of a balance-of-payments crisis,” the agency said in a statement.

Much of the current political turmoil stems from a standoff between the military and protesters who are demanding that the ruling generals step down and hand over power to civilian rule.

Recent violent clashes that left at least 14 dead have tapered off, but tensions remain high in the country especially as the fundamentalist Muslim Brotherhood appears to have strengthened its winnings after the second round of staggered parliamentary elections. The harder-line Salfist groups have come in second, raising fears that the next legislature will be dominated by Islamists.

El-Ganzouri called for a national dialogue and pleaded for a two-month period of calm to allow the country to restore security and some semblance of economic stability. He also said the ruling generals were eager to relinquish power, but did not elaborate.

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If you’re planning to buy an iPad or a MacBook during Missouri’s upcoming sales tax holiday, the best in-store bargain may be found at the MacHeadQuarters store on Manchester Avenue.

That’s because the city of St. Louis, where that store is situated, is waiving its local sales tax as part of the holiday, which runs Friday through Sunday (Aug. 5-7) payday advance lenders.

But you will still have to pay the 1.5 percent local tax if you head to the Apple stores at the St. Louis Galleria and West County Center, because Brentwood and Des Peres are not lifting their municipal taxes.

It may not be much, but for the extreme penny pinchers, choosing to go to MacHeadQuarters could save you an extra $7 on a $499 iPad

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Senate Democratic leader Harry Reid served notice Friday that he’s pushing ahead with his debt-limit bill as House Speaker John Boehner’s rival measure languished in limbo, further escalating a wrenching political standoff that has heightened fears of a market-rattling government default.

“This is likely our last chance to save this nation from default,” Reid declared glumly on the Senate floor, as a Tuesday’s deadline drew closer.

Reid’s move came with Boehner’s bill still in wait of a vote and a bitter standoff between GOP leaders and their conservative rank and file. Demoralized House Republicans were striving for a third straight day to pass the Boehner bill, even though it had virtually no chance of surviving the Senate.

Reid, D-Nev., said he had invited Senate Minority Leader Mitch McConnell, R-Ky., to join him in negotiations.

“I know the Senate compromise bill Democrats have offered is not perfect in Republican’ eyes. Nor is it perfect for Democrats,” Reid said. “But together, we must make it work for all of us. It is the only option.”

Reid’s move sets up a showdown vote on Sunday.

McConnell dismissed the Democratic effort, arguing that it stands no chance in the GOP-controlled House and blamed Obama for pushing the nation to the brink of an economic abyss.

“If the president hadn’t decided to blow up the bipartisan solution that members of Congress worked so hard to produce last weekend, we’d be voting to end this crisis today,” McConnell said on the Senate floor.

Underscoring the mad scramble in Congress for an elusive solution, both chambers recessed moments after opening speeches.

Boehner, R-Ohio, suffered a stinging setback Thursday when, for a second consecutive day, he had to postpone a vote on his proposal to extend the nation’s borrowing authority while cutting federal spending by nearly $1 trillion.

“Obviously, we didn’t have the votes,” Rep. David Dreier, R-Calif., said after Boehner and the GOP leadership had spent hours trying to corral the support of rebellious conservatives.

Republicans were trying again Friday. If they continued to fail, then President Barack Obama and Senate Democrats would have extensive leverage to shape a bill to their liking and practically dare the House to reject it and send the nation into default.

If, however, Republicans can get Boehner’s version through the House, a rapid and complex set of choices will determine whether and how a debt crisis can be averted. House Republicans will be under tremendous pressure to pass something, even if they have to make it so appealing to their right wing that the nation’s independents and centrists will laugh it off. As Thursday’s events proved, nothing is guaranteed.

Rep. Vern Buchanan, R-Fla., a member of the House Ways and Means Committee, said Friday morning he believed Boehner was “very close” to having the necessary votes for passage the second time around.

“I’m confident the speaker will get there today,” he said in an interview on MSNBC. Buchanan said conservatives have been wary of the various rival debt-limit bills because “people don’t trust the process.”

Nevertheless, Buchanan said “there’s been some momentum” in Boehner’s direction since late Thursday and into the day. He said he’ll vote for the bill, but warned, “The bottom line is, we’re willing to raise the debt ceiling, but at the same time we want to make sure the cuts are delivered.”

The main area of dispute between the two parties is how to encourage or guarantee big spending cuts in the future without rekindling a fiercely divisive debt-ceiling debate such as the one now raging.

Interviews with well-placed insiders suggest the following road map, assuming Boehner can get his bill out of the House:

The Democratic-controlled Senate would kill it quickly. The focus then would fall on the Senate’s two leaders, Reid and McConnell. They must decide whether they can reach a compromise that can pass the Senate _ where a united GOP can kill bills with filibusters _ and then pass the House and be signed by Obama. The White House would be integral to such talks.

Republican officials say McConnell could hold a strong hand, despite the House’s shaky performance. He could argue that the House finally passed a bill to raise the debt ceiling, while the Senate has done nothing but kill that bill. If Tuesday’s deadline passes with no resolution, Republicans say, voters will blame Democrats.

Under this thinking, the Senate would pass a measure similar to the House bill, perhaps with minor changes to save face and give political cover to Democrats who vote for it. The House would quickly concur, with numerous Democrats and all but the most conservative Republicans voting aye. Obama would have no choice but to sign it.

Democrats say the opposite is true. Obama has persuasively argued in recent weeks that Republicans are unreasonably demanding, they say.

Democrats control the Senate and White House. If Republicans insist that a partisan, House-passed bill is the only vehicle, then public anger will fall on them, this thinking goes.

The biggest sticking point is the House bill’s call for congressional votes to raise the debt ceiling, in two stages, before the 2012 elections.

A $900 billion debt-limit hike would come first, coupled with $917 billion in spending cuts over 10 years. A second vote, late this year or sometime next year, would allow another $1.6 trillion in borrowing power, provided that Congress and the president have agreed to another round of spending cuts of that amount or more.

Obama has consistently rejected this condition. He says it would hurt the economy and touch off another ferocious political fight over the debt ceiling, which Congress previously raised with little fuss year after year. Global markets and investors would not be reassured by such a drawn-out, uncertain scenario, he says.

The White House says the prospect of an economically devastating default must not be used as the “trigger” to force Congress to cut the deficit. Such triggers would take effect automatically if Congress did not act on a prescribed deficit-reduction package.

Those could include deep cuts in programs such as Medicare and Medicaid, which would be painful to Democrats, and tax increases that Republicans would be loath to accept. But Republicans believe the threat of default is a much stronger incentive to shrink the deficit.

Presidential adviser David Plouffe told MSNBC on Thursday that the Republican House bill would “have this whole debt ceiling spectacle, three-ring circus … repeated again a few months from now, over the holidays. You know, the debt ceiling debate would ruin Christmas.”

If the House sends Boehner’s bill to the Senate, a crucial point in the end-game scenario will come when McConnell decides whether to insist on the House proposal to raise the debt ceiling in two steps, both tied to large mandatory spending cuts. If he does, then Reid and Obama will have to decide whether to swallow the demand or let the impasse last beyond Tuesday, and blame McConnell.

Or, McConnell could yield. He could help pass a Senate bill that lets the second debt-ceiling hike take place more easily, with an incentive mechanism for spending cuts that stops short of a mandate.

That would hand a tough choice to Boehner. His tea party conservatives would howl in protest. It’s possible that 100 or more of his 240 House Republicans would vote against such a Senate-passed bill.

The measure presumably would pass anyway, with ample Democratic votes. But Boehner’s hold on the speakership could be weakened.

Of course, little or none of this might transpire if the House can’t figure out how to pass a bill. In that case, Obama would seem to hold almost all the cards.

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