Wolf’s Finance World

A federal judge has rejected most claims made in a shareholder lawsuit against Toyota Motor Corp. that accused the Japanese automaker of knowing about and hiding purported acceleration problems in some of its vehicles.

U.S. District Judge Dale Fisher said in her July 7 ruling that Japanese law takes precedence, especially since many of those who sued Toyota bought company stock on foreign exchanges.

“This respect for foreign law would be completely subverted if foreign claims were allowed to be piggybacked into virtually every American securities fraud case,” Fisher wrote in her 11-page decision.

Toyota spokeswoman Celeste Migliore said in a statement the company is pleased with the judge’s ruling.

“Although the court has given plaintiffs the opportunity to amend their complaint with respect to the claims under U.S. law only, we believe that any such attempt will result in allegations that remain unsupported by both the facts and law,” Migliore said.

The suit notes Toyota stock dropped about 20 percent in January and February 2010 when the company began recalling some of its models. The Japanese automaker has recalled about 14 million vehicles worldwide and it has paid the U.S. government a record $48.8 million in fines for its handling of three recalls.

Hundreds of lawsuits have been filed against Toyota, claiming economic loss and wrongful death due to sudden acceleration. Those suits are before a federal judge in Orange County and allege a design defect _ namely its electronic throttle control system _ is responsible for vehicles surging unexpectedly. Toyota has blamed driver error, faulty floor mats and sticky accelerator pedals for the unintended acceleration.

The automaker’s defense was buoyed earlier this year when U.S. regulators said electronic flaws weren’t to blame for unintended acceleration.

The first trials on the acceleration issue are expected to begin in 2013.

Source

Filed under: business, finance by Wolf
Comments Off

President Barack Obama and congressional leaders on Monday emerged still deeply divided over how to slash the nation’s debt, with reality sinking in that even a middle-ground proposal was not big enough to succeed and would not get through Congress anyway.

As time runs perilously short for action, Obama challenged top lawmakers to return to the White House on Tuesday with fresh ideas for a debt-reduction plan that could pass the House and Senate. All sides are scrambling to reach a deal as part of a tradeoff in which Congress would agree to extend the nation’s debt limit by Aug. 2 to prevent a catastrophic government default on its bills.

Turning up the pressure, Obama declared that he would reject any stopgap extension of the nation’s borrowing limit, imploring lawmakers once again to reach one of the most sizable debt-reduction deals in years.

He refused to even entertain a backup plan if that doesn’t happen.

“We are going to get this done,” Obama insisted in a news conference.

In a 90-minute closed meeting, House Majority Leader Eric Cantor spelled out potential spending cuts that had been identified in talks led for weeks by Vice President Joe Biden. But Democratic lawmakers in the room made clear such a cutting-only approach without tax hikes on wealthier Americans would never pass the Democratic-led Senate or the House, where Democratic votes would be needed, too.

It did not appear, either, that such a plan would meet the House Republicans’ own standard of a debt-cutting package. They want cuts that would exceed the size of the increase in the debt limit, which could be about $2.4 trillion to get the country through 2012 and next year’s elections.

Republicans won’t support a package that raises any taxes.

As the stalemate continues, the pressure increases. A government default could trigger another enormous economic swoon.

Democratic officials familiar with the White House position in the private talks insist that leaders of the House and Senate will not let that happen, and that Republicans ultimately would vote to raise the debt limit even if a deficit-cutting package does not come together in time.

Yet Republicans say otherwise. House Speaker John Boehner insists the House can’t pass such a bill.

“I agree with the president that the national debt limit must be raised, and I’m glad that he made the case for it today,” Boehner told reporters. “But the American people will not accept - and the House cannot pass - a bill that raises taxes on job creators.”

Obama renewed his case for a package that would put a historic dent in the country’s deficits by blending politically poisonous elements for both parties: tax hikes for the wealthy and big corporations opposed by Republicans and social service cuts that Democrats decry

He implored both political parties to give ground and show the American people that Washington can actually work.

“If not now, when?” Obama said.

By all accounts, Obama’s third meeting with House and Senate leaders in under a week produced little movement.

Cantor did most of the talking for Republicans, aides said, outlining up to $2.3 trillion in spending cuts over the upcoming decade, with $1.3 trillion coming from squeezing the day-to-day budgets of Cabinet agencies including the Pentagon.

Cantor erred on the high end of the savings range in virtually every instance. The White House countered that the cuts really added up to more like $1.7 trillion, which would leave negotiators $700 billion short of the $2.4 trillion being sought and no bipartisan way to make up the gap.

Democrats suggested that most spending cuts be concentrated in the later years of a deal, but a Republican aide said GOP lawmakers took issue with that suggestion and want the cuts to begin right away.

Obama spent most of his time encouraging lawmakers to reconsider a bigger deal, on the order of some $4 trillion in spending cuts and tax hikes over 10 years. Democrats familiar with the talks said the meeting produced a clearer recognition that the leaders were going to have to go back and think again about how to find a compromise.

Obama has offered to entertain raising the Medicare eligibility age from 65 to 67 years if Republicans make compromises, including letting tax cuts for wealthy Americans expire at the end of 2012, according to a Democratic congressional aide.

Yet the path to an accord remained hard to see. Cantor told reporters earlier in the day: “We are not going to raise taxes. That’s all.”

All the officials familiar with the talks spoke on condition of anonymity to disclose details of the private discussions.

Obama told reporters he would meet with the lawmakers every day until an agreement is reached. They have two weeks or less to do so in order to get any deal through Congress in time. He asked lawmakers to return to the White House on Tuesday at 3:45 p.m. EDT.

Obama tried to alter the debate by saying in his news conference that any potential tax increases on wealthier people would not take effect until 2013. Notably, that would fall after the next election.

The president said he would refuse to accept stopgap legislation of a few months to keep the nation from defaulting. “It’s not going to get easier; it’s going to get harder,” Obama said. “So we might as well do it now. Pull off the Band-Aid. Eat our peas.”

More broadly, Obama sought to position himself as the pragmatist seeking a compromise in a divided town.

To Republicans, he said they have long pushed deficit reduction as the way to create desperately needed jobs and now won’t take yes for an answer. “Where are they?” he said.

And to Democrats eager to protect entitlements, Obama said doing nothing is not tenable.

“So, yeah, we’re going to have a sales job,” he conceded. “This is not pleasant.”

Obama made clear Monday that any changes to Social Security would be designed to ensure money is available for beneficiaries years from now _ as opposed to trimming costs to reduce the deficit. One possibility would lower cost-of-living increases for recipients.

Many Democrats deeply oppose that idea. As to why that would be included in debt talks, Obama said it all came back to politics.

“If you’re going to take a bunch of tough votes,” he said, “You might as well do it now.”

Source

Filed under: canada, economics by Wolf
Comments Off

SAINT JOHN, N.B.—New Brunswick’s business establishment is mourning the mysterious and sudden death of former beer-brewing scion Richard Oland, a man described as a major force in the Atlantic Canadian economy.

Oland was a member of the family that owns Moosehead Breweries Ltd., but he left the company in the 1980s.

The business executive was found dead Thursday inside a building on Canterbury Street in downtown Saint John. He was 69.

Police described the death as suspicious, but released no details. An autopsy was to be performed Friday and the city’s police chief has scheduled a news conference for Monday.

The Oland family issued a brief statement Friday to publicly thank friends who have reached out to help and offer condolences.

“This is a very difficult time for our family and we hope everyone understands our need for privacy,” the statement said.

David Ganong, chairman of the Ganong Bros. Ltd. chocolate company, said he vacationed with Oland less than a week ago easy payday loans.

“I spent three days fishing with him in the Northwest Miramichi (River), using all of his fishing gear, and there would be no reason to suspect that Dick would have had a health problem at that time,” Ganong said in an interview from St. Stephen, N.B.

He was the younger brother of Derek Oland, who is now executive chairman of Moosehead.

Richard Oland was also known as a competitive yachtsman and fitness advocate.

The Oland family can trace its brewing roots to 1867, when John and Susannah Oland started the Army and Navy Brewery in Halifax. The company was later sold, but the family returned to the business, eventually setting up the Maritime Brewing and Malting Co. in the port city.

After the Halifax Explosion destroyed the family’s plant in 1917, George Oland — Richard’s grandfather — moved to New Brunswick, where he bought another brewery with the insurance money.

Source

Filed under: Europa, legal by Wolf
Comments Off

Americans took on more debt in May and used their credit cards more for only the second time in nearly three years, stepping up borrowing just as the economy began to slump and hiring slowed.

The Federal Reserve said Friday that consumer borrowing rose $5.1 billion in April. That following a revised gain of $5.7 billion in April. Borrowing in the category that covers credit cards increased, as did borrowing in the category for auto and student loans.

The overall increase pushed consumer borrowing to a seasonally adjusted annual level of $2.43 trillion in May. That was just 1.7 percent higher than the nearly four-year low of $2.39 trillion hit in September.

Borrowing is a sign of confidence in the economy. Consumers tend to take on more debt when they feel wealthier. That boosts consumer spending. Ultimately, it gives businesses more faith to expand and hire.

But credit card debt can also be a sign that people are falling on harder times.

The economy added just 18,000 jobs in June, the fewest in the fewest in nine months, the Labor Department said Friday. It was the second straight month of feeble job growth. The unemployment rate rose to 9.2 percent, the highest rate of the year.

Economists have said that temporary factors, in part, have forced some employers to scale back hiring plans. High gas prices have cut into consumer spending, which fuels 70 percent of economic activity. And supply-chain disruptions stemming from the Japan crisis have slowed U.S. manufacturing production.

The increase in credit card borrowing marked only the second monthly gain since August 2008. Households began borrowing less and saving more when unemployment spiked during the Great Recession. Many have resisted pulling out their credit cards in the two years since the downturn ended.

High unemployment, slow wage growth, and a weakening housing market have forced people to be more frugal. Analysts believe the rise in student loans reflects the slumping economy: more people who have lost jobs have returned to school to get training for new careers.

Most analysts had hoped the temporary impediment would fade and the economy would pick up in the second half of this year. Manufacturing output has shown signs of reviving and auto factories in Japan have resumed production. And gas prices have come down a little. The national average for gas on Friday was $3.59 a gallon, down from a peak of nearly $4 in early May.

Still, those factors, plus the slumping housing market and fears of the fallout from a European debt crisis, could weigh on the economy for the rest of the year.

An improving economy could boost consumer borrowing in the coming months. But economists don’t expect consumers to load up on debt the way they did during the housing boom. During that period, Americans felt wealthier and more willing to take on increased debt because of the soaring value of their homes.

The Federal Reserve’s borrowing report includes auto loans, student loans and credit cards but excludes mortgages and loans tied to real estate.

Source

Filed under: Uncategorized, management by Wolf
Comments Off

The U.S. service sector, which employs nearly 90 percent of the country’s work force, expanded for a 19th consecutive month in June. But growth slowed from May, a sign that the economy remains sluggish.

The Institute for Supply Management said Wednesday that its index for service companies dipped 53.3 in June from 54.6 in May. Any reading above 50 indicates expansion.

The private trade group measures activity for a range of industries including retail, health care, financial services and construction.

The index reached a five-year high of 59.7 in February. But since then growth has retreated. The index plunged to a low of 37.6 in November 2008 at the height of the financial crisis. The sector contracted for all but three months in 2009.

High gas and food prices have left consumers with less money to spend on discretionary goods, such as vacations, appliances and furniture. That has hurt retailers, restaurants and hotels. The index fell to 52.8 in April, the lowest reading since August.

Gas prices have declined since peaking in early May at a national average of nearly $4 per gallon. That should make it easier for consumers to spend more on other goods. Gas prices averaged $3.56 a gallon nationwide on Tuesday, according to AAA.

A separate ISM index that tracks activity in the manufacturing sector expanded in June at a faster pace than the previous month, as supply disruptions stemming from Japan’s earthquake faded free business cards.

Still, most economists say the economy grew at a weak pace in the April-June period. Growth likely came in little better than the 1.9 percent annual pace recorded in the first three months of the year.

Many economists expect growth to rebound a bit in the second half of the year. It should rise to 3.2 percent in the July-December period, according to an Associated Press survey of 38 economists.

Growth must be stronger to significantly lower the unemployment rate, which was 9.1 percent last month. The economy would need to grow 5 percent for a whole year to significantly bring down the unemployment rate. Economic growth of just 3 percent a year would hold the unemployment steady and keep up with population growth.

Employers added only 54,000 net new jobs in May, much slower than the average gain of 220,000 per month in the previous three months.

The government reports Friday on hiring data in June. Economists expect the economy added only 90,000 jobs and the unemployment rate was unchanged, according to survey by FactSet.

Source

Filed under: marketing, news by Wolf
Comments Off

You’re not a world class city, it seems, unless your parking spot costs more than your car. So Toronto, get set for the $100,000 parking spot.

Parking at new condominium projects has risen steadily in the city, quietly hitting a new high-water mark with the slate of ultra-luxury condominium projects.

The new $100,000 price point, almost certainly the highest in Canada, has caught the attention of the real estate community. It has also underlined the dramatically increasing cost of parking downtown.

“I guess you’ve got to put your Ferrari or Aston Martin somewhere,” said developer George Wong of Magnum Projects Ltd. “And if you’re in that income bracket you’re willing to pay the price.”

A scarcity of building sites, demand for residential space downtown, and an influx of super high-end luxury buildings have created stratospheric prices for spots in the city.

In downtown Toronto, parking would cost from about $35,000 and up in the current market, according to market research firm Urbanation. That is far more than the cost of an average new car in Canada, at around $26,000.

For luxury properties, parking would be considerably more.

At the Florian in Yorkville, it would be $60,000. At One Bloor it would be $55,000 according to figures by Urbanation.

But at the Four Seasons, parking will set you back a jaw dropping $100,000.

“It’s certainly setting a new price point. We have a lot of luxury projects on the market today that we didn’t have before, and I think this signals that Toronto is joining that world stage,” said Mimi Ng, a vice-president of Menkes Developments Ltd., the developer of the Four Seasons project.

“Five years ago, $25,000 for parking downtown was likely considered the upper end of the range,” says Ng, a former real estate analyst. “Now we’ve gone way beyond that.”

In relative terms, $100,000 might seem like pocket change. At least for the buyer of The Four Seasons penthouse who paid $28 million—the most expensive in Canada. When sales started in 2008 parking was $75,000, before creeping up to the $100,000 level today.

“Our purchasers typically have a small collection of automobiles, and they would likely have both a winter car and a summer car,” said Ng. “In terms of cost, the price of the parking is in line with the pricing of the unit.”

Two parking spots are included with units in the west tower, while the east tower, with smaller units, has one parking spot included. Additional spots are extra.

However, not all luxury buyers are happy with the steep cost of entry.

“I think it’s a little ridiculous, actually,” said Marcelo Lopez, an accountant who purchased a 1,865 square foot unit in the Four Seasons east tower.

Lopez drives a Porsche 911, while his wife drives a Mercedes SUV.

“After depreciation, the cars aren’t even worth the parking spot. I could rent a Ferrari on weekends in the summer and still come out on top.”

Lopez, who has only purchased the one spot that comes with his unit, says he is still considering what to do about his second car when they move into their building next year low interest rate personal loans. But the pricing doesn’t seem to have affected sales. The two towers are more than 80 per cent sold.

The $100,000 benchmark is significant not just for the Toronto market, but for the Canadian market as well.

That price tops many high end developments in Vancouver, the country’s most expensive city.

Vancouver-based realtor Wong says average prices for homes are higher on the east coast, while parking spot prices tend to be lower.

“Toronto downtown is a different dynamic than Vancouver downtown. Toronto is still the financial centre and Bay St., and office towers, and they command more of a premium for parking,” said Wong.

Wong sold an 8,000 square foot penthouse condo in Vancouver during the Olympics for a then record $22.3 million. While the suite came with its own enclosed parking spots, an extra spot was available to the purchasers at the time for a mere $40,000. That would be considered reasonable by Toronto standards.

Meanwhile, all that condo building on former parking lots in Toronto means it now cost more for everyone else to park downtown—a median $336.25 monthly for commercial lots, according to Colliers International.

At other luxury sites downtown such as the Trump Hotel and Residences in the city’s financial district, there are no deeded lots. Developers expect residents to pay about $500 monthly for valet parking for each car, which would work out to $6,000 annually. Most residents would likely have two cars, paying a $12,000 hit annually.

Despite the steep pricing for luxury developments, the average developer typically doesn’t make money from underground parking because it is expensive to build.

“It’s actually a bit of a loss leader for us,” says developer Jason Attard, a vice president of Aspen Ridge Homes, which is constructing a condo in the city’s entertainment district.

Attard sells his parking for $35,000, but figures it costs him closer to $40,000 per space.

“It’s land value, and it’s extremely expensive to build once you start going underground,” said Attard. “But without parking, it’s much harder to sell units because buyers expect it.”

Once you move out of the city core, the cost of additional parking drops dramatically. The best values seem to be in Scarborough, where you can get an extra spot for as low as $10,000.

But now that parking lot values have outstripped the costs of the average car, some consumers will likely wonder whether it makes sense to drive at all, even if the developer throws in a free car.

During the 2008 recession, as housing markets stalled briefly, at least one developer was giving away an economy car worth about $10,000 plus taxes with every suite sold, said Allen Schwartz, a Toronto real estate investor who has purchased several units over the years.

“You could have probably bought ten cars for what it costs to buy a spot, which seems kind of silly,” said Schwartz. “But I guess the point is you wouldn’t be living at the Four Seasons.”

Source

Filed under: Europa, finance by Wolf
Comments Off

Stocks and mutual funds are investments, not friends.

They have nothing to do with a dearly departed relative who willed them to you.

They harbor no warm feelings about how young you were when you purchased them or whether you once worked for their company. They have no memory of how well they did for you a decade ago.

Selling has zero impact on the investments’ psyche.

“Investments don’t love you back and don’t know if you own them or don’t own them,” asserted Paul Nolte, managing director of Dearborn Partners in Chicago. “Be dispassionate, because sentimental reasons are why investors often hold on for so long.”

Evaluate what an investment has done for you lately before making any decision.

“Financial and energy stocks are areas that we believe investors should consider selling now,” Nolte said. “In the case of financials, it is difficult to get your arms around what the companies really own or how much of it is toxic, while in energy we have already gotten some nice profits.”

Wall Street analysts have a way of avoiding harsh decisions: They give stocks buy, hold or underperform ratings while they follow them. But rather than say ’sell,” they stop coverage as if they never had anything to do with them in the first place.

Being your own investment psychologist isn’t easy.

“It is a lot easier psychologically for people to sell winners than losers because they feel like a winner if the investment made gains and a loser if it didn’t,” said Mark Salzinger, chief investment officer with Salzinger Sheaff Brock in Indianapolis.

This overlooks the fact that, from a tax standpoint, selling losses is advantageous but selling gains is not, he added.

“Emotions always run hot in times of greed and fear, but there’s nothing wrong with taking gains on investments that you own,” said Jim Lowell, editor of independent Fidelityinvestor.com in Needham, Mass. “On the other hand, there is also no reason on the planet to buy or sell based on the political policy or headline of the day.”

There are, however, countless reasons to sell a stock or mutual fund.

Performance may have been disappointing or troubles significant with no end in sight. It may have become overpriced based on the yardstick used to determine its value. It may be too much like your other investments, and you wish to rebalance. You may disagree with current priorities or ethics. There may be better opportunities elsewhere due to changes in the economy or markets.

“Ideally when you buy a stock, you should jot down a few reasons for why you are buying it,” said Nolte. “Then, when those reasons are no longer valid, it is time to sell that stock.”

That could be as basic as saying that you will allow the stock to decline 10 percent and sell at that point, Nolte explained. You could also make the determination from a value perspective. If you bought a stock at a price that was 10 times its earnings, and it is now at 15 times earnings, it is probably a good time to sell, he said.

Don’t put any investment out of mind. Too many people set up company 401(k) accounts, fund them and don’t open a statement for years, said Nolte. Circumstances do change.

“Just look at the stock charts of McDonald’s and IBM over a number of years,” said Nolte. “You will see that while they’ve generally gone up, there have been periods when their stock has gone nowhere, and you’d have been better off selling and moving your money elsewhere.”

If a big acquisition or financial problem threatens a company’s dividend, that might be time to sell, advised Salzinger. In the case of technology, there are many companies that look attractively priced relative to their history, yet there is a fear they could be rendered obsolete by new technology.

“We have personal computers, but what if somewhere down the road PCs become obsolete because all PCs are on cellphones?” said Salzinger. “Some technology scenarios can take away a company’s business.”

Mutual funds differ from individual stocks, but require monitoring just the same. They can outlive their usefulness.

“In my business, I am always focused on the fund manager because we are buying the manager and not the fund,” said Lowell. “If there is a manager change, that is an alarm bell for me, and I want to see that manager’s prior track record because it may be a reason to sell.”

When examining funds, Lowell monitors whether a fund is beating the stock index benchmark that it purports to follow. If an individual’s portfolio has some funds that have either prospered or done quite poorly, thereby throwing the investor’s overall diversification out of whack, it may be reason to sell.

Always pay attention to company news of the stocks you own. For example, Wal-Mart Stores Inc. recently renewed its plan to buy back as much as $15 billion of its shares, a buyback that replaces the $15 billion repurchase announced a year ago.

“Wal-Mart is broadcasting that it believes longer-term that its shares are undervalued,” believes Lowell. “That bullish move signaling a down-the-road recovery is worth noting for investors.”

Source

Filed under: business, technology by Wolf
Comments Off

Exxon Mobil is being ordered to pay more than $1.5 billion in damages to 160 families and businesses affected by a 2006 gasoline leak in Maryland.

Jurors awarded more than $1 billion in punitive damages on Thursday, after earlier awarding $495 million in compensatory damages.

The award in Baltimore County Circuit Court follows a $150 million award in 2009 involving about 90 households. The company is appealing that ruling.

Exxon Mobil Corp., based in Irving Texas, said the facts do not support the latest ruling and that it will appeal it as well no teletrack payday loans.

The 2006 leak occurred in Jacksonville, a small, affluent community about 20 miles north of Baltimore. An underground pipe that burst beneath the gas station allowed more 26,000 gallons of gasoline to escape.

Source

Filed under: finance, term by Wolf
Comments Off

In a blunt challenge to Republicans in Congress, President Barack Obama insisted Wednesday that elimination of selected tax breaks for oil companies and the super-wealthy must be included in any deficit reduction plan.

At his first White House news conference in three months, Obama also called on Congress to renew a payroll tax cut that took effect on Jan 1, one of several steps he said lawmakers can take quickly to help reduce 9.1 percent unemployment.

Although he declined to announce support for legalizing gay marriage, he defended his record on rights for homosexual Americans, saying he had done more to advance their cause than any of his 43 presidential predecessors.

On the deficit and economy, Obama said both parties must be prepared to “take on their sacred cows” as part of the negotiations, with Democrats accepting cuts in government programs.

At the same time, he said any agreement must include increased government revenue. Attempting to blunt Republican criticism, he said he also wants to extend existing middle class tax cuts.

“The tax cuts I’m proposing we get rid of are tax breaks for millionaires and billionaires, tax breaks for oil companies and hedge fund companies and jet owners,” he said.

“That’s not radical,” he said, adding quickly that a bipartisan agreement is possible to cut deficits, raise the government’s $14.3 trillion debt limit and avert a threatened financial crisis. He said a plan must be in place by Aug. 2, a date he called “a hard deadline.”

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.

The president stepped to the podium not long after the International Monetary Fund publicly urged lawmakers to raise the U.S. 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.”

The IMF recommended a long-term strategy for reducing red ink, 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.

Republicans in Congress have been insistent in recent days that any deficit reduction be limited to spending cuts, including reductions in benefit programs such as Medicare and Medicaid, and exclude additional revenues.

In remarks made during the day, Senate Republican leader Mitch McConnell of Kentucky said Obama “said as recently as six months ago that keeping taxes where they are enables businesses to hire more workers. In other words, that raising taxes leads to fewer jobs. So he can call for tax hikes. But he can’t call for tax hikes and job creation. It’s one or the other. `’

Obama said talks led by Vice President Joe Biden had “identified more than $1 trillion worth of spending cuts already. But everyone also know that we need to do more to close the deficit,” he added, citing a goal of $4 trillion.

In his opening remarks, the president called on lawmakers to renew a 2 percentage point cut in Social Security taxes in effect since Jan 1, pass trade agreements with Panama, South Korea and Colombia and overhaul of the nation’s patent laws.

On Libya, the president defended American participation in the NATO military action, saying the U.S. had carried out a “narrow mission in an exemplary fashion” against a tyrant who was threating to “massacre his people.”

“We have not seen a single U.S. casualty,” he said. “There’s no risk of additional escalation. This operation is limited in time and in scope.”

Defending his record on gays, he pointed to eliminating the ban on openly gay men and women serving in the military, a policy known as “don’t ask, don’t tell,” as well as ordering the Justice Department not to defend a law that defines marriage as between a man and woman.

Source

Filed under: business, management by Wolf
Comments Off

President Barack Obama will meet with Senate Democratic leaders Wednesday to continue discussions over debt negotiations.

Obama and Vice President Joe Biden will meet with Senate Majority Leader Harry Reid, Sens. Dick Durbin and Charles Schumer. The meeting comes two days after Obama met separately with Reid and with Senate Republican Leader Mitch McConnell.

The White House announced no new meetings with Republicans.

The debt negotiations are at an impasse over Democratic demands that long-term deficit reductions should include tax increases on the rich and on corporations. Republicans insist on no tax hikes.

The White House and Congress are trying to identify more than $2 trillion in deficit reductions over 10 years as part of an effort to increase the government’s borrowing authority, currently capped at $14.3 trillion.

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

President Barack Obama and the congressional Republican leadership have publicly dug in their heels on critical debt talk negotiations. While they appear immovable, however, they are talking.

Obama and Vice President Joe Biden spent more time in the Oval Office on Monday with Senate Republican leader Mitch McConnell than they did with a fellow Democrat, Senate Majority Leader Harry Reid.

“They will continue to talk,” McConnell spokesman Don Stewart declared after the meeting.

But about what? To be sure, neither McConnell nor Obama is fond of small talk.

Obama and Democrats insist that for there to be a deal on reducing long-term deficits, any agreement must include some tax increases on the wealthy or on corporations, mostly through closed loopholes. But before McConnell even walked into the white House, he had flatly rejected tax increases.

“It’s time Washington take the hit,” he said, “not the taxpayers.”

That would seem to put a damper on the conversation. But the deal is crucial to winning congressional support for raising the government’s borrowing limit, a step it must take by Aug. 2 to avoid a potential default. The current debt ceiling of $14.3 trillion would likely have to be increased by $2.4 trillion to last through the end of next year.

Republicans want an equal amount in deficit reduction over the next 10 years and say they cannot support increasing the debt ceiling without a budget deal at the same time.

“Compromise and an agreement will depend on each side being willing to accept some tough choices,” White House spokesman Jay Carney said Monday.

Failure to raise the ceiling “would do serious damage,” said Mark Zandi, chief economist at Moody’s Analytics, whose views are frequently cited by the Obama administration. “It will unhinge the already very fragile collective psyche.”

But Zandi said that if Republicans are being asked to give up their deep-seated opposition to tax increases, then Obama needs to sacrifice as well by abandoning a major campaign promise, such as his demand that Congress end Bush-era tax cuts for wealthier Americans.

Another option is for Obama to propose his own plan for further savings in Medicare. Republicans might find that appealing after the House Republican plan ran into broad public opposition and became a campaign issue for Democrats.

“The president needs to take a chance himself, and do something that shows he’s willing to give up something that’s very large to move this forward,” Zandi said in an interview.

The president stepped up his personal involvement in negotiations after bipartisan talks led by Biden stalled last week. Republican lawmakers abandoned the negotiations, saying the issues still on the table had to be addressed by the president.

Obama already has met privately with House Speaker John Boehner, R-Ohio, and with House Democrats.

Until Friday, Biden had held a series of meetings over several weeks with bipartisan teams from the House and Senate, focusing on areas where the two sides were amenable to cuts until the dispute over taxes led Republicans to walk out.

The White House is pushing for some tax increases on the wealthy or the elimination of tax breaks for big companies and wealthy individuals as part of a deficit-cutting plan. During the Biden-led negotiations, Democrats proposed about $400 billion in additional tax revenue, including ending subsidies to oil and gas companies, an idea that has failed previously in the Senate.

The administration also would tax private equity or hedge fund managers at higher income tax rates instead of lower capital gains rates, change the depreciation formula on corporate jets, and limit itemized deductions for wealthy taxpayers. It also has called for repealing a tax benefit for an inventory accounting practice used by many manufacturers.

All in all, Obama has proposed more than $600 billion in tax increases and would like a ratio of $1 in tax revenue for every $3 in spending reductions.

“At the end of the day I would be surprised if it was that 1-to-3 ratio the White House was talking about,” said Chris Krueger, a policy and politics analyst at MF Global’s Washington Research Group. “That is probably a bridge too far for congressional Republicans. But I wouldn’t be surprised if there a couple of ceremonial revenue raisers.”

While Republicans insist on no tax increases, they have been willing to consider other forms of revenue, particularly higher user fees.

“Revenues have never been off the table,” said Sen. Jon Kyl of Arizona, the Senate’s Republican participant in the Biden talks. “There are some user fees that are probably way low compared to when they were originally set.”

Obama’s budget wants $85 billion in new fees over 10 years, including raising the airline passenger security fee from a maximum of $5 per one-way trip to $11. Other proposals range from Food and Drug Administration food inspection fees to duck hunting fees. The $85 billion includes a federal auction of parts of the broadcast spectrum and the sale of surplus federal property.

Complicating matters is the congressional schedule. While the Senate is in session, the House is off this week ahead of the July 4 holiday. The House is scheduled to return next week when the Senate will be away. That makes it difficult for leaders in both chambers to find consensus among their respective memberships.

“It’s a really delicate balance and there is not a lot of time left,” Krueger said.

Source

Filed under: finance, online by Wolf
Comments Off