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Aug 09 2010

Monday Business Edition

America Goes Dark

By PAUL KRUGMAN, The New York Times

Published: August 8, 2010

(A) large part of our political class is showing its priorities: given the choice between asking the richest 2 percent or so of Americans to go back to paying the tax rates they paid during the Clinton-era boom, or allowing the nation’s foundations to crumble – literally in the case of roads, figuratively in the case of education – they’re choosing the latter.

But isn’t keeping taxes for the affluent low also a form of stimulus? Not so you’d notice. When we save a schoolteacher’s job, that unambiguously aids employment; when we give millionaires more money instead, there’s a good chance that most of that money will just sit idle.

The antigovernment campaign has always been phrased in terms of opposition to waste and fraud – to checks sent to welfare queens driving Cadillacs, to vast armies of bureaucrats uselessly pushing paper around. But those were myths, of course; there was never remotely as much waste and fraud as the right claimed. And now that the campaign has reached fruition, we’re seeing what was actually in the firing line: services that everyone except the very rich need, services that government must provide or nobody will, like lighted streets, drivable roads and decent schooling for the public as a whole.

Monday Business Edition is an Open Thread

From Yahoo News Business

1 BP spends $6.1 bln on Gulf spill response

AFP

57 mins ago

LONDON (AFP) – Energy giant BP said on Monday that it had spent 6.1 billion dollars so far in response to the massive oil spill in the Gulf of Mexico, and confirmed that the damaged well was no longer leaking.

“The cost of the response to date amounts to approximately 6.1 billion dollars (4.6 billion euros),” BP said in an official statement.

The costs include spill response, relief well drilling, the “static kill” and cementing of the ruptured well, grants to Gulf states, claims paid and federal costs.

2 BP faces ‘large financial penalty’: US environment chief

by Michael Mathes, AFP

Sun Aug 8, 1:10 pm ET

WASHINGTON (AFP) – President Barack Obama’s top energy advisor said Sunday that BP will pay a “large financial penalty” for the Gulf of Mexico oil disaster but refused to say if criminal negligence charges will be pursued.

With the ruptured Macondo well all but dead on the ocean floor as engineers shut the well for good, BP is shifting towards recovery operations including cleaning hundreds of miles of shoreline and restoring the economic health of the region.

Carol Browner, director of the White House Office of Energy and Climate Change Policy, stressed that the British energy giant was on the hook for billions of dollars in penalties for the largest unintentional oil spill in petroleum industry history.

3 US urges focus on clean-up, sea damage after BP spill

by Kerry Sheridan, AFP

Sun Aug 8, 12:46 pm ET

WASHINGTON (AFP) – US officials on Sunday urged further study of the damage done to the environment by BP’s broken well, and said clean-up efforts must continue despite claims that much of the oil had vanished from the Gulf of Mexico.

“I think what we need to understand is there’s a lot of oil that’s been taken care of. There’s a lot of oil that’s still out there,” said Coast Guard Admiral Thad Allen on CNN.

“You need to keep a steady hand at the tiller here, keep this cleanup going,” he said, describing it as a “catastrophe for the people of the Gulf” and calling for a close study of the damage done to the environment.

4 BP may re-drill near Gulf of Mexico oil well site

by Erica Berenstein, AFP

Fri Aug 6, 10:12 pm ET

NEW ORLEANS, Louisiana (AFP) – BP has shrugged off a potential public relations hit when the energy giant said it may drill a new well in the Gulf of Mexico reservoir which fed one of the world’s worst oil spills.

BP is on the hook for tens of billions of dollars in fines and clean-up and compensation costs, so tapping into the rich field deep under the seabed might well be worth it.

“Clearly there’s lots of oil and gas there and we’ll have to think about what to do with that at some point,” Doug Suttles, BP’s chief operating officer, told reporters.

5 Saudis hold breath on BlackBerry ban

AFP

1 hr 17 mins ago

RIYADH (AFP) – Hundreds of thousands of BlackBerry users were Monday awaiting a decision by the Saudi regulator on banning the handset’s messenger service following tests aimed at allaying security concerns.

The telecoms watchdog had postponed a ban due to come into force on Friday, allowing time until Monday evening to test suggested technical solutions that would give authorities access to BlackBerry’s encrypted data.

More 700,000 people subscribe to BlackBerry in the kingdom, most reportedly purchasing the device for personal use. But the birthplace of Al-Qaeda chief, Osama bin Laden, fears the smartphone could jeopardise its security.

6 Saudi regulator delays BlackBerry ban to test ‘solutions’

AFP

Sun Aug 8, 9:03 am ET

JEDDAH, Saudi Arabia (AFP) – Saudi’s telecoms regulator has postponed a ban on BlackBerry until Monday so that suggested solutions to the kingdom’s security concerns offered by the Canadian maker can be tested.

The Communications and Information Technology Commission said the 48-hour grace period, ending on Monday evening, was given “to test the suggested solutions,” a statement carried by SPA state news agency late on Saturday said.

The CITC decision was also based on the “ongoing efforts by the providers of mobile services to meet the requirements of the commission’s regulations.”

7 Onus shifts to US Fed after jobs slump

by Andrew Beatty, AFP

Sun Aug 8, 7:56 pm ET

WASHINGTON (AFP) – The Federal Reserve’s rate-setting panel will meet Tuesday amid pressure to resume crisis-era spending to restart a stalled recovery.

The 10-member body is expected to keep interest rates at historic lows, but Fed watchers will be looking for any hint of a return to stimulus spending.

After planing to reel in crisis measures, the Labor Department reported US economy shed 131,000 jobs in July, thrusting the Fed’s policies back into the spotlight.

8 Putin sows controversy with Russia grain ban

by Stuart Williams, AFP

Sat Aug 7, 11:04 pm ET

MOSCOW (AFP) – “I would like to inform you about one more decision,” Russian Prime Minister Vladimir Putin told his cabinet at the end of a government meeting as he prepared to drop one of his trademark bombshells.

Top wheat exporter Russia, Putin said, would from August 15 ban the export of grain until December 31 to keep prices down at home amid the worst drought to hit the country in decades.

The announcement catapulted wheat futures in Chicago and Europe up 10 percent to new two-year highs and prompted a warning from the UN food agency of a “serious” situation on world food markets.

9 Hewlett-Packard boss resigns after sex probe

AFP

Sat Aug 7, 4:41 am ET

NEW YORK (AFP) – Hewlett-Packard chief executive Mark Hurd resigned Friday after an accusation of sexual harassment uncovered subterfuge with company expenses, the computer giant announced.

“Chief Executive Officer and President Mark Hurd has decided with the board of directors to resign his positions effective immediately,” the company said in a statement.

HP had brought in outside counsel to investigate allegations that Hurd had violated HP’s sexual harassment policy in his dealings with a former marketing contractor.

10 Latest jobs data is blow to Obama election hopes

by Tangi Quemener, AFP

Sat Aug 7, 2:18 am ET

WASHINGTON (AFP) – The latest grim data on unemployment has dealt a new blow to President Barack Obama as he struggles to maintain his party’s majority in Congress in November elections.

Obama, who has been hurt by the Gulf of Mexico oil disaster, has been scrambling to highlight his economic management in helping lift the US economy out of its worst slump in decades.

But the latest data released Friday showed the recovery is sputtering: A Labor Department report showed 131,000 jobs were lost in July and the unemployment rate remained stuck at 9.5 percent, which is better than the worst levels this year but still painfully high.

11 China’s savings rate ‘to drop in coming decade’

by Hui Min Neo, AFP

Sun Aug 8, 2:16 am ET

GENEVA (AFP) – China’s high savings rate is expected to fall substantially in coming years as its workforce shrinks, the population ages and social security spending increases, a BIS report shows.

In research published by the Bank for International Settlements on the “myth and reality” of China’s savings rate, Ma Guonan and Wang Yi found that the Asian giant needs its population to spend more in order to sustain rapid economic growth in coming years.

The researchers, who were writing in their personal capacity, also reject claims that Chinese state firms have been benefiting from high savings thanks to exchange rate distortions and subsidies designed to drive economic growth.

12 Fears over plan to sell strategic Georgian pipeline

by Michael Mainville, AFP

Sat Aug 7, 11:58 pm ET

TBILISI (AFP) – Plans by Georgia to sell off at least part of a major gas pipeline from Russia are raising fears among both Georgians and Armenians that the strategically vital asset will fall into the hands of political foes.

Georgia’s parliament last month approved the lifting of a legal ban on the privatisation of the North-South pipeline which runs from Russia to Armenia and was previously listed as a “strategic asset” that could not be sold.

Georgian officials insist that only a minority stake could be sold.

13 As economy recovers, Germans eye a pay rise

by Mathilde Richter, AFP

Sat Aug 7, 11:44 pm ET

BERLIN (AFP) – After years of agreeing to moderate pay hikes to safeguard jobs, Germany’s powerful unions are gearing up for a dramatic change of strategy, bidding for wage gains that bosses say could derail the recovery.

Heavily dependent on exporting quality German-made products, the economy, Europe’s biggest, was hit harder than most by the global crisis but now appears to be recovering faster as demand across the globe picks up.

Foreign orders are booming, the country’s low unemployment has been hailed as a “jobs miracle,” top firms are reporting strong profits and consumer and business confidence levels are soaring.

14 Reformers gain a toehold in Nigerian corruption fight

by Joel Olatunde Agoi, AFP

Sat Aug 7, 11:05 pm ET

LAGOS (AFP) – The tale of Nigeria’s banking crisis gets complicated, as matters related to money in this country often do, but it may be best to start with the private jets.

Banks essentially loaning money to themselves used the cash for all sorts of alleged shady deals, including buying private jets or manipulating stock prices — and that was only part of the problem.

“The banks did not fail,” Central Bank Governor Lamido Sanusi said in a strikingly blunt speech earlier this year. “They were destroyed and brought to their knees by acts committed by identifiable people.”

15 Bolivians on hunger strike, cut rail links to Chile

AFP

Sat Aug 7, 10:17 pm ET

POTOSI, Bolivia (AFP) – Anti-government protesters tightened their siege of Potosi, launching a hunger strike and cutting rail links to Chile, as tourists began negotiating their way out of the mining city, 10 days into the blockade.

“We’re taking this to the bitter end,” said a hunger striker in the tent city that sprung up overnight in Potosi’s main square.

The hunger strike includes regional officials, union and farm leaders, as well as Potosi Governor Felix Gonzalez, a former ally of leftist President Evo Morales, whom many critics charge is ignoring the plight of Bolivia’s poor who voted him to power six year ago.

16 US economy sheds 131,000 jobs

by Andrew Beatty, AFP

Fri Aug 6, 5:59 pm ET

WASHINGTON (AFP) – The US economy shed more jobs than expected in July, the Labor Department said Friday, heightening fears that the world’s largest economy will take years to fully recover from a crippling recession.

Some 131,000 jobs were lost and the unemployment rate remained stuck at 9.5 percent last month, officials said, as federal and local governments slashed jobs.

The private sector was unable to offset a massive government layoff of 143,000 census-takers, with firms creating only a modest 71,000 jobs.

17 Caution prevails, but volatility seen lower

By Angela Moon, Reuters

Sun Aug 8, 5:14 am ET

NEW YORK (Reuters) – U.S. stock investors are turning more to options for protection after the latest data showing the frailty of the economic recovery, but they may find some comfort in Wall Street’s “fear gauge.”

After a dismal July payrolls report, options investors are busy buying protective puts on a popular exchange-traded fund that tracks the S&P 500 index (.SPX), but the CBOE Volatility Index (.VIX) suggests there is no need to be too concerned.

Protective put options in the SPDR S&P 500 fund (SPY.P), also known as the SPYders, were a favorite among traders after a larger-than-expected drop in July U.S. non-farm payrolls fueled worries that the economic recovery was faltering.

18 Asian mills eye Aussie wheat as traders scrap deals

By Naveen Thukral and Ruma Paul, Reuters

1 hr 43 mins ago

SINGAPORE/DHAKA (Reuters) – Exporters canceled major contracts of drought-hit Black Sea wheat to Bangladesh on Monday, signaling the need for Asian millers to scramble for supplies from other key growers like Australia.

Russia banned grain exports on Thursday last week as the worst drought on record ravaged crops across the Black Sea region, boosting the Chicago Board of Trade front-month wheat contract up 66 percent from a low of $4.25- in June.

Chicago wheat futures fell nearly 3 percent on Monday, extending their losses to around 10 percent in two sessions, but traders say the impact of the Russian ban has not been fully felt and the market faces wide swings in prices.

19 Fed debates winding road to more easing

By Pedro Nicolaci da Costa, Reuters

Sun Aug 8, 3:07 pm ET

WASHINGTON (Reuters) – Even with U.S. interest rates already near zero, Federal Reserve policymakers will still spend much of a meeting on Tuesday discussing ways to offer more rather than less monetary stimulus to the economy.

The problem is that despite the most aggressive rate-cutting campaign in the central bank’s history and Fed purchases of nearly $1.5 trillion in mortgage and Treasury bonds, U.S. growth prospects still look shaky.

In particular, the latest employment numbers confirmed that the outlook is souring as the year progresses, raising the possibility that things might get worse rather than better and potentially raising the risk of another recession.

20 Ex-HP CEO Mark Hurd settled with contractor

By Gabriel Madway, Reuters

Sun Aug 8, 12:42 am ET

SAN FRANCISCO (Reuters) – Hewlett-Packard Co’s former chief executive officer Mark Hurd has reached a legal settlement with the woman who accused him of sexual harassment, and she has also agreed to release HP from legal claims, according to sources familiar with the matter.

The world’s No. 1 computer maker stunned Wall Street and Silicon Valley on Friday by announcing Hurd’s resignation, accusing him of falsifying expense reports to conceal a “close personal relationship” with a female contractor.

The unidentified woman told HP’s board in June that Hurd had sexually harassed her, but an investigation found no violation of the company’s sexual harassment policy, HP said.

21 Weak private hiring shows recovery on the ropes

By Lucia Mutikani, Reuters

Fri Aug 6, 4:54 pm ET

WASHINGTON (Reuters) – U.S. private employers added fewer workers to their payrolls in July than expected and hiring in June was much weaker than had been thought, a big blow to an already feeble economic recovery.

The dismal news on jobs poses a challenge to officials at the Federal Reserve who are debating whether more needs to be done to foster growth, as well as to Democrats hoping to retain their congressional majorities in November elections.

The Fed’s policy-setting committee meets on Tuesday.

22 Berkshire net down 40 percent on derivative losses

By Jonathan Stempel, Reuters

Fri Aug 6, 6:57 pm ET

NEW YORK (Reuters) – Warren Buffett’s Berkshire Hathaway Inc (BRKa.N)(BRKb.N) said on Friday second-quarter profit fell 40 percent, as declining stock prices depressed the value of his derivative contracts.

Operating profit nevertheless soared 73 percent, helped by the February takeover of railroad operator Burlington Northern Santa Fe Corp, improved insurance underwriting including a tripling of pretax profit at the Geico Corp auto insurer, and a turnaround at the NetJets corporate plane unit.

Net income fell to $1.97 billion, or $1,195 per Class A share, from $3.3 billion, or $2,123, a year earlier.

23 BOJ eyes yen; may opt for minor easing if moves sharp

By Leika Kihara, Reuters

Sun Aug 8, 7:09 pm ET

TOKYO (Reuters) – The Bank of Japan hopes to avoid having to dig into its depleted policy arsenal next week, but may ease monetary policy if the yen soars toward an all-time high against the dollar and threatens a fragile economic recovery.

As long as the yen’s climb is spread over several weeks or months, the central bank is expected to stand pat on policy with solid exports to Asia underpinning Japan’s export-driven growth.

But the BOJ is ready to act if expectations of further monetary easing by the Federal Reserve drive down the dollar/yen rate fast enough to damage Japanese business sentiment. For example, a single day drop of 2-3 yen in the dollar/yen exchange rate could make the central bank nervous, traders said.

24 BP plans to continue relief well work this week

By JEFFREY COLLINS, Associated Press Writer

1 hr 37 mins ago

NEW ORLEANS – The oil that poured into the Gulf for more than 12 weeks has been forced back underground and BP engineers expect to spend this week drilling the final leg of a relief well to complete the “bottom kill” designed to permanently seal the leaking well.

BP and the government have said for months that intersecting the blown-out well and shoving more mud and cement into it is the ultimate solution to making sure it never spews crude into the ocean again.

The oil is already back at its source, thanks to the “static kill,” which involved thousands of gallons of mud and cement being poured last week through a cap that had been keeping the crude out of the water since July 15. The cement cap poured on top of the oil hardened enough over the weekend so engineers could begin digging the final 100 feet of the well again, according to a news release from the company.

25 Hurricane could bring bureaucratic delays to Gulf

By EILEEN SULLIVAN, Associated Press Writer

Mon Aug 9, 4:06 am ET

WASHINGTON – If a hurricane hits the Gulf Coast and whips up oil from BP’s massive spill, cleanup workers will not be able to swoop into action to fix the mess. A new Obama administration edict requires that the oil be tested before it can be cleaned, according to a response plan obtained by The Associated Press.

The extra step is supposed to make it easier for the government to get reimbursed if a hurricane slings oil from the Gulf of Mexico into backyards, neighborhoods and wetlands.

But it also could cause frustrating additional delays and prevent residents from returning to their homes while the government figures out who pays the bill.

26 Crabs provide evidence oil tainting Gulf food web

By JOHN FLESHER, AP Environmental Writer

2 hrs 35 mins ago

BARATARIA, La. – To assess how heavy a blow the BP oil spill has dealt the Gulf of Mexico, researchers are closely watching a staple of the seafood industry and primary indicator of the ecosystem’s health: the blue crab.

Weeks ago, before engineers pumped in mud and cement to plug the gusher, scientists began finding specks of oil in crab larvae plucked from waters across the Gulf coast.

The government said last week that three-quarters of the spilled oil has been removed or naturally dissipated from the water. But the crab larvae discovery was an ominous sign that crude had already infiltrated the Gulf’s vast food web – and could affect it for years to come.

27 Woman in HP scandal "saddened" by CEO’s ouster

By JORDAN ROBERTSON, AP Technology Writer

Sun Aug 8, 11:13 pm ET

SAN FRANCISCO – The woman at the center of the sexual harassment claim that forced the resignation of Hewlett-Packard Co. CEO Mark Hurd revealed her identity Sunday and said she is “surprised and saddened” that Hurd lost his job.

Jodie Fisher, 50, an actress and businesswoman, knew Hurd through her contract jobs with HP’s marketing department from 2007 to 2009. HP paid her up to $5,000 per event to greet people and make introductions among executives attending HP events that she helped organize.

Fisher echoed Hurd’s statement that the two never had a sexual relationship, but neither she nor her lawyer, celebrity attorney Gloria Allred, would discuss details of the harassment claim.

28 Bahrain says no plans to ban BlackBerry services

By ADAM SCHRECK, AP Business Writer

Sun Aug 8, 4:38 pm ET

DUBAI, United Arab Emirates – Bahrain’s foreign minister said Sunday the country has no plans to follow its Persian Gulf neighbors in banning some BlackBerry services because security fears do not outweigh the technological benefits.

His comments come as device maker Research in Motion Ltd. is facing opposition by a number of countries around the world, including Saudi Arabia and the United Arab Emirates in the Gulf, to the way its encrypted e-mail and messenger services are managed.

Bahrain’s Sheik Khaled bin Ahmed Al Khalifa told The Associated Press the handheld devices raise legitimate concerns, but that his nation has decided that banning some of the phones’ features is “not a way of dealing with it.”

29 Cash-hungry states add casinos, lure same gamblers

By WAYNE PARRY and STEPHEN SINGER, Associated Press Writers

Sun Aug 8, 7:38 pm ET

ATLANTIC CITY, N.J. – Cash-starved states are increasingly being drawn to the lure of easy money in casinos – a bet that could ultimately hurt taxpayers if the supply of slot machines, poker tables and racetracks outpaces customers’ demand.

The race to open new casinos is most frenzied in the Northeast, which has 41 casinos and 20 more planned.

Atlantic City, N.J., which for decades held a gambling monopoly outside Nevada, was already reeling from a beatdown inflicted by neighboring competitors. Now New York, which has casinos run by Indian tribes, just approved slot machines for its Aqueduct racetrack. Pennsylvania has added table games like poker and blackjack to its nine slot-machine casinos – and five new casinos are planned.

30 Hawaii sugar grower working to power Navy

By AUDREY McAVOY, Associated Press Writer

Mon Aug 9, 3:15 am ET

HONOLULU – The federal government has turned to a 130-year-old Hawaii sugar grower for help in powering the Navy and weaning the nation off a heavy reliance on fossil fuels.

It will spend at least $10 million over the next five years to fund research and development at Maui cane fields for crops capable of fueling Navy fighter jets and ships. The project also may provide farmers in other warm climates with a model for harvesting their biofuel crops.

Hawaii has become a key federal laboratory for biofuels because of its dependence on imported oil as well as its great weather for growing crops. Factor in the heavy military presence at places such as Pearl Harbor, and the islands become an ideal site for the government to test biofuel ideas on a commercial scale.

31 Northwest wineries seek growing Chinese market

By GEORGE TIBBITS, Associated Press Writer

Sun Aug 8, 3:29 pm ET

SEATTLE – Hong Kong and mainland China are developing a strong thirst for wine, and Washington and Oregon are hoping for a taste of those growing markets.

So far, only a trickle of Northwest wines make it to Asian countries outside of Japan. But experts say as affluence grows in China’s booming economy, so will the demand for the finer things in life.

The recession hurt U.S. wine sales to most of the world last year, but not to Hong Kong, where the value of American wine imports jumped 138 percent to $40 million.

32 Medicare’s private eyes let fraud cases get cold

By RICARDO ALONSO-ZALDIVAR, Associated Press Writer

Sun Aug 8, 9:07 am ET

WASHINGTON – They don’t seem that interested in hot pursuit. It took private sleuths hired by Medicare an average of six months last year to refer fraud cases to law enforcement.

According to congressional investigators, the exact average was 178 days. By that time, many cases go cold, making it difficult to catch perpetrators, much less recover money for taxpayers.

A recent inspector general report also raised questions about the contractors, who play an important role in Medicare’s overall effort to combat fraud.

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