Category: Politics

Greece Fails to Gather Support to Elect New President

17-Dec (Bloomberg) Greek Prime Minister Antonis Samaras’s bid to elect a new head of state faltered in parliament after he failed to gather enough support from lawmakers for his nominee in the first of three attempts.

With voting ongoing in Athens, more than 100 lawmakers in the country’s 300-seat chamber withheld their backing for Samaras’s candidate, Stavros Dimas, ensuring that he falls short of the 200 votes required for his election as president. Samaras has 155 lawmakers in his governing coalition.

Attention now turns to the second vote on Dec. 23, when Samaras again needs a two-thirds majority to win. If he fails in the third attempt, set for Dec. 29, parliament is dissolved and early elections called.


PG View: One step closer to a political crisis in Greece that could reignite concerns over a “Grexit”.

Posted in all posts, Politics |

Senate passes spending bill, ends government shutdown threat

14-Dec (Reuters) – The U.S. Senate on Saturday passed a $1.1 trillion spending bill that lifts the threat of a government shutdown as Congress attempts to wrap up a two-year legislative session marked by bitter partisanship and few major accomplishments.

The Senate’s 56-40 vote sends the measure to President Barack Obama, who is expected to sign it into law before federal spending authority expires at midnight on Wednesday.

Passage of the 1,603-page bill was a long, tough struggle in the Senate and the House of Representatives marked by bitter disputes over changes to banking regulations and Obama’s recent executive order on immigration.


Posted in all posts, Debt, Politics |

Abe vows to stick to reflationary policies after election win

15-Dec (Reuters, via IndiaExpress) — Japanese Prime Minister Shinzo Abe, brushing aside suggestions that a low turnout tarnished his coalition’s election win, vowed on December 15 to stick to his reflationary economic policies, tackle painful structural reforms and pursue his muscular security stance.

But doubts persist as to whether Abe, who now has a shot to become a rare long-lasting leader in Japan, can engineer sustainable growth with his “Abenomics” recipe of hyper-easy monetary policy, government spending and promises of deregulation.

“We heard the voice of the people saying ‘Move forward with Abenomics’,” Abe told a news conference at his ruling Liberal Democratic Party (LDP) headquarters, adorned with giant posters of the premier and his campaign slogan “This is the only path”.

“I want to boldly implement the ‘Three Arrows’,” Abe said, adding he would compile stimulus steps before the year’s end and ask business leaders to boost wages, which have not kept pace with rises in consumer prices.


Posted in Central Banks, Monetary Policy, Politics, QE |

Democrats balk at U.S. spending bill, raising shutdown risk

11-Dec (Reuters) – Congressional Democrats objected on Wednesday to controversial financial and political campaign provisions tucked into a $1.1 trillion U.S. spending bill, keeping the risk of a government shutdown alive.

The complaints from House of Representatives Minority Leader Nancy Pelosi and other top Democrats clouded the chances for passage of the funding bill as a midnight Thursday deadline drew near.

Republicans were preparing a one-or-two day extension to keep federal agencies open past the deadline, but were unwilling to make any concessions on dozens of provisions added to the bill.


PG View: Same old, same old.

Posted in Politics |

Congress has 2 weeks to avert a government shutdown

01-Dec (AP, via NPR) — Lame-duck lawmakers return to Washington on Monday facing a stacked agenda and not much time to get it all done before the new Congress convenes in January and a Republican takeover is complete.

Their to-do list includes keeping the government running into the new year, renewing expired tax breaks for individuals and businesses and approving a defense policy measure that has passed for more than 50 years in a row. They hope to get it all done in two weeks without stumbling into a government shutdown.

…The No. 1 item is preventing a government closure when a temporary funding measure expires on Dec. 11. The House and Senate Appropriations committees are negotiating a $1 trillion-plus spending bill for the budget year that began Oct. 1 and are promising to have it ready by the week of Dec. 8.


Posted in Debt, Politics |

Scotland Votes No, Stays in the U.K.

18-Sep (The Wall Street Journal) — Voters in Scotland chose to remain in the U.K. in an Independence referendum on Sept. 18.

Yes: 45% 1,617,989 votes
No: 55% 2,001,926 votes


Posted in Politics |

This Paragraph Should Scare The Heck Out Of People Who Want Scottish Independence

10-Sep (BusinessInsider) — This paragraph from Credit Suisse should scare those in Scotland who might want independence from Great Britain:

Risk of an economic crisis: In our opinion Scotland would fall into a deep recession. We believe deposit flight is both highly likely and highly problematic (with banks assets of 12x GDP) and should the BoE move to guarantee Scottish deposits, we expect it to extract a high fiscal and regulatory price (probably insisting on a primary budget surplus). The re-domiciling of the financial sector and UK public service jobs, as well as a legal dispute over North Sea oil, would further accelerate any downturn. In our opinion, as North Sea oil production slows, we estimate that the non-oil economy would need a 10% to 20% devaluation to restore competitiveness. This would wages, driven by a steep rise in unemployment.


PG View: Polling on the issue of Scottish independence has moderated somewhat recently, perhaps the Scottish people have gotten wind of this.

Posted in Politics |

Merkel Increasingly Isolated on Austerity

03-Sep (Der Spiegel) — The debate over Germany’s insistence on euro-zone austerity has flared anew as an ailing France continues to demand economic stimulus. The European Central Bank may now be siding with Paris, leaving Merkel looking increasingly alone.

The chancellor peered at her impassioned interviewer as if he were some kind of rare insect. An orange microphone in her left hand and eyebrows severely arched, Angela Merkel sank deeply into the armchair on the stage of the Berliner Ensemble theater, as though trying to put the greatest possible distance between herself and the journalist from the political magazine Cicero. Gesticulating wildly, he had just asked for her thoughts on the pain felt in France at being left behind by Germany economically. “Can Germany continue to play such a dominating role?” he demanded.

Her response was evasive. After a pause, she commended France for its military operations in Mali and the Central African Republic. Beyond that, though, not much praise for Paris would be forthcoming that evening on the last Wednesday in August. Merkel’s larger message was the same as it has been for years: France has to solve its structural problems. Only then can it resume its role among Europe’s leaders.


PG View: If the ECB joins France and the rest of the stimulus crowd, Germany is going to have to open the collective purse yet again…

Posted in Politics |

Japan Cabinet Reshuffle: Abe Unveils New Ministers

03-Sep (The Wall Street Journal) — Japanese Prime Minister Shinzo Abe overhauled his government Wednesday, rolling out a lineup that signaled his determination to push ahead with changes to boost the economy and raise the country’s military profile.

Mr. Abe’s first cabinet reshuffle since he took power 20 months ago introduced some surprise new faces while retaining ministers in major posts such as finance and foreign affairs.

…”We will continue to put the economy first, aim to snuff out deflation and do whatever we can to implement growth strategies,” Mr. Abe said at a news conference. “It’s the mission of the new Abe cabinet to solidify economic growth and make sure its fruit is felt in every nook and cranny of the land.”

…Robert Feldman, an economist at Morgan Stanley MS +0.61% MUFG in Tokyo, said the new cabinet lineup “suggests extra momentum for third arrow reforms in some key areas,” referring to the structural changes under Mr. Abe’s pro-growth strategy known as Abenomics. The first two arrows are monetary easing and more government stimulus spending.


Posted in Politics |

Ukrainian president dissolves parliament and announces early elections in October

25-Aug (AP, via US News and World Report) — Ukraine’s president has dissolved parliament and called for early elections in October as his country continues to battle a pro-Russian insurgency in its eastern regions.

President Petro Poroshenko announced in a statement posted on his website Monday that he has dissolved parliament and called for snap elections on October 26.

He said the move was in coherence with the Ukrainian constitution, noting that the ruling coalition collapsed several weeks ago.


Posted in Geopolitical Risks, Politics |

Central banks to lawmakers: You try growing the economy

25-Aug (Washington Post) — After years of bold action following the global financial crisis, the world’s central bankers are ready to pass the baton.

The consensus at the annual gathering of these stewards of the economy this year was that the power of monetary policy to drive global growth is nearing its limit. Further progress will now depend on whether government leaders are willing to step up to the plate.

“The only conclusion that we can safely draw, in my view, is that we need action on both sides of the economy,” European Central Bank President Mario Draghi said in a speech at the conference, which is hosted by the Federal Reserve Bank of Kansas City and wrapped up on Saturday. “Only if the strategy is truly coherent can it be successful.”

The normally staid world of monetary policy entered the spotlight during the financial crisis when central bankers slashed interest rates, pumped trillions of dollars into the financial system and exercised broad authority to rescue failing institutions. Their actions were unprecedented and untested – and largely credited with staving off a global depression.

But averting disaster is not the same as ensuring growth. The global economy is forecast to expand 3.4 percent this year, less than previously expected. Inflation in some countries remains dangerously low. The job market in advanced economies is still not fully healed.


PG View: If the central banks really plan on passing the baton off to politicians, you can almost bank on said-baton being dropped.

Posted in Central Banks, Monetary Policy, Politics |

French Government Dissolved Amid Internal Feud

25-Aug (ABC News) — French President Francois Hollande dissolved the government on Monday after open feuding in his Cabinet over the country’s stagnant economy.

Prime Minister Manuel Valls offered up his Socialist government’s resignation after accusing the outspoken economy minister of crossing a line with his blunt criticism of the government’s policies. Hollande accepted the resignation and ordered Valls to form a new government by Tuesday.

France has had effectively no economic growth this year, unemployment is hovering around 10 percent, and Hollande’s approval ratings are in the teens. The country is under pressure from the European Union to get its finances in order, but Economy Minister Arnaud Montebourg has questioned whether the austerity pressed by the EU will kick start French growth.


Posted in Politics |

Congress dithers on the economy

03-Jul (Politico) — When the latest sign of a troubled economy emerged last week, Congress had a ready response: Nothing.

The same week that new data came out showing the U.S. economy shrank nearly 3 percent in the first quarter, Speaker John Boehner (R-Ohio) announced plans to sue President Barack Obama for abusing his executive authority. Senate Majority Leader Harry Reid (D-Nev.), meanwhile, garnered headlines for denouncing the name of Washington’s football team. Both chambers then went into an 11-day recess.

The reaction at the White House wasn’t much stronger. Officials there bashed Republicans, and then argued the overall economy is doing just fine now.

The collective shrug highlights Washington’s inability — or unwillingness — to make bipartisan deals that would assist Americans still struggling to recover from the 2008 economic collapse.


PG View: Worth noting that Congress notched a new record low approval rating of just 16% in June according to Gallup.

Posted in Politics |

Sen. Paul threatens to hold Yellen nomination: Source

25-Oct (CNBC) — Sen. Rand Paul is threatening to put a hold on the nomination of Janet Yellen to chair the Federal Reserve, a source close to the Kentucky Republican said Friday.

Paul is insisting on a vote on his Fed transparency bill, and has informed Senate leadership of his intentions, the source said.

…The senator’s bill would mandate a complete audit of the Federal Reserve.


Posted in Central Banks, Politics |

Senate Leaders Reach Bipartisan Deal

16-Oct (The Wall Street Journal) — Senate leaders on Wednesday struck an 11th-hour agreement to avoid a U.S. debt crisis and fully reopen the federal government, putting lawmakers on track toward ending a stalemate that worried investors world-wide and provided striking evidence of congressional dysfunction.

House Speaker John Boehner (R., Ohio), in a statement released Wednesday afternoon, said House Republicans will allow the Senate deal to come up for a vote. “Blocking the bipartisan agreement reached today by the members of the Senate will not be a tactic for us,” Mr. Boehner said.

…House Rules Chairman Pete Sessions (R., Texas) said passage of the bill was a “foregone conclusion.”

“I do expect it to pass,” Mr. Sessions said.


Posted in Budget/Debt Ceiling Crisis, Politics |

Senate reaches deal, House will vote first

16-Oct (Politico) — Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell will soon announce an agreement to reopen the government and avert default on U.S. debt, according to several sources familiar with the talks.

The House plans to move on the Senate’s bill first, sources say, a move that would clear a path to end the first government shutdown in 17 years and avoid the first potential economy-shaking default on U.S. debt. It remains unclear when a final vote would occur in the Senate.

If the House passes the bill first and sends it to the upper chamber, it would eliminate some burdensome procedural hurdles in the Senate and require just one procedural roll call with a 60-vote threshold needed to advance the bill toward final passage in the Senate.

…It still is not assured that Congress will send President Barack Obama a bill to sign by Thursday, when the Treasury Department warns the country will start running out of cash to pay its bills for the first time in history.


Posted in Budget/Debt Ceiling Crisis, Politics |

Shutdown begins: Stalemate forces first U.S. government closure in 17 years

01-Oct (Washington Post) — The U.S. government began to shut down for the first time in 17 years early Tuesday, after a Congress bitterly divided over President Obama’s signature health-care initiative failed to reach agreement to fund federal agencies.

Hours before a midnight deadline, the Republican House passed its third proposal in two weeks to fund the government for a matter of weeks. Like the previous plans, the new one sought to undermine the Affordable Care Act, this time by delaying enforcement of the “individual mandate,” a cornerstone of the law that requires all Americans to obtain health insurance.

The new measure also sought to strip lawmakers and their aides of long-standing government health benefits.


Posted in Budget/Debt Ceiling Crisis, Economy, Politics |

Senate Passes Budget Bill as House Weighs Options

27-Sep (New York Times) — The Senate on Friday overwhelmingly approved stopgap spending legislation to keep the federal government open without gutting President Obama’s health care law, setting up a weekend showdown with the House that will decide whether much of the government shuts down at midnight Monday.

The 54-to-44 vote for final passage followed a more critical moment when the Senate, in a bipartisan rebuke to Republican hard-liners, cut off debate on the legislation. The 79-to-19 vote included the top Republican leadership and easily exceeded the 60-vote threshold to break a filibuster.

The Senate then voted along party lines, 54 to 44, to strip out House Republican language that tied further funding of the government to defunding the health care law. That vote required only a simple 51-vote majority.

…Now Speaker John A. Boehner of Ohio faces a defining choice: accept the Senate bill, which funds the government through Nov. 15 without Republican policy prescriptions, or listen to his conservatives, who will accept a government shutdown unless serious damage is done to the health care law.


PG View: This seems like much ado over a CR that only provides an additional 6-weeks of funding for the government. Even if it is passed by the House, we’ll be right back at this silliness in mid-November with an even more contentious debt ceiling battle ahead as well.

Posted in all posts, Debt, Politics |

Lew Issues Debt-Ceiling Warning

25-Sep (The Wall Street Journal) — The U.S. Treasury Department on Wednesday said it would exhaust emergency measures to avoid falling behind on government obligations no later than Oct. 17 and would be left with $30 billion in cash to run the government, a warning that could hasten fiscal discussions on Capitol Hill.

Treasury Secretary Jacob Lew, in a letter to Congress, said the $30 billion in cash would “be far short of net expenditures on certain days, which can be as high as $60 billion.” He called on Congress to raise the nation’s borrowing limit immediately to prevent the country from falling behind on its bills.

…Because the government runs a deficit and spends more money than it brings in through revenue, analysts believe it would only be a matter of days, or perhaps weeks, before that cash ran out and triggered what is known as a “technical default” because some payments wouldn’t be met.

In the letter, Mr. Lew said Republican proposals to “prioritize” Treasury’s payments after this time, such as by making interest payments to bondholders before making other payments, is “simply default by another name.”


Posted in Debt, Fiscal Cliff, Politics |

Triumph Confirms ‘Era of Merkelism’

ngela Merkel is at the zenith of her power. Her historic election win on Sunday reflects how deeply Germans appreciate her no-nonsense, frugal Hausfrau style of governing, say editorials. But she now needs to address domestic reforms to secure her legacy.

German Chancellor Angela Merkel won a stunning victory in Sunday’s election, leading her conservatives to their best result in two decades following a campaign that focused almost entirely on her rather than on policies.

The election result, which puts her on a similar footing with Christian Democratic Union (CDU) party heavyweights like Konrad Adenauer and Helmut Kohl, but she won’t have much time to savor it. She faces difficult coalition talks with the opposition Social Democrats and possibly with the Greens.


Posted in Politics |

Shutdown Prospects Soar as Obama, GOP Square Off

18-Sep (RollCall) — The prospect of a partial government shutdown increased significantly this morning.

President Barack Obama made it emphatically clear that he is not in any way open to negotiating a delay or a weakening of his health care law. He spoke just minutes after House GOP leaders announced plans to pass legislation this week that would make defunding Obamacare their condition for stopgap spending until December and an increase in the debt limit good for at least a year.

The president, in remarks to corporate executives at the Business Roundtable, said he won’t allow a “faction” of the most conservative Republicans to “extort” such a concession from him because that “would fundamentally change how American government functions.”

“We will blow the whole thing up unless you do what we want? That can’t be our recipe for governing,” he said in characterizing the Republican plan. He also contended that this could jeopardize the economic recovery by rattling financial markets close to the next two budget deadlines — the start of the fiscal year in a dozen days and the Treasury’s need to borrow money beyond the legal limit sometime in the middle of October.

…At least for today, though, the atmospherics on both sides suggest that a government shutdown lasting at least a few days might be required to focus the negotiators’ minds.


Posted in Debt, Politics |


26-Jul (Politico) — The campaign by liberals against Larry Summers as Fed Chair gathered pace yesterday with a letter circulating among some Senate Democrats backing Fed Vice Chair Janet Yellen and a number of critical op-eds and blog posts (see below). Complaints about Summers mainly focus on issues other than his views on monetary policy, such as his investment record at Harvard and treatment of women both inside and outside government. But the biggest risk of a Summers nomination is that it could create market uncertainty this fall at the worst possible time.

Pantheon’s Ian Shepherdson on this point: “The danger for the market … is not that the next Chairman is likely to change the policy course dramatically, but that an attempt to appoint Mr. Summers backfires and his nomination is held up for an extended period. That means the Fed could find itself rudderless at the same time Congressional fighting over the debt ceiling reaches its peak.


Posted in Central Banks, Politics |

A Day of Friction Notable Even for a Fractious Congress

12-Jul (New York Times) — — Even in a Congress where bipartisanship and comity are now officially the exceptions to the regular order, the near implosion on Capitol Hill on Thursday was notable, as both chambers erupted in a furor that went on for much of the day.

…The chaos reflects the reality that Congress has largely been reduced from a lawmaking entity to a political operation, in which positions are taken and fermented largely in the name of maintaining party unity rather than attracting votes from the other side. In both the Senate, controlled by Democrats, and the House, under the rule of Republicans, the minority is largely powerless to do anything but protest.


PG View: Fed chairman Bernanke has lamented the “fiscal headwinds” in recent months, but as this article illustrates, Congress is showing no signs whatsoever that they can come together to address the serious fiscal issues facing our nation. That leaves the economy in the hands of the Fed, to do what it can to keep it sputtering along through expansive monetary policy…

Posted in Politics |

Japan is not ready for the fourth of Shinzo Abe’s arrows

03-Jul (Financial Times) — Is it the right time to fire Shinzo Abe’s fourth arrow? There has been so much emphasis on arrows number one to three that many have forgotten about the fourth altogether. This entails doubling the consumption tax in two stages, starting in April next year, to 10 per cent. By some accounts, the fourth arrow, the opening shot in an effort to repair Japan’s finances after years of deficits, is the most important of all. Deciding when to fire it could be the trickiest decision the prime minister has had to make.

…bond markets are watching closely. If they sense a lack of resolve, they could become jittery. That could push interest rates up sharply, raising the cost of debt service, or provoke capital flight.


PG View: So let me see if I have this correct: Pump the economy full of yen under the guise of stimulus and deflation fighting, and then suck ‘em all out again through higher taxes? It’s sounding more and more like the real purpose of QE is to simply finance massive deficit spending by governments…

Posted in Central Banks, Monetary Policy, Politics, QE |

Morsi and Egyptian Generals Edge Closer to Conflict

03-Jul (The New York Times) — Egypt’s top generals summoned civilian political leaders to an emergency meeting Wednesday just hours before the deadline they have set for President Mohamed Morsi to leave power.

Among those called to the meeting was Mohamed ElBaradei, the former United Nations diplomat protesters demanding Mr. Morsi’s ouster have tapped as one of their negotiators over a new interim government, Reuters reported, citing unnamed official sources.

Mr. ElBaradei has been an outspoken critic of Mr. Morsi and his allies in the Muslim Brotherhood, the constitution they pushed to a referendum and the previous period of military rule. He has declined to comment in his current position. News agencies reported that top Muslim and Christian religious authorities were invited as well.

The escalating tensions between Mr. Morsi’s Islamist supporters and their opponents continued to spur street violence overnight.


Posted in Politics |

The Economic and Political Decline of France

05-Jun (Der Spiegel) — France is in the grip of a crisis. As both its economy and European influence weaken, scandal has hobbled its political elite. The country needs drastic overhaul, but President Hollande does nothing but waver and hesitate.

…France’s plight was initially apparent in the economy, which has been stagnating for five years, because French state capitalism no longer works. But the crisis reaches deeper than that. At issue is a political class that more than three quarters of the population considers corrupt, and a president who, this early in his term, is already more unpopular than any of his predecessors. At issue is a society that is more irreconcilably divided into left and right than in almost any other part of Europe. And, finally, at issue is the identity crisis of a historically dominant nation that struggles with the fact that its neighbor, Germany, now sets the tone on the continent.

The French economy has been in gradual decline for years, without any president or administration having done anything decisive about it. But now, ignoring the problems is no longer an option. The economy hasn’t grown in five years and will even contract slightly this year. A record 3.26 million Frenchmen are unemployed, youth unemployment is at 26.5 percent, consumer purchasing power has declined, and consumption, which drives the French economy, is beginning to slow down, as well.

…This mixture of factors could jeopardize the entire European structure. For one thing, if France continues to decline, more and more responsibility will be shifted to Germany. “Germany cannot carry the euro on its shoulders alone indefinitely,” writes Harvard University economist Kenneth Rogoff. “France needs to become a second anchor of growth and stability.”


Posted in Economy, European Debt Crisis, Politics |

McConnell: GOP won’t vote to raise debt limits without concessions

07-May (TheHill) — Senate Minority Leader Mitch McConnell (R-Ky.) said Tuesday that Republicans will not vote to increase the nation’s debt limit this summer if it is not attached to legislation to reduce the federal deficit.

“I can tell you with certainty I think it’s extremely unlikely that any Republican is going to vote to raise the debt ceiling without doing something about the debt,” he told reporters.

McConnell said he is in discussions with Speaker John Boehner (R-Ohio) and other House leaders about the possibility of adding tax reform or a deficit-reduction plan to the debt limit.


PG View: Here we go again…

Posted in Debt, Politics |

Shutdown averted: Congress passes 2013 spending bill

21-Mar (Washington Times) — Acting with striking unity, Congress on Thursday passed a $1 trillion spending bill to fund the government for the rest of the fiscal year, heading off a government shutdown showdown and beginning to rearrange some of the sequester cuts.

The 318-109 vote in the House, following a similarly easy vote in the Senate on Wednesday, could signal the beginning of a new determination in both parties to avoid the kinds of bitter last-minute showdowns that dominated the previous two years.

President Obama has signaled he’ll sign the measure into law.


PG View: Sequester reaffirmed, but another $1 trillion in spending approved to get us to 30-Sep.

Posted in Economy, Politics |

No Agreement on $1.2 Trillion in Cuts as Deadline Nears

13-Feb (Bloomberg) — Democrats and Republicans in the U.S. Congress are nowhere near a plan to avert $1.2 trillion in spending cuts about two weeks before they are set to begin.

It’s the latest in a series of fiscal deadlines created by Congress that in the past two years took the U.S. to the brink of a debt default, a government shutdown and middle-class tax increases that neither party wanted. Unless lawmakers act, the across-the-board spending reductions will begin March 1.

Leaving the cuts in place would shave U.S. economic growth this year by 0.6 percent and cost 750,000 jobs by the fourth quarter, Congressional Budget Office Director Doug Elmendorf said yesterday at a hearing.


Posted in Politics |

House approves debt-limit extension, presses Senate to pass budget

23-Jan (The Hill) — The House on Wednesday approved a bill extending the nation’s debt limit, raising pressure on the Senate to pass its first budget in nearly four years.

The House approved the No Budget, No Pay Act, which also includes a measure withholding senators’ pay until they complete that work, in a 285-144 vote.

Among Republicans, 33 voted against it to protest the absence of specific spending cuts alongside suspending the nation’s borrowing limit. But they were more than offset by the 86 Democrats who voted for the measure.

The bill extends the debt ceiling through May 18, and requires each chamber to pass a budget by April 15 or have its members face a suspension of pay. Republicans are hoping the bill gives Congress a few months to find a longer-term debt-ceiling agreement that includes significant spending cuts.


PG View: The latest punt on the debt ceiling is weighing on gold this morning.

Posted in Debt, Politics |