August 13, 2009

Fed guardedly optimistic:

The Federal Reserve expressed cautious optimism yesterday the economic recession may be bottoming out. It slowed its plans to buy $300 billion in Treasury debt, a measure aimed at lowering consumer interest rates.

"Information since the Federal Open Market Committee met in June suggests economic activity is leveling out," the Fed said. "Conditions in financial markets have improved in recent weeks." The Open Market Committee, which sets interest rates, concluded a two day meeting Wednesday.

The Fed extended its purchase of Treasury debt, originally planned to reach its $300 billion target by the end of September, until the end of October to provide a "smooth transition in markets."

However, the Fed is in no rush to end its unprecedented emergency efforts to promote economic recovery. Interest rates will remain at or near zero for the foreseeable future despite the surging deficit.

The deficit is projected to hit $1.84 trillion when the fiscal year ends Sept. 30, four times higher than last year's record level. It currently stands at $1.27 trillion reflecting the huge government expenditure to counter the recession.

Other indicators also show it is too soon to start cheering. July retail sales were down 0.1 percent following three months of slight gains. Also initial jobless claims rose last week to 558,000 while most economists had predicted a fall. The total number of jobless fell.

In Europe, the economies of France and Germany both grew by 0.3 percent in the quarter ending June 30, reversing a year-long recession. The Eurozone as a whole contracted by 0.1 percent although this was less than economists predicted.

Health care protests sway:

Those raucous, rude town hall meetings on healthcare reform may generate more heat than light but people are watching and their views are being swayed, a USA Today/Gallup poll indicates.

Thirty-four percent of the 1,000 people surveyed Tuesday said they had become more sympathetic to the protesters while 21 percent had become less. The split was greater among independents where 35 percent became pro-protester and only 16 percent became more opposed.

This is bad news for the president who needs the support of independent voters. It also suggests the protests are not just expressing the views of conservative activists. Fifty-seven percent of those polled said they thought the protests expressed genuine concerns.

Healthcare has Americans engaged and often angry, often confused. Seventy percent of the poll respondents said they were following the debate closely.

A separate Gallup poll conducted last week showed 49 percent disapproved of the president's handling of healthcare while 43 percent approved. The figures had changed little from the month before.

Medal of Freedom:

President Obama took a short break yesterday from the turmoil of health politics to award the Medal of Freedom to 16 recipients, American and foreign, living and dead, at the White House. The Medal of Freedom is the highest U.S. award given to civilians.

Among the foreign recipients were two Nobel laureates, Archbishop Desmond Tutu of South Africa, campaigner against apartheid and global peace activist, and Stephen Hawking, the British physicist.

The dead were Jack Kemp, former Republican vice-presidential candidate and quarterback for the Buffalo Bills, and Harvey Milk, the San Francisco gay rights activist, elected to public office and shot dead in 1978.

The president's choices sparked at least some controversy. Mary Robinson, former president of Ireland, attracted a group of pro-Israel demonstrators outside the White House. She had convened a human rights conference in 2001 that was marked by harsh criticism of Israel.

The president ran the show tightly completing speeches and awards in a mere 40 minutes. He clearly had pressing business to which to attend.

Divide India says Chinese scholar:

A suggestion from a Chinese think tank that India should be divided into as many as 30 parts has sparked anger among Indians.

The report published by the China International Institute of Strategic Studies in July said it would be in China's interests to work to break up India into 20-30 independent states with the help of countries friendly to China such as Pakistan, Bangladesh, Nepal and Bhutan.

It also proposed working with ethnic groups within India such as Kashmiris and Tamils to encourage them to press for their independence.

The report was available online but has now been taken down.

The Indian foreign ministry has played the issue down saying the article reflects the views of an individual and not those of the Chinese government.