THE “GRAND BARGAIN”: BEHIND CLOSED DOORS
Budget negotiations between the White House and Republican House Speaker Boehner have progressed steadily in recent days, breathing life into talks that appeared to have stalled.
The people familiar with the matter say talks have taken a marked shift in recent days as staff and leaders have consulted, becoming more “serious.” Both sides have agreed to keep details private, according to the people, who declined to detail where new ground was being broken.
Obama sounded conciliatory notes at a Daimler AG plant in Michigan yesterday. In his first comments since meeting with Boehner Dec. 9 at the White House, the president didn’t repeat frequent complaints about Republicans holding tax cuts for most Americans “hostage” because they oppose higher rates for wealthiest, and said he was ready to come to an agreement. Since Boehner complained Dec. 7 that Obama had wasted a week, statements from the speaker’s office have been milder, too.
After calling on Congress to pass a law to prevent the tax hikes “right now”, Mr Obama added: “That’s the bare minimum we should be doing in order to grow the economy. But we can do more … I understand people have a lot of different views. I’m willing to compromise a little bit.”
Without support for a deal from Ryan and Cantor, Boehner — in his second year as speaker — risks repeating the anti-tax Tea Party uprising that doomed his 2011 effort to reach a budget deal with Obama.
Meanwhile, chain store sales are hanging in, by the nails…
China’s copper and crude-oil output records in November reinforce an optimistic outlook and also support indications of an uptick in industrial demand.
Copper production rose to 531,000 metric tons in November, up 2.1% on month and 11.6% on year, data from the National Bureau of Statistics showed Tuesday. This followed data from the bureau that showed Chinese refiners processed 10.17 million barrels a day of crude oil in November, up 4.2% on month and 9.1% on year. (…)
At least it appears that crude oil refined in the country is staying there—whether it is consumed or stockpiled. China continued to be a net importer of oil products in November, shipping in 1.35 million tons more than it shipped out, according to customs data.
In another sign of rising industrial confidence, China’s largest listed steelmaker, Baoshan Iron & Steel Co. in November raised its December prices for key steel products, ending five months of flat or reduced levels.
Baoshan’s products are largely used for appliance, automotive and other manufacturing purposes, and the increases suggest that the non-construction steel-consuming sector is seeing rising demand. Baoshan had cut prices in July through September, but left them unchanged for October and November. (…)
Power consumption growth rallied in November to nine percent year-on-year, extending the acceleration to two months in a row and signaling an industrial sector that is stabilizing.
Chinese financial institutions extended 522.9 billion yuan ($83 billion) of new yuan loans in November, up from 505.2 billion yuan in October, data from the central bank showed Tuesday.
Total social financing—an alternative measure of credit supply which includes other sources of financing such as bond issuance and trust lending—also declined, falling to 1.14 trillion yuan in November from 1.29 trillion yuan in October, the PBOC said.
Meanwhile, M2—the broadest measure of money supply—rose 13.9% at the end of November, down from 14.1% growth at the end of October.
The Dutch central bank said the Netherlands faces a prolonged period of economic contraction and warned that the euro-zone’s fifth-largest economy will likely miss the European Union’s budget deficit target next year.
DNB now forecasts Dutch GDP to shrink by 0.6% in 2013 compared with its June estimate for growth of 0.6%. As a result, the government’s budget deficit will continue to exceed the EU’s ceiling of 3% of GDP and is expected to come in at 3.5% in both 2013 and 2014, down from a 4.1% gap this year, DNB said.
The Netherlands is very sensitive to economic conditions in the euro zone, as about 60% of its exports go to other countries in the currency bloc, DNB said. The country’s economic woes are aggravated by a slump in the housing market, which is hurting private consumption and squeezing local banks. (…)
Belgium’s national bank also cut its earlier forecast. It said it expected its economy to contract 0.2% this year, down from an earlier growth projection of 0.6%, and for the economy to stay flat next year. “Only net exports will continue to support growth, while domestic demand, excluding public spending, will record a marked fall,” the Belgian Central Bank said, adding it expects the country to meet its 2.8% deficit goal for this year.
The energy game changer:
North America will become a net energy exporter by 2025, Exxon Mobil predicts in its latest long-term energy outlook.
(…) The closely watched annual forecast of energy trends, set to be released Tuesday, concludes the growth of U.S. and Canadian oil and gas production has staying power and could lead to more international shipments of oil and gas, said Bill Colton, Exxon’s vice president of corporate strategic planning, who led the study.
Exxon’s forecast follows similar estimates by the U.S. Energy Information Administration and the International Energy Agency, which have recently predicted North America will produce more energy than it uses in just a few decades, a shift with geopolitical as well as economic ramifications.
Exxon predicts that an anticipated decline in coal usage by power plants will accelerate as more efficient natural-gas-fired plants are built. The Irving, Texas, company forecasts coal use will drop 33% from 2010 to 2025,substantially more than its previous 23% estimate.
“The economics of natural gas in the power-generating sector continue to look even better over time,” Mr. Colton said. (…)
If President Obama and Congress want more tax revenue as part of a deal to avoid the fiscal cliff, they should consider cutting the capital gains tax rate. Since 1981, every four-year period after the capital gains tax rate was reduced saw an increase in the amount of capital gains revenue the government received.
Worker Liberation in Michigan Another state gives individuals the right not to join a union.
(…) The Michigan law is a particular breakthrough because it comes in what used to be America’s industrial heartland and in a state where 17.5% of workers are still unionized. Nationwide, the share is 11.8%, though only 6.9% in the private economy.(…)
Michigan would become the 24th right-to-work state and it could be the best thing to happen to its economy since the internal combustion engine. Michigan still has the nation’s sixth highest state jobless rate at 9.1%, and it had one of the lowest rates of personal income growth between 1977 and 2011. A flood of economic evidence shows that right-to-work states have done better at attracting investment and jobs than have more heavily unionized states. (…)