Politics: Daily Briefing: Stimulus without end?

Published by: Clark Barrow on Wednesday September 5th, 2012

Clark Barrow

By CLARK BARROW - Some of the Fed's policymakers are advocating stimulus with no end date.

DAILY BRIEFING - SUMMARY

· FEDERAL RESERVE - While the U.S. Federal Reserve has yet to announce any new specific actions to stimulate the economy, many policy makers for the central bank are embracing stimulus initiatives without an end date.

· PROTESTERS - Dozens of protesters clogged streets and blocked traffic Tuesday outside the Democratic National Convention on its opening day, making for some tense moments that ultimately brought more theater than violence.

· PLATFORM – Delegates at the Democratic National Convention approved the 2012 Democratic National platform on Tuesday. A detailed review of their platform is included in this briefing.

· DEMOCRATIC NATIONAL CONVENTION - First lady Michelle Obama praised her husband Tuesday night in a prime-time Democratic Convention speech. Former President Bill Clinton is schedule to address the DNC Wednesday evening.

· DEBT - The U.S. government debt, which topped $16 trillion for the first time on Tuesday, now equals approximately $136,260 for every household in the country.

· FOOD STAMPS - The U.S. Department of Agriculture said 46.7 million people participated in their Supplemental Nutrition Assistance Program (SNAP/food stamps) in June 2012.

· CHINA - China warned the United States not to get involved in South China Sea territorial disputes on Tuesday as U.S. Secretary of State Hillary Clinton arrived in Beijing pledging to pass on a strong message on the need to calm regional tension.

WHAT WE KNOW

ECONOMIC NEWS

· FEDERAL RESERVE - While the U.S. Federal Reserve has yet to announce any new specific actions to stimulate the economy, many policy makers for the central bank are embracing stimulus initiatives without an end date.

o Four U.S. Federal Reserve presidents have come out in favor of an open-ended strategy for bond buying, with three calling for the program to begin now. Rather than specify a fixed amount of bonds to purchase by a certain date, such a strategy would leave the Fed able to announce a pace of purchases that it could adjust as the economy gets closer to Bernanke’s goals.

o St. Louis Fed President James Bullard, San Francisco Fed President John Williams, Chicago’s Charles Evans and Boston’s Eric Rosengren have endorsed open-ended bond-buying to until the economy significantly improves.

o The Fed bought a total of $2.3 trillion of securities from 2008 through June 2011. The first round of so-called quantitative easing consisted of mortgage-backed securities, federal agency debt and Treasuries, while the second round was limited to $600 billion of Treasuries

· INCOMPLETE - Activity for the nation's manufacturers showed contraction for the third straight month in August, the Institute for Supply Management reported Tuesday. The ISM index fell slightly to 49.6% in August from 49.8% in July.

o Readings below 50 indicate contraction. This is the first three months of contraction since the summer of 2009, when the recession was ending. The new-orders index slipped to 47.1% in August from 48.0% in the prior month.

o Meanwhile, spending fell 0.9% in July, missing analysts' estimates, to a seasonally adjusted annual rate of $834 billion, the U.S. Commerce Department said Tuesday. Private residential construction fell 1.6%, while private nonresidential construction fell 0.9%.

· The Dow Jones Industrial Average fell 54.90 points, or 0.4%, to 13,035.94.

· The S&P 500 lost 1.64 point, or 0.1%, to 1,404.94.

· The Nasdaq Composite gained 8.1 points, or 0.3%, to 3,075.06.

COMMODITIES

· The U.S. national average for a gallon of regular gasoline is $3.82.

o When President Obama was inaugurated, in January 2009, the U.S. national average for a gallon of regular gasoline was $1.85. Average gasoline prices are currently 106 percent higher than they were when Mr. Obama became president.

· Oil for October delivery declined $1.17, or 1.2%, to end at $95.30 a barrel on the New York Mercantile Exchange.

· Gold for December delivery advanced $8.40, or 0.5%, to $1,696 an ounce on the Comex division of the New York Mercantile Exchange.

NEWS TO WATCH

· ELECTION - As of today, there are 62 days until the November 2012 presidential election.

· ISAAC - It will likely take weeks to bring Louisiana back to normal after last week’s visit from Hurricane Isaac, an unusually wet storm that caused serious flooding in 10 parishes and damaged more than 13,000 homes.

o State officials on Tuesday made their first estimates of the toll imposed by Isaac, which began to bring water to the Louisiana coast on Aug. 28. The slow-moving storm continued to drop rain on the region, causing flooding but no levee breaks –

o Electrical power had been restored to 98% of customers, officials said. Some 38,000 customers remained without electricity, down from the 900,000 outages at the peak of the storm last week. Fewer than 1,600 people remained in shelters, down from the high of about 6,000.

· PROTESTERS - Dozens of protesters clogged streets and blocked traffic Tuesday outside the Democratic National Convention on its opening day, making for some tense moments that ultimately brought more theater than violence.

o Just five blocks from Time Warner Cable Arena, where delegates are meeting this week, protesters took over an intersection for about two hours, attracting hundreds of police officers who swooped in to surround them and try to funnel them to more secure areas.

o Officers took at least 14 people away in handcuffs in what was the most vigorous day of protests since both parties began meeting to formally nominate their presidential candidates. Republicans gathered last week in Tampa, where just two people were arrested by the end of the three-day affair.

· PLATFORM – Delegates at the Democratic National Convention approved the 2012 Democratic National platform on Tuesday, but detailed review of the platform revealed many changes from their 2008 platform:

o ISRAEL - Several pro-Israel sections of the 2008 Democratic Party platform have been removed from the 2012 platform—on Jerusalem, Palestinian refugees, and Hamas. The new platform represents another shift by the Obama Democrats toward the Palestinian position on key issues in the peace process.

§ For Jerusalem, the new platform has been brought into line with the Obama administration’s policy of not recognizing Jerusalem as Israel’s capital and supporting its division. Jerusalem is unmentioned in the 2012 document, whereas the 2008 and 2004 Democratic Party platforms declared “Jerusalem is and will remain the capital of Israel…It should remain an undivided city accessible to people of all faiths.” The Obama administration’s refusal to recognize Jerusalem has been a point of significant controversy in recent months.

o GOD - Meanwhile, the word "God" has been removed from the 2012 Democratic National Committee platform. Instead of a specific mention of "God", the platform embraced the importance of "faith" in America.

o ABORTION - The platform an extreme position on the issue of abortion. The platform said "the Democratic Party strongly and unequivocally supports Roe v. Wade and a woman’s right to make decisions regarding her pregnancy, including a safe and legal abortion, regardless of ability to pay." That last part--"regardless of ability to pay"--is an endorsement of taxpayer-funded abortions, a policy that President Obama has personally endorsed.

· DEMOCRATIC NATIONAL CONVENTION - First lady Michelle Obama praised her husband Tuesday night in a prime-time Democratic Convention speech as a devoted husband and caring father at home and a "man we can trust" to revive the nation's weak economy as president, beckoning the country to return him to the White House despite agonizingly slow recovery from recession.

o Former President Bill Clinton is schedule to address the DNC Wednesday evening.

o Meanwhile, Democrats are poised to avoid the danger of President Obama accepting his party’s nomination before a partially-empty stadium by shifting his speech to an indoor arena and citing ‘severe weather’.

o The Obama campaign has been working desperately to ensure that the 74,000-seater Bank of America stadium in Charlotte would be filled.

o Buses for students from across North Carolina and even members of black churches in neighboring South Carolina have been arranged.

PRESIDENT’S SCHEDULE

· In the morning, President Obama will receive the Presidential Daily Briefing at the White House.

· In the afternoon, the president will depart Washington, D.C. and travel to Charlotte, North Carolina.

· The president will remain overnight in Charlotte, North Carolina.

HAPPENING IN THE U.S. CONGRESS

U.S. SENATE

· The U.S. Senate is not in session today.

U.S. HOUSE OF REPRESENTATIVES

· The U.S. House is not in session today.

TOPICS OF INTEREST

FEDERAL GOVERNMENT

· DEBT - The U.S. government debt, which topped $16 trillion for the first time on Tuesday, now equals approximately $136,260 for every household in the country.

o Just since President Obama was inaugurated on Jan. 20, 2009, the debt has increased by $45,848 per household—or about 50 percent per household.

o Since Obama took office, the U.S. federal debt has increased by more than $5.3 trillion, a 50.3 percent increase. Under President Obama's administration, the U.S. federal debt has increased more than any other U.S. president. That is as much as the entire debt accumulated by the United States from the founding of the country in 1776 until Feb. 28, 1997, when President Bill Clinton was in his second term. Thus, under Obama, the debt has increased more than under all presidents from George Washington through George H.W. Bush.

o Since Obama took office, every American’s share of the U.S. federal debt has increased by $17,323 to a total of $51,742 trillion.

· FOOD STAMPS - The U.S. Department of Agriculture said 46.7 million people participated in their Supplemental Nutrition Assistance Program (SNAP/food stamps) in June 2012. The department reported that 31.9 million people participated in SNAP in January 2009, the month that Mr. Obama was inaugurated.

o Participation was up 0.4 percent from May and 3.3 percent higher than a year earlier and has remained greater than 46 million all year

o Food-stamp spending, which more than doubled in four years to a record $75.7 billion in the fiscal year ended Sept. 30, 2011, is the U.S. Department of Agriculture’s biggest annual expense.

FOREIGN POLICY

MIDDLE EAST

· IRAN - The head of Iran's navy says the country aims to put its warships in international waters off the U.S. coast "in the next few years."

o Iranian officials said the action is part of Iran's response to the increased U.S. naval presence in the Persian Gulf.

o The U.S. Navy's 5th fleet is based in Bahrain -- across the gulf from Iran -- and the U.S. plans maritime war games later this month.

· SYRIA - More than 100,000 Syrians fled their country last month, a sudden acceleration of the exodus prompted by 18 months of conflict, the United Nations said Tuesday.

o The surge coincided with a sharp increase in the carnage in Syria, as the government of President Bashar al-Assad began using its air force against towns and neighborhoods across the country where opponents of his rule have found support.

o The resulting flood of displaced people, mainly in the last two weeks of August, accounted for more than 40 percent of the 234,000 refugees who have registered for United Nations support since the fighting began. Tens of thousands more have fled but have not registered.

ASIA

· CHINA - China warned the United States not to get involved in South China Sea territorial disputes on Tuesday as U.S. Secretary of State Hillary Clinton arrived in Beijing pledging to pass on a strong message on the need to calm regional tension.

o U.S. officials say Clinton will stress the importance of cooperation and partnership on the visit, an important chance to compare notes during a year of political transition in both countries.

o But her visit has been overshadowed by disputes over tiny islets and craggy outcrops in oil- and gas-rich areas of the South and East China Seas that have set China against U.S. regional allies such as the Philippines and Japan.

EUROPE

· EURO ZONE - Moody's Investors Service has changed its outlook on the Aaa rating of the European Union to “negative,” warning it might downgrade the bloc if it decides to cut the ratings on the EU's four biggest budget backers: Germany, France, the U.K., and the Netherlands.

o The move will add to pressure on the European Central Bank to provide details of a new debt-buying scheme to help deeply indebted euro zone states at its policy meeting on Thursday.

o Back in July, Moody's changed its outlook for Germany, the Netherlands, and Luxembourg to “negative” as fallout from Europe's debt crisis cast a shadow over its top-rated countries. The outlook on France and the U.K. are also “negative.”