Archive for the ‘Libya’ Category

G-8 leaders to marshal support for Arab nations; President Barack Obama and the other leaders will seek to marshal their combined economic might behind …

G-8 leaders to marshal support for Arab nations
May 25, 2011, 9:57 a.m. EDT
Associated Press

Journal By Calvin Lee Ledsome Sr.,

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PARIS (AP) — Arab uprisings are pushing aside deficits and austerity as the biggest worry of the leaders of the Group of Eight industrialized nations this year.

President Barack Obama and the other leaders will seek to marshal their combined economic might behind the grass-roots democracy movements that have swept the Arab world — and driven away tourists and investors.

Egypt and Tunisia, where popular revolts this year overthrew authoritarian regimes, want to show G-8 leaders and international financiers that they are still sound investment destinations — which might be a tall order as the future shape and policies of their governments remains unclear.

The discussions starting Thursday in the chic Normandy resort of Deauville will see the host, French President Nicolas Sarkozy, bring together the heads of wealthy nations for what one of Sarkozy’s top advisers describes as “the founding moment” of a partnership between the G-8 and the Arab countries.

That partnership may be strained, however, by tensions over how to handle Libya’s rebel movement and entrenched leader Moammar Gadhafi. NATO appears to have no exit strategy, and efforts to oust Gadhafi remain elusive.

The leaders of the U.S., Canada, Britain, Germany, France, Japan, Italy and Russia will greet counterparts from Tunisia, Egypt and the head of the Arab League to hash out details of what some are calling a new “Marshall Plan” for these countries, similar to the massive U.S. aid to Europe after World War II that helped the continent rebuild and stave off communism.

The historic parallel is fitting, as Deauville is just a short drive along the English Channel from the D-Day landing beaches where the U.S. and its allies began to roll back the Third Reich in 1944.

A top Sarkozy official drew another historical analogy, saying the aid and investment to be promised to the Arab nations would resemble that which the G-8 offered to Eastern and Central European nations after the collapse of communism in 1989.

Last week President Barack Obama said the U.S. has asked the World Bank and the International Monetary Fund to present a plan at the G-8 summit that sets a path to stabilize and modernize the economies of Tunisia and Egypt.

The U.S. will forgive up to $1 billion in Egyptian debt and guarantee another $1 billion to finance infrastructure and new jobs. Obama said he will ask Congress to finance enterprise funds that will provide money for investment in both countries — a request that comes as Congress seeks to cut spending.

Tunisia, followed by Egypt, kicked off change around the Arab world, as broad-based popular movements took to the streets demanding greater rights and political representation from their authoritarian governments.

But the street demonstrations in Cairo and Tunis that thrilled and inspired the Arab world also drove away the tourists and investors on which these economies are heavily dependent.

“The first thing they will be looking for is direct financial aid,” said Said Hirsh, a Middle East economist with Capital Economics consultancy in London. “Both countries need quite a lot of money considering the hit to their economies and their revenues.”

While U.S. officials say G-8 countries will discuss their role in the process, they say it is too soon to reach a deal on dollar amounts for assistance.

The European Bank for Reconstruction and Development, a London-based institution set up in 1991 to foster transition to market economies in post-communist Europe, could be “repurposed” to focus its expertise on the southern Mediterranean region, a top official in Sarkozy’s office said, speaking on condition of anonymity because of protocol.

The heads of the World Bank and the United Nations will also be present and add their signatures to the partnership declaration. Former IMF chief Dominique Strauss-Kahn, under house arrest in New York following his indictment for sexual assault, will be replaced for the event by the institution’s acting managing director John Lipsky.

Finding a permanent replacement for Strauss-Kahn is likely to take up a good part of the summiteers’ small talk.

Nuclear safety will be another topic, with Japanese Prime Minister Naoto Kan scheduled to provide leaders with an update on the continuing crisis at the Fukushima Dai-ichi nuclear power plant.

The future of the Internet will also figure in the G-8 leaders’ talks. Mark Zuckerberg of Facebook and Eric Schmidt of Google and other Internet executives took part in two days of debates focused broadly on the Internet’s impact on the global economy. Several of the Internet conference’s speakers will then take policy recommendations to Deauville in talks with the G-8 leaders.

Police have established one security cordon around the conference center where the leaders are meeting, and another perimeter encompassing all of Deauville. Local ports, train stations and the airport will be shut from Wednesday to Friday, and a no-fly zone enforced over the town.

The show of force may have discouraged radicals and other protesters from attempting to organize demonstrations close to the summit. Anti-G8 protesters plan symbolic demonstrations in the neighboring towns of Caen and Le Havre, but they do not plan to try to disrupt the event in Deauville itself, according to a statement circulated by radical groups online.


Associated Press writers Julie Pace in Washington, D.C., Geir Moulson in Berlin, Charmaine Noronha in Toronto, David Stringer in London and Paul Schemm in Rabat, Morocco contributed to this report.

Greg Keller can be reached at


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Rising oil prices beginning to hurt US economy

Rising oil prices beginning to hurt US economy
Posted by Calvin Lee Ledsome Sr.,Owner and Founder of: and

WASHINGTON (AP) — Just when companies have finally stepped up hiring, rising oil prices are threatening to halt the U.S. economy’s gains.

Some economists are scaling back their estimates for growth this year, in part because flat wages have left households struggling to pay higher gasoline prices.

Oil has topped $108 a barrel, the highest price since 2008. Regular unleaded gasoline now goes for an average $3.69 a gallon, according to AAA’s daily fuel gauge survey, up 86 cents from a year ago.

The higher costs have been driven by unrest in Libya and other oil-producing Middle East countries, along with rising energy demand from a strengthening U.S. economy.

Airlines, shipping companies and other U.S. businesses have been squeezed. The rising prices are further straining an economy struggling with high unemployment and a depressed housing market.

“The surge in oil prices since the end of last year is already doing significant damage to the economy,” says Mark Zandi, chief economist at Moody’s Analytics.

Unlike other kinds of consumer spending, gasoline purchases provide less benefit for the U.S. economy. About half the revenue flows to oil exporting countries like Saudi Arabia and Canada, though U.S. oil companies and gasoline retailers also benefit.

For consumers, more expensive energy siphons away money that would otherwise be used for household purchases, from cars and furniture to clothing and vacations.

High energy prices are “putting a drain on consumer budgets,” says James Hamilton at the University of California, San Diego. “To the extent they’re having to spend more on gasoline, they have to make cutbacks elsewhere.”

Two-thirds of Americans say they expect rising gasoline prices to cause hardship for them or their families in the next six months, according to a new Associated Press-GfK Poll. The telephone poll conducted March 24-28 had a sampling error margin of plus or minus 4.2 percentage points.

Seventy-one percent say they’re cutting back on other expenses to make up for higher pump prices. Sixty-four percent say they’re driving less. And 53 percent say they’re changing vacation plans to stay closer to home.

“I try to leave the car parked at home all day Saturday,” says Curt Lindsay, who commutes an hour each way to his job as a computer systems administrator outside Washington, D.C. “I’d rather not spend the money on gasoline.”

Since gasoline prices topped $3 a gallon, Lindsay has also been trying to drive more slowly to conserve fuel.

His co-worker Albert Zaza canceled family trips to New York and Boston after the cost of filling up his Honda CRV surged from $35 to $47. Zaza spends four to five hours in traffic each day and has to fill up every other day.

Rising fuel prices are pinching businesses too.

In Tipton, Iowa, Grasshopper Lawn Care is tacking 5 percent onto customers’ bills to compensate for higher fuel costs. The company has to buy more than 8,000 gallons of gasoline a year. It plans to keep the surcharge until gasoline prices dip back below $3 a gallon, owner Dan Kessler says.

The oil shock and global instability are diluting the benefits of an improving job market. The unemployment rate, though still high, is at a two-year low. And the economy has just produced the strongest two months of hiring since before the recession began.

Bernard Baumohl, chief economist at the Economic Outlook Group, has slashed his estimate for growth this year to 2.8 percent from 3.5 percent. In 20010, the economy grew 2.9 percent.

Consumer spending accounts for about 70 percent of the economy. After adjusting for inflation and for seasonal factors, consumers spent 0.3 percent more in February than in January.

But that’s unlikely to last. Gasoline prices are surging just as inflation-adjusted incomes are falling. More expensive gas is draining much of the cash Americans are receiving from a cut in Social Security taxes this year.

Zandi estimates that higher oil prices shaved 0.5 percentage point from growth in the January-March quarter. He predicts the economy grew 2.6 percent during the quarter.

If oil prices average $100 a barrel for the year, Zandi says, growth will be 0.3 percentage point lower than if prices had stayed at last year’s level — an average of less than $80 a barrel. A few months of $125-a-barrel oil would slash economic growth by a full percentage point, Zandi says. And a few months at $150 a barrel could push the economy back into recession.

Surging oil prices don’t hurt everybody in the United States. Oil companies, for example, stand to gain. In 2008, Exxon Mobil Corp. earned $45 billion — a record for a U.S. company — after oil prices hit a record $150 a barrel.

Oil services companies such as Halliburton Co., Schlumberger Ltd. and Baker Hughes Inc. also benefit as the oil industry rushes to find and produce more oil. And the products of biodiesel and other alternative energy companies become more competitive the higher oil prices go.

In a speech last week, Sandra Pianalto, president of the Federal Reserve Bank of Cleveland, offered hope that higher oil prices won’t persist long enough to do much damage.

“Large increases in food or energy prices tend to be temporary,” Pianalto said. “History shows that they are often followed by sharp declines.”

But Mark Pawlak, a market strategist at Keefe, Bruyette & Woods, says he worries about a repeat of what happened to the economy last year: It built momentum at the start of 2010, only to stall in the face of a European debt crisis and a run-up in oil prices from February to April.


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The price of oil fell after China said it will raise interest rates again!

Oil slides as China raises interest rates

Posted by Calvin Lee Ledsome Sr.
Owner and Founder of: and

NEW YORK (AP) — The price of oil fell Tuesday after China said it will raise interest rates again to help control inflation.

Benchmark crude gave up 38 cents at $108.09 per barrel in morning trading on the New York Mercantile Exchange.

In London, Brent crude rose 84 cents to $121.50 per barrel on the ICE Futures exchange.

Analysts are still concerned about uprisings in North Africa and the Middle East, which supplies about 27 percent of the world’s oil. But higher interest rates could slow China’s economy and shrink its appetite for oil. China, which trails only the U.S. in oil consumption, should still drive world oil demand this year, though it might not increase consumption as much as previously expected, analysts said. China has hiked interest rates four times since October.

“With higher interest rates, it’s tougher to raise money,” PFGBest analyst Phil Flynn said. “Businesses won’t be able to hire as much. People will buy (fewer) cars and they’ll drive less.”

Analysts also say the arrival of an oil tanker in one of Libya‘s rebel-held ports could mean that oil may start flowing from the country sooner than expected. Before the rebellion, Libya exported about 1.5 million barrels of oil per day — mostly to Europe. Those shipments have all but shut down.

It will probably be several months, even years, before Libya returns to the level of oil shipments it had before the uprising, experts said. Still, the arrival of a tanker was seen as a promising sign. Libya supplied less than 2 percent of world demand, but the losses have forced Saudi Arabia and other OPEC countries to make up for the shortage by boosting production at home. That will put further pressure on world supplies, especially if demand increases as expected later this year.

In other Nymex trading for May contracts, heating oil and gasoline futures both dipped by less than a penny to $3.1700 and $3.1691 per gallon, respectively. Natural gas lost a penny at $4.282 per 1,000 cubic feet.


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Markets see renewed fears about European debt

Markets see renewed fears about European debt
Associated Press
Posted by Calvin Lee Ledsome Sr.,
Owner & Founder of: and

LONDON (AP) — An outbreak of jitters over Europe’s debt crisis and discouraging U .S. housing data weighed on stocks Wednesday as investors grew increasingly concerned over both Portugal and Ireland.

A day before a summit of EU leaders in Brussels, a major worry is that Portugal’s government may fall later Wednesday following an expected defeat on planned austerity measures in a Parliament vote.

“A failure to support the proposed austerity measures (in Portugal) may trigger the fall of the government, increasing the likelihood that an EU bailout will be needed,” said Vassili Serebriakov, an analyst at Wells Fargo Bank.

While Portugal tries to stave off a bailout, the new Irish government is showing no sign of raising its super-low corporate tax rate, meaning the European Union is unlikely to give the Irish easier terms for their bailout loan.

Against that backdrop, investors are refocusing on Europe’s debt crisis after a couple of weeks when most attention has been centered on North Africa and Japan.

Movements in bond markets indicated increasing pessimism among investors. The yield on Portugal’s ten-year bonds was up 0.12 of a percentage point to 7.61 percent, a whisker short of euro-era highs, while Ireland’s yield was up 0.23 percentage point to 10.07 percent, its highest level since the single euro currency was established in 1999.

The worries started to affect the euro, which was trading 0.3 percent lower on the day at $1.4135.

And in Europe’s stock markets, Germany’s DAX was down 0.5 percent at 6,749 while the CAC-40 in France fall 0.3 percent to 3,881. The FTSE 100 index of leading British shares was 0.2 percent lower at 5,750.

In the U.S., stocks were further undermined by another bad set of housing figures — the Dow Jones industrial average was down 0.3 percent to 11,982 while the broader Standard & Poor’s 500 index fell 0.6 percent to 1,286.

This time, the Commerce Department reported that new-home sales fell 16.9 percent last month to a seasonally adjusted annual rate of 250,000 homes. That was the third straight monthly decline and far below the 700,000-a-year pace that economists view as healthy.

“This report and the existing home sales data released yesterday confirm that the housing market is still in free fall,” said Steven Ricchiuto, chief economist at Mizuho Securities.

U.S. economic news has barely driven markets over recent weeks, as investors have been preoccupied by developments in the Arab world, most recently in Libya, and the aftermath of the devastating March 11 earthquake and tsunami in Japan.

Japan’s struggle to contain radiation from the Fukushima Dai-ichi nuclear power plant and fears that the economic cost of the natural disasters may run over $300 billion weighed on Tokyo’s Nikkei 225 stock average earlier, which closed down 1.7 percent to 9,449.47.

There was also a lot of interest in the resumption of trading on Egypt’s stock exchange following a near two-month shutdown because of the mass protests that toppled former President Hosni Mubarak. Unsurprisingly, it plunged almost 9 percent, with foreign investors leading the sell-off.

Earlier in Asia, South Korea’s Kospi eased 0.1 percent to 2,012.18, while Hong Kong’s Hang Seng shed 0.1 percent to 22,825.40.

Mainland Chinese stocks rose with the Shanghai Composite Index gaining 1 percent to 2,948.48, and the smaller Shenzhen Composite Index up 1.2 percent to 1,299.99. Benchmarks in Taiwan, Singapore and Thailand also rose.

Oil prices on the New York Mercantile Exchange hovered around $105 a barrel as violent uprisings in Libya and elsewhere in the Middle East kept traders nervous about possible crude supply disruptions. OPEC-member Libya, which produces enough oil to meet nearly 2 percent of world demand, has almost totally stopped shipping it.


Pamela Sampson in Bangkok contributed to this report.


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U.S. Stocks Fall on Europe Debt Concerns, Higher Oil

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Calvin L. Ledsome Sr.,

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