US and China response to South Korea’s military drill

Despite Korea DPR’s warnings of retaliation, the Republic of Korea conducted its scheduled live-artillery drill today in Yeonpyeong. As a precaution for a possible North Korean offensive, military commanders launched fighter jets into their airspace to repulse any potential attack.

Just weeks ago, the North Korean army shelled the South Korean island after military exercises of this kind were held, resulting to four casualties. The South Korean government responded with an angry tone threatening to use military force if attacked again. Pyongyang considers the Yeonpyeong waters as part of its territory.

The United Nations (UN) Security Council has earlier called for an emergency meeting to discuss possible actions regarding the military drill by the South but failed to reach a consensus. China and Russia has asked Seoul to stop the drill to avoid igniting a deadly confrontation with its neighbor.

This has caused a divide among the council’s permanent members with the US supporting the exercise while China and Russia voicing against it.

The US has recently sent New Mexico governor Bill Richardson to North Korea as the White House’s unofficial envoy in an effort to deflate the tension ahead of the scheduled exercise. He admitted of talking out the North Koreans from taking any aggressive response.

Meanwhile, during the Security Council meeting, China has expressed willingness to bring together the two Koreas in the negotiating table. China remains a crucial economic and political ally of Pyongyang as the regime is heavily dependent from Beijing for its fuel and food needs.

Will Americans see tax increase in 2011?

The US Senate is poised to approve the economic package negotiated by President Obama and Republicans in Congress over the course of the previous weeks. The bill primarily focuses on the extension of the Bush-era tax cuts although House Democrats are calling for some revisions once the bill gets to them.

As this is happening in Washington, a recent study has been released by the Rockefeller Foundation revealing the widespread effect of the crisis, which began 2 years ago, to Americans. It states that over 9 out of 10 US households were hit substantially during the period of March 2008 to September 2009.

Many Americans felt the deterioration of their wealth and income during the period which even saw the value of their investments and home fell like a rock.

Many believe that continues to be the case in 2010. Even Federal Reserve chairman Ben Bernanke himself admitted in his own words that recovery in the US economy is “disappointingly slow” despite all the monetary intervention tools they have utilized such a near-zero interest rates and the billions of dollars the central bank have pumped into the economy.

President Obama’s remarks that the compromise package is a “substantial victory for middle-class families” is in defense of a plan that could face a stiff challenge with Democrats in the lower chamber where they believe can cause significant losses in potential revenues for the government thus limiting their ability to implement economy-spurring plans that address the needs of middle-class America.

Once the bill passes the Senate in the final vote, House Democrats are expected to push for a revision of the estate tax which under the Obama-GOP plan, the first $10 million that couples pass on to their heirs will be exempted from taxation. The balance will be subject to a 35 percent tax rate.

Democrats want a return to the 2009 estate tax levels where the exemption is $3.5 million and the balance was taxed 45 percent. Republicans, meanwhile, threatened that any partisan change to the bill would mean the death of the deal and Americans will be forced to brace for tax increase across all brackets beginning January 1.

Where’s the economy headed now as Democrats oppose Obama’s tax deal?

The markets and the general public continue to hang on to their breath as the president’s bill to prevent taxes from rising may face a grinding halt courtesy of no other less than his own party.

The Democratic caucus voted to sharply oppose President Barack Obama’s compromise tax deal with members of the GOP in Congress, which guarantees a two-year extension of the Bush-era tax cuts for all income brackets.

Obama’s partymates was angered with how the president easily conceded to the Republicans in Congress including extending tax cuts to the so-called wealthy and a lower-than-expected estate tax rate after a $5 million threshold per individual.

Vice President Joe Biden, who negotiated the deal with the GOP, defended the plan and told fellow Democrats that they must either approve of it or not.

Those in favor of it believe this will keep the momentum in the economic recovery considering US unemployment remains a shade under 10 percent. The economic package also guarantees a 13-month extension of unemployment benefits, a 2 percent slash in payroll taxes, and tax breaks for small businesses.

The business sector is generally supportive of the package to be passed as they seek more certainty in the economic outlook for the near term. Some businessmen have suggested that the proposed tax cut extension would allow their companies to purchase equipment and hire more people, both vital to the economic recovery in general.

Aware of the opposition from within its own stable, the White House, in a statement, believed that discussions between both sides will still continue in the next few days and some of the major elements of the economic package will eventually be approved.

Unemployment in older people on the rise

With their savings and investments wiped out by the financial meltdown, the economic crisis has surely claimed people aged 55 and above as its helpless victims. Many belonging in this particular segment of the population are now forced back into the jobs market seeking for work but sadly they are not getting the call back.

In the recently released November jobless report, more than one in every ten Americans are out of work for 12 months or more. Another report by Pew Fiscal Analysis Initiative last April revealed older people had the most difficult time landing a job.

Older workers, who have been working for 20 years or so, find out that their work experience is actually working against them as employers are increasingly looking to hire younger and “cheaper” workers.

Unemployment in the United States spans a broad range of industries including manufacturing and retail. The November jobs numbers showed a weaker-than-expected 9.8 percent unemployment rate, casting a cloud on the Obama administration’s economic strategy.  

A New York Times study shows unemployment rate for aged 55 and above is now twice as it was before the crisis began in late 2008. The same study also reveals poverty is now steadily on the rise in this age group.

Analysts agree that older workers do not only have to hurdle competition against younger workers, but may also find it challenging to get around new technology, which changes rapidly. Many older workers are also questioned by employers on why they were out of work for a long time, diminishing their value on the market.

Obama’s compromise tax deal: Will his own party approve?

This time, the president is directing his talk not to Republicans, but to the congressional members of his own Democratic Party. President Obama even sounded like scolding his partymates as he warned them not to be stubborn for the interest of the American public.

The president offered a gesture of interest in “working together” with Republican lawmakers to pass the highly debated Bush tax cuts, which are set to expire at the end of the year and other economic measures aimed at stimulating the US economy.  

They agreed on certain points including extension of tax rates for all brackets for 2 years, continued government assistance for unemployment insurance claims for the next 12 months, and payroll tax reduction for 1 year that would essentially trim social security contributions paid by workers, are just among the agreed points of the compromise deal which both sides believe will greatly benefit the middle class and boost demand in the economy.

A lot of Democrats are not too happy with the compromise saying the president gave away too much and will not be able to obtain some of the promises he made during the campaign. The president, already expecting opposition to the deal, strongly suggested that he would not let the battle of political ideologies between Democrats and the GOP to claim ordinary Americans as collateral damage.

Final 2010 BCS standings: Auburn vs. Oregon for the national crown

It is now official and it is not the usual contenders who will be contesting this season’s Tostitos Bowl Championship Series (BCS) National Championship Game in Arizona. Outsiders Auburn and Oregon broke the run of the traditional giants as they continue their own separate quests for college football’s most elusive prize. 

It is the first time for the Tigers and the Ducks, ranked No. 1 and No. 2, respectively, in the final rankings of the BCS for 2010, to appear in the national title game since the modern ranking system began in 1998. Auburn last won the national title in 1957 while Oregon has yet to win one.

Curiously, last year’s protagonists for the title—Alabama and Texas—did not even figure in this year’s Top 10 rankings. Two-time BCS national champion Florida likewise did not enter the Top 10 whereas Southern California, another two-time winner, was ranked 10th overall.

Amazingly, both Auburn (13-0) and Oregon (12-0) did not even break into the Top 10 of the AP poll at the start of the season, the first of its kind in the history of the BCS title game. The two football programs are scheduled to face off on January 10 next year at the University of Phoenix Stadium in Glendale, Arizona.

Here is a list of the teams selected by the BCS to play in this season’s bowl games:

Rose Bowl: TCU vs. Wisconsin

Tostitos Fiesta Bowl: Oklahoma vs. Connecticut

Discover Orange Bowl: Stanford vs. Virginia Tech

All State Sugar Bowl: Ohio State vs. Arkansas

Tostitos BCS National Championship Game: Auburn vs. Oregon

Rise in jobless rates shows recovery is still fragile

Recently released unemployment numbers surprised many analysts and government officials and certainly made the case for another look at the policies that the leaders in Washington are debating right now. The Dow may have dodged the poor figures to end the week in a high note but it has caused some concern on what to do next in a seemingly fragile economic recovery.

The latest report from the Labor Department showed a 9.8 percent rise in unemployment for the month of November, the highest since April this year. The worse-than-expected job numbers had many analysts scratching their heads because of improving retail and manufacturing numbers in the past months.

Politicians particularly the Republicans in Congress were quick to build their case against any move to increase taxes.

However, some argue that neither tax cuts nor tax credits can fix the problem since businesses are not able to grow anyway with the current economic situation where demand is anemic.

Economists generally projected a 150,000 rise in payrolls but the Labor Department announced only a 39,000 increase from the same period last year. Declining manufacturing jobs hurt the Obama administration’s efforts to bring Americans back to work.

Underemployed workers—people who work part time but hope to find full-time jobs—continue to remain high at 17 percent. The number of people unemployed for 6 months or more is at its highest in 3 months.

This is particularly surprising since November is usually the month where retailers begin to hire more workers because of the start of the shopping season.

What does the US House bill on tax cut extension mean to you?

As expected, Democratic and Republican leaders in the US House of Representatives voted along party lines regarding the debate on the extension of the Bush-era tax cuts. The voting favored those who want an extension of the tax cuts but only for middle-income individuals and households. 

Incoming House speaker John Boehner of Ohio led the Republican move in the Congress’ lower chamber to extend the lower tax rates and expanded tax credits signed during the Bush administration, which was supposed to expire by the end of the year, but had to settle on a bill meant only for the middle class while the same measures for the wealthy were allowed to expire.

Boehner, who sees it as a political maneuvering on the part of the Democrats who want to satisfy those who oppose extending the tax cuts to the wealthy, warned that the bill will not pass in the Senate. President Barack Obama has been pushing for a limited extension of the tax cuts covering only individuals earning less than $200,000 and married couples earning less than $250,000 a year.

The Republicans, emboldened by their sweeping victory in the last elections, voted against the bill saying it will be hurtful for the economy and for higher-income taxpayers.

Essentially, the House bill means people earning within the $250,000 and $250,000 income thresholds would continue to enjoy the lower 10 to 33 percent income tax rates and 15 percent tax rate on dividend income and capital gains.

People earning beyond the threshold will have their tax rates increased in the range from 35 to 39.6 percent while capital gains tax would increase to 20 percent.

Republicans hope that the bill will be eventually killed when it goes to the Senate and are eyeing a legislation that will not impose any tax increases for anybody.

Who will be WikiLeaks’ next target?

The world is just processing the latest revelations it just brought out to the public, but online whistleblower WikiLeaks has already lined up many more secrets waiting to be revealed. Their next target: US banks.

Banks are expected to be on their guard as WikiLeaks founder Julian Assange told Forbes in an interview that he has documents showing unethical behavior by executives of a major US bank, which he declined to name.

Some analysts believe he may be referring to Bank of America although some are not certain which among the banks he was talking about after he only provided a few hints.

Assange said that the major bank still exists and by ruling out Lehman Brothers, Bear Sterns, and Merill Lynch, that only leaves Goldman Sachs, Bank of America, Citigroup, JP Morgan Chase, Wells Fargo, and Morgan Stanley as likely candidates.

He likened the bank with the corruption scandal involving Enron and its executives which led to the company’s bankruptcy in 2002.

In late 2008, the government allocated $700 billion of public money to bail out some of the major banks and financial institutions through its Troubled Asset and Relief Program (TARP) during the height of the financial crisis. Citigroup and Bank of America were among the biggest beneficiaries of the TARP fund according to the New York Times.

News of the impending revelations by WikiLeaks have sent worry signals particularly to investors of financial stocks after the website rocked governments all over the world and caused diplomatic inconveniences between the US and its key allies earlier this week.