Bill Clinton: How I’d fix the economy

NEW YORK (CNNMoney) — Move over Congress. Move over President Obama. Bill Clinton is back — and he has a lot of economy-fixing ideas.

The elder Democratic statesman has crammed his latest book — called “Back to Work” — with dozens upon dozens of policy prescriptions designed to get the economy back on track.

Clinton hammers one point over and over: Government is good, and the policies of “antigovernment ideologues” would only “push the pedal to the metal of the most destructive trends of the last thirty years.”

So how can the United States get back on track?

“We need to get our game face on,” Clinton writes.

A few of his ideas: Homeowners with underwater mortgages should have their loan principal reduced, U.S. companies should be allowed to repatriate profits held overseas and investment in green jobs and infrastructure must be increased.

Clinton says the country needs “a rapid, comprehensive effort to resolve the ongoing mortgage crisis.”

Every delinquent homeowner with a mortgage worth more than the house should have the principal written down or the loan’s term extended at a lower interest rate. Another option: If a homeowner can’t make reduced payments, they should be allowed to exchange a deed for a multi-year lease.

If those options don’t work for a homeowner, foreclosure should be expedited.

On the corporate tax code, Clinton says he favors reforming the system in a way that would lower tax rates but not the amount of revenue collected by the Treasury.

And in the near-term, Clinton says Congress should allow companies with earnings held overseas to repatriate that money at a tax rate below the usual 35% — say 15% to 20%.

If a company is able to prove they will use their repatriated profits to create new jobs in the United States, the tax rate should be dropped all the way to 0%.

The American tax machine

With as much as $1 trillion in profits being held overseas, the scheme could create a nice chunk of revenue for the Treasury. Clinton says that money should be used to fund infrastructure grants to the states.

Many of Clinton’s other proposals would try to create jobs linked to projects that would help change the way Americans produce and consume energy.

For example, Clinton wants an “aggressive, fifty-state building retrofit initiative” that is financed with a government-backed loan guarantee program. Meanwhile, states should launch their own retrofit programs. Congress should bring back full tax credits for green tech jobs.

The United States should also develop more efficient biofuels, work to harness geothermal heat and extract more natural gas — a process that often requires companies to use the controversial “fracking” technology.

At the very least, rooftops should be painted white, Clinton says, to help cut down on energy costs.

In all, Clinton lists 46 bullet-point ideas to help the economy, but he sneaks a few more in around the margin.

However, many of the ideas would require congressional action.

And as Clinton points out, Washington is tied in knots at the moment — totally consumed by partisanship. Very little legislation has successfully emerged from Congress this session.

And after all, that is where the rubber meets the road.

Analysis

With the US economy in turmoil and witnessing some of the highest rates of unemployment this is an interesting article showing Bill Clinton’s perspective on how to solve the economy. Bill Clinton is known for the 8 years of positive Economic growth during his time as President of the USA.
Yet, the tax code is vital for Americans and it is a tricky subject also for the GOP candidates for Presidency.

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US creates $30bn small business fund

The US Senate has backed a bill that will establish a $30bn (£19.5bn) fund for small businesses.

President Obama’s Democrats won a 61-38 vote to pass the legislation, with backing from two Republicans.

The measure is designed to help open up lending for small businesses, cut their taxes and boost Small Business Administration loan programmes.

The new loan fund would be available to community banks to encourage lending to small businesses.

Supporters say banks should be able to use the fund to access up to $300bn in loans.

Polish Economy Grew Faster in 2nd Quarter on German Expansion

Polish economic growth grew faster than expected in the second quarter as a weak zloty and recovery in western Europe spurred exports.

Gross domestic product rose 3.5 percent from a year earlier, compared with 3 percent in the previous quarter, the Warsaw-based Central Statistical Office said today. The result exceeded the 3.2 percent median estimate of 11 economists in a Bloomberg survey.

Poland, the only European Union member to avoid a recession in 2009, was aided by demand from Germany, where GDP expanded at the fastest pace in two decades during the second quarter. The EU forecasts Poland will outperform again this year, growing 2.7 percent, compared with an average of 1 percent for the 27-member bloc.

Asia Slowdown to Have `Serious’ on Affect Europe, Economy Chief Rehn Says

Slower economic growth in China, India or other Asian economies would have a “serious negative impact” on Europe’s growth, the European Union’s economic chief said.

Olli Rehn, the EU commissioner for economic and monetary affairs, said yesterday in a Bloomberg Television interview that a slowdown in the U.S. recovery and turmoil in the sovereign debt markets also could cause concern in Europe.

Strengthening global growth helped Europe’s economy show the fastest expansion in four years in the second quarter after the Greek budget crisis earlier damped confidence in the euro currency and forced governments to step up deficit-cutting measures. Euro-area growth is likely to decelerate in the second half of the year as signs of a slowdown in the U.S. and China dim export prospects.

In the U.S., the world’s biggest economy, the Commerce Department may revise lower its second-quarter growth rate to the slowest since the recovery began, according to the median forecast of economists in a Bloomberg News survey. China’s expansion eased to 10.3 percent in the second quarter and industrial production cooled more than forecast in June, data showed last month, signaling a deeper second-half slowdown.

Household finance under pressure in August

http://www.bbc.co.uk/news/business-11053227

Household finances came under pressure on all fronts in August, according to market researchers Markit and YouGov.

Their survey of 2,000 households showed people were increasingly worried about losing their jobs and higher costs of living.

The Household Finance Index suggests individuals are feeling few benefits from the growing economy.

Some 30% of polled households said their finances had worsened, compared to 6% who said they had improved.

Nearly 69% of respondents reported a rise in the price of their goods and services in August from July, the highest level since the survey began 18 months ago.

Tim Moore, economist at Markit, said: “Stronger growth in the UK economy has done little to put a floor under the downturn in household finances.”

Emerging economies alter dynamics of oil demand

http://www.ft.com/cms/s/0/a6b6d93a-abc0-11df-9f02-00144feabdc0.html

Emerging economies have upended the long-standing pattern of global oil consumption, according to the west’s energy watchdog, in a further sign of how countries such as China and India are transforming commodities markets.

The International Energy Agency estimates that oil demand was higher this year during the second quarter for the first time, at about 86.6m barrels a day, ahead of the traditional peak winter season of January-March, at 86.0m b/d.

But with growing demand for oil coming from countries such as China, India, Saudi Arabia, Brazil and Indonesia, seasonal patterns are changing, a trend the Paris-based IEA believes will accelerate.

The IEA said: “This emerging seasonality will probably raise new refining and logistical challenges.”

In the past, oil demand fell 1.5-2.0m b/d between the first and second quarters, allowing refineries to undergo maintenance. Low demand periods helped to build inventories to meet peak consumption later.

Russian grain ban angers traders

http://www.ft.com/cms/s/0/4a47ed9a-a898-11df-86dd-00144feabdc0.html

Workers at Novorossiysk, a sprawling port on Russia’s Black Sea coast, were rushing at the weekend to load a last ship with grain before an export embargo kicked in.

Analysts said the embargo had enraged grain traders and ports that have flourished during bumper harvests in the past two years. “Everything was working like a Swiss clock – and then it was stopped in one minute by a decree,” said Dmitry Rylko, the director of the Institute for Agricultural Market Studies, a Moscow-based consultancy.

Moscow announced the grain export ban early this month as an extreme heatwave and drought destroyed more than one-fifth of Russia’s grain crops and wildfires swept across the European part of the country.

Vietnam Devalues Currency to Boost Exports as Stocks Approach Bear Market

http://www.bloomberg.com/news/2010-08-18/vietnam-devalues-currency-to-boost-exports-as-stocks-approach-bear-market.html

Vietnam devalued its currency for the third time since November, moving to reverse a slump in exports that helped to drive stocks close to a bear market.

The dong slid to a record-low 19,425 per dollar at 9:28 a.m. in Hanoi after the central bank lowered the reference rate by 2 percent to help control a trade deficit. The Ho Chi Minh City Stock Exchange’s VN Index dropped 1.6 percent to 455.96, extending its decline from the May peak to 17 percent, near the 20 percent that would indicate a bear market.

A weaker currency may boost exports and demonstrates the government’s focus on boosting economic growth over further easing inflation, said Prakriti Sofat, a Singapore-based economist at Barclays Capital. Prime Minister Nguyen Tan Dung said in June the economy may expand as much as 7 percent this year, beating the 6.5 percent target, from 5.3 percent in 2009.

“The main reason for the central bank’s move is to balance onshore foreign-exchange demand-and-supply and to support exporters,” Sofat said. “Vietnam largely exports low value- added goods and typically competes on prices.”

Peter Popham: Japan shows us the limits of growth

http://www.independent.co.uk/opinion/commentators/peter-popham-japan-shows-us-the-limits–of-growth-2054285.html

It’s finally happened: China’s economy has overtaken Japan’s. Less than 20 years after Deng Xiaoping told his people that “to get rich is glorious”, and three decades after the Chinese Communist Party began its first timid opening to the outside world, the Central Kingdom has surpassed its rival across the Sea of Japan. China is now officially the world’s number two and, unless something inconceivable happens, it will hold that place until it becomes number one, maybe as soon as 2030.

There are several reasons why Japan stopped growing after the crash. An ageing population, a shrinking birth rate and a national disinclination to admit millions of immigrants are among the obvious ones. But one reason economists tend to overlook is the following: with the Cold War coming to an end, Japan saw that, for the first time since the 1850s, there really was nothing to fear any more.

Youth unemployment across the world hits record high

http://news.blogs.cnn.com/2010/08/12/youth-unemployment-across-the-world-hits-record-high/

The number of young unemployed across the world has soared to a record high and is likely to climb further this year, a United Nations agency reported Thursday, amid a U.S. government report that that jobless claims in America jumped to five-month high.

The International Labor Organization said in its 2010 report that out of 620 million youths ages 15 to 24 in the global work force, 81 million were unemployed at the end of 2009, and warned of a “lost generation” as more youths lose hope of finding work.

The youth unemployment rate increased from 11.9 percent in 2007 to 13.0 percent in 2009, the report said.