Singapore shoots down "rumor" of APEC attack plot
Singapore has downplayed media reports of a plot to attack an Asia-Pacific summit in the city-state in November, the Straits Times newspaper reported on Monday.
"The rumors are rumors. You check it, if it is unverifiable, you know you can't be chasing after every rumor,' Second Home Affairs Minister K. Shanmugam was quoted by the daily as saying during a mock terrorist attack exercise on Sunday.
The Singapore Police Force and the Ministry of Home Affairs were not available for immediate comment.
An intelligence analyst from the Center for Intelligence and National Security in Indonesia told Reuters last week probes into last month's bombings in Jakarta had uncovered a plot to target the Asia-Pacific Economic Cooperation (APEC) summit in Singapore.
U.S. President Barack Obama and other leaders of the 21-member APEC group will attend the mid-November summit in Singapore, a regional financial center and shipping hub.
The investigation also revealed that terrorists planned to use snipers to attack Obama's convoy during a planned visit to Indonesia around the same time.
Shanmugam said Singaporean authorities took security "very seriously."
"Wherever the President of the United States, or various heads of states visit, you obviously take the appropriate security precautions," he said. "For a small country like us, this is not just an issue of preparing against terrorist attacks, it's creating a mindset and understanding within our population that (in) any kind of emergency, we are all able to respond," Shanmugam said.
Labels: APEC, Obama, Singapore, United States of America
Obama imposes salary cap for firms that join bailout
If business that make billion dollar deals can fail, why are they able to cough up high salaries? Who is reponsible for the rich / poor divide?
$$$$$$$$$$$$$$$$$$$
President Barack Obama on Wednesday imposed a salary cap of $500,000 for top executives at companies that receive large amounts of bailout money, saying that some executives were being "rewarded for failure," in part with taxpayer-subsidized money.
"We all need to take responsibility," the president said as he prompted Congress once again to act on his economic stimulus program and repeated his comments that some Wall Street executives had shown "the height of irresponsibility."
He urged the Senate to pass his economic stimulus package, now calculated to exceed $900 billion, perhaps even $1 trillion, saying: "A failure to act, and act now, will turn crisis into a catastrophe. Millions more jobs will be lost."
A handful of companies will probably be most directly affected by the salary cap - Citigroup, Bank of America, American International Group, General Motors and Chrysler - though others will also face tighter restrictions. All the companies are expected to look for ways to remain competitive in the fierce bidding for the most talented executives.
The move, which Obama described as "basic common sense," reflects rising public and congressional resentment at the notion of money-losing companies drawing federal aid while paying multimillion-dollar bonuses to top executives.
"We don't begrudge anybody for achieving success, and we believe that success should be rewarded," he said. "But what gets people upset - and rightfully so - are executives being rewarded for failure, especially when those rewards are subsidized by U.S. taxpayers."
Treasury Secretary Timothy Geithner, appearing with the president for the White House announcement, said that many less wealthy Americans felt that they were bearing a heavier burden from the financial crisis than were those who helped create it.
The Bush administration had imposed general restrictions on executive pay, but the new rules are far tougher and could force executives to accept deep pay reductions. The impact probably would be felt most acutely in financial centers like New York.
Executives at companies that have already received money from the Treasury Department would not have to make any changes. But analysts and administration officials expect a huge wave of new losses, largely because of the deepening recession, and say that many companies that have already received federal money may come back.
Other countries have also considered pay limits, though not as strict. European Union finance ministers declared that managers of bailed-out European banks should "not retain undue benefit," but they left it to member states to define specific limits. Germany plans to ban bonuses and set a ?500,000, or $640,000, pay limit for executives at rescued banks, Reuters reported.
Obama's announcement on pay seemed to have a clear political component: He was trying to regain the initiative after a day in which two important political appointees, Tom Daschle and Nancy Killefer, withdrew from consideration over tax problems. Obama subsequently conceded having "screwed up" by pushing Daschle's appointment to head the Health and Human Services Department.
In a comment regarding Daschle that might almost have applied to executive pay, Obama told NBC on Tuesday: "Ultimately, it's important for this administration to send a message that there aren't two sets of rules. You know, one for prominent people and one for ordinary folks."
Obama said Wednesday that Geithner would introduce a major new plan next week to further shore up banks - and reportedly also help homeowners and home buyers. Laying the groundwork for that, the tough language on executive pay now might help defuse the angry opposition he surely will face over another big spending plan.
"We will have to do more, substantially more, to fix this crisis," Geithner said.
The new rules would have these effects on the companies receiving the largest amounts of bailout money:
Senior executives would be limited to $500,000 in total annual compensation, other than restricted stock. They would be able to cash in such stock only after the government had been repaid.
Executive compensation terms must be fully disclosed and subject to a so-called "say on pay" provision - largely a question of accountability, meaning that they must be submitted to a nonbinding vote by shareholders.
Previously, the top five executives in a given company had to have "claw-back" provisions meaning they could pull back bonuses or incentive pay from anyone found to have knowingly provided inaccurate financial information used to calculate incentives; now that will extend to the next 20 executives as well.
Before, the top five executives at each company were barred from receiving "golden parachute" payments upon severance. Now that will extend to the top 10, and the next 25 will be barred from severance payments exceeding a year's compensation.
For companies receiving smaller bailouts, the $500,000 compensation limit applies, but it can be waived if they fully disclose compensation terms and adopt a "say on pay" approach. The claw-back provisions apply. And the top five executives will be allowed a maximum one-year compensation upon severance, not the current three.
Last May, the insurer Aflac became the first American company to adopt a say-on-pay approach. Other U.S. companies are following suit.
Say-on-pay votes have long been common in Britain and Australia, and experts believe they have helped slow the rise of compensation.
Under the U.S. Treasury's $700 billion rescue program, most companies that have received money so far have been classified "healthy" rather than on the brink of collapse.
But those receiving "exceptional assistance," like Citigroup and the others, faced acute problems. And top executives at those companies made far more than $500,000 in recent years.
Kenneth Lewis, chief executive of Bank of America, took home more than $20 million in 2007, including $5.75 million in salary and bonuses.
Vikram Pandit, who became chief executive of Citigroup in December 2007, made $3.1 million.
Richard Wagoner, chief executive of General Motors, made $14.4 million, most of it in stock, options and other noncash benefits.
Public and congressional pressure has grown so sharp that Wagoner, and also Robert Nardelli, chief executive of Chrysler, recently said they would reduce their personal compensation to a dollar a year.
Robert Frank, a Cornell University economist, wrote recently in The New York Times that "executive pay in the United States is vastly higher than necessary," and the public condemnation entirely understandable.
"Executives in other countries, whose pay is often less than one-fifth that of their American counterparts, seem to work just as hard and perform just as well," he wrote.
Frank argued against a pay cap, however, saying that "in large companies, even small differences in managerial talent can make an enormous difference."
James Reda, managing director of James F. Reda & Associates, a compensation consulting firm, said that such limits would make it hard for big companies to recruit and keep executives.
"I don't think this will work," he said, adding that for top executives, the new cuts would be "pretty draconian."
But others say that excessively high executive pay has tended to foster a dangerous culture of excessive risk, much as flourished before the Great Depression.
"Wages in finance were excessively high around 1930 and from the mid-1990s until 2006," according to a National Bureau of Economic Research paper by Thomas Philippon and Ariell Reshef.
Labels: Bailout, IHT, Obama, Wage Cap
Good Bank Bad Bank
Bad bank sparks optimism in US equities.
Last night's decision by the US Federal Reserve's Federal Open Markets Committee to leave interest rates unchanged at virtually zero was a no-brainer. How can it do otherwise when the deepening financial and economic situation forced its back against the wall last December when it effectively cashed in all its chips and took the fed funds rate to nil.
All the Fed could do now is proceed with what it stated in the accompanying statement -- that is, to continue expanding its balance sheet. ‘The Committee also is prepared to purchase longer-term Treasury securities if evolving circumstances indicate that such transactions would be particularly effective in improving conditions in private credit markets.' And hope for the best. ‘The Committee anticipates that a gradual recovery in economic activity will begin later this year.' But even this statement has to be qualified with, '…but the downside risks to that outlook are significant.'
Indeed they are. At the same time the Fed announced its decision and its statement, the International Monetary Fund (IMF) released its latest projections. The IMF slashed its global economic growth projection down to 0.5 per cent this year - the weakest rate since the second world war - from its previous estimate of 2.2 per cent. It expects growth to rebound to 3 per cent in 2010.
Also, the IMF now expects global bank losses to reach US$2.2 trillion due to toxic assets. This exceeds the previous estimate of US$1.4 trillion stated in October and just US$600-800 billion before that. Is this latest projection now set in stone? Or will it be revised even higher in three months time, and higher still in six months? Remember that many of the assets have no market value as buyers have long vanished.
This is perhaps why US equities took as positive rumours that President Barack Obama's latest stimulus package could include the creation of a bad bank - an ‘Aggregator Bank' -- that will buy and stock illiquid and toxic assets of financial institutions. This plan is expected to be announced next week.
If the rumours are true, the Obama administration maybe hoping that this bad bank will succeed the same way that the Resolution and Trust Corporation (RTC) -- established in 1989 to dispose of bad assets of failed US savings and loans institutions - did in resuscitating trust and confidence in US financial institutions.
The concept is good. Take away all the bad assets from banks and financial institutions and they will be healthy enough to resume lending. Credit will again start flowing and grease the wheels of recovery.
But this maybe better said than done. After all the RTC of 1989 bought assets from institutions that were already dead. They no longer have any bargaining power as to the RTC's price offer.
Under the current environment, it is not that the financial institutions have any bargaining power either. But they are still alive, albeit barely. The disappearance of buy/sell transactions in toxic assets means that no one knows exactly what the market value of these assets are - or whether they are still worth something.
Herein lies the rub. If the bad bank bids too low for these assets, investors and shareholders of these still-operating institutions may dump their holdings and thereby, ultimately expanding the liquidity problem of these financial companies. Should the bad bank pay too high a price for toxic assets, it pays too high a price. It risks holding them in its vault for a very long time or it may have to write them off eventually -- wasting taxpayers' money in the process.
But surely the geniuses on Capitol Hill would have a Plan B for the bad bank to work. And for equity markets, at least for today, it may be enough to see their government working stridently towards a solution.
Labels: IMF, Obama, US Federal Reserve
The issues facing Obama
HopeBama. Can he save America with plans on Energy, Education, Health care, Guantánamo Bay, Security and citizenship, Tax breaks, old and new, Iraq, Iran, Nafta?
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
Energy
"I will invest $15 billion a year in renewable sources of energy to create five million new energy jobs over the next decade."
Oct. 31, Des Moines, Iowa
On energy and climate change, Barack Obama's focus has shifted over the course of the year as the economy has weakened.
An earlier proposal put an economy-wide cap on greenhouse gases, requiring industry and utilities to buy credits from the government to emit carbon dioxide. The plan would have produced hundreds of billions of dollars in government revenue and drive up the cost of energy for everyone.
Obama is now emphasizing a program to spend $150 billion over 10 years to develop renewable sources of energy, like wind, solar and biofuels, and to encourage energy conservation in homes, offices and public buildings. He would also provide substantial financial help to the auto industry to develop high-mileage and electric cars.
Education
"A truly historic commitment to education - a real commitment - will require new resources and new reforms."
May 28, Mapleton, Colorado
Obama's education plan outlined about $8 billion for recruiting, performance pay and other initiatives that represent his approach to updating the Bush education law known as No Child Left Behind. But his plan also offered grand proposals for every level of education, including a $4,000 tuition tax credit that would make college more affordable for millions of students and a $10 billion expansion of early childhood programs.
The challenge will be how to finance all those proposals when budgets are extremely tight, experts said.
Obama's $10 billion proposal to expand early childhood education would probably produce tremendous savings to the nation later, but experts said he would find it extremely challenging to finance under current financial conditions.
Health care
"If you don't have health insurance, you'll be able to get the same kind of health insurance that members of Congress get."
Oct. 31, Des Moines
Obama has said "every American has a right to affordable health care," but he has not said exactly how he would finance coverage for the 45 million people who are uninsured. The economic slump and the bailout for the financial industry may reduce the amounts available to cover the uninsured.
On his Web site, Obama says his health plan "will lower health care costs by $2,500 for a typical family by investing in health information technology, prevention and care coordination." Health policy experts endorse those goals but say they are unlikely to produce such large savings.
If Obama hopes to keep his promise, he will need to mobilize public support for specific legislative proposals. And he will need to co-opt or placate a swarm of lobbyists.
Guantánamo Bay
"We're going to lead by setting the highest of standards for civil liberties and civil rights and human rights."
Feb. 20, Dallas
As president, Obama could simply declare an end to practices that have been widely condemned as torture. He could revoke President George W. Bush's executive order, disclosed in 2007, that allowed the Central Intelligence Agency to use more severe interrogation techniques than allowed under the U.S. Army Field Manual.
To do so, however, he would have to overrule at least some intelligence professionals who have argued that they need to use more aggressive methods.
His pledge to close the prison at Guantánamo Bay, Cuba, would require finding a place to imprison dozens of detainees.
Federal officials have drafted plans to move them to centers in the United States, but even supporters of that acknowledge the potential consequences, including the release of suspects for lack of evidence.
Security and citizenship
"We cannot deport 12 million people. Instead, we'll require them to pay a fine, learn English and go to the back of the line."
Sept. 10, Washington
As a senator, Obama supported comprehensive immigration overhaul, and in the campaign he pledged to enhance border security and provide a path to citizenship for millions of people in the country illegally. And while he said he favored a guest worker program, he also advocated tougher penalties for employing illegal immigrants.
But his proposals are very likely to encounter resistance from those who contend that they amount to amnesty - an argument that helped jettison a bill in Congress. And with the economy shedding jobs, opponents will also argue that immigrants are taking jobs from citizens. But experts say Obama will face pressure to act from the many Hispanic voters who supported his candidacy in part because of his stance on immigration.
Tax breaks, old and new
"As president, here's what I'll do: cut taxes for every working family making less than $200,000 a year."
- Oct. 29, paid television address
Obama pledged to extend the Bush tax cuts of 2001 and 2003 past 2010, when they would expire, for taxpayers making less than $250,000 a year. He would repeal the cuts for taxpayers making more than that, effective Jan. 1, 2010.
Obama considers the extension for those making under $250,000 a continuation of current policy, not a tax cut.
But he promises a new break for taxpayers making less than $200,000 - an annual tax credit of $500 a worker, or $1,000 a working couple. It would be a refundable credit, so those who do not earn enough to pay income taxes but do pay payroll taxes would also benefit.
Given the economic crisis and the Democratic gains in Congress, the odds are good that he will push the measures through.
Iraq
"Nobody's talking about bringing them home instantly, but one to two brigades a month. It'll take about 16 months to get our combat troops out."
May 16, Watertown, South Dakota
Obama has said repeatedly that he would set a 16-month timetable for troop withdrawal. Some military experts believe that could lead to a reversal of the gains from the increase in troops over the past 18 months, and they argue that the generals running the war should decide how many troops to pull out and when to do it.
Obama appears to have the Iraqi government on his side. Iraqi leaders say his timetable is closer to theirs, which they put at 2010. The Bush administration timetable, which has some wiggle room, was 2011.
But all of this supposes relative stability, even while troops are withdrawing. And questions also remain about the kind and level of force Obama would leave behind.
Iran
"I would be willing to lead tough and principled diplomacy with the appropriate Iranian leaders at a time and place of my choosing."
June 4, Washington
Obama raised expectations that he would meet with Iran's leaders. He said during the campaign that the notion of not talking to America's foes was "ridiculous." Since then, he has tempered his words somewhat, indicating that he would send envoys initially and would meet personally with Iran's leaders only if he thought he could advance the American agenda.
Obama also faces the issue of when to reach out. If he makes a move before June, when Iran's presidential election is scheduled, he risks giving President Mahmoud Ahmadinejad claim to a foreign policy victory, to the possible detriment of more moderate Iranian presidential aspirants. But if he waits too long, Iran could get closer to acquiring a nuclear weapon.
Nafta
"I think we should use the hammer of a potential opt-out as leverage to ensure that we actually get labor and environmental standards that are enforced."
Feb. 26, Democratic candidate debate
No legal hurdle would prevent Obama from pulling out of the North American Free Trade Agreement, a distinction from other trade deals. But trade experts say the political and economic costs of scuttling the deal would be enormous.
Even opening it up to renegotiate labor and environmental standards carries risks: Canada might seize the opportunity to renegotiate provisions on energy, while Mexico might push for access for its trucks in the United States.
Obama's union supporters have not put changing Nafta at the top of their agenda, focusing instead on issues like China's exchange rate. With little political upside and so much potential downside, this may be one issue Obama prefers not to touch.
Labels: Education, Energy, Guantánamo Bay, Health care, Iran, Iraq, Nafta, Obama, old and new, Security and citizenship, Tax breaks
