Category Archives: ECON-FINANCE

How the U.S. Could Pressure North Korea Tomorrow: Quit the $100 Bill; North Korea is minting superdollars

How the U.S. Could Pressure North Korea Tomorrow: Quit the $100 Bill; North Korea is minting superdollars | Business | TIME.com.

 

 

 

Photo-Illustration by TIME

Photo-Illustration by TIME

U.S. negotiators are heading into a second day of what have been dubbed “serious and substantial” talks with North Korean officials. Yet amidst all the discussion of how the U.S. will attempt to work with Kim Jong Un, there has been little (open) speculation as to whether Dear Leader Junior might crank up production of $100 and $50 bills. No, not North Korean 100- or 50-won banknotes, worth about as much as old tissues. I’m talking about fake greenbacks — or, as the U.S. Secret Service has dubbed them, “superdollars.”

 

These ultra-counterfeits are light years beyond the weak facsimiles produced by most forgers, who use desktop printers. As an anti-counterfeiting investigator with Europol once put it: “Superdollars are just U.S. dollars not made by the U.S. government.” With few exceptions, only Federal Reserve banks equipped with the fanciest detection gear can identify these fakes.

Yet as unpatriotic as this may sound, perhaps America would be better off if Kim Jong Un were to try and enrich himself with D-I-Y Benjamins. Let me explain, by way of a little background about superdollars.

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The “super” moniker does not stem from any particular talent on the part of the North Koreans. It’s a matter of equipment. The regime apparently possesses the same kind of intaglio printing press (or presses) used by the U.S. Bureau of Engraving and Printing. A leading theory is that in 1989, just before the collapse of the Berlin Wall, the machines made their way to North Korea from a clandestine facility in East Germany, where they were used to make fake passports and other secret documents. The high-tech paper is just about the same as what’s used to make authentic dollars, and the North Koreans buy their ink from the same Swiss firm that supplies the US government with ink for greenbacks.

Forging $100 bills obviously gels with the regime’s febrile anti-Americanism and its aim to undercut U.S. global power, in this case by sowing doubts about our currency. State level counterfeiting is a kind of slow-motion violence committed against an enemy, and it has been tried many times before. During the Revolutionary War, the British printed fake “Continentals” to undermine the fragile colonial currency. Napoleon counterfeited Russian notes during the Napoleonic Wars, and during World War II the Germans forced a handful of artists and printing experts in Block 19 of the Sachsenhausen concentration camp to produce fake U.S. dollars and British pounds sterling. (Their story is the basis for the 2007 film “The Counterfeiters,” winner of the 2007 Oscar for Best Foreign Language Film.)

Superdollars can be viewed as an act of economic warfare, but Pyongyang’s motive is probably more mundane: The regime is broke. The 2009 attempt to raise funds by devaluing its already pathetic currency revealed not only the country’s fiscal desperation, but also the abuse Dear Leader was willing to inflict on his people. The won was devalued 100-fold, which meant 1,000 won suddenly had the purchasing power of 10 won. (Imagine waking up to a learn that a slice of pizza costs $250.) Officials set a tight limit on how much old money could be exchanged for new, so whatever value existed within people’s paltry savings evaporated overnight. Compared to devaluation, generating quick cash by counterfeiting some other country’s more stable currency looks downright humanitarian.

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The superdollar affair has a certain comic-book quality: copying the currency of the evil capitalists so you can buy cognac and missiles. But Washington isn’t laughing. At the end of December, Ireland’s high court rejected a U.S. request to extradite former Workers Party president and IRA veteran, Sean Garland, for his alleged involvement with the superdollar plot. There is also the question of what exactly the North Koreans hope to procure with all of this “money.” According to the House Task Force on Terrorism and Unconventional Warfare, superdollars may be part of the regime’s effort to acquire materials for nuclear weapons.

Since the superdollars were first detected about a decade ago, the regime has been pocketing an estimated $15 to $25 million a year from them. (Other estimates are much higher—up to several hundred million dollars’ worth.) That sounds like a lot of money, but compared to the $1 trillion in cash circulating in the great ocean of commerce, a few hundred million is chump change. Although certainly costly for small business owners who unknowingly accept a bunch of forgeries, counterfeits probably won’t bring about a crisis of faith in our paper money anytime soon.

Yet taking the long view, maybe a rash of new superdollars from the hermetic regime of Kim Jong Un would be beneficial. How so? Because counterfeits have a way of reminding people of what material money is and how it functions, and that could lead to a discussion of its pros and cons. Cash is, and always has been, such an uncontested part of everyday life that we rarely stop to consider its toll on society as the currency of crime, to say nothing of the heaping expense of printing, transporting, securing, inspecting, shredding, redesigning, reprinting, re-inspecting, and redistributing it ad nauseum, plus the broader costs of prosecuting and incarcerating the thousands, if not millions, of people who commit cash-related crimes. That’s not to suggest we could get rid of paper money tomorrow; we still don’t have a substitute that’s equally convenient, universally accepted, and adequately secure. But that day may be closer than you think. (Coins, however, we could—and should—do away with. As in, right now.)

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Superdollars, and the untold billions of (electronic) dollars spent combating them could be the wake-up call that finally forces us to think more clearly about the costs of physical money. If killing all cash strikes you as a little too radical, consider for a moment what it would mean to get rid of high-denomination banknotes. Who would be most inconvenienced if Washington were to outlaw $100 and $50 bills tomorrow? Cartel bosses in Juarez, Mexico jump to mind. So do human traffickers in China and Africa, aspiring terrorists in Afghanistan, wildlife poachers, arms dealers, tax evaders, and everyday crooks who hold up mom and pop groceries. And, or course, North Korean government officials.

So then. At the risk of infuriating cash-hoarding militia members, anonymity-obsessed ACLU’ers, the U.S. Treasury, Russian mob, Laundromat owners, and just about every person who has ever hid a purchase from a spouse or income from the government, I would say this to Kim Jong Un and his posse of counterfeiters: Bring it.

David Wolman is a contributing editor at Wired and the author of The End of Money: Counterfeiters, Preachers, Techies, Dreamers—and the Coming Cashless Society, out this month from Da Capo Press. Follow him on Twitter: @davidwolman

Read more: http://business.time.com/2012/02/24/how-the-u-s-could-pressure-north-korea-tomorrow-quit-the-100-bill/?iid=biz-article-mostpop1#ixzz1nVl122r1

World economy on verge of new jobs recession

BBC News – ILO: World economy on verge of new jobs recession.

The global economy is on the verge of a new and deeper jobs recession that may ignite social unrest, the International Labour Organization (ILO) has warned.

It will take at least five years for employment in advanced economies to return to pre-crisis levels, it said.

The ILO also noted that in 45 of the 118 countries it examined, the risk of social unrest was rising.Watch movie online Rings (2017)

Separately, the OECD research body said G20 leaders meeting in Cannes this week need to take “bold decisions”.

The Organisation for Economic Co-operation and Development said the rescue plan announced by EU leaders on 26 October had been an important first step, but the measures must be implemented “promptly and forcefully”.

The OECD’s message to world leaders came as it predicted a sharp slowdown in growth in the eurozone and warned that some countries in the 17-nation bloc were likely to face negative growth.

‘Moment of truth’

In its World of Work Report 2011, the ILO said a stalled global economic recovery had begun to “dramatically affect” labour markets.

It said approximately 80 million net new jobs would be needed over the next two years to get back to pre-crisis employment levels.

But it said the recent slowdown in growth suggested that only half the jobs needed would be created.

“We have reached the moment of truth. We have a brief window of opportunity to avoid a major double-dip in employment,” said Raymond Torres from the ILO.

The group also measured levels of discontent over the lack of jobs and anger over perceptions that the burden of the crisis was not being fairly shared.

It said scores of countries faced the possibility of social unrest, particularly those in the EU and the Arab region.

Loss of confidence

Meanwhile, in its latest projections for G20 economies, the OECD forecast growth in the eurozone of 1.6% this year, slowing to 0.3% next year.

OECD’s forecasts on GDP growth

Country 2011 2012
US 1.7% 1.8%
Euro area 1.6% 0.3%
Japan -0.5% 2.1%
China 9.3% 8.6%

In May, it had forecast growth of 2% per year in both 2011 and 2012.

It also cut its growth forecasts for the US to 1.7% in 2011 and 1.8% in 2012. It had previously expected growth of 2.6% and 3.1% respectively.

The organisation called for G20 leaders, who meet on Thursday and Friday, to act quickly.

“Much of the current weakness is due to a generalised loss of confidence in the ability of policymakers to put in place appropriate responses,” the OECD said.

“It is therefore imperative to act decisively to restore confidence and to implement appropriate policies to restore longer-term fiscal sustainability.”

It also called for the eurozone to cut interest rates.

Markets dive on Greek referendum

BBC News – Eurozone debt crisis: Markets dive on Greek referendum.

US and European markets have fallen following Monday’s announcement of a Greek referendum on the latest aid package to solve its debt crisis.

Eurozone leaders agreed a 50% debt write-off for Greece last week as well as strengthening Europe’s bailout fund.

But the Greek move has cast doubt on whether the deal can go ahead.

New York’s Dow Jones ended the day 2.5% lower, after a mid-afternoon rally on hope that Greek MPs may block the referendum proved short-lived.

One of Mr Papandreou’s MPs, Milena Apostolaki, resigned from the ruling Pasok parliamentary group on Tuesday, leaving the government with a two-seat majority in parliament.

Six other party members have called for Mr Papandreou to resign, according to the state news agency.

There are doubts whether the government will last long enough to hold the referendum, pencilled in for January.

A confidence vote is due to take place in the Greek parliament on Friday.

Banks down

Earlier in the day, London’s FTSE 100 had ended trading down 2.2%, while the Frankfurt Dax fell 5% and the Paris Cac 40 some 5.4%.

Analysis

January seems to be the best bet for when a referendum will take place.

If a week is a long time in politics, two months is an eternity in financial markets in their current state of mind.

A “no” would blow away one leg of the euro rescue package agreed in Brussels last week, and it was a precarious, unfinished structure in the first place.

Some even see the vote as a referendum on Greek membership of the eurozone.

Perhaps Mr Papandreou is gambling that voters will see it that way and reluctantly say “yes”.

The markets may have good and bad days, but they won’t quietly bide their time while they wait to see if the bet pays off.

Shares in French banks saw the biggest falls, with Societe Generale down 16.2%, BNP Paribas 13.1% and Credit Agricole 12.5%.

Other European banks also fared badly for the second day, with Germany’s Commerzbank and Deutsche Bank and the UK’s Barclays and Royal Bank of Scotland all 8% to 10% lower.

German Chancellor Angela Merkel and French President Nicolas Sarkozy issued a joint statement following a telephone conversation between the two leaders saying: “France and Germany are determined to ensure with their European partners the full implementation, as quickly as possible, of decisions taken by the summit, which today are more necessary than ever.”

The two also said that eurozone leaders and the IMF would meet on Wednesday to hold talks over Greece.

Confidence vote

Greek opposition parties have accused Prime Minister George Papandreou of acting dangerously, and called for an early election.

“Elections are a national necessity,” conservative leader Antonis Samaras said, adding that Mr Papandreou was putting Greece’s EU membership at risk.

Opinion polls in Greece suggest that most people do not support the deal and there have been demonstrations against the austerity measures across the country, some of them violent.

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Last week’s eurozone rescue package could unravel long before political events in Greece take their course”

Mr Papandreou told a meeting of his governing Socialist party on Monday that Greek people would have the final say on the austerity package, which is designed to reduce Greek debt by about 100bn euros through a series of measures including public sector pay cuts, tax rises and falling pensions.

The austerity measures are a condition of the bailout packages from the European Union and International Monetary Fund.

Some analysts are saying that the referendum would in effect be on whether Greece should abandon the euro.

Nobel Prize winning economist Christopher Pissarides said, “If there is a ‘no’ vote, Greece would immediately declare bankruptcy. I do not see how Greece could remain in the euro.”

There is also concern that the referendum would be unlikely to take place before January, which would create months of uncertainty for the markets.

In Athens, some Greeks greeted the referendum plan with scepticism

“We cannot wait until 15 January,” said Konstantinos Michalos, president of the Athens Chamber of Commerce.

“Personally, I do not think we will ever get there.”

A senior member of Chancellor Angela Merkel’s coalition in Germany said he had been irritated by the referendum announcement.

“The prime minister had [agreed] to a rescue package that benefited his country,” Rainer Bruederle told Deutschlandfunk radio.

Latest Planned Austerity Measures

  • New pay and promotion system covering all 700,000 civil servants
  • Further cuts in public sector wages and many bonuses scrapped
  • Some 30,000 public sector workers suspended, wages cut to 60% and face lay off after a year
  • Wage bargaining suspended
  • Monthly pensions above 1,000 euros to be cut 20% above that threshold
  • Other cuts in pensions and lump-sum retirement pay
  • Tax-free threshold lowered to 5,000 euros a year from 8,000

“Other countries are making considerable sacrifices for decades of mismanagement and poor leadership in Greece.”

He added that the only thing to do now would be to prepare for the Greek state to be insolvent and try to limit the damage to Europe’s banking system.

On the currency markets, the euro continued to slide, falling a further 1.3% against the US dollar.

The yield on German bonds fell to near-record lows, while the difference between the yield of German bonds and those of Italian and Belgian bonds rose to the highest since the introduction of the euro.

Earlier, the Nikkei in Tokyo closed down 1.7% and the Hang Seng in Hong Kong closed down 2.5%.

Europe’s main share markets had all fallen before the referendum announcement as well, with the FTSE, Dax and Cac 40 all dropping by about 3% on Monday.

MIT economist: Wall Street created worst recession since WWII

MIT economist: Wall Street created worst recession since WWII | The Raw Story – Digg.

rawstory.com — MIT economics professor Simon Johnson said on MSNBC’s The Rachel Maddow Show on Wednesday night that Wall Street “blew itself up,” which lead to the “most severe recession since World War II.” The former chief economist of the International Monetary Fund added that the enormous economic damage was “a direct consequence of what the biggest banks did and were allowed to get away with.” Watch video, courtesy of MSNBC, below: Visit msnbc.com for breaking news, […] 1 day 8 hr ago

MIT economist: Wall Street created worst recession since WWII | The Raw Story

Trouble in Triple-A World

Trouble in Triple-A World – By Joshua E. Keating | Foreign Policy.

Standard & Poor’s decision last Friday to downgrade U.S. debt from AAA to AA+ status was as much about politics as economics. According to the ratings agency, “the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges.”

As others have noticed, not all of the remaining 15 countries with AAA ratings exactly have their fiscal houses in order. But as long as S&P is getting into the political risk assessment game, he’s a look at the political state of play in some of the world’s most creditworthy countries.

FRANCE

Predictable is probably not the first word one would use to describe the politics of a country that has gone through five different governments since its founding. Today, even the smallest economic reforms — such as, raising the retirement age from 60 to 62, is enough to bring the country to a grinding halt as labor unions shut down the country’s businesses and transportation networks and protesters take to the streets. Maybe that’s the definition of predictability?

The country’s president has been investigated for receiving illegal campaign donations, his predecessor is on trial for payoffs to political allies, and its most prominent opposition leader is facing multiple rape charges. Meanwhile, France’s third-largest political party, which has performed disturbingly well in both national and regional elections, is the far-right National Front which wants to ban all immigration and has pledged to pull France out of the eurozone if it ever comes to power.

BRITAIN

Britain’s decision to stay out of the eurozone, which has given it the flexibility to print more pounds if need be, is looking pretty wise these days. On the other hand, with a growth rate under one percent over the last 12 months and riots raging the capital city, Britons can’t exactly feel too secure. The country’s debt-to-GDP ratio is 80 percent, six points higher than that of the United States.

For now, Prime Minister David Cameron has been able to push harsh austerity measures meant to restore fiscal confidence through Parliament, but he’s dependent on an often uneasy partnership with the Liberal Democratic Party, which could drop its tenuous support, collapsing Cameron’s government.  The prospect of a hung Parliament so rattled currency markets last year that the pound briefly fell against that poster child of skyrocketing inflation, the Zimbabwean dollar.

Exchequer Chancellor George Osborne says he views the global debt crisis as an “opportunity” to push through economic reforms, but unless his government can deliver growth fast, the window of opportunity may be a short one.

CANADA

Want a definition of government dysfunction? How about a prime minister who, when faced with a myriad of tricky issues — an unpopular war, economic turmoil, Olympic fever — chooses to shut down the government for two months. That’s exactly what Canadian Prime Minister Stephen Harper did in early 2010, employing a time-honored Canadian political tactic known as a “prorogue” to shut down parliamentary debate. It was the third time the prime minister had employed the prorogue in as many years. One can hardly blame Harper for wanting to avoid parliamentary debate. Because of repeated votes of no-confidence, Canada has had four national elections in the last seven years.

Canada has weathered the financial crisis better than most developing world economies, though the effect of U.S. and European economic woes may force the country to revise down its growth forecasts.

GERMANY

Once touted as “Frau Germania” and the recipient of glowing comparisons to Margaret Thatcher and even Otto Von Bismarck, German Chancellor Angela Merkel, has definitely lost her mojo lately. And there’s never been a worse time for it: With Germany’s key role in the European economy, she’s arguable the continent’s most important person. But Merkel isn’t quite the strong and unbending leader as these times call for anymore: she’s changed her position from radical free trader to defender of the welfare state, from defender of the environment to champion of industry, and from nuclear cheerleader to anti-nuke activist.

Voters aren’t buying it. Her popularity is at its lowest point since 2006 and her party was trounced in recent local elections.  Most worryingly, the leader of Europe’s lender of last resort hasn’t been able to sell voters on the need to bail out Europe’s struggling economies.

LUXEMBOURG

Pop quiz: What country has the world’s largest national debt per capita? Greece? Ireland? Pakistan? Nope. It’s tiny AAA-rated Luxembourg, which boasts a debt of nearly $1.9 trillion, or about $3.44 million per capita. Granted, the country also has the second highest GDP per capita, so they can probably cover their debts right now. But given the country’s reliance on the European banking sector and investment funds — not the most stable field at the moment — who’s to say how long the duchy’s good times will last?

Surprise! House disaster vote has become political football

House disaster vote sets up showdown with Senate – BusinessWeek.

The GOP-controlled House remains on track to pass $3.7 billion in disaster relief as part of a bill to avert a government shutdown at the end of the month, the No. 2 House Republican said Wednesday. But first the party must overcome opposition from Democrats and some tea party Republicans.

Democratic leaders, including some who said last week they would back the stopgap measure, came out solidly against it Wednesday morning because it contains $1.5 billion in cuts from a government loan program to help car companies build more fuel-efficient vehicles.

That money would pay for the most urgently needed portion of the disaster aid that’s required to avoid a cutoff next week of Federal Emergency Management Agency relief to victims of Hurricane Irene, recent Texas wildfires and Tropical Storm Lee.

GOP leaders are also encountering opposition from tea party Republicans like Rep. Jeff Landry of Louisiana, who opposes the stopgap measure because it permits a higher spending rate than Republicans proposed last spring. The measure instead follows a hard-fought spending pact endorsed by GOP leaders and President Barack Obama.

Majority Leader Eric Cantor, R-Va., predicted Wednesday that the stopgap measure, commonly called a continuing resolution, or CR, will pass.

In the Senate, the measure awaits a battle with Democrats. That fight involves how much disaster aid to provide and whether any of it should be paid for with offsetting spending cuts.

FEMA has only a few days’ worth of aid remaining in its disaster relief fund. The agency has already held up thousands of longer-term rebuilding projects — repairs to sewer systems, parks, roads and bridges, for example — to conserve money to provide emergency relief to victims of recent disasters.

The House measure contains $1 billion in immediate aid for the 2011 budget year that’s about to end and another $2.7 billion for the 2012 budget year beginning Oct. 1. The Senate measure totals $6.9 billion, with $804 million proposed for the last few days of fiscal 2011.

Senate Majority Leader Harry Reid, D-Nev., said that once the stopgap measure passes the House, he’ll move to substitute the Senate’s more generous aid package for the House’s version. It will take at least seven Republicans to join with majority Democrats to win the 60 votes likely required to defeat GOP blocking tactics.

Ten Republicans voted with Reid last week to pass the stand-alone disaster aid measure, but their votes can’t be taken for granted now. Tea party favorites like Sens. Marco Rubio, R-Fla., and Pat Toomey, R-Pa., were among those who voted with Reid last week, but they told reporters Wednesday that they’ll instead support the partially paid-for House version.

If two more Senate Republicans switch, Reid would no longer have the 60 votes he needs.

In the House, Democrats are rallying against the measure because of accompanying cuts to an Energy Department program that subsidizes low-interest loans to help car companies and parts manufacturers retool factories to build vehicles that will meet new, tougher fuel economy standards. These lawmakers include House Democratic Whip Steny Hoyer of Maryland and top Appropriations Committee Democrat Norm Dicks of Washington. Both had previously said they would support the measure.

Democrats say cutting the loan program could cost up to 10,000 jobs because there wouldn’t be enough money for all pending applications.

“While the government has a responsibility to fund disaster response in places that were devastated by Hurricane Irene or other natural disasters, it is unconscionable to use funds designed to create jobs in manufacturing states to pay for it,” Reps. Gary Peters, D-Mich., and Anna Eshoo, D-Calif., said in a letter to House Speaker John Boehner, R-Ohio.

They credited $3.5 billion of loan subsidies with supporting loans totaling $9.2 billion that created or saved 41,000 jobs in Tennessee, California, Indiana, Michigan, Delaware, Illinois, Kentucky, Missouri and Ohio. Ford Motor Co. and Nissan Motor Co. have already received loans; Chrysler Group LLC is awaiting final approval of a loan.

A protracted showdown could ultimately lead to a partial shutdown of the government when the budget year ends Sept. 30. That’s unlikely, however.

Senate Minority Leader Mitch McConnell, R-Ky., predicted the conflict could be worked out in time for the Senate to make a Thursday night getaway to a weeklong recess. Such a scenario probably depends on Republicans prevailing.

“Congress always responds appropriately to disasters,” McConnell said. “We’re having a discussion about the appropriate way to do that, and I’m confident it will be resolved.”

Reid, however, is spoiling for the battle. “We’re not going to cave in on this,” he said.

The underlying stopgap funding measure would finance the government through Nov. 18 to give lawmakers more time to try to reach agreement on the 12 unfinished spending bills needed to run government agencies on a day-to-day basis for the 2012 budget year.

FEMA funding faces now familiar congressional wrangling

FEMA funding faces now familiar congressional wrangling – CNN.com.

Washington (CNN) — As rescuers raced Tuesday to free people trapped by floodwaters caused by Hurricane Irene, Washington politicians bickered over how to pay for it.

The same budget arguments that nearly brought the first government default in history earlier this month now raise questions about whether the Federal Emergency Management Agency will have enough money to deal with Irene’s aftermath.

FEMA’s Disaster Relief Fund has less than $800 million remaining, and given the pace of operations in the wake of Irene, could run out before the end of the current fiscal year on September 30.

With conservative House Republicans calling for spending cuts to offset any increase in emergency funds — a condition opposed by many Democrats — the ability of Congress to act quickly on the issue remains uncertain.

“The notion that we would hold this up until Republicans can prompt another budget fight and figure out what they want to cut, what they want to offset in the budget, and to pit one section of the country against the other and to delay this and create this uncertainty, it’s just the latest chapter and I think one of the most unsavory ones of our budget wars,” said Rep. David Price, D-North Carolina.

Connecticut Gov.: Ron Paul is an ‘idiot’
Ron Paul and FEMA
Paul defends negative remarks about FEMA
Is FEMA relevant?

Irene first made landfall on the U.S. mainland in North Carolina, devastating some coastal areas. Price said GOP efforts led by House Majority Leader Eric Cantor of neighboring Virginia to offset additional emergency funds amount to “an untenable position and one that simply is unresponsive and insensitive to the kind of situation we face.”

Cantor’s spokesman, however, noted that an appropriations bill already passed by the House and awaiting action in the Democratic-controlled Senate includes additional money to replenish the FEMA disaster fund.

“That funding was offset,” said the spokesman, Brad Dayspring. “The Senate has thus far failed to act on that legislation.”

While the appropriations bill is for fiscal year 2012, which begins October 1, the money could be used for disasters that occurred in fiscal 2011.

“People and families affected by these disasters will certainly get what they need from their federal government,” Dayspring said. “The goal should be to find ways to pay for what is needed whenever possible. That is the responsible thing to do. ”

States can request FEMA Disaster Relief Fund assistance once the president declares a federal disaster within their borders. Most of the Eastern and Northeast states hit by Irene already have that designation.

Federal officials say they don’t yet know how much money will be needed for all the emergency operations associated with Irene. After a series of destructive tornadoes earlier this year, including one that leveled a large swath of Joplin, Missouri, FEMA announced Monday that it was not approving new long-term reconstruction projects in order to ensure it has enough money for immediate emergency funding needs.

“Historically, when the balance in our Disaster Relief Fund has been under the range of $1 billion, we have employed this strategy,” a FEMA statement said.

Rachel Racusen, a FEMA spokesperson, said in a statement that the revised funding strategy “prioritizes the immediate, urgent needs of survivors and states when preparing for or responding to a disaster.”

“This strategy will not affect the availability of aid that any disaster survivors are receiving for recent disasters, such as tornadoes or flooding, or our response operations for Hurricane Irene or any event in the coming weeks or months,” Racusen said.

Missouri legislators worried that FEMA was shifting priority from Joplin’s recovery to focus on Irene because of the funding crunch.

“Recovery from hurricane damage on the East Coast must not come at the expense of Missouri’s rebuilding efforts,” Republican Sen. Roy Blunt said in a statement Monday. “If FEMA can’t fulfill its promise to our state because we have other disasters, that’s unacceptable, and we need to take a serious look at how our disaster response policies are funded and implemented.”

To Price, the problem is the Republican demand for spending offsets, which he said ended up pitting regions against each other for needed emergency funding.

“I’m just very impatient and I think the American people are going to be impatient with any attempt to hold these funds hostage to political objectives,” he said.

A Democratic Senate appropriations aide told CNN on condition of not being identified that the FEMA disaster fund was at $772 million on Tuesday morning, and that it would be about a week before the agency can estimate the costs associated with Hurricane Irene.

The House appropriations bill for the Department of Homeland Security, which includes FEMA, will come up in the Senate Appropriations Committee on September 6, according to the Senate aide.

It doubled the original $1.8 billion requested by President Barack Obama for fiscal 2012, adding $850 million for emergency funding that was offset by cuts in other DHS programs including the Coast Guard, first responders and FEMA, the aide said.

In addition, House Appropriations Committee Chairman Robert Aderholt, R-Alabama, added another $1 billion for the Disaster Relief Fund that was offset by cutting funds for a fuel-efficient vehicles program, according to the aide.

Democrats take issue with cuts to Homeland Security funding to offset additional emergency funding, the aide noted. In July, Sen. Mary Landrieu, D-Louisiana, who chairs the Homeland Security Appropriations subcommittee, criticized the House appropriations bill as “short-sighted.”

Even the White House got involved in the fracas, with Press Secretary Jay Carney telling reporters Tuesday that he wished Cantor and other conservative Republicans had the same commitment to spending offsets “when they ran up unprecedented bills and never paid for them” during the administration of President George W. Bush.

That prompted a quick response from Cantor’s office, which said: “The goal should be to find ways to pay for what is needed when possible. In the face of a $14 trillion national debt, that is the responsible thing to do.”

The Shape of the Global Economy Will Fundamentally Change

The Shape of the Global Economy Will Fundamentally Change – By Mohamed El-Erian | Foreign Policy.

Who would have thought just 18 months ago that a member of the eurozone, the most elite club of economies in Europe, could have a worse credit rating than Pakistan? And yet this is the case for Greece today, perched on the verge of a debt restructuring; two other eurozone countries (Ireland and Portugal), meanwhile, are already in Europe’s intensive care unit, receiving large bailouts.

And who would have thought that a rating agency would dare question the sacred AAA credit rating of the United States, the sole supplier of global public goods such as the international reserve currency (the dollar) and a financial system that serves as the nexus of international capital flow? Still, that’s exactly what Standard & Poor’s has done: In August the agency downgraded the United States’ AAA status to AA+, citing policymaking uncertainty in Washington and the country’s lack of a long-term plan to deal with its fiscal problems.

And who would have thought that the same country, which is renowned for its flexible labor markets and dynamic entrepreneurship, would experience a persistently high unemployment rate? Well, this is the case for the United States, where unemployment is stuck at around 9 percent, unemployment among 20-to-24-year-olds is a staggering 14.5 percent, and the related joblessness problems are becoming increasingly structural in nature.

There are, of course, several bespoke reasons for these developments. But together, they speak to major realignments that are fundamentally changing the character of the global economy and how it functions. Three things in particular have had a significant influence, and they will continue to shape the world we live in for years to come.

First, too many advanced economies face problems rooted far below the surface, in their balance sheets and in the structure of their economies. This is not just about the unemployment crisis and the rapidly deteriorating public finances that, in cases such as Greece’s, have reached alarming levels. It is also about malfunctioning housing markets, a continued breakdown in bank credit intermediation, and weak political leadership in the midst of messy party politics.

Second, rather than deal with these structural problems, policymakers have preferred to kick the can down the road. As a result, the problems have festered and become more entrenched, and the risk of adverse contagion has risen.

This is most obvious in Europe, where a liquidity approach — involving piling new debt on top of already crushing obligations — has repeatedly been applied to Greece’s debt solvency crisis. This has also transferred massive liabilities from the private sector to Greek and European taxpayers and contaminated previously healthy institutions such as the European Central Bank. It is also the case in the United States, where unprecedented stimulus spending has failed to sufficiently reignite growth and job creation.

Third, several emerging economies have hit their developmental breakout phase, largely undeterred until now by the misfortunes of the developed world. You see this in Brazil, China, Indonesia, and several other countries. In the process, they have gone from strength to strength, so much so that their economies have started overheating at a time when more established countries are languishing. This is new territory for the global marketplace, one in which the less mature countries are more robust and resilient than their advanced peers and are able to grow sustainably at high levels while also strengthening their balance sheets.

Absent a major policy mistake — a lurch toward protectionism, disorderly defaults, or disruptions to the international payment and settlement system, for instance — we should expect these global realignments to continue.

It will take several years for the advanced economies to fully rehabilitate their balance sheets and restore the conditions for high growth and employment creation. In the meantime, income and wealth distribution will become even more skewed, morphing from an economic issue into a sociopolitical one.

The combination of stretched balance sheets and disappointingly slow growth also means that the advanced countries will opt for a mix of approaches to deal with recurrent debt concerns as they continue to de-lever from the age of credit and debt-entitlement. Some, such as Britain, will rely primarily on years of budgetary austerity. Others, like Greece, will succumb to debt restructuring.

Then there is the United States, the economy that anchors the core of the global economic and financial systems. It will initially opt for financial repression — essentially a hidden taxation of creditors and depositors — and attempt higher inflation to address its balance sheet issues. With time, however, it will likely be forced into greater austerity amid noisy political posturing and bickering.

The messier this transition, the greater the risk of undermining the international standing of America’s global public goods. This in turn will challenge a global monetary system built on the assumption that its core — the United States — remains economically strong.

This is an important qualifier for what otherwise would be a far more encouraging outlook for much, though not all, of the emerging world. Look for these countries to continue to close the income and wealth gaps vis-à-vis the advanced countries. In the process, they will pull millions more out of poverty, providing them with greater economic opportunities and better access to education, health care, and nutrition.

As they continue to grow, emerging countries will push for greater accommodation on the part of a global economy that is still overdominated by the advanced economies. Global governance issues will come to the fore. International institutions will be pressured to reform more seriously. And multilateral negotiations will need to be more respectful of the growing strength of the emerging countries.

All this translates into an unusually fluid global economy — and a world in which many established parameters will instead become variables. The sooner we prepare for it, the greater the chance that we are beneficiaries of the transformations taking place, not their victims.

destruction of the human race one of several potential outcomes of contact with aliens

Research explores potential outcomes of contact with aliens | Reuters.

(Reuters) – Contact with extraterrestrials could be beneficial or might destroy the human race, according to an analysis of possible outcomes of an alien encounter that even one author of the study described as unlikely.

The scenarios are contained in a paper written by a trio of scientists dated in April and published in the journal Acta Astronautica that won media attention this week following an article published in a British newspaper.

The collection of possible outcomes, should earthlings meet beings from elsewhere, ranges from beneficial to harmful, according to the paper by Seth Baum, a doctoral candidate, and Jacob Haqq-Misra and Shawn Domagal-Goldman, both postdoctoral scholars.

Contact with extraterrestrials might lead to a discussion of math and science or helpful collaboration on solving serious issues like world hunger or poverty, the paper said.

In some of the more dire situations, the scientists said aliens could intentionally plan to eat or enslave people on earth.

Another possibility would be for extraterrestrials to destroy life on earth if they detected civilization was expanding too rapidly and could harm others. Evidence of humans destroying the environment could prompt such an attack.

Extraterrestrials could also harm earth through disease or by using technology, knowingly or unintentionally, they said.

The journal that published the study, Acta Astronautica, publishes articles on developments in space research. Baum is doing doctoral work at Pennsylvania State University, where Haqq-Misra is a post-doctoral research associate.

The other author, Domagal-Goldman, said in a blog post on Friday that while he believed contact with alien civilization was unlikely, researching the possibility was fun.

While there is still no detected form of extraterrestrial intelligence, the researchers said their review provided the groundwork for a more comprehensive plan to respond to alien contact should it ever occur.

(Reporting by Lauren Keiper, editing by Ellen Wulfhorst and Cynthia Johnston)