Archive for May, 2011

Mexico presses Carstens for IMF amid ‘uncertainty’

Tuesday, May 31st, 2011 | Finance News

MEXICO CITY (AFP) – Mexico said it would press the candidacy of its central banker Agustin Carstens for the post of IMF chief as it won the endorsement of Spain, but said the outlook for the key finance post remains uncertain.

Mexican Foreign Minister Patricia Espinosa appeared at a joint press conference with his Spanish counterpart Trinidad Jimenez, who noted that the eurozone country will support Carstens based on earlier commitments with other Latin American countries.

Espinosa said she had spoken with the foreign ministers of Brazil, Australia, Thailand, Peru, Paraguay and Uruguay, and hoped to talk soon with Japan.

The case of Carstens marks a major push for an emerging market chief of the International Monetary Fund after a long tradition of a European leader at the IMF, with a US national at the helm of the World Bank.

The moves come as the organization seeks to fill the managing director's post vacated by Dominique Strauss-Kahn after the Frenchman was arrested and charged with sexual assault in New York.

In Brazil, a source close to President Dilma Rousseff said Mexican President Felipe Calderon called Tuesday to support Carsten's candidacy.

The source said Brazil would wait for the full picture before endorsing a candidate.

Spain shares a seat at the International Monetary Fund with Mexico, Venezuela and four smaller Central American nations, Finance Minister Elena Salgado noted earlier in Madrid.

As a result of the alliance, if one of the countries sharing the seat presents a candidate, the others must vote for that person, she said, even if Spain represents 35 percent of the votes among those countries.

But "the position of Spain is that the French minister (Finance Minister Lagarde) is an excellent candidate and it is she whom we would like to see in the (IMF) post."

Carstens, 52, the governor of the Bank of Mexico and former Mexican finance minister, is a declared will face French Finance Minister Christine Lagarde, who has the backing of other large European countries.

Lagarde was in Brazil on Monday to press her candidacy.

Carstens is due in Brazil on Wednesday for a meeting with Brazilian Finance Minister Guido Mantega and a session Thursday with Brazil's central bank chief, Alexandre Tombini.

The IMF is due to publish a full list of candidates by June 17. The final selection is expected to be announced by June 30.

The executive board, whose members represent a country or a group of countries, is aiming to select the next chief by consensus, but could resort to a vote.


Lawmakers vote in debt ceiling ‘charade’

Tuesday, May 31st, 2011 | Finance News

WASHINGTON (AFP) – Lawmakers voted against raising the US borrowing cap without making cuts in spending, in a Republican ploy Democrats branded a "charade" unworthy of a vital economic issue.

The Treasury says that unless Congress votes to raise the $14.29 trillion debt ceiling by August 2, Washington could be forced to default on its obligations, in a move that would send shockwaves through the global economy.

Republicans, who won the House of Representatives last November amid a mood of steep anxiety over the ballooning size of government debt, will only back raising the debt limit in return for steep cuts in the deficit.

But they set up a vote on a bill they knew would lose -- on raising the debt ceiling by $2.4 trillion without a corresponding trim in spending -- to show they were serious about getting the budget shortfall under control.

The measure was voted down 318-97 --- with many Democrats siding with Republicans to avoid being branded as blocking austerity measures gloomy voters seem to favor after an era of out-of-control spending.

"Today, we are making clear that Republicans will not accept an increase in our nation's debt limit without substantial spending cuts and real budgetary reforms," said Dave Camp, a key Republican player in the budget debate.

The White House had initially argued for a "clean" vote on the debt limit without conditions.

But it later recognized that position was not politically sustainable, and has held several rounds of talks on Republicans on huge spending cuts.

But no deal has yet been reached, as markets seek clarity on an issue vital to US public finances and the wider global economy.

Most observers however feel that a deal will eventually be reached, since the fiscal consequences of failure are so great.

So Tuesday's vote could give Republican lawmakers cover to argue to their ultra-conservative base that any eventual vote to lift the ceiling secured slashing budget cuts.

Steny Hoyer, the number two House Democrat, had advised his caucus to vote against the Republican bill, saying that failure to do so could expose them to "demagoguery" in the looming 2012 campaign season.

He branded the vote a "political charade," adding: "if we were adults and acting as adults, we would come together and give certainty to the markets that of course America is going to pay its bills."

White House spokesman Jay Carney took pains to avoid being drawn into the political theater, saying the decision to vote was "fine."

He insisted that the White House was confident that talks between Vice President Joe Biden and top Republicans would eventually yield a deal to raise the debt ceiling, despite current political posturing.

"We believe very strongly the impact of not raising the debt ceiling would be calamitous," he said.

Both Obama and Republicans have agreed on a figure of roughly four trillion dollars in budget cuts that they say is vital to reining in the deficit in the long-term and putting the economy on a sustainable path to fiscal prudence.

But they are still sharply at odds about how to make the savings -- and will debate the scope of the cuts at a closed meeting at the White House Wednesday.

Republicans claim Obama is interested in preserving big government programs and wants tax increases which would harm the economy.

The White House says Republican budget plans would place the very survival of popular social programs like Medicare for the elderly at risk, and would also cut vital investments in clean energy and education.

On a day of political posturing, key Democratic Senators Barbara Boxer and Bob Casey called on Treasury Secretary Timothy Geithner to argue lawmakers should not be paid if Washington defaults on its debts.

"If we cannot do our jobs and protect the full faith and credit of the United States, we should not get paid," the senators said.

Democratic Senator Robert Menendez meanwhile joined 19 colleagues and called on Biden to end billions of dollars in subsidies to oil firms in any deal that would raise the debt ceiling or cut the deficit.


Assembly votes to extend film production tax break

Tuesday, May 31st, 2011 | Finance News

SACRAMENTO, Calif. – The state Assembly voted Tuesday to extend incentives for California's entertainment industry for five more years, approving up to $500 million in additional tax credits to help keep movie-making jobs in the state.

The California Film and Television Tax Credit Program enacted in 2009 has already helped keep some $2.2 billion in film and television production and 25,000 crew jobs in California, said Assemblyman Felipe Fuentes, a Sylmar Democrat, arguing for the extension.

The Assembly voted 72-1 to extend the program from 2014 to July 2019. The bill goes next to the state Senate.

Supporters said other states and nations have been stepping up their incentives to lure away film and television work.

California lost production jobs for years until the credit took effect, said Assemblyman Anthony Portantino, D-La Canada Flintridge, and it was carefully crafted for economic benefit to the state.

"You had to create the job here to get the credit," he said.

Democrats and Republicans both backed AB 1069 as a way to preserve California jobs, though some GOP lawmakers said other industries needed the help as much as Hollywood.

Only Assemblyman Chris Norby voted against the bill, saying the tax credits tilted the level playing field of business competition.

"This is about picking and choosing economic winners and losers," Norby said. "If you want to support Hollywood, go see a movie. I haven't seen one in a long time."

Los Angeles area legislators had pushed for a production tax credit for years without success until then-Gov. Arnold Schwarzenegger got behind the idea in 2008. His backing was pegged to a decision by the producers of the ABC Studios television series "Ugly Betty" to move production from Los Angeles to New York, costing about two-thirds of the 150 crew members their jobs on the $3 million-per-episode show.