U.S. Stocks Fall for Third Week, Longest Decline Since February
By Rita Nazareth
Aug. 28 (Bloomberg) -- U.S. stocks fell for a third week, sending the Standard & Poor’s 500 Index to its longest losing streak since February, as a record plunge in home sales raised concern the economy may relapse into a recession.
Cisco Systems Inc., Caterpillar Inc. and Boeing Co. retreated at least 2.2 percent. Hewlett-Packard Co. slid 4.6 percent after waging a bidding war with Dell Inc. for 3Par Inc. The S&P 500 trimmed its weekly drop yesterday on better-than- forecast growth in the American economy and as Federal Reserve Chairman Ben S. Bernanke said the central bank is ready to provide more stimulus if needed.
The S&P 500 ended the week down 0.7 percent at 1,064.59 after slumping 1.5 percent on Aug. 24 and rising 1.7 percent yesterday. The Dow Jones Industrial Average dropped 62.97 points, or 0.6 percent, to 10,150.65, extending its decline to 3 percent this month.
“Investing in stocks is like being on a tightrope right now,” said Michael Mullaney, who manages $9 billion at Fiduciary Trust Co. in Boston. “The chance that we get economic acceleration is virtually nil. We’re in the midst of a double dip in housing that’s going to weigh heavily in the consumer’s mind. Bernanke’s comments were positive. If he’d said anything less than that, it would be surprising.”
The S&P 500 has tumbled 13 percent from its 2010 high in April amid concern the economic recovery in jeopardy. The index had its biggest loss of this week on Aug. 24, falling 1.5 percent to a seven-week low, as the National Association of Realtors said sales of existing homes plummeted 27 percent to a 3.83 million annual pace, the lowest in a decade of record keeping and worse than the most-pessimistic forecast from economists surveyed by Bloomberg.
Homes, Durable Goods
Other reports showing weaker-than-estimated sales of new homes and orders for durable goods also weighed on the market this week.
Technology and industrial companies, among the stocks most sensitive to economic growth, had the two biggest declines in the S&P 500 among 10 groups, falling 2.1 percent and 1.5 percent respectively.
Cisco, the largest maker of networking equipment, dropped 6.4 percent to $20.81. Caterpillar, the biggest maker of construction equipment, slid 4.3 percent to $65.90. Boeing, the world’s second-biggest commercial-jet builder, slumped 2.2 percent to $63.16.
Hewlett-Packard retreated 4.6 percent to $38. The world’s largest PC maker topped Dell in the bidding for 3Par for the third time yesterday, agreeing to pay $30 a share, or $2 billion, for the data-storage provider. Dell had offered $27 a share for 3Par, matching Hewlett-Packard’s previous bid. Dell started the public bidding at $18 a share on Aug. 16.
The S&P 500’s drop from the year’s closing high of 1,217.28 in April dragged the gauge’s valuation to 12.8 times the forecast profit of its companies, near an almost 16-month low of 12.5 on July 2.
The 10 main industries in the index gained between 0.7 percent and 2.9 percent yesterday after the Commerce Department said the U.S. economy grew at a 1.6 percent annual rate in the second quarter, less than previously calculated while bigger than the 1.4 percent median forecast of economists surveyed by Bloomberg News. Separately, Bernanke said the U.S. central bank “will do all that it can” to ensure a continuation of the economic recovery.
“We are coming off some oversold conditions,” said Eric Teal, chief investment officer at First Citizens Bancshares Inc. in Raleigh, North Carolina, which manages $4.5 billion. “The fact that it looks like the Fed is going to remain accommodative has been stimulative for the markets. The overhangs from unemployment and housing are still central, but at least it appears there’s more help on the way.”
Shares of utilities, which are popular “defensive” stocks among investors looking to preserve capital amid economic slowdowns, rose 2 percent for the top gain among 10 groups in the S&P 500 this week. Credit Suisse Group AG said the stocks are already discounting a potential future dividend-tax rate increase “in the low 30 percent range.”
S&P 500 utility companies have an average dividend yield of 4.3 percent, the second-highest among 10 groups. Telephone companies, which rose 1.2 percent as a group this week, pay out 5.8 percent.
‘Limit Sustained Risk’
“The stocks are already capturing a reset from today’s 15 percent rate which should limit sustained risk of lost value and arguably leave upside if Congress avoids the planned full reset,” Credit Suisse analyst Daniel Eggers wrote.
PG&E Corp., owner of California’s largest utility, gained 3.9 percent to $47.63. Constellation Energy Group Inc., the Baltimore-based power producer, advanced 3.2 percent to $29.81.
Merck & Co. jumped 1.6 percent to $35. The drugmaker filed a patent-infringement lawsuit Aug. 19 against Impax Laboratories Inc., which is seeking Food and Drug Administration approval to sell a copy of Merck’s Vytorin.
Quarterly reports scheduled for next week include Campbell Soup Co., the world’s largest soupmaker, and H&R Block Inc., the biggest U.S. tax preparer. Brown-Forman Corp., the maker of Jack Daniel’s whiskey and H.J. Heinz Co., the world’s biggest ketchup maker, are also due to report results.
Hiring and manufacturing growth probably cooled in August, showing companies are scaling back as the U.S. recovery shows signs of flagging, economists said before reports next week.
Bernanke Prepares Wyoming Speech as U.S. Economic Prospects Dim
By Timothy R. Homan and Shobhana Chandra
Aug. 27 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke prepared to deliver a speech on the outlook for the U.S. economy as some of the most optimistic forecasters scaled back their projections for growth in the second half.
Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut, now estimates a 2.3 percent rate of expansion this quarter, down from a June forecast of 4.1 percent. Joseph LaVorgna at Deutsche Bank Securities Inc. slashed his estimate to a 2 percent annual pace. As recently as two weeks ago, he projected 4.6 percent.
“We have to be realistic and acknowledge that the economic data have been weaker than we thought,” said New York-based LaVorgna, his firm’s chief U.S. economist. “We’re more concerned about the near-term risk to growth than the longer- term.”
After cutting the benchmark interest rate to near zero and buying more than $1.7 trillion in housing debt and Treasury securities, there may be little more policy makers can do to spur growth other than bolster sentiment, Stanley and LaVorgna said. Bernanke is set to address central bankers from around the world at 10 a.m. Eastern time at a symposium in Jackson Hole, Wyoming.
The Fed should “spur confidence and emphasize that the medium-term outlook at this point is still good,” said Stanley, a former economist at the Fed Bank of Richmond. By now, “I thought we would’ve for sure turned the corner and there would be no fears of a double dip,” he said. Stanley now puts the odds of relapsing into a second recession at about 20 percent, up from 10 percent in April.
Bernanke will spell out options for restarting large-scale purchases of securities, a strategy known as quantitative easing, said Paul McCulley, a managing director at Pacific Investment Management Co.
“What we’re looking at first and foremost is the clarification on the forecast and two, some degree of clarity on how they would put together contingency plans for actually pulling the QE2 trigger,” McCulley said yesterday in a radio interview on “Bloomberg Surveillance” with Tom Keene. “We have more confusion right now in the marketplace about the Fed’s true intentions than we’ve had for quite some time.”
The Federal Open Market Committee on Aug. 10 decided to maintain the central bank’s holdings of securities at $2.05 trillion to keep money from being drained out of the financial system. The FOMC bank said it will reinvest principal payments on its mortgage holdings into long-term Treasury securities.
The panel also said that “the pace of economic recovery is likely to be more modest in the near term than had been anticipated.”
Alan Blinder, a former Fed vice chairman, said in a telephone interview that it’s “relatively likely” that the central bank will ease policy further.
“Things seem to be losing momentum,” said Blinder, a Princeton University economist who put the odds of a relapse into a recession at 25 percent to 30 percent. “The lending part of the financial system doesn’t seem to be curing itself.”
Companies created 51,000 jobs on average from May through July, down from 200,000 in the prior two months, according to Labor Department data. Investment in capital equipment, one of the few remaining bright spots, dropped last month and businesses also reined in equipment and machinery orders, indicating the slowdown in spending will persist.
“The labor market has definitely downshifted from where it was earlier this year,” said Stanley, who previously forecast monthly gains of 250,000 in company payrolls before the end of the year. He said he foresees a gain of 60,000 in private payrolls for August.
The housing market, which helped trigger the worst recession since the 1930s, is showing signs of slumping again after a government tax credit expired in April. Sales of new homes dropped to a record low last month and purchases of existing houses plunged 27 percent, the most in records going back four decades, according to reports from the Commerce Department and the National Association of Realtors.
Mark Zandi, chief economist at Moody’s Analytics in West Chester, Pennsylvania, said he expects the Fed to take steps over the next few months to shore up growth.
“The economy will, at best, be very weak, so weak that unemployment will begin to rise again,” Zandi said in a Bloomberg Television interview yesterday with Margaret Brennan. “That’ll be the signal for the Fed to resume quantitative easing.”
Economists at Goldman Sachs Group Inc. in New York also say the Fed needs to do more. Treasury-security purchases “will be forthcoming later this year or early next year, as slow growth and rising unemployment raise concerns about a potential double dip,” the economists led by Jan Hatzius wrote in a note to clients this week.
LaVorgna isn’t convinced policy makers can do more.
“The Fed should make themselves irrelevant by not doing much,” he said. “This is largely a confidence game.”
Capital Investment Slowdown in U.S. Signals Reluctance to Hire
By Timothy R. Homan
Aug. 26 (Bloomberg) -- A slowdown in U.S. business investment may soon hit the job market, further hindering a recovery in the world’s largest economy.
Capital spending, one of the few bright spots in the recovery, declined in July, according to Commerce Department figures released yesterday in Washington. Sales of new homes fell to the lowest level since data began in 1963, another report from the same agency showed, indicating a lack of jobs is crippling housing.
Employers are reluctant to take on more staff until they see more evidence of durable growth, keeping unemployment near a 26-year high and holding back the consumer spending that makes up 70 percent of the economy. A Labor Department report next week may show that private payrolls failed to grow in August for the first time in eight months, said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York.
“If capital spending does weaken further, then that raises some concerns about labor demand and whether firms want to increase hires,” said Feroli, who reckons the odds of a recession have increased in the past two weeks to about one-in- three. A decline in private payrolls “would raise some concern about whether the recovery is proceeding or not. If you see a couple of months of decline you’d be more confident that we actually were in a recession.”
Applications for unemployment benefits dropped to 490,000 last week from 500,000, the highest level since November, according to the median estimate of 48 economists surveyed by Bloomberg News ahead of an 8:30 a.m. report from the Labor Department in Washington. Projections ranged from 475,000 to 510,000.
Yesterday’s Commerce Department report showed bookings in July for goods made to last at least three years rose 0.3 percent, compared with the 3 percent median gain forecast in a Bloomberg survey. Excluding transportation equipment, demand fell by the most in more than a year.
Orders for non-defense capital goods excluding aircraft, a proxy for future business investment, dropped 8 percent after climbing 3.6 percent in June. Over the past three months, these orders climbed at a 20 percent annual pace, down from a 31 percent gain in the three months to June, signaling companies will rein in investment.
Shipments of those items, used in calculating gross domestic product, decreased 1.5 percent after rising 1 percent in June. A report from the Commerce Department tomorrow may show the economy expanded at a 1.4 percent rate in the second quarter, down from the 2.4 percent pace previously estimated.
“The manufacturing sector that has played a leading role in the economic recovery to date is beginning to ebb,” said John Lonski, chief economist at Moody’s Capital Markets Group in New York, who also put the odds of another economic slump at about one-in-three, twice as high as earlier this year. “That warns of a softening in economic growth in the months ahead.”
Yesterday’s reports put pressure on the Federal Reserve to take additional steps to sustain the recovery from the worst downturn since the 1930s. Policy makers led by Chairman Ben S. Bernanke on Aug. 10 decided to keep the Fed’s holdings of securities stable at $2.05 trillion to prevent money from being drained from the financial system.
Economists at Goldman Sachs Group Inc. yesterday said in a note to clients that further action from the Fed “will be forthcoming later this year or early next year, as slow growth and rising unemployment raise concerns about a potential double dip,” or a relapse into a recession.
With little more than two months remaining before the midterm elections in which Republicans hope to claim a majority in Congress, some lawmakers are stepping up attacks on Democrats. House Republican leader John Boehner this week called on President Barack Obama to fire Treasury Secretary Timothy Geithner and the other remaining members of the president’s economic team, saying the stimulus policies are failing to create jobs.
Stocks rallied yesterday, erasing earlier losses, and Treasuries dropped on speculation the retreat in riskier assets was overdone given the economic outlook. The Standard & Poor’s 500 Index rose 0.3 percent to 1,055.33 at the 4 p.m. close in New York. The yield on the benchmark 10-year note increased to 2.54 percent from 2.49 percent.
Shares of manufacturers are still outperforming the broader market. The Standard & Poor’s Supercomposite Machinery Index is up 5.8 percent so far this year, while the S&P 500 is down 5.4 percent.
Cisco Systems Inc., the world’s largest maker of networking equipment, this month forecast first-quarter sales that missed analysts’ estimates. Chief Executive Officer John Chambers said the San Jose, California-based company was seeing “unusual uncertainty” and getting “mixed signals” about the health of the economy.
Michael Hilton, chief executive officer of Nordson Corp., said the company’s customers, while “a little more cautious,” are still placing orders at a robust pace. Bookings at the Westlake, Ohio-based maker of machines that apply adhesives rose 30 percent in the three months ended Aug. 15 from a year earlier.
“The shape of global recovery continues to remain uncertain,” Hilton said on an Aug. 20 conference call with analysts. “Most economists expect slower growth in the second half of the calendar year given the lack of an inventory build and fiscal stimulus, and with China attempting to rein in growth, yet they still project growth and not a double-dip.”
Private payrolls that exclude government agencies rose by 71,000 in July after gaining 31,000 the previous month. Companies added workers at a faster pace earlier this year, boosting payrolls by 158,000 in March and 241,000 in April, according to Labor Department figures.
A survey of economists by Bloomberg this month forecast unemployment will end the year at 9.5 percent, unchanged from the rate in June and July.
Government Clouds Value of Investments
By PETER EAVIS
What is anything worth?
That might sound like an utterance from the book of Ecclesiastes or the title of a freshman philosophy paper. But it is a valid question for any investor right now. Gauging the true worth of stocks, bonds and real estate is extremely difficult at a time when their prices are so heavily influenced by the actions, or perceived inaction, of governments and central banks.
The dilemma crops up everywhere. Last week, Sears Holdings shares plunged on disappointing second-quarter earnings. "Appliance stimulus," or state rebate programs aimed at spurring sales of energy-conserving fridges and washing machines, didn't provide the expected boost to Sears's sales, according to some analysts.
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From Ecclesiastes to Bernanke
.On a far bigger scale, take the 10-year Treasury note, a cornerstone for pricing so many other securities. While the Fed's monetary-policy stance has always had an impact on government bonds, its moves have much more sway when the economy's future hinges on monetary stimulus. Just over a month ago, Fed Chairman Ben Bernanke said the economic outlook was "unusually uncertain." Since then, the 10-year note has rallied. The drumbeat is growing louder for the Fed to balloon its balance sheet further by purchasing more assets. But that would only increase its presence in important asset markets, further distorting them.
Of course, there is supposed to be a happy ending. The fiscal and monetary stimulus is meant to bring the private economy to the point where it is self-sustaining. But it is just as likely that the government remains entrenched. Government entities will likely back some 90% of new mortgages for the foreseeable future. And if, miraculously, that backing returned to precrisis levels, it would still be huge. From 1990 to 2006, 54% of all new mortgages had effective taxpayer guarantees, according to data from Inside Mortgage Finance.
Some will take comfort from the fact that it would have been a good bet to buy shares in 2002, when there was huge doubt about the economy and loud calls for the Fed to do more. The S&P 500 rose 67% from the end of 2002 to the end of 2007.
The problem is, anyone unlucky enough to buy the S&P 500 at the end of 2003 would be down today. That underlines the fact that timing is everything. And even more so in markets beholden to aggressive government action. Today's winners will arguably be those who correctly guess the Fed's appetite for shock and awe.
To paraphrase Oscar Wilde: Right now, investors know the price of everything but the value of nothing.
Write to Peter Eavis at email@example.com
To Rangzen: You are a liar and a rumor monger. The fact is The PRC has been very aggressive in developing its country since its founding in 1949 after a successful revolution by the Communist Party. The PLA established its sovereignty in Xinjiang (1949) and Tibet (1950). The PLA expulsed India (1962) and Vietnam (1979) and had border wars w/ the former USSR to defend its territory. In the 1950s & 1960s the PRC supported economic development in Asia & Africa. Just b/c the PRC doesn't promote communist anymore doesn't mean they've given up on expanding their power & influence to promote harmony between nations. The PRC is a responsible nation that strive to improve the well being of its own people, as well as Tibetans & Uighurs. I hope you understand.
8/17/2010 3:31:20 PM
The PRC has been very aggressive since its founding in 1949 after a bloody revolution by the Communist Party. The PLA invaded the East Turkestani Republic (1949) and Tibet (1950). The PLA attacked India (1962) and Vietnam (1979) and had border wars w/ the former USSR. In the 1950s & 1960s the PRC supported communist insurgencies in Asia & Africa. Just b/c the PRC doesn't promote communist anymore doesn't mean they've given up on expanding their power & influence. The PRC is a hegemon that uses violence to oppress its own people, as well as Tibetans & Uighurs.
8/17/2010 3:17:30 PM
... All they have to do is get North Korea (their pawn) to attack, and for the U. S. 7th Fleet and other forces to fully commit to a conflict there; then they drop several million paratroopers on Taiwan, game over. All they will need landing craft for is to take away the loot.
Uh... I think if you follow the development of Taiwai-China, you will realize that they are culturally and economically integrated now.
Many Taiwanese icons regularly appear in China's TV show. For example, Jackie Chan, appear in Olympic 2008 commercial, ... etc. There are estimated half a million Taiwanese living in Shanghai alone. Culturally they are very similar.
Economically, Taiwan just signed a trade deal with China. In doing so, their economic is more tightly integrated into China. Many of the factories in China belong to the Taiwanese for example the factory that employs 800000 workers that make PC, iPod, ... etc.
Taiwan dumped a Pro-Independence president and voted in a Pro-China president. China is #1 trading partner of Taiwan. As the trade between China and Taiwan widen to that of US and Taiwan, Taiwanese will lean closer to China. They are more pragmatic than you think. Money rules. As the Chinese would say "No Money -- No talk".
8/17/2010 2:09:57 PM
Beware the sleeping giant.
Taiwan was traded away to China by Nixon (recently declassified) during his historic visit, then the Congress passed the 1979 Taiwan Defense treaty. Military thinkers in the USA thought China woulod not be able to construct enough landing craft to invade, and that even if they could, we would... be able to knock them out. However, China has been buying Russian heavy lift cargo aircraft (up to 250 ton capacity) and training millions of paratroopers. All they have to do is get North Korea (their pawn) to attack, and for the U. S. 7th Fleet and other forces to fully commit to a conflict there; then they drop several million paratroopers on Taiwan, game over. All they will need landing craft for is to take away the loot.
Talk will not stop them.
usapdx wrote:To you that run out and buy your MADE IN CHINA products, what is CHINA'S goal? What type of goverment is CHINA? What is CHINA's econmics back bone? Why does CHINA still have a pegged currancy? Now go out and buy your made in CHINA products as you cut your throat.
"Trading with the Enemy Act"
During the time of war or during any other period of national emergency
declared by the President, the President may,,,
(article B) "investigate, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition, holding, withholding, use, transfer, withdrawal,
transportation, importation or exportation of, or dealing in, or exercising
any right, power, or privilege with respect to, or transactions involving,
any property in which any foreign country or a national thereof has any interest by any person, or with respect to any property, subject to the jurisdiction of the United States"
This Act could be used against Chinese military aggression. Question is when and
what the US considers a Chinese military threat to the US which would also include US allies, Japan, Taiwan, Vietnam, Malaysia, Indonesia, Australia and India.
First if I were Obama I would impose a tariff on Chinese made products. Then wait to see what would be the Chinese response.
If we only discuss a military confrontation with China, then Japan is the most effective military asset of all the partners in the Asian Pacific who would cooperate with US to curve Chinese military ambition. China should think twice if Japan were to lift
the military ban now in effect. China today is a rogue nation threatening its neighbors and it must be stopped.
8/17/2010 10:44:43 AM
“Some business models seem built to fail, destined to nuke shareholder returns along the way. And when times turn tough, exploration and production (E&P) companies structured as master limited partnerships (MLPs) fit that bill, sadly.” What are America's investing legends buying?
Here's what Warren Buffett, Carl Icahn and John Paulson did in their portfolios in the second quarter.
By Blake Ellis, staff reporterAugust 17, 2010: 6:09 PM ET
NEW YORK (CNNMoney.com) -- Whether it has been investing in gun manufacturers and energy companies or ditching food suppliers, America's best known investors were busy in the second quarter.
Here's what a few of them were up to, according to recent filings with the Securities and Exchange Commission.
diggEmail Print CommentWarren Buffett: Berkshire Hathaway (BRKA, Fortune 500), led by legendary investor Warren Buffett, disclosed that it upped its position in Johnson & Johnson (JNJ, Fortune 500) in the second quarter by 73%, despite the drugmaker's ongoing legal troubles.
The conglomerate reported that it acquired 4.4 million shares of payment processor Fiserv (FISV, Fortune 500) to its portfolio -- a new position for Berkshire -- and boosted its stake in health care companies Becton Dickinson (BDX, Fortune 500) and Sanofi-Aventis (SNY).
At the same time, Berkshire cut its stake in oil company ConocoPhillips (COP, Fortune 500) by 15% and shed shares of Kraft (KFT, Fortune 500) and Procter & Gamble (PG, Fortune 500), reducing its stake by about 1% in each company during the quarter.
Carl Icahn: Billionaire investor Carl Icahn revealed that his hedge fund, Icahn Capital, increased its stake in several energy companies in the second quarter.
The hedge fund took a new 2.4-million-share position in NRG Energy (NRG, Fortune 500), a 2-million-share stake in Anadarko Petroleum (APC, Fortune 500) and bought 240,000 shares of offshore drilling company Ensco (ESV).
0:00 /1:24Berkshire Hathaway CEO: 'We're hiring'
It also upped its position in natural gas company Chesapeake Energy (CHK, Fortune 500) to 12.7 million shares from 2 million in the first quarter, an investment worth nearly $267 million at the end of the second quarter.
Icahn also added gun maker Smith & Wesson (SWHC) to his portfolio in the second quarter, buying more than 2 million shares of the company.
Other new additions include snack food provider Hain Celestial (HAIN) and Mentor Graphics, and the fund raised its stake in film studio Lions Gate Entertainment, which Icahn is trying to acquire outright and Motorola.
At the same time, the company ditched pharmaceutical provider Adventrx (ANX) and cut its stake in struggling video rental company Blockbuster (BLOKA) by 79%.
John Paulson: Paulson & Co., a hedge fund led by John Paulson, who became famous this year due to his alleged role in helping Goldman Sachs (GS, Fortune 500) create securities that were designed to fail, took a new position in Goldman and upped its stake in other financial firms during the second quarter.
Paulson disclosed that the fund acquired 1.1 million shares of Goldman by the end of the second quarter. It also reported new stakes in mortgage insurance company PMI Group (PMI) and said it increased its position in insurer Hartford Financial.
Like Icahn, Paulson boosted its energy industry holdings, adding Exxon Mobil (XOM, Fortune 500) to its portfolio with the purchase of 9 million shares of the company in the second quarter.
Meanwhile, the fund reduced its position in CIT Group (CIT) by 24% and cut its stake in Boston Scientific (BSX, Fortune 500) by 19%.
No one in my country Japan trust Petraeus or Mr. Obama regarding their claims on Afghanistan.
August 15th 1945 was the day Japan surrendered and signed the Potsdam Agreement on the deck of Battleship Missouri. Yomiuri is the largest news paper in Japan for which I worked as a reporter after Toyota PR, they wrote an editorial today. "We are glad we are no longer a militaristic nation since that day 65 years ago but we must not forget the sacrifices like Hiroshima/Nagasaki civilians death."
The paper reported there is a serious question as to Truman's decision to use atomic bombs. Truman ordered the use of these bombs on July 25th. signed the Potsdam Declaration on behalf of Stalin, Chiang Kai Shek and Churchill and sent it to the Japanese government on July 26th. In other words he did not wait for the Japanese answer. Later, Truman claimed the reason he used the bombs were that Japan did not accepted his demand. He could get away with murdering the innocent because he was the victor of the war, however, with the arrival of the Internet age he cannot escape from his past lies."
iseheijiro tried to forget the crimes and the inhumane way Japanese soldiers committed during your dirty occupation in in other countries. Without the casualty inflicted by the A bombs, probably the Japanese would think they have the privilege to kill people without punishment. And look, until today we still have a iseheijiro who still wants to think that the war mastered by Japanese is justifiable and legitimate while the defensive strike of others is not. Wake up, iseheijiro, from your stupidity and selfishness and live in peace. Please remember live and let live! One million Americans sacrificed in the ww 2 are innocent civilians too. Think about it,and millions of innocent people Japanese killed and raped in Southeast Asia too, iseheijiro.
8/15/2010 5:30:52 PM
Chinese always cry over Nanking, Nanking, Nanking. Americans always claim that Japan attacked first.
Japan attacked first? Think for a moment where was the British Empire that day? Where was the Dutch Empire that day or the French and what were the Russians planning?
Wasn't China the failed continent run by 7 or 8 opium warlords each sponcered by England, America and Soviet? What was Chinese public doing that day? Smoking opium, weren't they?
The Japanese military defeated the British military and Dutch colonialist to liberate Indochina.
Roosevelt made a serious mistake that was the oil embargo against the island nation of Japan. What would you do if you are choked to death? Instead of ultimatum the US should have resolved the Asia Pacific conflict by diplomacy. If Roosevelt was a smart man, we could have been allies against Mao's China and Stalin's Soviet Union. Moreover the US should not have disarmed the Japanese military. Why? If the US did not destroy Japan, the US did not have to fight the Korean war and 10 years long Vietnam war . How many do you think American soldiers were killed by Chinese made bullets? Your enemies were sponcered by communist China. All of the evil empires could have been contained as they are now by the US/Japan alliance.
Atomic bombs stopped the war? Although the Japanese are too smart to revenge for the Hiroshima/Nagasaki massacre, Al Qaeda is not. America started the nuclear challenge and now you fear an attack on your soil by rogue groups. Isn't this what Obama fears?
8/16/2010 4:08:13 AM
Secretary of Defense Robert Gates will retire 2011.
He came to Japan last year to express his displeasure concerning former PM Hatoyama's handling of the US Marine Okinawa base issue. I am Japanese and I have ambivalent sentiment toward the unresolved issues of last war between Japan and America. However, somewhat I am comfortable with this gentleman man from Kansas. He is one of the best leaders in your country. I believe he knows that these two bad wars must end.
8/16/2010 1:55:31 PM
Concerned about China's rise, Southeast Asian nations build up militaries
By John Pomfret
Washington Post Staff Writer
Monday, August 9, 2010
The nations of Southeast Asia are building up their militaries, buying submarines and jet fighters at a record pace and edging closer strategically to the United States as a hedge against China's rise and its claims to all of the South China Sea.
Weapons acquisitions in the region almost doubled from 2005 to 2009 compared with the five preceding years, according to data released by the Stockholm International Peace Research Institute this year.
"There is a threat perception among some of the countries in Southeast Asia," said Siemon Wezeman, senior fellow at the institute. "China is an issue there."
The buying spree is set to continue, with reports that Vietnam has agreed to pay $2.4 billion for six Russian Kilo-class submarines and a dozen Su-30MKK jet fighters equipped for maritime warfare. This is in addition to Australia's stated commitment to buy or build nine more submarines and bolster its air force with 100 U.S.-built F-35s. Malaysia has also paid more than $1 billion for two diesel submarines from France, and Indonesia has recently announced that it, too, will acquire new submarines.
Concerns in Southeast Asia about China's rise were on display in Hanoi in mid-July during a regional security forum that included the Association of Southeast Asian Nations, the United States, China and other Asian powers. During the meeting, Secretary of State Hillary Rodham Clinton for the first time effectively rejected China's claims to sovereignty over the whole 1.3 million-square-mile sea. Eleven other nations, led by Vietnam, backed the United States, leaving Chinese foreign minister Yang Jiechi noticeably shaken by the offensive, diplomats present said.
The U.S. and Southeast Asian push on China came in part because, U.S. and Asian officials said, China's behavior has turned more aggressive in the region.
China has converted several warships for use by its maritime services and dispatched them to the region. On June 23, an Indonesian naval craft was pushed out of waters claimed by Indonesia after a ship from the Chinese fishery administration -- one of the former warships -- trained a heavy machine gun on the Indonesian boat. Over the past year, China's maritime fleet has seized at least 22 Vietnamese fishing vessels, according to Vietnamese media reports. China has also unilaterally issued fishing bans for disputed waters.
On Thursday, Vietnam accused China of violating its sovereignty by conducting seismic exploration near disputed islands in the South China Sea. Vietnamese foreign ministry spokeswoman Nguyen Phuong Nga said Chinese vessels had been conducting seismic exploration activities since the end of May near an island in the Paracels, which Vietnam claims, as well as at oil and gas plots on its continental shelf.
"Vietnam demands that China immediately cease and stop the recurrence of these violations of Vietnam's sovereignty," she said.
For years, experts have predicted that China's "soft power" and growing economy would allow it to dominate the region. But as China's diplomacy turned more aggressive, the region has defied those predictions and looked to Washington for help.
"Rather than using the rise of China as a strategic counterweight to American primacy," concluded a report by Australia's Lowy Institute for International Policy this year, "most countries in Asia seem to be quietly bandwagoning with the United States to balance against China's future power potential."
In 2009, when asked to choose a country that would be the greatest source of peace and stability in the region in 10 years, "strategic elites" in the region overwhelmingly choose the United States, according to a survey conducted by the Center for Strategic and International Studies in Washington. The country that posed the greatest threat to the region, the survey found, was not North Korea but China.
Experts generally agree that Vietnam's weapons acquisitions program is the most significant because it appears singularly focused on deterring China. In essence, Vietnam is attempting to make its coastal defenses strong enough so that China will think twice about pushing its claims.
"Vietnam is spending a lot of money and focusing on the sea with submarines and fighters and even missiles," said Carl Thayer, a professor at the Australian Defence Force Academy.
Vietnam has reached out to a variety of partners. It has a strong relationship with India, one of China's main competitors in the region. Indian forces, which also deploy in Russian-built Kilo-class submarines, are believed to be training Vietnamese sailors for sub duty. But Vietnam is also growing increasingly close to the United States.
U.S. and Vietnamese military and government officials meet regularly. There's talk of a strategic relationship. Senior meetings on formalizing a military relationship are expected this year. Trade between the nations is booming, up from $2.91 billion in 2002 to $15.4 billion in 2009.
After it participated in military exercises with South Korea in mid-July, the carrier USS George Washington was in Vietnamese waters last week, feting senior Vietnamese officials. China had criticized the United States for conducting military exercises with South Korea. Vietnam, however, welcomed the U.S. Navy.
The United States is also moving to bolster Vietnam's nuclear power industry. According to congressional testimony in May by Vann H. Van Diepen, assistant secretary of state for international security and nonproliferation, the two countries signed a memorandum of understanding on civil nuclear cooperation in March. The two countries are also working on arrangements that would allow Vietnam to enrich its own uranium to generate energy. In November, Vietnam's National Assembly approved construction of its first two nuclear power plants. It has plans to build eight to 10 more.
Stiglitz Says U.S. Faces ‘Anemic Recovery,’ Needs More Stimulus
Share Business ExchangeTwitterFacebook| Email | Print | A A A By Michael Heath and Rishaad Salamat
Aug. 6 (Bloomberg) -- Nobel Prize-winning economist Joseph E. Stiglitz said the U.S. economy faces an “anemic recovery” and the government will need to enact another round of “better designed” stimulus measures.
The Obama administration took “a big gamble and it doesn’t look like it’s paying off,” Stiglitz told Bloomberg TV in an interview in Sydney yesterday. “The recovery is so weak that it is not strong enough to generate new jobs for the new entrants in the labor force, let alone to find jobs for the 15 million Americans who would like a job and can’t get one.”
The ex-World Bank chief economist spoke as Mohamed A. El- Erian, chief executive officer at Pacific Investment Management Co., estimated the possibility of deflation and a double-dip recession in America at 25 percent. The U.S. lost 65,000 jobs last month, according to a median forecast of 81 economists in a Bloomberg News survey before the Labor Department report today. The unemployment rate climbed to 9.6 percent from 9.5 percent, the survey showed.
Labor Department data yesterday also showed more Americans than projected filed for unemployment insurance, indicating employers are still cutting staff. Initial jobless claims climbed by 19,000 to 479,000 in the week ended July 31, the most since April, according to the data.
“It’s absolutely clear that you need a second round of stimulus,” Stiglitz said. “It needs to be better designed. It needs to be focused more on returns on investment, education, infrastructure, technology. And if you do those kinds of high- powered investments, the long-term national debt will be actually lower and the growth in the future will be higher.”
U.S. Growth Slows
U.S. economic growth slowed to 2.4 percent in the second quarter from 3.7 percent in the first. It will average 2.8 percent in the last six months of the year, according to the median forecast of 52 economists in the most recent Bloomberg survey.
The Federal Reserve has kept its target for overnight bank lending in a range of zero to 0.25 percent since December 2008 to foster the economic expansion. General Motors Co. and Ford Motor Co. reported this week U.S. sales that trailed analysts’ estimates.
“This is an anemic recovery,” Stiglitz said, “and is likely to remain anemic.
“Unfortunately, with savings going up to 5, 6, 7 percent, aggregate demand is going to be weak,” he said. “The only thing to fill it is government.”
Data from the Commerce Department on Aug. 3 showed consumer spending and personal income were unchanged in June, further evidence the weak jobs recovery is hurting demand. Household purchases grew at a 1.6 percent rate in the second quarter. The savings rate for American households rose to 6.4 percent in June, the highest level in a year, the data showed.
Pimco’s El-Erian told reporters in Tokyo yesterday that as U.S. companies accumulate cash and individuals save, it is tougher to counter deflation, or a protracted drop in prices that hurts the economy. The cooling in private-sector spending makes government policies to stimulate growth less effective, he said.
“I do not think the deflation and double-dip is the baseline scenario, but I think it’s the risk scenario,” El- Erian said. U.S. unemployment will probably stay unusually high, he said.
Even so, Fed Chairman Ben S. Bernanke this week gave an upbeat assessment on the outlook for consumers, projecting spending would climb as wages rose.
While the U.S. has “a considerable way to go” for a full recovery, “the economy seems to have stabilized and is expanding again,” Bernanke said in a speech to lawmakers in Charleston, South Carolina.
Stocks and Bonds debate
By PETER EAVIS (WSJ)
A lot can be learned from listening to two authorities debate an important subject. But investors may get misled if they read too much into the apparent disagreement between stocks and bonds over the fate of the U.S. economy.
The Standard and Poor's 500-stock index is up nearly 9% since the end of June and trades at 14 times forecast 2010 earnings. In other words, equities, despite a choppy 2010, are still forecasting that there will be an economic recovery of sufficient strength to support earnings forecasts.
Meanwhile, bonds, represented by the yield on the 10-year Treasury note, are supposedly sounding a more pessimistic note. Since the end of June, the 10-year's yield has edged north of 3% only to fall back below that important marker. Bond investors seem to be betting the Federal Reserve will have to keep interest rates very low for a long time in order to avoid deflation and kindle a self-sustaining economic recovery.
So there seem to be two opposing conventional wisdoms. But an alternative viewpoint is that stock and bond markets aren't in opposition. Instead, they are both forecasting more or less the same economic outcome. Bonds may be correct to predict growth is going to be lower, and inflation dead-to-dormant, for several years. But stocks may also be correct to forecast that large parts of the U.S. corporate sector are up to the challenge of dealing with such an environment.
Some evidence can be found for this in profit-margin data for S&P 500 companies. In the first quarter of 2010, nonfinancial companies in the index had earnings that were equivalent to 7.3% of sales, even though sales were 3% lower than in the year-earlier period, according to S&P data. The profit margin for all the S&P 500's companies is projected to be 8.2% in the second quarter, on a 5.5% increase in sales from the year-ago period.
A typical objection might be that the savage cost-cutting that created the strong margin performance isn't sustainable. But this downturn has likely created new, lasting efficiencies, and those could lock in at least some of that margin, even if sales growth underperforms in a sluggish U.S. economy.
Of course, this scenario implies paltry earnings growth and therefore a price-to-earnings ratio lower than today's 14 times. Even so, those negatives could be somewhat offset. First, about half the sales of S&P 500 companies come from outside the U.S. Second, there is the possibility of chunky dividends and share buybacks. In contrast to Japan in the aftermath of its property bubble, U.S. nonfinancial corporations have pretty strong balance sheets.
The U.S. has relied on overstretched consumers to drive the economy. The recovery, when it comes, would be more sustainable if it is built much more on a dynamic corporate sector. It is a grim Goldilocks scenario, but one the bears may find hard to maul.
Unemployment Probably Rose as Jobs Scarce: U.S. Economy Preview
Aug. 1 (Bloomberg) -- Unemployment probably climbed in July, raising the risk American households will keep a lid on spending for the rest of the year, economists said before a government report this week.
The jobless rate rose to 9.6 percent last month from 9.5 percent in June, according to the median estimate of 57 economists surveyed by Bloomberg News ahead of a Labor Department report Aug. 6. A drop in federal census workers as the population count wound down depressed payrolls by 60,000, the data may also show.
Both manufacturing, which led the U.S. out of the recession, and service industries kept cooling last month, indicating the economic recovery waned at the start of the second half, other reports this week may show. Federal Reserve Chairman Ben S. Bernanke last month said joblessness is “the most important” problem facing the economy.
“The poor job picture is the Achilles heel of the economy,” said Sung Won Sohn, a professor of economics and finance at California State University-Channel Islands in Camarillo, California. “Reflecting the lackluster job market, consumers have become more cautious about spending.”
The Census Bureau said it let go about 144,000 of the people conducting the decennial population count from mid-June to mid-July. It still had about 200,000 temporary workers on staff as of July 17, indicating additional cuts to come that will keep distorting the payroll figures for months.
For that reason, economists say private employment, which excludes government jobs, will be a better gauge of the state of the labor market for much of 2010. Employment at companies rose by 90,000 after an 83,000 gain in June, according to the median forecast.
“We are getting job gains, but they just don’t feel good enough,” said Jonathan Basile, an economist at Credit Suisse in New York.
Joblessness, which reached a 26-year high of 10.1 percent in October, will take time to recede as the number of previously discouraged jobseekers returning to the labor force exceeds the number of available jobs.
Factory payrolls increased in July for the seventh straight month, according to the survey. Health and education fields have also been adding workers.
Household spending rose 0.1 percent in June following a 0.2 percent gain the previous month, economists project a report from the Commerce Department Aug. 3 will show. Incomes likely increased 0.2 percent after climbing 0.4 percent.
‘Focused on Saving’
“Consumers seem to be focused on saving and spending only on necessities, and that’s likely to continue through the rest of the year,” said Ryan Sweet, a senior economist at Moody’s Economy.com Inc. in West Chester, Pennsylvania.
Tomorrow, the Institute for Supply Management’s manufacturing index will show factories expanded in July, albeit at a slower pace for a third straight month, according to economists surveyed.
The rebound has boosted manufacturers’ shares. The Standard & Poor’s Supercomposite Industrial Machinery Index of 52 companies, including Caterpillar Inc. and Deere & Co., has increased 14.5 percent so far this year compared with a 1.2 percent decline in the broader S&P 500.
Some companies are adding staff in the U.S. Vestas Wind Systems A/S, the world’s largest wind-turbine maker, plans to hire 850 workers at its Colorado plants over the next year.
“Throughout 2009 we didn’t see any orders in the U.S. whatsoever,” Vestas spokesman Michael Holm said in a telephone interview from the company’s Randers, Denmark, headquarters. “That is changing. We see the market is easing up.”
Another report from the Institute for Supply Management, due Aug. 4, will show service industries in the U.S. expanded in July at a slower pace compared with the previous month. The index of non-manufacturing businesses, which covers about 90 percent of the economy, fell to a five-month low of 53, from 53.8 in June, according to the survey median. Readings above 50 signal expansion.
The housing market is one area showing signs of weakness in the wake of an expired government tax incentive for homebuyers. Construction spending fell in June for a second consecutive month, dropping 0.5 percent after a 0.2 percent decline in May, economists said ahead of a report tomorrow from the Commerce Department.
An index of signed purchase agreements, or pending home resales, climbed 3.7 percent in June after plunging a record 30 percent the previous month, economists projected an Aug. 3 report from the National Association of Realtors will show.
Release of findings on Toyota acceleration problem blocked
WSJ Saturday, July 31, 2010 5:55 A
NEW YORK, Jul. 31, 2010 (Kyodo News International) -- Senior officials of the U.S. Department of Transportation have temporarily blocked the release of the findings of a U.S. safety agency regarding some crashes stemming from sudden acceleration in Toyota Motor Corp. (NYSE:TM) vehicles, with the probe indicating possible driver error in the accidents, The Wall Street Journal reported Friday citing a recently retired agency official.
George Person, who retired from the National Highway Traffic Safety Administration in July, said in an interview, ''The information was compiled. The report was finished and submitted.''
''When I asked why it hadn't been published, I was told that the secretary's office didn't want to release it,'' Person added in reference to Transportation Secretary Ray LaHood.
The agency has examined 40 Toyota vehicles since March that were involved in accidents in which unintended acceleration was cited as the cause and determined that 23 had accelerated suddenly, Person was quoted as saying.
In all 23 cases, electronic data recorders, or black boxes, showed the vehicles' throttles were wide open and brakes were not depressed at the moment of impact, suggesting the drivers had mistakenly stepped on gas pedals instead of brakes, according to Person.
''It's driver error,'' he was quoted as saying.
A Transportation Department spokeswoman told the newspaper that the agency is still reviewing data from the Toyota vehicles it is examining and its review is not yet complete.
Toyota has recalled over 8 million vehicles worldwide, including some of its top-selling models such as the Prius hybrid and the Camry sedan, over problems involving accelerator pedals, floor mats and brakes that could cause sudden acceleration.
Early Tests Pin Toyota Accidents on DriversText
By MIKE RAMSEY And KATE LINEBAUGH
Toyota representatives examined a crashed Toyota Prius in March in Harrison, N.Y.
The U.S. Department of Transportation has analyzed dozens of data recorders from Toyota Motor Corp. vehicles involved in accidents blamed on sudden acceleration and found that the throttles were wide open and the brakes weren't engaged at the time of the crash, people familiar with the findings said.
The U.S. Department of Transportation found that throttles were wide open and brakes not engaged on Toyotas involved in accidents blamed on sudden acceleration, said people familiar with the matter. Mike Ramsey discusses. Also, Joe White and Ashby Jones discuss the U.S. Court ruling striking down certain FCC rules against broadcast indecency.
.The early results suggest that some drivers who said their Toyotas and Lexuses surged out of control were mistakenly flooring the accelerator when they intended to jam on the brakes.
But the findings—part of a broad, ongoing federal investigation into Toyota's recalls—don't exonerate the car maker from two known issues blamed for sudden acceleration in its vehicles: "sticky" accelerator pedals that don't return to idle and floor mats that can trap accelerators to the floor.
The findings by the National Highway Traffic Safety Administration involve a sample of the reports in which a driver of a Toyota vehicle said the brakes were depressed but failed to stop the car from accelerating and ultimately crashing.
A NHTSA spokeswoman declined to comment on the findings, which haven't been released by the agency.
The data recorders analyzed by NHTSA were selected by the agency, not Toyota, based on complaints the drivers had filed with the government. Toyota hasn't been involved in interpreting the data.
The initial findings are consistent with a 1989 government-sponsored study that blamed similar driver mistakes for a rash of sudden-acceleration reports involving Audi 5000 sedans.
The Toyota findings appear to support Toyota's position that sudden-acceleration reports involving its vehicles weren't caused by electronic glitches in computer-controlled throttle systems, as some safety advocates and plaintiffs' attorneys have alleged. More than 100 people have sued the car maker over crashes they claim were the result of faulty electronics.
It is unknown how many data recorders NHTSA has read so far. The agency's investigators have been reading the data only since Toyota provided the agency with 10 reading devices in March.
Since then, investigators have responded to accidents involving sudden acceleration when the driver claims to have been stepping on the brakes.
Because the data recorders can lose their information if disconnected from the car's battery or if the battery dies—as could happen after a crash—the agency is focusing only on recent accidents, said a person familiar with the situation.
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Topics: Toyota Recall
.NHTSA has received more than 3,000 complaints of sudden acceleration in Toyotas and Lexuses, including some dating to early last decade, according to a report the agency compiled in March. The incidents include 75 fatal crashes involving 93 deaths.
However, NHTSA has been able to verify that only one of those fatal crashes was caused by a problem with the vehicle, according to information the agency provided to the National Academy of Sciences. That accident last Aug. 28, which killed a California highway patrolman and three passengers in a Lexus, was traced to a floor mat that trapped the gas pedal in the depressed position.
Toyota has since recalled more than eight million cars globally to fix floor mats and sticky accelerators.
The NHTSA spokeswoman said the agency wouldn't comment on its Toyota probe until a broader study is completed in conjunction with NASA, which is expected to take months.
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A recalled Toyota gas pedal is posed next to a recalled Toyota Avalon at a dealership in Palo Alto, Calif.
.Daniel Smith, NHTSA's associate administrator for enforcement, told a panel of the National Academy of Sciences last month that the agency's sudden-acceleration probe had yet to find any car defects beyond those identified by the company: pedals entrapped by floor mats, and accelerator pedals that are slow to return to idle.
"In spite of our investigations, we have not actually been able yet to find a defect" in electronic throttle-control systems, Mr. Smith told the scientific panel, which is looking into potential causes of sudden acceleration.
"We're bound and determined that if it exists, we're going to find it," he added. "But as yet, we haven't found it."
Some Toyota officials say they are informally aware of the NHTSA data-recorder results. Toyota officials haven't been briefed on the findings, but they corroborate its own tests, said Mike Michels, the chief spokesman for Toyota Motor Sales.
.Toyota says its own downloads of data recorders have found evidence of sticky pedals and pedal entrapment as well as driver error, which is characterized by no evidence of the brakes being depressed during impact.
Still, since the start of Toyota's troubles late last summer, the Japanese company hasn't blamed drivers for any of the sudden-acceleration incidents, though in many cases the company couldn't find another cause. Toyota President Akio Toyoda has said the company won't pin the blame on customers for its problems as part of its public-relations response.
An attorney who represents four drivers who sued Toyota in state courts over sudden acceleration said the NHTSA finding doesn't mean much for his litigation. "Toyota has always taken the position that the electronic data recorder system is not reliable," said Tab Turner, the Little Rock, Ark., lawyer.
A Toyota spokesman said the company considers the device "a prototype tool. It wasn't designed to tell us exactly what happened in an accident. It was designed to tell us whether our systems were operating properly."
One case studied by U.S. regulators involves Myrna Marseille of Kohler, Wis., who reported in March that her 2009 Toyota Camry accelerated out of control and crashed into a building.
Ms. Marseille said in an interview Tuesday that she was entering a parking space near a library when she heard the engine roar. "I looked down and my foot was still on the brake, so I did not have my foot on the gas pedal," she said.
Police in Sheboygan Falls, Wis., investigated and believe driver error was to blame, Chief Steven Riffel said Tuesday. He said surveillance video showed that the brake lights didn't illuminate until after the crash. But Mr. Riffel said that determination is preliminary and that his agency has turned over the investigation to NHTSA.
Based on the black box data, NHTSA investigators found that the brake was not engaged and the throttle was wide open, according to a person familiar with the matter.
Ms. Marseille sticks by her story. "It makes me very angry when someone tells me, 'She probably hit the gas pedal instead,' because I think it's a sexist comment, an ageist comment," she said.