NIPPON FALCONS LEAGUE

Our blog's intention is to request the US government to grant us a chance to defend our mother country Japan at the American court of law regarding the resolution "Comfort Women" passed July 30, 07.

安倍は、もっと円を下げる

Japan Export Slide Bolsters Abe’s Case for Driving Down Yen

By Andy Sharp - Jan 23, 2013 7:48 PM CT

Japan’s exports fell more than analysts forecast and the annual trade deficit swelled to a record, bolstering the case for Prime Minister Shinzo Abe to weaken the yen even as trade tensions mount.

Shipments dropped 5.8 percent in December from a year earlier, compared with a median estimate for a 4.2 percent decline in a Bloomberg News survey of 23 economists. The annual deficit was 6.93 trillion yen ($78 billion), the finance ministry said in Tokyo today.

Japan is mounting a defense of its currency policies ahead of a Group of 20 meeting next month, as officials from Germany to South Korea express concern at efforts to weaken the yen. In an interview in Tokyo yesterday, currency chief Takehiko Nakao said that the Bank of Japan (8301) is not undertaking a “competitive” devaluation and its aim is to end deflation.

“Foreign officials are becoming increasingly vocal over the possibility that Japan’s policy actions have the potential to prompt a currency war,” said Izumi Devalier, a Japan economist at HSBC Holdings Plc in Hong Kong. “I think the government will avoid taking the rhetoric too far.”

A yen that has weakened about 7 percent against the dollar in the past two months makes products relatively cheaper in export markets and boosts overseas income for Japanese companies such as Canon Inc. (7751) when repatriated. It also pushes up the cost of imports such as liquefied natural gas.

Yen’s Level

The currency pared gains after the trade figures were released, and was 0.1 percent higher at 88.52 per dollar at 10:32 a.m. in Tokyo. The Nikkei 225 Stock Average was 0.1 percent lower.

With imports rising 1.9 percent and exports falling for seven months, the nation’s trade shortfall in December was 641.5 billion yen, the sixth month in deficit. Imports of LNG rose 8.3 percent from a year earlier.

Japan’s export slide comes as Europe’s crisis drags on shipments and a diplomatic dispute with China over islands claimed by both nations hurts demand for products such as Toyota Motor Corp.’s cars.

Exports to China fell 15.8 percent from a year earlier, while those to the U.S. dropped 0.8 percent. Shipments to the European Union were 11.1 percent lower.

“These are bad numbers for the economy,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. and a former BOJ official. “The positive impact of the yen’s decline on exports has yet to be seen, but it is already boosting import values.”

Asset Purchases

The yen strengthened on Jan. 22 by the most since May after the Bank of Japan said it will adopt a 2 percent inflation target with no deadline and delay Federal Reserve-style open- ended asset purchases until January 2014.

Goldman Sachs Group Inc. and Societe Generale SA are predicting that Japan’s currency will resume declines as Abe presses for more easing. Goldman yesterday raised its growth forecast for the year beginning April 2013 to 2 percent from 1.2 percent and said it sees the yen at 100 per dollar by the end of 2015.

“Abe will try to push the yen down as far as he can, at least to 100-105 per dollar,” said Lee Sang Jae, a senior economist at Hyundai Securities Co. in Seoul. “Today’s export figures will reinforce his case.”

South Korean Finance Minister Bahk Jae Wan said in Seoul yesterday that his nation’s exporters may be “at risk” from Japanese policies.

The Japanese government yesterday raised its view of the economy for the first time in eight months after it unveiled a 10.3 trillion yen fiscal stimulus package this month
For Related News and Information:

To contact the reporter on this story: Andy Sharp in Tokyo at asharp5@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net
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北京のスモッグ

Beijing’s acting mayor said the city will take 180,000 old vehicles off the road and replace coal- burning heaters in 44,000 homes in a bid to cut air pollutants by 2 percent this year.

The capital will also promote clean-energy vehicles among government departments, the public, street cleaners and trash collectors, the Xinhua News Agency reported yesterday, citing top city official Wang Anshun. He spoke at the opening of the municipality’s legislative session.

The city had ordered government vehicles off the roads as part of an emergency response to record pollution that hit the city earlier this month. At 4 a.m. today, a sensor at the U.S. Embassy in Beijing showed that levels of PM2.5, the fine airborne particulates that pose the greatest health risks, had risen to 441. The World Health Organization recommends 24-hour exposure to PM2.5 levels no higher than 25.

The official Beijing government reading along a road near Tiananmen Square was 258 at 4 a.m., which it rates as “heavily polluted,” according to a city government Website.

Beijing also plans to reduce coal consumption by 1.4 million tonnes and emissions of volatile organic compounds by 8,000 tonnes, as well as closing some 450 heavily polluting plants, the Xinhua report added, citing municipal authorities it didn’t identify.

To contact Bloomberg News staff for this story: Daryl Loo in Beijing at dloo7@bloomberg.net
To contact the editors responsible for this story: Jason Gale at j.gale@bloomberg.net; Peter Hirschberg at phirschberg@bloomberg.net
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東南アジアが発展し、日中貿易は後退し、韓国は泣く

Japan’s Stimulus Seen Boosting Southeast Asia as Korea Suffers

By Karl Lester M. Yap - Jan 20, 2013 10:00 AM CT

Japan’s drive to revive growth may boost Southeast Asian nations as rising demand in the world’s No. 3 economy spurs orders and Japanese companies take advantage of cheap funding to invest in the region.

Indonesia, Thailand and Malaysia are identified by HSBC Holdings Plc and Credit Suisse Group AG to be among the biggest beneficiaries of Japanese monetary easing and a 10.3 trillion yen ($115 billion) stimulus plan by Prime Minister Shinzo Abe, who wrapped up a tour of Southeast Asia on Jan. 18. In contrast, South Korea may suffer as a weakening yen makes its rival’s automotive and electronics exports more competitive, say Credit Suisse and Australia & New Zealand Banking Group Ltd.

The wave of cheap funds “will drive Japanese companies and banks to raise investments and expand in Southeast Asia,” Frederic Neumann, co-head of Asian economics research at HSBC in Hong Kong, said in an interview. “This will spur asset prices, investment, consumption and could single handedly help these economies sustain high levels of growth in 2013.”

Abe is exerting pressure on the central bank to bolster an economy that has had three recessions in five years as he seeks to rejuvenate a nation whose investments helped spur Southeast Asia’s boom in the early 1990s. Lower borrowing costs at home may add momentum to plans by Japanese companies to expand overseas, with Toyota Motor Corp. announcing in November it will increase production in Indonesia.

The nation’s seventh prime minister in six years has called for “bold monetary policy” to defeat deflation and drive the yen lower. The Bank of Japan, which starts a two-day policy meeting today, will adopt the 2 percent inflation target advocated by Abe, doubling its current 1 percent goal, according to people familiar with central bank officials’ discussions.

’Compelling Investment’

The prospect of additional policy easing has helped send the yen down about 10 percent versus the dollar and push the Asia excluding Japan stocks gauge up 11 percent in the two months ended Jan. 18. It has also lifted prospects for Asian emerging-market bonds and currencies as investors seek higher returns.

“Not only is the U.S. implementing more quantitative easing, but Japan has joined the party,” said Jason Mortimer, a rates and options strategist at JPMorgan Chase & Co. in Hong Kong. “You’re going to have even more pressure on currencies to appreciate especially in emerging-market Asia where currencies are undervalued. This is a very compelling investment opportunity.”

Winners, Losers

Commodity exporters such as Indonesia and Malaysia are best positioned to benefit from stronger domestic demand in Japan, according to a Jan. 16 Credit Suisse report that analyzed each Asian economy’s exports to the country, excluding industrial supplies and machinery parts that are less likely to be destined for consumer demand.

“The winners would be countries which have Japan as both their ‘suppliers’ and ‘consumers’ while the losers would be those whose exports are similar to and compete with those from Japan,” Santitarn Sathirathai, a Singapore-based economist at Credit Suisse, wrote in the report.

A recovery in Japan would provide a further boost to a region where government spending and rising investment have helped support growth. The Asian Development Bank in December lifted forecasts for Southeast Asian expansion even as the global outlook faltered, after policy makers took steps to bolster their economies, with Malaysian Prime Minister Najib Razak increasing outlays and Philippine President Benigno Aquino speeding up infrastructure projects.

Importers Gain

Japan’s stimulus and a weaker currency may also bring risks. ANZ said a declining yen will hurt overseas suppliers as shipments become more expensive. Net exporters including Malaysia, the Philippines and Indonesia may suffer while net importers of Japanese goods such as Hong Kong, Thailand and Taiwan will probably gain, Eugenia Victorino, a Singapore-based economist at ANZ, wrote in a Jan. 10 report.

South Korea is most vulnerable to the currency effect, according to Credit Suisse, while Daiwa Capital Markets estimates the country’s technology companies, shipbuilders and automakers including Kia Motors Corp. (000270) may be among the biggest losers.

Gains in the won prompted South Korea’s central bank to announce in November it would tighten limits on currency forward positions at banks. The Bank of Korea this month lowered its growth forecast for 2013, highlighting obstacles to a rebound that include currency appreciation.

Japan’s dispute with China over the sovereignty of islands in the East China Sea has also helped shift Abe’s focus toward Southeast Asia and prompted companies to add investments elsewhere in the region.

Strengthen Ties

The prime minister, who took office last month, visited Vietnam, Thailand and Indonesia last week to strengthen bonds with countries in the region, some of which are also involved in territorial disputes with China.

Nissan Motor Co. (7201), Japan’s second-largest automaker, pledged in November to invest 11 billion baht ($370 million) in a second Thai factory. Toyota said the same month it will more than double vehicle production capacity and build a new engine factory in Indonesia.

Japan’s trade ties with Southeast Asia are growing as the dispute with China hurts sales to the mainland.

In the first 11 months of last year, shipments to the 10 members of the Association of Southeast Asian Nations, Japan’s third-largest export destination, accounted for 16.2 percent of all overseas sales, a rise of 1.3 percentage points from the full-year 2011, Japanese customs data show. The share of exports to China, Japan’s biggest market, fell to 18.1 percent from 19.7 percent over the same period.

To contact the reporter on this story: Karl Lester M. Yap in Manila at kyap5@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
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チャイナのデータは水増しされている

China Export Surge Spurs Data Skepticism at Goldman, UBS

By Bloomberg News - Jan 13, 2013 10:00 AM CT

China’s unexpected surge in exports last month renewed concern from analysts at Goldman Sachs Group Inc., UBS AG and Australia & New Zealand Banking Group Ltd. (ANZ) that statistics from the nation can be unreliable.

The 14.1 percent jump from a year earlier was the biggest positive surprise since March 2011, according to data compiled by Bloomberg. The increase didn’t match goods movements through ports and imports by trading partners according to UBS, while Goldman Sachs and Mizuho Securities Asia Ltd. cited a divergence from overseas orders in a manufacturing index.

Enlarge image
A worker walks near a bulk carrier cargo ship docked at an iron ore transfer and storage center operated by the Shanghai International Port Group in Shanghai, China. Photographer: Qilai Shen/Bloomberg

Smaller trade gains could signal a less robust recovery from a seven-quarter slowdown just as Australian Treasurer Wayne Swan says the economic rebound is a sign of improving global demand. Accurate statistics from the world’s second-biggest economy are increasingly important for domestic and foreign investors and for China’s government, ANZ’s Liu Li-Gang says.

“China’s influence on the global economy has become bigger, so not only Chinese policy makers but also business people and the rest of the world need better data,” said Liu, Hong Kong- based chief economist for Greater China, who formerly worked for the World Bank. “Unreliable data could have a negative impact on resource allocation and business planning.”

The Beijing-based customs administration, which reported the December trade figures on Jan. 10, said it couldn’t immediately respond to a faxed request from Bloomberg News for comment on the banks’ skepticism.

Economy Stabilizing

China’s economic growth may have recovered to 7.8 percent in the fourth quarter from a year earlier, after sliding to a three-year low of 7.4 percent in the previous period, according to the median estimate in a Bloomberg News survey ahead of the data release on Jan. 18.

Evidence that China’s economy “appears to be stabilizing” is “one cause of optimism” that global demand will improve this year, Swan said in his weekly economic note yesterday. China is Australia’s largest export market.

ANZ’s Liu and colleague Louis Lam published research last week that underscored doubts about the quality of China’s economic data. They found that quarterly GDP, industrial production, fixed-asset investment and inflation data published in percentage terms failed to conform to “Benford’s Law,” which holds that in any series of numbers certain patterns will be found only if the statistics are naturally generated.

Li Keqiang, who may succeed Wen Jiabao as premier in March, was quoted in 2007 as saying he watched figures on power, rail cargo and loans because gross domestic product numbers were “man-made.” Li’s remarks were in a U.S. diplomatic cable published by WikiLeaks in late 2010.

’Too Good’

After China’s statistics bureau reported third-quarter GDP in October, Standard Chartered Plc analysts said the 7.4 percent increase was “too good to be true” when compared with the slowdown in electricity production and the readings of a manufacturing index, while London-based Capital Economics Ltd. said its own analysis indicated expansion of about 6.5 percent.

The median forecast for December exports in a Bloomberg survey of 40 economists was for a 5 percent gain, with the highest estimate at 9.2 percent, after November’s 2.9 percent growth. Goldman Sachs, ranked by Bloomberg as the most accurate forecaster for the indicator, projected a 7 percent rise.

The increase, which was the biggest since May, could indicate exporters’ rush to finish year-end orders and government pressure to report exports before the end of the year to reach the government’s 2012 target of 10 percent growth, Shen Jianguang, Mizuho’s Hong Kong-based chief Asia economist, said in a Jan. 10 note.

Rushed Shipments

“It is possible that local governments may have tried to boost exports data by either making round trips in special trade zones” or by exporting “earlier than otherwise in an attempt to improve the annual exports data,” Goldman Sachs’ Beijing- based economists Yu Song and Yin Zhang wrote the same day.

Rushed shipments and even faked exports to secure tax refunds may have contributed to the stronger growth data, according to Alistair Thornton and Ren Xianfang, Beijing-based analysts at IHS Inc. (IHS)

UBS economists led by Hong Kong-based Wang Tao pointed to a “quite obvious discrepancy” in the growth of China’s exports to Taiwan and South Korea and those economies’ reported imports from China in recent months, even as historically they have tracked each other well.

Some trading companies are turning to transportation providers like Shenzhen Global Express Logistics Ltd. for help in shipping goods through so-called bonded zones to claim export tax rebates or charge higher import prices for goods without them physically leaving the country.

One-Day Tour

Shenzhen Global offers customs clearing and other freight services including a “one-day tour,” Lin Yongtai, a manager with the company in the city bordering Hong Kong, said in a telephone interview.

For a fee of 1,000 yuan ($161) per vehicle per day, the company will drive trucks into warehouses in bonded zones, where cargo must clear customs, so that businesses can obtain a refund of value-added tax on the “export” of their products or boost sale prices for goods that carry the cachet of being imported.

“A poor villager can boast he has thousands of yuan of turnover every day, but people later discover he only has one bull -- he takes the bull out every morning and brings it back every evening,” Lin said. “The same applies to some parts of China’s foreign trade.”

Such practices aren’t unknown to the customs administration. In March 2009 it issued a statement that “some local governments and enterprises” were trying to move goods in and out of bonded zones to inflate their export and import numbers and said such shipments would not be included in official data.

--Nerys Avery, Zhou Xin. Editors: Scott Lanman, Nerys Avery
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チャイナのデーターは疑わしい

China Data Suspected Says 75-Year-Old Theory: Cutting Research

By Simon Kennedy & Steve Matthews - Jan 10, 2013 6:54 PM CT


A mathematical tool devised by an American physicist in the 1930s underscores doubts about the quality and reliability of Chinese economic data, according to research by Australia & New Zealand Banking Group Ltd. (ANZ)

The results are based on “Benford’s Law,” which holds that in any series of numbers, certain patterns will be found only if the statistics are naturally generated. The rule, created by former General Electric Co. (GE) engineer Frank Benford, suggests patterns for the first and second digits in a numeric series and can be used to detect phony data, Li-Gang Liu, ANZ’s chief economist for Greater China, and colleague Louis Lam said in a Jan. 8 report.

Benford’s work has already been adapted to show Greece should have been suspected of manipulating its data before the European debt crisis and that now-jailed financier Bernard Madoff was overstating investment returns.

The ANZ economists studied China’s annual nominal gross domestic product data from 1952 to 2011 to measure how frequently numbers from one to nine appeared as the first digit. While the 24 occurrences of “one” is higher than the 18 suggested by the rule, the economists said the statistics largely abide by what Benford’s Law allows. The same is true of industrial production data.

Suspicions emerged when the data was probed more deeply and reported in percentage terms, the ANZ report said, adding that the guilty party was often the second digit. An examination of the quarterly GDP growth rate from December 1991 to September 2012 shows zero occurred as the second digit 21 times, much higher than what Benford would calculate and suggesting a rounding-up to achieve a bigger leading digit. One through four also appeared more regularly than the law reckons, while seven through nine featured less.

Inflation reported on a percentage basis also failed to fit the law.
“Non-conformity to the Benford’s law does not always indicate data manipulation, but nevertheless it raises doubts about the quality of Chinese data,” the authors said. “Our statistical analysis seems to have confirmed the long-rooted suspicion on quality and reliability of Chinese data.”

* * *

Central banks may need to allow a dilution of their independence during periods of economic stress.

That’s according to a paper titled “Helicopter Money: Or How I Stopped Worrying and Love Fiscal-Monetary Cooperation,” released this week by Paul McCulley, a former managing director at Pacific Investment Management Co. and Zoltan Pozsar from the Federal Reserve Bank of New York.

In a map of different economic situations that they call the “Global Macro Chessboard,” the authors show when companies and households are cutting back, monetary policy will flop if it’s aimed at boosting private demand for credit. The solution is to embrace fiscal stimulus and have the central bank communicate that such measures should be encouraged until the deleveraging finishes.

Signs of overlapping of fiscal and monetary policies have drawn criticism recently from central bankers including St. Louis Fed President James Bullard and Bundesbank President Jens Weidmann.

“The lesson here is that central bank independence is not a static state of being,” said McCulley and Pozsar in their report published by the Global Society of Fellows. “Rather, it is dynamic and highly circumstance dependent: during times of war, deflation and private deleveraging, fiscal policy will inevitably grow to dominate monetary policy.”

* * *

The rise of emerging markets is prompting economists to ask how long their growth spurts can last.

The answer is until per-capita income reaches $10,000 to $11,000 and, once growth resumes, about $15,000 to $16,000 as measured in 2005 dollars, according to three economists including Barry Eichengreen of the University of California, Berkeley.

In an update to a 2012 paper published this week by the Cambridge, Massachusetts-based National Bureau of Economic Research, the economists found countries tend to experience slowdowns at two different income levels.

The effort to quantify the current level of the so-called middle income trap -- where economic development tends to stall -- shows emerging economies often slow in several steps. They may be more at risk of weakening at lower levels of income than the previous research suggested, meaning more countries are vulnerable to the trap.

“Middle-income countries may find themselves slowing down at lower income levels than implied by our earlier estimates,” said Eichengreen, Kwanho Shin of Korea University and Donghyun Park of the Asian Development Bank.

Slowdowns are most likely in emerging markets with high old-age dependency ratios, strong investment rates and undervalued currencies that lower incentives to move up the technology ladder, the study said.

“These patterns will presumably remind readers of current conditions and recent policies in China,” it said. China’s per capita GDP was $7,129 in 2010.

Still, the study also finds China has slightly higher average years of secondary schooling than the median and a greater share of high-tech goods to exports, suggesting less risk of a slowdown.

“Countries accumulating high quality human capital and moving into the production of higher tech exports stand a better chance of avoiding the middle income trap,” Eichengreen and co- writers said.

* * *

Economies that suffer civil conflict can bear lingering scars through the risk that hostilities might break out again.

A paper published this month by the International Monetary Fund found that a one percent increase in the probability of conflict recurrence lowers real gross domestic product per capita by 10 percent over the next five years.

The report, by Serhan Cevik of the IMF and Mohammad Rahmati of University of Texas, calculated a postwar economy will record average economic growth of 1.5 percent per year over the subsequent five years, which they say is very weak.

Of the 94 countries studied between 1960 and 2010, 20 percent relapsed into fighting in the first year after a civil war and 40 percent within five years.

* * *

A finance minister’s career history may determine how fast a country’s debt falls.
A study of 15 European countries from 1980 to 2010 by Marc- Daniel Moessinger of the ZEW Center for European Economic Research in Mannheim, Germany found the longer time a finance chief spends in cabinet before taking the post, the smaller the rise in debt to gross domestic product on his or her watch.

“This implies that either budget deficits decrease or budget surpluses increase if the finance minister is a political heavyweight,” said Moessinger.

The likely reason is the traditional role of a finance chief in resisting the spending pressures of cabinet colleagues. A minister who has been on the other side of the discussion is more likely to have negotiating skills.

“A finance minister who was a national cabinet member before becoming minister of finance has shown his ability to survive in politics,” the report said. “This demonstrates decisiveness and self-assertion which then also reflects in his new position as minister of finance.”

* * *

John Taylor, the Stanford University economist who created a rule for guiding monetary policy given inflation and growth projections, says the Federal Reserve and other central banks may need to coordinate their movement away from record monetary stimulus.
Central banks from around the world have departed from policy guidelines such as the eponymous rule by holding rates at record lows and with bond purchases known as quantitative easing, Taylor said in a paper presented at the American Economic Association meeting in San Diego Jan. 5.

“An unusually low interest rate at one central bank puts pressures on central banks in other countries to also choose unusually low interest rates,” said Taylor, a U.S. Treasury official in President George W. Bush’s administration. “Many central banks will tend to resist large appreciations of their currency, and one way to do so is to cut their own policy rate.”

Taylor said there has been a “spillover” from the Fed’s low rates starting from 2003 to 2005, when the U.S. central bank kept rates “too low for too long.” That prompted other central banks to lower their rates more than they should have, he said.

“The adverse effects on economic performance suggest the need for international monetary rebalancing in which central banks return to a more balanced rules-based policy,” Taylor said. “International coordination might be quite useful in this rebalancing.”

One skeptic of coordination was Martin Feldstein, former president of the National Bureau of Economic Research, who previously served as chief economic adviser to President Ronald Reagan.

“As a general rule, attempts at policy coordination among countries have not succeeded,” Feldstein said, speaking on the same panel as Taylor. “Macroeconomic coordination only appears to work when it is clearly in the self-interest of each country taken individually to do what is good for the group as a whole.”

To contact the reporters on this story: Simon Kennedy in London at skennedy4@bloomberg.net Steve Matthews in Atlanta at smatthews@bloomberg.net
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財政の崖、一応落ち着いたが

The U.S. House passed a bill undoing income tax increases for more than 99 percent of households, giving a victory to President Barack Obama even as Republicans vowed to fight him in coming weeks for spending cuts in exchange for raising the debt ceiling.

“The deficit needs to be reduced in a way that’s balanced,” Obama said at the White House. He said he wants top earners and corporations to pay even more and that Congress must raise the debt ceiling. “Everyone pays their fair share. Everyone does their part,” he said.

The 257-167 vote just after 11 p.m. yesterday capped a tension-filled final push as Republicans balked at a bipartisan Senate bill. House Speaker John Boehner ordered a vote even though 151 of 236 Republicans, including Majority Leader Eric Cantor, ultimately voted no. Obama said he’d sign it into law.

“The deficit needs to be reduced in a way that’s balanced,” Obama said at the White House. He said top earners and corporations should pay even more and that Congress must raise the debt ceiling. “Everyone pays their fair share. Everyone does their part,” he said.

The final days of drama surrounding the so-called fiscal cliff of scheduled tax increases and spending cuts illustrated the partisan struggle that has made U.S. budget policy unpredictable and prone to crises as deadlines approach. Obama wielded the leverage he gained in his Nov. 6 re-election. Still, he fell short of reaching with Republicans a larger deficit- reduction grand bargain.

Debt Ceiling

Republicans immediately turned to their next battle -- a bid to use the need to raise the nation’s $16.4 trillion debt ceiling to force Obama to accept cuts in entitlement programs such as Medicare. Congress must act as early as mid-February to prevent a default and the dispute may reprise a similar 2011 episode that led to a downgrade of the U.S. credit rating.

“Without meaningful reform of entitlements, real spending controls, and a fairer, cleaner tax code, our debt will continue to grow, and our economy will continue to stumble,” Boehner said in a statement after the vote.

Obama said he’s “very open to compromise.” Medicare spending can be reduced, he said, yet “we can’t simply cut our way to prosperity.”

Futures on the Standard & Poor’s 500 Index expiring in March added 1.6 percent to 1,442.4 at 7:23 a.m. in New York. The equity benchmark surged 1.7 percent on Dec. 31, the biggest rally on the final day of a year since 1974, as Republican and Democratic lawmakers made last-minute concessions to finalize the deal. Dow Jones Industrial Average futures soared 168 points, or 1.3 percent, to 13,200 at 7:23 a.m. The benchmark 10- year yield for Treasury bonds rose seven basis points, or 0.07 percentage points, to 1.83 percent at 7:33 a.m. in New York.

Payroll Taxes

The largest economic impact of the budget accord will come from ending a two-percentage-point payroll tax cut, a move that will shrink paychecks for U.S. workers immediately even as most income tax cuts that expired Dec. 31 are being extended permanently.

The payroll cut’s lapse will pull more than $100 billion out of the economy in 2013 and is the primary reason why 77.1 percent of U.S. households will face higher taxes this year, according to the nonpartisan Tax Policy Center in Washington.

The Republican-controlled House yesterday almost unraveled a bipartisan agreement brokered over the waning days of 2012 by Vice President Joe Biden and Mitch McConnell of Kentucky, the Senate Republican leader. The Senate passed that bill 89-8 in the first hours of Jan. 1. In last night’s House vote, 85 Republicans and 172 Democrats voted for the measure, while 16 Democrats and 151 Republicans opposed it.

Tax Increases

Compared with continuing 2012 policies, the agreement would increase taxes by $620 billion over the next decade, according to the White House. The federal budget will be $4 trillion bigger than projected had all the scheduled tax boosts been retained.

Republicans claimed a victory because the bill ends the temporary nature of most of the tax cuts that President George W. Bush campaigned on in 2000 and were scheduled to lapse at the end of 2010 and then again in 2012.

“We’re making permanent tax policies Republicans originally crafted,” said Representative Dave Camp, a Michigan Republican and the chairman of the tax-writing Ways and Means Committee.

In addition to tax increases on top earners, the bill extends expanded unemployment benefits and continues refundable tax credits for low-income families and college students. It would also delay by two months automatic cuts scheduled to start this month, offsetting the $24 billion cost with a blend of additional revenue and spending reductions, half of which would come from defense.

‘More Spending’

“It’s unbelievable that what you see in there is more spending as opposed to less spending,” said Representative Rob Woodall, a Georgia Republican, about the Senate-passed bill.

Boehner put the bipartisan Senate compromise to an up-or- down vote last night after it became clear that he couldn’t add spending cuts with Republican votes alone, especially with fewer than two days before the new Congress is sworn in.

Yesterday’s episode demonstrated again the fractiousness of House Republicans, who passed bills in 2012 that would extend the expiring tax cuts for all income levels and replace the automatic spending cuts with other policies.

They eventually ceded control of the fiscal-cliff debate to the administration and the Senate. Boehner couldn’t reach an agreement with Obama, and he couldn’t get House Republicans to back a plan that set the threshold for tax increases at $1 million in income.

Priorities Ignored

Instead, at the last minute, he was forced to accept a deal that contained few of the Republican priorities he could have gotten by accepting what Obama was offering on Dec. 17.

Boehner’s recent difficulty in getting his members to follow his recommendations “all rolls off his back” because “he feels pretty confident about his leadership, about the strength of his leadership,” said Florida Republican Rich Nugent, a first-year House member.

Boehner isn’t “looking over his back and worried about it, at least he doesn’t exhibit that to us,” Nugent said.

Nor should Boehner be worried about challenges to his speakership, said Nugent, a former sheriff.

“Having been a chief executive, there’s always people who agree and disagree with your leadership,” he said.

The bill would reinstate tax cuts that expired Dec. 31 on taxable income of individuals up to $400,000 and of married couples of up to $450,000, leaving those top earners with a marginal tax rate of 39.6 percent, up from 35 percent last year.

Carried Interest

Those same households would pay higher tax rates on their dividends and capital gains, including private-equity managers’ carried-interest income. The top rate will go to 23.8 percent, including taxes from the 2010 health-care law that took effect yesterday.

Many households with incomes above $500,000 won’t face the higher rates at all, because deductions are subtracted from gross income before the rates are assessed.

Limits on itemized deductions and personal exemptions will also return, starting at $250,000 of income for individuals and $300,000 for married couples.

The deal would set the top estate-tax rate at 40 percent, splitting the difference between the parties’ positions. The per-person exemption will be more than $5 million and indexed for inflation.

Biggest Burden

The burden of higher taxes will fall hardest on the top 1 percent and particularly on the top 0.1 percent of taxpayers. Those making more than $2.7 million will pay an average of $443,910 more in 2013, or 26 percent of the additional burden, according to the Tax Policy Center. Households with income between $500,000 and $1 million will pay an average of $14,812 more.

Miscellaneous tax breaks will get extended through 2013, including the production tax credit for wind energy and the tax credit for corporate research.
The boundaries of the fiscal debate have shifted repeatedly since Congress began focusing on deficit reduction in 2010.

Lawmakers missed an opportunity to use the fiscal cliff they created to force themselves to act, said Alan Simpson and Erskine Bowles, the co-chairmen of Obama’s 2010 fiscal panel.

“Even after taking the country to the brink of economic disaster, Washington still could not forge a common-sense bipartisan consensus on a plan that stabilizes the debt,” they said in a statement.

Democrats Recover

What’s happening instead is deficit reduction achieved in fits and starts. Democrats see a multi-stage game where they lost badly in 2011 and have now recovered their footing to insist on pairing tax increases with spending cuts.

In 2011, using the debt ceiling as leverage, Republicans got Obama to agree to more than $1 trillion in spending cuts plus another $1.2 trillion still set to start this year.
A 2011 deficit-reduction supercommittee deadlocked, pushing the issue into the 2012 election. Democrats were able to prevail only after Obama won a second term campaigning on tax increases, while Democrats gained seats in the House and Senate.

Republicans, particularly in the House, want to insist on spending cuts at every turn. Although they failed in this round, they drove that argument in last year’s debt-ceiling fight, and they will replay it in the next few weeks.

The U.S. hit the debt limit Dec. 31 and the Treasury Department began employing so-called extraordinary measures to finance about $200 billion in deficits in 2013.

A debt limit increase will be needed as early as mid- February, according to the Congressional Budget Office, and the automatic spending cuts will start taking effect March 1.

Last night Obama said he won’t “have another debate with this Congress over whether or not they should pay the bills they’ve already racked up.”
Republicans want to replay their demand that debt limit increases be matched dollar-for-dollar with spending cuts.

Obama said he wants future deficit-reduction deals to feature a “balanced” approach that includes spending cuts and further tax increases.

To contact the reporters on this story: Richard Rubin in Washington at rrubin12@bloomberg.net; Roxana Tiron in Washington at rtiron@bloomberg.net; James Rowley in Washington at jarowley@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net
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伊勢平次郎

Author:伊勢平次郎
Author: Nobuyoshi Ozaki

A long forty six years have passed since I stepped on to American soil. I have had various odd jobs in the past until I recently retired. Examples include working with Steven Spielberg as assistant director in a film called "1941." I was supervisor and later became Public Relation representative for Toyota Group - USA. My last occupation was a Senior Research analyst working in Silicone Valley for a major news paper from Tokyo, Japan. My spouse, Christine is a flight attendant, traveling often to the Middle East and Africa. We have spent three quarters of our life together as world adventurers. This photo was taken in Argentina. We now live in swampy Louisiana.

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