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No finance limit forces Obama into fame game - Sydney Morning Herald
Illustration: Simon Letch
This morning, Australian time, the US President, Barack Obama, is due to attend a fund-raising dinner party at the New York home of movie stars Sarah Jessica Parker and Matthew Broderick. Co-hosted by the editor-in-chief of Vogue, Anna Wintour, the price of a ticket was a reported $80,000 a head. Not a good look for the President in the week the US Federal Reserve reported that average American wealth had plummeted to $77,300 in 2010 - down from $126,400 in 2007.
As the US economy is underperforming, unemployment is officially 8.2 per cent and confidence is, at best, wavering, this would not seem to be the time to be hanging out with high-wattage wealthy celebrities. But the President needs the money.
Obama and the now certain-to-be-anointed Republican candidate, Mitt Romney, have opted to not accept public financing for the 2012 presidential election campaign. Previously, candidates would raise money to boost their electoral fortunes before the party conventions, but after that would accept the benefits - and constraints - of public funding.
Now, after a Supreme Court decision that effectively deregulated campaign financing (undoing all those decades of hard work to reform what had arguably been a pretty corrupt system), the bar has been raised significantly.
More money is going to be needed. And there are now virtually no limits on how it is raised or spent.
This presidential election is, according to Obama's senior campaign strategist, David Axelrod, going ''to test the limits of what money can do in politics, because there's gonna be so much of it concentrated in so few states'', as he told New York magazine's John Heilemann earlier this month.
And Obama is now falling behind in the fund-raising stakes. Although at the end of March, when he had raised about US$197 million, he was way ahead of the then-frontrunner Republican contender Romney, who had just $87.5 million, the other Republicans have since coalesced behind Romney - and so have their donors.
Just this week, billionaire Nevada casino owner Sheldon Adelson, who had been backing Newt Gingrich, kicked in $10 million to Romney's Restore Our Future super-PAC (political action committee) and Forbes magazine reports he may well follow that with the $100 million he had promised Gingrich.
Last month, Romney raised $76.8 million to Obama's $60 million, and he is pulling ahead with the very wealthy.
Wall Street has spurned Obama, so far giving Romney $37.1 million and Obama only $4.8 million. Ominously, these sums include donations from 19 people who gave to Obama in 2008 but not this time. Forbes says 32 billionaires, or 8 per cent of their 400 rich list, have donated to Romney and more will follow.
So while Obama continues to pursue the grassroots online fund-raising that was so successful in 2008, for the really big bucks he is being forced to take his begging bowl to three different and potentially risky sources of funds: Hollywood, Silicon Valley and rich gays. No one in the know doubts that the President's decision to support gay marriage was made with an eye to the pink dollar. A few days after the decision, a Hollywood fund-raiser hosted by George Clooney and including high profile gay supporters, raised $15 million.
This strategy is risky because it requires Obama to be hanging out with the mega-rich at a time when his political message is directed to economically distressed Americans, who are striving to return to being middle class. It could easily backfire on him.
The now pretty much united Republicans are trying to portray Obama as more focused on fund-raising than on governing. Given he has done 160 events so far (compared with George Bush's 74 at this time in the 2004 race), including six in just six hours in Maryland last Tuesday, this will not be a hard case to make.
A few weeks ago it was unimaginable that America's first black president may be in danger of not winning a second term but that prospect is now causing apprehension and even panic among Democrats.
The failed recall of the Republican governor Scott Walker in the highly unionised and overwhelmingly Democratic state of Wisconsin is being seen as a huge wake-up call that the party cannot assume that it will win in the presidential election in November.
Consolidated polling is showing just a two-point difference between Obama and Romney. Even among the three key demographics Obama felt confident of holding - women, young people and Latinos - the numbers are starting to close.
If Romney chooses Latino Florida senator Marco Rubio as his running mate, as a straw poll among party conservatives advocated this week, they could be a formidable team able to make significant inroads into the much-needed Latino vote in states such as Florida and Arizona.
Obama shows no signs of improving his ticket would he ditch the Vice-President, Joe Biden, although refreshing his team would seem to be a no-brainer in a tight electoral race. If this is not the time to place the extremely popular Hillary Clinton on the ticket, when is?
Obama's team foolishly set the bar high by leaking their expectation that their guy would be the first in presidential election history to raise $US1 billion and that Priorities USA Action, his super-PAC, would rake in another $100 million. Instead, Obama is struggling to reach the revised target of $750 million and his PAC, according to New York magazine, has just an embarrassing $10 million.
So we will be seeing a lot more of Obama with movie stars and the super-rich in coming months. The only question is whether the money raised will be at the expense of his political credibility - and his electoral prospects.
Twitter: @SummersAnne
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Fed repaid on Bear and AIG rescue loans - Financial Times
June 15, 2012 12:24 am
FOREX-Rising Spanish and Italian yields pulls euro lower - Reuters
* Euro cuts gains as Spanish borrowing costs rise
* Italy sells three-year debt at 6-mth high of 5.3 pct
* Investors wary ahead of Greek election on Sunday
By Anirban Nag
LONDON, June 14 (Reuters) - The euro pared gains against the dollar on Thursday as Spanish and Italian bond yields surged, highlighting the risk of euro zone contagion ahead of Sunday's elections in Greece that could lead to the country being pushed out of the common currency.
The euro's outlook may stay bearish after benchmark 10-year Spanish government bond yields hitting 7 percent on Thursday - a level where fellow euro zone members such as Greece and Ireland had to seek international bailouts as it is seen as too expensive in the long term.
The aid deal put together for Spanish banks at the weekend has signally failed to calm the markets, with Italian three-year borrowing costs spiking to 5.30 percent at an auction on Thursday.
The common currency fell to a session low $1.2542 on trading platform EBS, turning lower on the day and off the day's high of $1.25894. It was last trading at $1.2565 with large option expiries cited at $1.2500 which could curtail losses for the time being.
"Spanish yields are creeping up, which clearly indicates that the bank bailout deal will not change anything and they are dragging Italian yields higher," said Stuart Frost, head of Absolute Returns and Currency at fund manager RWC Partners.
"For the euro/dollar, all this means it is on a slippery slope down."
Earlier, the common currency took Moody's downgrade of Spanish government debt to one notch above junk status in its stride.
Many analysts said the euro was likely to trade between $1.24 and $1.27 ahead of Sunday's Greek vote, with investors either reluctant to initiate fresh bearish bets or squaring positions given uncertainty over the election outcome.
Speculators have added to very large bearish bets against the euro in the past few weeks, leaving scope to the euro to stage a short-covering rally if parties supporting austerity and reforms in Greece win at the weekend.
Right now, it is too close to call and a victory for the far-left SYRIZA, which opposes the austerity measures on which Greece's bailout deals are based, would intensify fears of a potential euro zone break-up, and likely push the currency towards recent two-year lows around $1.2280.
A sharp rise in yields on German Bunds, viewed as the euro zone's safest asset, has also raised concerns that the cost of the debt crisis is growing for Germany, the bloc's paymaster. A further rise in German yields would weigh further on the euro, traders said.
SNB REITERATES FRANC CAP
The Swiss franc rose against the euro after the SNB said it was prepared to buy unlimited amounts to defend the 1.20 level. The euro fell to 1.2008 francs on trading platform EBS, from around 1.20196 before the announcement.
Traders said the SNB has been buying lots of euros in recent weeks, stepping up its defence of the cap ahead of the Greek election, which could fuel demand for the safe-haven franc. SNB President Thomas Jordan hinted that capital controls could be introduced if the situation in the euro zone deteriorates and puts more upward pressure on the franc.
"Clearly the SNB is trying to downplay the franc's attractiveness and buy more time. We expect further pressure on the euro/Swiss franc 'floor' in the coming days, especially considering the Greek elections," said Peter Rosenstreich, chief FX analyst at Swissquote Bank, in a note.
Against the yen, the euro eased 0.1 percent to 99.60 , off a session high of 100 yen, with Japanese exporters' bids lined up above that level. The dollar fetched 79.26 yen, off Monday's high of 79.92 yen with expectations of more easing by the Federal Reserve weighing on the greenback.
The New Zealand dollar was up 0.5 percent on the day at US$0.7778, paring gains from Wednesday, when it hit a one-month high of $0.7808.
The kiwi eased after the Reserve Bank of New Zealand said a weak economy and an uncertain global outlook meant rates need to stay at record lows. As expected, the RBNZ kept rates unchanged at 2.5 percent for a 10th straight meeting.
Debt crisis: years of Greek recession take their toll as election looms - Daily Telegraph
His struggle to make ends meet exemplifies the plight of Greeks mired in a fifth year of recession. Yesterday the official unemployment rate rose to a record 22.6 per cent in the first quarter. But the hungry civil servant's attitude towards the general election on Sunday also typifies the polarized nature of the national debate.
The race has boiled down to choice between a coalition led by either New Democracy, the conservative establishment party, or Syriza, an insurgent Leftist coalition.
Vangelis will support the latter, as he did in a May 6 vote, when Syriza stunned the whole of Europe by coming second and then confounded attempts to form a national unity government, so requiring Sunday's fresh election. New Democracy, however, led narrowly in the last public opinion polls before they closed on June 2 under Greek law. Private polling since has shown a similar trend.
The stakes could hardly be higher. The vote has been presented as a de facto referendum on Greece's membership of the euro because of the pledge by Alexis Tsipras, Syriza's 37-year-old leader, to revise the second memorandum of understanding between and international institutions and lenders, which contained the toughest austerity measures and brought riots to the capital's streets.
His demands include a three to five year moratorium on Greece's interest payments, a rapid recapitalisation of the country's banking system and a restoration of unemployment benefit and the minimum wage to pre-crisis levels - reforms that were required by the memorandum.
Though Mr Tsipras has given himself some wriggle room, by not committing to a unilateral cancellation of the agreement, his critics claim that his demands would be so inflammatory that Berlin and Brussels would soon give up on the Greeks. The next tranche of Greece's bailout funding would then be withheld, so hastening its exit from the euro.
Officially, Mr Tsipras is committed to staying in the currency, though the same cannot be said for all the members of his coalition. But his gamble is that German leaders are bluffing when they say that a Greek exit from the euro would be manageable.
Like many Greeks, he reckons that although his country is small enough to represent just two per cent of the eurozone's output, it is big enough to be the first domino that starts the collapse of the single currency.
He is hoping that supposed disillusion in Europe with austerity will work in his favour and loosen the creditors' grip on the Greek economy.
"Tsipras is trying to convince people that we can stay in the euro with him in charge," said Spiros Rizopoulos, head of Spin Communications, a consultancy in Athens. "But if he thinks Angela Merkel is going to back down – well, he can say that, but I can say I am Brad Pitt, but am I am not Brad Pitt."
Greek bank shares rose 19pc yesterday, bucking European trends on market talk that broadly pro-bailout parties are likely to prevail on Sunday.
But few people will vote with enthusiasm for New Democracy. Its 61-year-old leader Antonis Samaras is seen by many Greeks as part of the corrupt old guard responsible for what Wolfgang Schaeuble, the German finance minister, this week called "decades of economic mismanagement".
Though Mr Samaras says he wants to renegotiate the memorandum, his demands would be minor compared to those of his rival Mr Tsipras.
Neither however has presented a convincing vision for rebuilding Greece's sclerotic bureaucracy and lack of competitiveness.
Euro zone finance ministers to discuss outcome of Greek vote on Sunday - Reuters UK
BRUSSELS |
BRUSSELS (Reuters) - Euro zone finance ministers are scheduled to hold a teleconference on Sunday evening to discuss the outcome of Greek elections, two euro zone officials said on Thursday.
Greece holds a parliamentary election on Sunday and polls show that the leftist SYRIZA party, that rejects the terms of the euro zone bailout for Athens, is neck-and-neck with the pro-bailout New Democracy party.
If STRIZA won the election and Greece were to tear up the terms of the bailout, France and other euro zone countries have warned that Greece could face leaving the euro zone and returning to the drachma currency.
One euro zone official said that the main concern, if SYRIZA overwhelmingly won the election, was the risk of large capital outflows from Greece if depositors worry their savings in euros could later be frozen or converted into drachmas.
"It is not even about a bank run on Monday morning after the elections. People can now log on to internet banking and make transfers on Sunday evening as well," a third euro zone official said, explaining the rationale of the ministerial call.
If a SYRIZA victory sparked panic about a return of the drachma, the immediate action would come from the country's central bank, backed by the European Central Bank.
The Greek central bank has the ability to directly inject cash into the country's banks, if savers rush for their money, in the form of Emergency Liquidity Assistance, which although provided by the ECB, would be underwritten solely by Greece.
Top ECB officials and staff would also keep a close watch from Frankfurt and keep in touch with other euro zone central banks, in case there were signs that people in other countries such as Spain were starting to pull their cash from banks.
Among the euro zone contingency plans for a possible Greek exit from the euro are the suspension of the Schengen passport-free zone and imposing capital controls and limiting ATM withdrawals.
(Reporting By Jan Strupczewski in Brussels and Andreas Framke in Berlin, editing by Diana Abdallah)
Forex focus: European unity may lie ahead – but for how many? - Daily Telegraph
As HiFX’s Chris Towner says: “Germany is being forced into a corner where it is they who will need to start to give up if they would like Europe to become more unified. The Spanish finance minister is right to say that the battle for the euro will be waged in Spain, but it will be decided in Germany.”
Eurosceptics suspect Germany will use the crisis to usher in a United States of Europe.
“Is there a hidden German agenda? Probably not,” answers Charles Purdy of Smart Currency Exchange. “They have always thought and made clear that greater fiscal unity is a must for the euro – ensuring that each country adopts their fiscal discipline. Up to now the political will has been lacking but if the euro is to survive and the 'weaker’ countries are to benefit from Germany’s strong credit rating then fiscal union will be what Germany expects.”
World First’s chief economist Jeremy Cook believes greater unification will take decades, saying: “Fiscal union is the endgame for the eurozone – a United States of Europe that has centralised fiscal and monetary policy and leadership based from one location. This will take years to set up and will only follow a huge upheaval of the European political landscape.”
However, while the consensus view is that the eurozone will bind closer together, this doesn’t mean that all 17 members will remain in the club.
“It is becoming increasingly clear that some nations can’t remain in the eurozone,” says Richard Driver of Caxton FX. “A stronger eurozone with a fiscal union is the only way the eurozone can survive but this won’t come soon enough for Greece.”
Stephen Hughes of Currencies.co.uk is sceptical, saying, “As a growing number of voices call for greater fiscal union across the eurozone, it’s still by no means a given that this is an achievable path – don’t forget that even the German people have yet to ratify the fiscal compact.
“But, given the depth of the current euro crisis, we are likely to see a more accommodating stance from policymakers in the coming months. What is clear is that any move to greater unity will take time to implement, something Greece certainly doesn’t have. As for Spain, Portugal and Ireland, the jury’s out for them...”
Forex: GBP/USD trades higher and tests 1.5560 - FXStreet.com
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