The United States Postal Service Warns of Default
The United States Postal Service has a history as long as the nation's. The Second Continental Congress appointed Benjamin Franklin as the first Postmaster General in seventeen seventy-five.
This week, current Postmaster General Patrick Donahoe brought an urgent message to a Senate committee. He told the Committee on Homeland Security and Governmental Affairs that the Post Office could need more money by the end of the month.
PATRICK DONAHOE: \the Postal Service will default on a mandated 5.5 billion dollar payment to the Treasury to pre-fund retirement retiree health benefits. Our situation is urgent.\
The Postal Service had losses of almost six billion dollars for the nine-month period ending in June. That could grow to ten billion for the year. Part of the deficit is a five and a half billion dollar payment to the federal retirement plan for postal workers.
Mister Donahoe is asking Congress to approve huge changes to the Postal Service. He wants to cut over one hundred thousand workers, close thousands of post offices and end Saturday mail delivery. He says the service needs to operate more like a business.
PATRICK DONAHOE: \revenues, the Postal Service requires the ability to operate more as a business does.\The Postal Service is responsible for its own financing and not part of the federal budget. But it does take part in federal retirement and health plans. It says it has paid too much to federal retirement plans and wants at least seven billion dollars returned.
Mister Donahoe also wants to pull the Postal Service out of the federal benefit plans. He says the service's proposals could cut twenty billion dollars by twenty fifteen and return it to profitability.
John Berry is director of the federal Office of Personnel Management which supervises federal retirement and health plans. He said the Obama administration would soon announce its own plan.
At the hearing, Senator Susan Collins criticized the administration for not having a plan already. Leaders of two labor unions representing postal workers have also criticized the proposed cuts.
The United States Postal Service has over five hundred sixty thousand employees. It reported revenue of sixty-seven billion dollars last year -- more than either of its biggest private competitors, FedEx or UPS. But as the amount of physical mail decreases, so too have the earnings from Postal Service operations.
Committee member Joseph Lieberman noted the need for change.
French Foreign Minister to Pressure Beijing on Yuan
JOSEPH LIEBERMAN: \Century national asset. But times are changing rapidly now, and so too must the Postal Service if it is to survive.\
French Foreign Minister Alain Juppe says China's currency is undervalued, and he will press Beijing on the yuan during a three-day visit beginning Monday.
Juppe told reporters in Australia Sunday that a strong yuan would help bolster the euro, which is in danger of collapsing under the massive debt incurred by weaker members of the European Union.
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During his stay in China, Juppe will meet with his Chinese counterpart Foreign Minister Yang Jiechi and other Chinese leaders.
Beijing has long maintained strict controls on its currency, prompting criticism from the United States and other nations that it artificially holds down its value in order to give Chinese exporters a trade advantage.
President Obama Outlines 450 Billion Jobs Plan
U.S. President Barack Obama has urged lawmakers to pass a nearly $450 billion job creation plan combining tax cuts with government spending.
President Obama outlined the American Jobs Act in a speech before a joint session of Congress late Thursday. He said the United States is in a national crisis and called for immediate action to revive the economy and improve people’s lives.
During the televised address, Mr. Obama called for an end to partisan politics, describing it as a political circus, and urged lawmakers to take steps to help the economy.
Mr. Obama said his proposal would cut taxes for workers and businesses and lead to new jobs for construction workers, teachers and other Americans. The bill includes initiatives to put people to work repairing and modernizing roads, railways, airports, waterways and at least 35,000 schools.
The president said it also offers tax credits to companies that hire long-term unemployed workers and cuts payroll taxes in half for every working American and every small business. Recent figures showed job creation at a standstill, as concerns grow over the possibility of a second recession.
US Falls, China Gains in Competitive Economies List
Switzerland is still the world's most competitive economy, but China and other emerging countries are gaining ground, according to a study published Wednesday by the World Economic Forum.
The WEF says Switzerland benefits from good infrastructure and financial markets, and transparent government.
The United States fell to fifth place in the rankings, while China moved up slightly to 26th place. The WEF report says advanced economies have not grown stronger in the race for profit and prosperity for the past 7 years, while major emerging nations have made gains. The report抯 authors say the U.S. economy is extremely productive, has good universities, strong innovation, and a flexible workforce. But they also note high levels of public debt and low levels of trust in political leaders.
The rankings are based on publicly available economic data along with a survey of more than 14,000 business leaders in 142 economies.
Swiss Central Bank Takes Steps to Protect Exporters Interest
Switzerland is moving to protect its exporters hurt by Europe's financial crisis, putting a cap on the franc's exchange rate against the euro.
With world stock markets experiencing huge swings in value on an almost daily basis, some investors have turned to gold and purchase of the Swiss currency as safe havens from the market turmoil. That in turn has made the franc more valuable, and the country's exports more costly on world markets.
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But the Swiss central bank said Tuesday it would no longer allow the euro to trade below 1.2 francs, aiming for what it called a \currency.
Investors continued to sell stocks on most world exchanges after Monday's steep losses. European stocks were down in afternoon trading, and some Asian markets continued their slide, driven by fears of slowing growth in the United States and the sovereign debt crisis in Europe.
Japan's closely watched Nikkei index closed down by 2.2 percent, at its lowest level since April 2009, while similar losses were recorded elsewhere in Asia, except in Hong Kong, where stocks rose. Export-oriented manufacturers suffered some of the heaviest losses.
Gold rose to an all-time high at more than $1,919 an ounce before settling back. A flight to U.S. Treasury bonds drove yields to their lowest level in more than 60 years.
Tuesday's stock trading followed losses Monday of around 3 percent in major Asian markets and more than 4 percent in European financial capitals. Analysts blamed the European losses in part on concerns about Greece's ability to meet its debt obligations and the viability of the region's common currency, the euro.
In Singapore, Finance Minister Tharman Shanmugaratnam was quoted saying a new global recession is now more likely than not. However, World Bank President Robert Zoellick said at the same conference be believed a double-dip recession will be avoided.
The two-day round of stock selling in Asia was sparked by Friday's U.S. report that showed stagnant job growth. The data increased concerns that the United States could lapse back into recession.
Worries about U.S. growth were compounded by a downbeat report on China's services sector.
US Banks Face Lawsuits Over Risky Mortgages
A U.S. newspaper says the federal government is set to file lawsuits against more than 12 massive financial institutions for misrepresenting the quality of mortgage-backed securities that played a role in the 2008 financial crisis.
The New York Times says the Federal Housing Finance Agency is taking action against Bank of America, JPMorgan Chase and Goldman Sachs and others.
The banks bundled mortgages and sold them to investors, including government-backed mortgage companies Fannie Mae and Freddie Mac during the housing bubble.
The Times says the FHFA will argue the banks missed evidence the homeowners' incomes were inflated or falsified. When those homeowners' were unable to pay their mortgages, the securities lost value.
Fannie Mae and Freddie Mac lost more than $30 billion combined on the securities. The Times reports the FHFA is seeking repayment from the banks for those losses.
US Job Growth Stalls
Job growth stalled in the U.S. economy in August, leaving the unemployment rate at a relatively high 9.1 percent.
Friday's report from the Labor Department shows no net gain of jobs in August, compared to an estimated net gain of 85,000 in July. Most economists had predicted the figures would show at least some gains in the job market. The August report is the weakest in nearly a year.
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Employment rose in health care, fell in government, and was hurt by a strike at a major phone company.
Employers are reluctant to hire because of worries that painfully slow U.S. economic growth will hurt their sales and profits. Economic growth has been hurt by weakness in the consumer spending that drives most U.S. economic activity. Consumers worried about their jobs and facing high prices for energy and food lack the confidence in the future needed to make major purchases.
U.S. President Barack Obama will introduce a plan to stimulate the national economy and create jobs in a speech before a joint session of Congress next Thursday.
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