Manufacturing Shrinks in Europe & U.S., Slows in China
Institutes around the world reported dire manufacturing numbers today, saying it unexpectedly shrank for a second month in the U.S., contracted the most in three years in the U.K., fell to a 37-month low in the Euro area, and slowed to its weakest in eight months in China. Slower global growth and European contagion hurt the U.S., British exports fell as the Eurozone’s jobless rate rose to a record high of 11.2 percent in May and June, and China may have to implement more easing policies to avoid being dragged down by a sinking Europe. American Treasury Secretary Timothy Geithner said Europe’s woes are a bigger danger to the U.S. than the so-called “fiscal cliff,” because the country has control over the latter. Even still, a report showed today that the U.S. added more jobs than predicted in July, at 163,000.
Fed May Keep Rates Low Through 2014, Delays Further Action
The U.S. Federal Reserve said today it could keep its interest rate at a low level through 2014, and hinted at more measures to promote job market recovery, but put them off until at least mid-September. Investors were hoping for more decisive action, and U.S. shares fell in response. In contrast, stocks rose in Europe on bets that the European Central Bank will act soon to rescue faltering economies and boost growth. The ECB Governing Council and the Bank of England Committee, both of which meet on the first Thursday of every month to set monetary policy, will announce their decisions tomorrow. President Mario Draghi said last week “the ECB will do whatever it takes to defend the euro,” prompting economists to describe Draghi as more pragmatic than his predecessor Jean-Claude Trichet, a welcome change in times of trouble.
U.S. Elections 2012: Obama Ahead in Swing States
While the sluggish economy is dampening U.S. President Barack Obama’s hopes for a second term, new polls show that his personality is an advantage over Republican candidate Mitt Romney in Ohio, Florida, and Pennsylvania, according to Quinnipiac University/New York Times/CBS News polls. Voters are unconvinced about Obama’s ability to get the economy back on track, but Romney’s refusal to release his tax records means he’s losing their trust. Political scientists seem to agree with the polls, Reuters says: a survey of nine forecasters predicts Obama will win 50.5 percent of the popular vote. This doesn’t mean he will win the election, as its outcome is determined by an electoral college. A new independent analysis released today shows that Romney’s plan for a tax reform and deficit reduction would give cuts to the wealthiest 5 percent and increase taxes for the rest by 1.2 percent.
Syrian Rebels Have U.S. Support
U.S. President Barack Obama signed a secret order earlier this year, authorizing the Central Intelligence Agency and others to support Syrian rebels. While it does not provide for lethal weapons, international observers have noticed increased organization and efficiency among opposition forces in recent weeks. There are still fears that the conflict is giving Al-Qaeda groups a chance to establish themselves, turning it into a war between Sunnis and Shi’ites. Human rights activists condemned the public execution of four Syrian President Bashar al-Assad’s loyalists in Aleppo yesterday. As violence continued in the country’s commercial capital, U.S. Defense Secretary Leon Panetta said this battle is the “nail in Assad’s coffin.” Saudis raised $117 million to help the Syrian people with much-needed cash, but also with cars and medical equipment. One million people were displaced, and as many as 122,000 left Syria altogether.
Israel Ends Draft Exemptions for Ultra-Orthodox Men
Israel Defense Minister Ehud Barak gave the army a month to prepare for a draft that includes ultra-Orthodox men. For six decades, rabbinical students in Israel were exempt from serving in the military as the new nation helped rebuild Jewish Study Houses that were ravaged during World War II. Thanks to the high birthrate among the ultra-Orthodox, the community quickly grew. It now represents 10 percent of Israelis, most of whom still benefit from the exemption. As time went on, resentment grew among their more secular compatriots, and the country’s Supreme Court recently ruled that the exemptions were unconstitutional. Ultra-Orthodox leaders reacted with anger to the news, predicting this will cause a “civil war” and arguing that the military is not ready to welcome and adjust to the presence of devout Jews among its troops. Most Israelis are drafted at the age of 18. Men serve three years and women two years.