President Obama discusses the proper relationship between government and business in creating economic growth, rejecting the false choices that are often perceived in that relationship, at a meeting of the Business Roundtable, a lobbying group for Fortune 500 CEOs, Washington DC, Wednesday, Feb 24, 2010. Saying that the government he leads doesn’t step in “to supplant private enterprise, but to catalyze it,” he reminded the business leaders that it is the government’s responsibility to establish the basic rules of the marketplace to ensure honest competition, make investments that serve general welfare, and to guarantee a level of security for all Americans.

Federal Reserve Chairman Ben Bernanke made clear Wednesday that the US central bank is not going to raise interest rates in the near future. In his semi-annual testimony to Congress on the economy and monetary policy, Bernanke said that short-term interest rates, now near zero, were likely to remain there for at least several more months.

Bernanke highlighted concerns about what he termed the "nascent recovery" - - marked by high unemployment, fragile real-estate markets, weak lending and large budget deficits. He said slack in the economy meant the benchmark federal-funds rate would remain near zero for an "extended period."  Of particular concern, because of its long-term implications for workers' skills and wages, is the increasing incidence of long-term unemployment; indeed, more than 40 percent of the unemployed have been out of work six months or more, nearly double the share of a year ago, he said.

RDQ Economics  commented: "The Fed has no interest in surprising the markets on policy matters and the outlook for policy depends on slack (especially the unemployment rate), inflation and inflation expectations. Bernanke remains particularly concerned about the outlook for unemployment, which historically has been the major factor determining the timing of the first move to tighten rates."

US regulation: Senate Banking Committee Chairman Chris Dodd and Republican Senator Bob Corker of Tennessee on Wednesday met Treasury Secretary Timothy Geithner to discuss financial regulation proposals. "We're working, a lot of members are, the door's open," Dodd commented to reporters after addressing the Credit Union National Association. A spokeswoman said it seemed likely a bill setting out reform proposals will be ready next week.

President Obama, speaking to the Business Roundtable, a lobby group for top CEOs, said opposition to reform was grounded in a misrepresentation of administration objectives.

"We have arrived at a juncture in our politics where reasonable efforts to update our regulations, or make basic investments in our future, are too often greeted with cries of 'government takeover' or even 'socialism," 'Obama said.

The President added that he was "an ardent believer in the free market."

American government is broken, failing under promises it can’t keep:Prof. Peter Morici of the University of Maryland commented on Wednesday: "From Medicare and Medicaid to fixing the environment and potholes, governments face huge deficits. Taxes must go up and services curtailed dramatically, or massive borrowing will create hyper-inflation.

The private economy is growing too slowly for taxes to keep up with spending. Innovations in product design, customer service and problem solving that swept through most private industry in recent decades have largely by-passed private health care and government agencies, much as they did General Motors.

In trenches of writing budgets, health care reform, environmental regulations, and policies to create jobs, Democrats and Republicans remained hued to ideology. They spend ever more on failed programs and tax breaks, and impose burdensome rules rather than embrace radical renewal in the spirit of Alexander Hamilton, Franklin Roosevelt or Ronald Reagan.

America can’t turn to prescriptions that worked for another age, but it can adopt the mindset retired British Prime Minster Tony Blair called finding a “Third Way.”

President Obama’s 2010 budget offers more middle class tax breaks, and Republicans would slash taxes for everyone with reckless abandon. More folly!

Instead, stand still taxes and benefits, for now, and address problems in ways that do more with less—just like Wal-Mart, Ford and other successful enterprises.

On health care, President Obama proposes ladling more money on a broken system, patching coverage gaps with bigger subsidies and taxes on the rich. Republicans embrace some regulatory fixes, such as interstate competition among health insurers. Neither side wants to genuinely tackle the inefficiencies causing Americans to annually pay $1 to 2 trillion more for health care than would a comparable population in Europe.

Rather, let liberals create their public or nonprofit option, modeled on the British system. Empower it to pay no more for drugs and administrative costs than the Europeans, and free it of torts liabilities. Then let Americans choose between that and their private providers. Competition between public and private insurers would quickly drive down costs.

Despite scientific controversy, congressional liberals believe CO2 emissions drive global climate change with the certainty that New York is three hours ahead of Los Angeles. Moderates and conservatives are reluctant to pass sweeping restrictions on emissions, because those would impose huge costs on U.S. manufacturers Chinese competitors don’t bear.

Now, President Obama plans to impose those emission restrictions through executive order at the Environmental Protection Agency.

Whatever the truth on climate change, Americans spend too many dollars on imported oil that do not return to buy U.S. exports. That puts a huge hole in demand for U.S. goods and services and is a principal reason the private economy grows too slowly.

Most imported oil is for gasoline, and technology is already at hand to dramatically boost fuel efficiency and eliminate most imports. Nuclear power has proved a winner in France.

Instead of tying a milestone about the neck of manufacturing or throwing money at more failed stimulus spending, initiate a national program to quickly build a fleet of efficient cars and trucks, and 25 nuclear power plants over the next ten years.

Those would cut CO2 emissions dramatically, skip the theological debate on global warming, jump growth-start growth and tax receipts, and set examples of pragmatism the rest of government could follow."

"Our vehicles are safe now," said Akio Toyoda, president of Toyota Motor to CNBC's Phil Lebeau. He also adds that the automaker would like to work with others "in a very open manner" to find out the cause of the acceleration problems:

Economic View; Irish Trade data point to a very weak Q4 for goods exports: Goodbody economist, Deirdre Ryan, comments  - -"The pieces of the Irish GDP picture for Q4 of last year are slowly being filled. Yesterday it was the turn of the external sectors, with the release of external trade data for December. The data point to a very weak Q4 for the trade sector, on the merchandise front at least, with the value of goods exported down 13% yoy in the final quarter. This was the fastest rate of quarterly decline since Q2 2003 and an acceleration on the more modest 5% decline in goods exports seen in Q3.

Imports have been declining at a much faster pace for all of last year but the rate of decline moderated a touch towards year end, easing to -20% in Q4 from -27% yoy in Q3. While the trade sector had been the one bright spot for the most part of 2009, these data indicate a material worsening in export trends in the final months of the year, an outcome due mainly to lower levels of chemical exports. The value of chemicals exports fell 2% yoy in the quarter to November (+5% yoy in Q3), which was the weakest rate of growth in this export commodity since May 2008. With chemicals accounting for almost 60% of goods exported in 2009 (Jan-Nov), trends here have a material effect on the overall merchandise trade position.

Merchandise exports are one half of the overall trade picture, with activity in the services sector making up the remainder. Exports in this area have proved more resilient and experienced a decline of just 0.6% yoy in the first three quarters of 2009. We forecast a 1% decline in GDP this year (-7.4% in 2009), which incorporates a further contraction in domestic demand, (-5% expected after an estimated 12% decline in 2009), and 1.5% growth in total exports (-3% decline in imports). While the Q4 national accounts due next month will shed more light on the starting position for 2010, the trends in the trade data highlighted above provide some cause for concern in relation to momentum in the merchandise trade sector."

Adverse weather conditions may have had an impact on new home sales in January which fell 11.2% month-on-month and 6.1% year-on-year in a month that should have seen a relatively easy comparison. Of more concern was the downward revision to the November and December data and the rise in inventory levels to 9.1 months supply. Housing demand appears to be getting little benefit from the extension of the homebuyers' tax credit to end-April.

The reality is that the fundamentals for home sales remain difficult in the US with high unemployment combining with a consumer who is more focused on de-leveraging than borrowing. The poor consumer confidence data from earlier this week support this view.

Things are not much better in the private non-residential construction market. The ABI, which is a good lead indicator of commercial construction activity, declined in January having enjoyed a positive move since the middle of last year. The index declined to 42.4 in January form 45.4 in December, though it stills remains well above the 33.9 low recorded in January of last year. The enquiries index also declined to 52.2 from 59.7 but obviously remains above the important 50 level.

The is no doubt that activity levels in both the residential and private construction sectors was impacted by adverse weather conditions in January and the impact may even be worse in February. However, there are other factors at play which are impacting consumer confidence, illustrating the fragile nature of this recovery."

The Dow gained 92 points or 0.89% to 10,374 on Wednesday.

The S&P 500 rose 0.97% and the Nasdaq climbed 1.01%.

The MSCI Asia Pacific Index lost 0.7% Thursday.

The Nikkei 225 dipped 0.95% and the Shanghai Composite added 1.27%.

"If problems are detected, we will not be evasive. We have not withheld information and we shall not do so in the future," Akio Toyoda, the grandson of the founder of Toyota Motor Corp., told a news conference on Wednesday in Washington DC after giving testimony at a US Congress hearing on the safety of Toyota vehicles.

Toyoda, the president of Toyota, said he did not know of the problems of sudden acceleration in his company’s cars that have been linked to more than 30 deaths in the US up to the end of 2009, even though thousands of complaints had poured into the company and regulators for years.

“My name is on every car. You have my personal commitment that Toyota will work vigorously and unceasingly to restore the trust of our customers,” he told members of Congress.

Despite having a US MBA degree, Toyoda spoke through a translator and his performance was generally judged to have been evasive and uninspiring.

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Finfacts Reports

Eurozone retail sales fell at sharpest rate in February since March 2009

Ulster Bank reports loss of £368m for 2009; Parent bank Royal Bank of Scotland reports loss of £3.6bn

Inflation as a solution for America's fiscal problems?

Eircom reports profit of €327m before adjustments for six months to end of 2009 -- down 3%

Thursday Newspaper Review - Irish Business News and International Stories - - February 25, 2010

Morgan Stanley chairman says investment bankers are overpaid

Markets News Afternoon: Bernanke says low US interest rates required to support a “nascent” recovery; Share prices dip in Dublin

US new home sales tumbled 11.2% in January to the lowest since at least 1963

US bank lending fell in 2009 at the highest rate since 1942

Irish merchandise exports fell 3.3% in 2009

Germany's export recovery prevented economy from contracting in Q4 of 2009; Budget deficit ratio in 2009 was 3.3% of GDP

In Europe, the Dow Jones Stoxx 600 has risen 0.15% Thursday.

German unemployment data:figures published today show that German unemployment rose slightly to 8.7%  in February, with a total of 3.64 million people without jobs.

In January, the unemployment rate had been 8.6% according to unadjusted data from the Federal Labour Agency.

The jobless total rose by 7,000.

Kurzarbeit - - Germany's short-time working scheme

The ISEQ has gained 0.47% in Dublin.

Aer Lingus is up 2.7% and Elan has climbed 1.0%.

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