If You Love Failure, Egypt Has Been A Smashing Success

Cairo (CNN) — On the eve of a presidential runoff election, Egypt’s military council formally dissolved parliament Friday, in line with a ruling from the nation’s top court that declared the legislative body invalid.

The Supreme Council of the Armed Forces — the military rulers in control of the country since the fall of Hosni Mubarak — officially informed parliament that it was dissolved, said Maj. Mohamed Askar, a spokesman for the council.

He said there was no notice to lawmakers denying them access but a report posted on the English website of Al-Ahram newspaper said entry was barred.

The military council, known by its acronym SCAF, claimed full legislative power after the High Constitutional Court’s ruling Thursday that the constitutional articles that regulated parliamentary elections were invalid.

Gen. Hussein Tantawi, the head of SCAF and Egypt’s de facto ruler, was in an emergency meeting with the council Friday to discuss the drafting of a new constitution. The council is widely expected to issue its own interim constitutional charter.

The court’s ruling triggered fears that Egypt’s revolution will unravel and Cairo braced for angry protests Friday night. By evening, however, the capital was surprisingly quiet though a few protesters chanted in the streets calling for a boycott of the voting that begins Saturday.

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The GOP’s all-important social conservatives may be getting more comfortable with Mitt Romney’s Mormon faith — but liberals are increasingly wary about the candidate’s religion in the run-up to November, according to a new study.

The study found anti-Mormon attitudes have increased since Romney’s 2008 presidential bid and are highest among liberal and non-religious voters. Their discomfort could pose a problem for the Republican candidate in November.

“The victory of Mitt Romney in the 2012 Republican primary has convinced many observers that Romney’s Mormon religion is now irrelevant to his electoral chances,” wrote study author David Smith. But “aversion to Mormons is still an important force in American public opinion, and one that seriously affects Romney’s chances even if he ultimately overcomes it.”

The study found attitudes about Mormonism among Evangelicals has largely remained unchanged since 2007 — when 37 percent said they were “less likely to vote for a Mormon candidate for president,” compared with 33 percent this year.

However, that sentiment among non-religious voters increased from 21 percent to 41 percent over roughly the same period.

Among liberal voters, 43 percent said they were less likely to vote for a Mormon presidential candidate in 2012, compared with 28 percent in 2007.

Political strategist Elliott Curson said Thursday that Romney’s religion becomes less of concern “as each day goes by.”

“Still, some people will not vote for Romney because he’s not of their religion, and some people will not vote for Obama because he’s not like them,” said Curson, a media consultant for Ronald Reagan in the 1980s.

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In a Europe where the outcome of most elections is predicted weeks before votes are cast, the triumph of left-wing Syriza in May’s Greek elections was one of the few shocks of recent years.

The party often described as near-Communist in its rhetoric is neck-and-neck with right-wing New Democracy in the polls ahead of Sunday. Talking to people in Athens, it’s not difficult to see why foreign analysts and officials are afraid that Syriza will win most of the votes this weekend.

“What are the old parties doing? They’ve had their chance and look where we are,” Angelis, a waiter in a café opposite Greece’s parliament building, told CNBC. He’s planning to vote for Syriza on Sunday.

Syriza’s very newness is one of its advantages. The Greek people are increasingly fed up with corruption, which is one of many drags on their economy, and the older parties have all had their corruption scandals over the years.

They also have the advantage of never having backed the bailout – or the “memorandum” as it is known in Greece – which is the focus of much discontent in the country.

Measures which have been enacted by the technocratic government to try and meet the terms of the bailout often appear to have created more problems than they have solved. For example, electricity bills were raised by a controversial new property tax, but consumers were allowed to put off paying those bills.

Now, an estimated 500,000 households haven’t paid their electricity bills for more than three months and the state-run energy company needs to pay $657.2 million which it doesn’t have to its banks by June 22.

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In 2011, a record 46 million people – or 1 in 7 Americans — participated in the Supplemental Nutrition Assistance Program (SNAP), better known as Food Stamps.

The increased use of Food Stamps is a huge social and political issue for America, and it’s also big business. In 2011, the U.S. government spent $72 billion on Food Stamps.

Among the beneficiaries, food producers such as Cargill, PepsiCo. (PEP), Coca-Cola (KO) and Kraft (KFT), as well as retailers like Wal-Mart. Of course, Wall Street gets a cut too, led by JPMorgan Chase (JPM), which administers the SNAP benefits in 24 states.

In the accompanying video, I discuss the (big) business of Food Stamps with Marion Nestle, professor of Nutrition, Food Studies, and Public Health at New York University and author of several books, most recently Why Calories Count.

Generally speaking, Nestle is a supporter of the program, calling it “the only safety net we have left for the poor.”

However, with obesity rates rising among the poor — and obesity a huge factor in rising health-care costs — Nestle and other health experts wonder whether there should be restrictions on what kind of foods can be purchased with Food Stamps.

Currently, there are few restrictions on what can be purchased with Food Stamps, other than alcohol and prepared foods.

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You can see a list of the actions on their website, here: http://www.moodys.com/Pages/BankRatings.aspx

A Republican senator challenged the Pentagon on Monday over its contract with a Russian export firm that is “arming the Assad regime” in Syria, calling for an audit of the contract amid fresh warnings about a new wave of Syrian violence.

Sen. John Cornyn, R-Texas, expressed “grave concerns” about the contract in a letter Monday to Defense Secretary Leon Panetta. He was referring to an Army contract with Russian firm Rosoboronexport for Mi-17 helicopters to equip the Afghan military.

Cornyn wrote that the Defense Department awarded a no-bid contract to the company last June, though he was told months later by the Pentagon that the firm “continues to supply weapons and ammunition” to the regime of Bashar al-Assad.

“I remain deeply troubled that the (Defense Department) would knowingly do business with a firm that has enabled mass atrocities in Syria,” Cornyn wrote, suggesting sanctions against Rosoboronexport would be more appropriate than a contract.

A Pentagon spokeswoman, though, defended the contract.

Spokeswoman Tara Rigler said in an email to FoxNews.com that it is “the only legal method to purchase the military version of the Mi-17 and to provide an appropriate measure of flight safety and airworthiness.”

“As we have noted before, these aircraft remain crucial to the development of Afghanistan’s Air Force capability and therefore important to our mission of ensuring that Afghan forces can ultimately defend their own sovereignty,” Rigler said.

She said Panetta has received Cornyn’s letter and would respond to the senator “promptly” about his concerns.

On Monday, Russia’s Deputy Prime Minister Dmitry Rogozin also defended his country’s arms sales to Syria.

“Under no circumstances can the arms supplied to Syria be used against the civilian population,” Rogozin was quoted as saying by the ITAR-Tass news agency.

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Thomas Marano, chief executive officer of Residential Capital, wrote me a letter.

“Dear Homeowner,” it begins. (That’s me, homeowner.)

“As you may have read or heard, Residential Capital LLC recently announced that it and its subsidiaries, including GMAC Mortgage, are restructuring under Chapter 11. The restructuring does not change your obligations as a mortgage borrower. You must continue to make your scheduled mortgage payments on time and in full.”

I can only guess why he sent me this letter. Maybe he’s afraid I’m going to do what he’s doing.

ResCap is a subsidiary of Ally Financial, which was founded in Detroit as General Motors Acceptance Corp., or GMAC, in 1919. It nearly collapsed in the 2008 financial crisis after it had made a bold expansion into “liar loans” and other subprime mortgage products.

Additionally, the U.S. auto industry it serviced was near death.

To keep GMAC alive, the Federal Reserve allowed it to become a bank holding company — giving it the ability to borrow from the Fed at nearly 0%. The U.S. government, beginning with the Bush administration, also gave it a $17.2 billion bailout, of which it still owes nearly $12 billion.

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Anticipate more unsubstantiated threats as the clerics flail desperately in an attempt to get oil prices back up.

LONDON (Reuters) – Iran’s state finances have come under unprecedented pressure and the resilience of ordinary people is being tested by soaring inflation as oil income plummets due to tightening Western sanctions and sharply falling oil prices.

Tough financial measures imposed by Washington and Brussels have made it ever more difficult to pay for and ship oil from Iran. Its oil output has sunk to the lowest in 20 years, cutting revenue that is vital to fund a sprawling state apparatus.

Already down by more than a quarter, or about 600,000 barrels per day, from rates of 2.2 million bpd last year, shipments of crude oil from Iran are expected to drop further when a European Union oil embargo takes effect on July 1.

Tehran is already estimated to have lost more than $10 billion in oil revenues this year.

Causing even more pain, oil prices fell below $100 a barrel last week to a 16-month low amid a darkening outlook for economies in Europe, the United States and China.

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With Detroit teetering over a monetary abyss, Mayor Dave Bing and the city’s new chief financial officer issued a clarion call Friday, warning bluntly that the city will run out of cash next week if a lawsuit challenging the financial agreement the city made with the state to avoid insolvency isn’t dropped.

Calling his frustration level “off the charts” and saying the lawsuit is creating an even worse financial situation than the city was already in, Bing said he has urged Detroit’s top lawyer, Krystal Crittendon, to drop the suit so the city can avoid losing a portion of $80 million the state is threatening to withhold if the lawsuit doesn’t go away.

But, Bing said, by law he cannot force Crittendon to drop the suit.

“I didn’t want to get into a lawsuit — it makes no sense to me, and nobody wins, as far as I’m concerned,” Bing said at a news media briefing Friday. “We’ve spent way too much time on this issue that keeps us from doing the things that we need to do to fix the city.”

The urgency of the financial situation and growing impatience in Lansing resulted in Bing’s push to get together with the council for a closed-door meeting Monday to try to come to some type of consensus.

“If our city runs out of money, there is no bigger crisis that we would have,” Bing said.

But City Council President Charles Pugh said he and many of his colleagues want Crittendon to stand her ground on her challenge of the consent deal. Pugh insisted Friday that it’s not out of brinkmanship, but concern that the city’s consent agreement with the state must be reviewed in court to determine whether it violates Detroit’s own laws governing the conduct of elected city officials.

Pugh said of CFO Jack Martin’s warning that the city will be broke by Friday: “We feel like that may be a bit of an exaggeration.”

Peter Letzmann, a former city lawyer for Detroit, Pontiac and Troy who teaches public administration law at Grand Valley State University, said he doubts Crittendon has the legal standing to pursue the case, which he predicted a judge will toss out.

“I’ve never seen this kind of chutzpah by a city attorney acting without the authority of the mayor or City Council,” Letzmann said.

“They’re turning out the streetlights in Detroit, but we’re spending city dollars chasing what is pretty clearly a frivolous lawsuit,” he said. “They’ve got to stop politicking here. They’re just pushing the city to bankruptcy.”

The battle ultimately could lead to an emergency manager if state officials deem the city to be in violation of the consent agreement. The deal gives the state significant control over Detroit’s finances but prevents, for now, the appointment of an emergency manager who could strip virtually all authority from Bing and the council.

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New York, June 08, 2012 — Recent developments in Spain and Greece could lead to rating reviews and actions on many of the euro area countries, says Moody’s Investors Service in the report “Rating Euro Area Governments Through Extraordinary Times — Implications of Spain’s bank recapitalisation needs and the rising risk of a Greek Exit”.

As Spain moves closer to the need for direct external support from its European partners, the increased risk to the country’s creditors may prompt further rating actions. The official estimates of recapitalising Spain’s banking system have risen significantly and the country’s indirect reliance on European Central Bank (ECB) funding via its banks has been growing. Moody’s is assessing the implications of these increased pressures and will take any rating actions necessary to reflect the risk to Spanish government creditors. Moody’s rating on Spain is currently A3 with a negative outlook.

However, Spain’s banking problem is largely specific to the country and is not likely to be a major source of contagion to other euro area countries, except for Italy, which likewise has a growing funding reliance on the ECB through its banks.

In contrast, Moody’s says that if the risk of a Greek exit from the euro were to rise further, it could lead to additional rating pressures throughout the region. Greece’s exit from the euro would lead to substantial losses for investors in Greek securities, both directly as a result of the redenomination and indirectly as a result of the severe macroeconomic dislocation that would likely follow. It could also pose a threat to the euro’s continued existence.

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BERLIN (Reuters) – German news magazine Der Spiegel reported on Saturday that leaders of European institutions are working on a comprehensive plan to rescue the euro that would include the issuance of joint euro bonds – a move Germany has repeatedly rejected.

The news magazine said European Union Commission President Jose Manuel Barroso, European Council President Herman Van Rompuy, Euro group head Jean-Claude Juncker and European Central Bank President Mario Draghi are working on plans for a “genuine fiscal union” in which individual member states would no longer be able to independently take on new borrowing.

Governments would only be able to decide how to spend money that is covered through their revenues, Der Spiegel reported. Any country that needs more money than it takes in would have to report that need to the group of euro finance ministers.

The magazine quoted four high-ranking EU planners saying this group of finance ministers would then decide which financial desires at which levels were justified and would then issue joint euro bonds to finance these new borrowing needs.

“The exclusive group of ministers would be led by a full-time chair, who could ultimately rise to the position of European finance minister,” the magazine wrote.

The weekly added that this “powerful group of finance ministers” would be controlled by a new European body in which representatives of national parliaments would have seats.

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ZURICH (Reuters) – U.S. officials seem to want an end to a dispute over wealthy Americans with hidden Swiss offshore bank accounts before the U.S. presidential election in November, the Swiss finance minister said in a newspaper interview on Saturday.

“My impression at the moment is that the U.S. wants a solution by the elections. Both sides endeavour to find a solution in the foreseeable future,” Switzerland’s finance minister Eveline Widmer-Schlumpf told Basler Zeitung.

Eleven Swiss banks – including Credit Suisse (CSGN.VX) and Julius Baer (BAER.VX) – are under investigation by the United States for aiding U.S. citizens suspected of dodging taxes with the help of offshore bank accounts.

Switzerland wants the investigations dropped, in exchange for payment of fines and the transfer of names of thousands of U.S. bank clients. At the same time, Switzerland is seeking a deal to shield the remainder of its 300 or so banks from U.S. prosecution.

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Anadarko Petroleum Corp. (APC) investors are discounting the company’s market value by $2 billion as analysts and lawyers see few ways to minimize the effect of a $25 billion lawsuit spawned by the toxic past of its Kerr-McGee Corp. unit.

The 2006 purchase of Kerr-McGee’s oil and gas assets, a key part of former Chief Executive Officer Jim Hackett’s legacy of expanding Anadarko, has left the company battling a lawsuit that’s put a cloud over its stock. Energy investors may want to look at buying shares in companies that don’t have the sort of litigation risk that Anadarko has, said Jeffrey Campbell, an analyst for Pritchard Capital Partners in New York.

“We cannot support jumping in front of the litigation bus when peer companies offer attractive upside without unquantifiable risk,” Campbell said in a May 22 note. At its June 7 closing price of $63.20, Anadarko’s stock is underperforming peers by about $4.16 a share, implying investors were pricing in about $2 billion for a possible settlement or penalty, according to Campbell’s estimate.

The suit, which went to trial May 15 in Manhattan Bankruptcy Court, contends The Woodlands, Texas-based Anadarko’s Kerr-McGee unit was part of a two-step transaction that defrauded the Environmental Protection Agency of the money to clean 2,772 polluted sites.

After an internal reorganization started in 2001, Kerr- McGee spun off its chemicals business and old environmental liabilities as Tronox Inc. (TROX) beginning in 2005. About three months after the transaction was completed, Anadarko offered to buy Kerr-McGee’s oil and gas assets for $18 billion.

(Reuters) – Economic growth in the United States picked up over the two prior months and hiring showed signs of a “modest increase,” the Federal Reserve said on Wednesday.

“Reports from the twelve Federal Reserve Districts suggest overall economic activity expanded at a moderate pace during the reporting period from early April to late May,” the central bank said in its latest “Beige Book” summary of national activity.

The Fed’s previous Beige Book assessment of the economy, released on April 11, had painted growth in a more timid light, describing it as “modest to moderate.”

The Beige Book, prepared this time by the Dallas Fed based on information collected through May 25, has market interest because it is based on anecdotal reports from business people from coast to coast and will be used by Fed policymakers at their next meeting on June 19-20.

“Hiring was steady or showed a modest increase,” the Fed said, matching the language used in its previous assessment.

The Labor Department reported last week that hiring slowed in May for the fourth straight month, with just 69,000 people added to payrolls.

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New York, June 05, 2012 — Creditor recoveries when US leveraged buyouts default are nearly equal to recoveries in non-LBO defaults, Moody’s Investors Service says in a new special comment, “Lessons from 200 LBO Defaults.”

Of the more than 1,000 US defaults in Moody’s Ultimate Recovery Database, 200 involved companies that had undergone leveraged buyouts since 1988. The average family recovery in those LBO defaults was 54%, compared with 55% in the more than 800 defaults at companies that had not experienced LBOs.

“The high leverage of LBOs has not translated into lower creditor recoveries in defaults of companies with private equity owners or other financial sponsors,” says David Keisman, a Moody’s Senior Vice President and author of the report. “While the LBO sponsors could not spare these companies from defaulting — and may have prompted defaults through high leverage — the average family-level recovery rate in these situations was nearly the same as the rate at the non-LBO companies.”

One of the main reasons LBO recoveries have been in line with non-LBOs is the high proportion of distressed exchanges and prepackaged bankruptcies among defaulted LBOs. These types of defaults typically yield higher family-level investor recoveries than regular bankruptcies. Less than half of LBO defaults occurred through regular bankruptcies (not prepackaged), compared with nearly two thirds of non-LBO defaults, Moody’s said.

The average recovery for the bank debt at the top of a company’s capital structure was less in LBO defaults (75%) than in non-LBOs (83%) because the wide use of bank debt in LBOs left a smaller cushion of subordinated debt tranches to takes losses first.

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MADRID (Reuters) – Spain, the latest combat zone in Europe’s long-running debt wars, urged the euro zone to set up a new fiscal authority to manage the bloc’s finances and send a clear signal to markets that the single currency project is irreversible.

Prime Minister Mariano Rajoy said the authority would also go a long way to alleviating Spain’s woes which, along with the prospect of a Greek euro exit, have threatened to derail the single currency project.

It is not the first time a European leader has proposed creating such an authority but the problems and the size of Spain – a country deemed too big to fail – have prompted EU policymakers to hurriedly consider measures such as creating a fiscal and banking union ahead of a EU summit on June 28-29.

Germany, the paymaster of the euro zone, and others insist such a move can only happen as part of a drive to much closer fiscal union and relinquishing of national sovereignty.

Overspending in the regions and troubles with a banking sector badly hit by a property crash four years ago have sent Spain’s borrowing costs to record highs and pushed the country closer to seeking an international bailout.

The risk premium investors demand to hold Spanish 10-year debt rather than German bonds rose to its highest since the launch of the euro – 548 basis points – on Friday.

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NEW DELHI (Reuters) – It had been another brutal day for the rupee on the foreign exchanges as India’s economic crisis escalated and, travelling home from a visit to Myanmar last week, Indian Prime Minister Manmohan Singh summoned journalists on his plane for a briefing.

The one statement he had prepared for the media that night, however, concerned allegations of corruption leveled against him and his cabinet ministers – not the economy.

Quizzed on the Indian currency’s precipitous slide to record lows, Singh blamed the global economic slowdown and the euro zone’s emergency, and he voiced hope that the G20 would sort these troubles out at a summit in Mexico later this month.

Two days later, when gross domestic product (GDP) data showed India’s growth rate had plunged to its lowest level in nine years, Singh’s finance minister likewise pointed a finger at “weak global sentiments”, as well as the central bank for its tight monetary policy.

But as warning lights flash on India’s economic dashboard – with manufacturing output and consumer demand now fading as well as corporate investment, fiscal and trade deficits ballooning and inflation stubbornly high – few buy the line that it’s somehow not the government’s fault.

“There is so much denial, but almost all of the problems in India are self-inflicted,” said Rajeev Malik, senior economist at CLSA Singapore. “The Indian situation is … an outcome of policy incoherence, a government that’s asleep.”

Economists say New Delhi’s policy inertia and the absence of significant reforms to sustain growth have now turned India’s slowdown from a cyclical one to something that is structural or systemic.

The country is now stuck with lower growth than its potential: not the “Hindu rate of growth” of about 3.5 percent that dogged the state-stifled economy before big-bang reforms two decades ago, but a 21st-century version of that, which Malik calls “growth with a government-incompetence discount”.

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Public-employee unions in Wisconsin have experienced a dramatic drop in membership — by more than half for the second-biggest union — since a law championed by Republican Gov. Scott Walker sharply curtailed their ability to bargain over wages and working conditions.

Now with Mr. Walker facing a recall vote Tuesday, voters will decide whether his policies in the centrist state should continue — or whether they have gone too far.

The election could mark a pivot point for organized labor.

Mr. Walker’s ouster would derail the political career of a rising Republican star and send a warning to other elected officials who are battling unions. But a victory for the governor, who has been leading his Democratic opponent in recent polls, would amount to an endorsement of an effort to curtail public-sector unions, which have been a pillar of strength for organized labor while private-sector membership has dwindled.

That could mean the sharp losses that some Wisconsin public-worker unions have experienced is a harbinger of similar unions’ future nationwide, union leaders fear. Failure to oust Mr. Walker and overturn the Wisconsin law “spells doom,” said Bryan Kennedy, the American Federation of Teachers’ Wisconsin president.

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House Republicans are releasing emails and documents that shed light on dealings between the White House and the drug industry as President Barack Obama maneuvered to move his health care overhaul through Congress.

The materials released Thursday cover a critical period in the summer of 2009 when the legislation was bogging down in Congress. An $80-billion financial commitment by the drug companies gave Obama some momentum.

The deal included better prescription coverage for Medicare recipients. Broad outlines were known at the time.

Drug makers succeeded in avoiding new requirements to pay rebates to the government for Medicare drugs. Ultimately, they were also able to preserve an existing ban against patients importing lower-priced medications from overseas.

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