Asian stocks and the won plunged to 10-month lows after a report that North Korean leader Kim Jong Il ordered his military to prepare for combat last week. The euro weakened and commodities declined on concern Europe’s debt crisis will spread.The MSCI Asia Pacific Index dropped 3 percent to 109.00 at 4 p.m. in Tokyo, set for its lowest close since July 30. The Stoxx Euro 600 slid 1.5 percent to 232.80. Standard & Poor’s 500 futures lost 2 percent. The won lost 3.7 percent against the yen. Korea’s Kospi Index slumped 2.8 percent. The euro fell 1.4 percent against the yen. Crude oil slipped below $70 a barrel.
“Increasing tensions on the Korean peninsula, coupled with deepening concern about sovereign debt risks in Europe, are affecting investors’ sentiment,” said Kim Young Joon, a fund manager at NH-CA Asset Management in Seoul, which manages $9.7 billion in assets. “But much of North Korea’s comments appear bluffing. I don’t think another disastrous event will happen.”
The North Korea Intellectuals Solidarity group said on its web site that the country’s military was put on alert and the U.S. announced plans yesterday to conduct anti-submarine exercises with South Korea following the March 26 torpedoing of a warship. The International Monetary Fund urged Spain to take more steps to overhaul ailing banks as the nation’s financial sector “remains under pressure.”.....
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Commodities Drop
BHP Billiton Ltd., which got 22 percent of its fiscal 2009 revenue in Europe, slid 3.9 percent to A$36.34 in Sydney after copper and oil prices retreated on concern a slowdown in the euro region will reduce demand. Rio Tinto Group, the world’s third-largest mining company, lost 3.7 percent to A$61.81.
Crude oil declined 2.4 percent to $68.51 a barrel in New York. Copper dropped 2.2 percent to $6,756.25 a metric ton on the London Metal Exchange. The metal has slumped 11 percent in the past month. Aluminum declined 2.4 percent to $2,035 a ton and nickel slumped 2.7 percent to $21,600 a ton.
“I don’t think things have worsened in Europe in the past few days, but the reason we haven’t seen any significant rallies in the market is that the uncertainty hasn’t dissipated,” Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, said in a telephone interview. “The one thing about the euro zone is that everyone has been revising down their demand outlook. The fundamentals there have no doubt become weaker in the last month.”
Some scientists fault the federal government for not having investigated dispersants more fully earlier. Knowledge of dispersants' environmental effect is limited because the government "had virtually no money to put into that research," Nancy Kinner, a professor of civil and environmental engineering at the University of New Hampshire, said at a congressional hearing last week.
Although thousands of people are working to fight the spill, basic questions about its environmental impact remain. One is how much oil is spewing into the gulf. Scientists' estimates vary widely—from some 5,000 barrels a day to more than 50,000 barrels a day. The National Oceanic and Atmospheric Administration chief, Jane Lubchenco, said last week that efforts to measure the leak have been delayed in part because they would require sending more robots to the ocean floor. That would increase the chance that the robots might impede eachother's work and lead to an accident, she said. Federal officials say 16 robots already are working in the vicinity of the leaking well to try to plug it.A government team spent the weekend crunching reams of existing data—from video footage and pressure readings to overhead imagery—to try to come up with a more accurate estimate by early this week.
Equally unclear is how the leaking oil is affecting undersea life. Earlier this month, a research vessel sponsored by the National Oceanic and Atmospheric Administration produced water samples from the Gulf that researchers said suggested oil was collecting in a plume deep below the water's surface. But scientists analyzing the samples say they are of limited value because they were taken with equipment not designed for oil. The researchers on the ship took the samples using bottles designed to test for substances that dissolve in water—but oil doesn't, said Edward Overton, an emeritus professor of environmental sciences at Louisiana State University who is analyzing some of the samples. The oil stuck to many of the research bottles, he said, potentially skewing lab results."This is not a very satisfactory way to do it," Mr. Overton said of the water-sampling method. "Unfortunately, it's all that we've got out there right now."
Additional research ships are heading out to study the water.
Onshore, authorities are responding to the spill with more than a decade-old maps that assess the environmental sensitivity of U.S. coastal areas—maps that spill responders use to prioritize areas they want to protect from oil. NOAA said last week that it would cost $11 million to update the environmental-sensitivity maps—money NOAA hasn't had.
China and the U.S. focused their first day of talks in Beijing on joint efforts to prop up the world’s economy in the face of a European sovereign-debt crunch that pushed off a showdown on the yuan’s value.Officials “spent quite a bit of time discussing the European debt crisis,” Chinese central bank Governor Zhou Xiaochuan said at a press briefing. The nation’s currency policy is being “touched upon” at the talks, he said.
President Hu Jintao said China will move gradually and independently in altering exchange-rate policy after keeping the yuan pegged to the U.S. dollar for 22 months. Treasury Secretary Timothy F. Geithner, who has delayed a report to the U.S. Congress that could name the nation a currency manipulator, said he welcomed China’s commitment to yuan changes.
“Behind the scenes, U.S. officials will be concerned that Europe’s debt crisis provides a convenient justification for Beijing to delay for a few more months” in ending the peg, said Brian Jackson, an emerging markets strategist at Royal Bank of Canada in Hong Kong who previously worked at the Federal Reserve and Bank of England.
Jackson sees the yuan rising 5 percent to 6.5 per dollar by the year’s end. In contrast, non-deliverable yuan forwards indicated a 1.5 percent gain in the next 12 months as of 9:41 a.m. in Hong Kong. Investors last week pared back expectations for an appreciation on concern the debt debacle centered on Greece will undermine the global recovery.
Republican National Committee Chairman Michael Steele criticized Kentucky Senate candidate Rand Paul’s views on anti-discrimination laws, yet said he expects Paul to join Republicans in fighting for civil rights.Paul is facing a controversy because he questioned part of the Civil Rights Act of 1964. While Paul said racism and discrimination are abhorrent, he said he would have tried to change the provision that deals with private businesses.
“His philosophy is misplaced in these times,” Steele said yesterday on “Fox News Sunday.” Earlier, on ABC’s “This Week,” Steele said he “wasn’t comfortable” with Paul’s view, yet expects him to be “on the same page” in the future.
“Rand Paul as United States senator will be four-square with the Republican Party and lockstep with moving forward on civil rights, not looking backward,” Steele said.
Republicans and Democrats are struggling to adjust to a wave of election results that show Americans are upset with the establishment in both parties. In his primary, Paul beat Kentucky Secretary of State Trey Grayson, the chosen candidate of Senate Republican leader Mitch McConnell.
Paul’s comments “were unfortunate,” Minnesota Governor Tim Pawlenty, a fellow Republican, said on CNN’s “State of the Union.” Still, Paul’s identification with the Tea Party movement represents “new energy, new ideas, passion” that will help Republicans, Pawlenty said.
The euro weakened for a second day against the yen and dollar as signs the European debt crisis is spreading revived concern the region’s recovery will slow.The single currency dropped to within one yen of its weakest in more than eight years after the International Monetary Fund urged Spain to do more to overhaul its ailing banks, adding to speculation Europe’s financial institutions face more losses. The yen strengthened as a decline in Asian stocks boosted demand for Japan’s currency as a refuge. The won slumped as tensions escalated between the two Koreas over the sinking of a warship from the South’s navy in March.
“I’m concerned about what policy makers can do to contain the debt crisis should it spread from Greece to bigger nations like Spain and Italy,” said Tetsuya Inoue, chief researcher for financial markets at Nomura Research Institute, a unit of Japan’s largest brokerage. “Economic growth can’t help but lose momentum. The euro will stay under downward pressure.”
The euro fell 1.3 percent to 110.29 yen as of 6:45 a.m. in London from yesterday in New York. The common currency dropped to $1.2283 from $1.2372. The dollar was at 89.81 yen from 90.29 yen, and climbed to $1.4339 per pound from $1.4425.
The 16-nation euro touched a four-year low of $1.2144 on May 19, and the weakest since 2001 at 109.51 per yen on May 20.
Spain’s banking industry “remains under pressure,” as consolidation has been “too slow,” the Washington-based IMF said in a report yesterday after a regular review of Spain.
“We fully support” the new austerity measures, it said, referring to Spain’s plans to rein in its budget deficit with the deepest spending cuts in three decades.
Spain’s Banks
Four Spanish savings banks plan to combine to form the nation’s fifth-largest financial group with more than 135 billion euros ($166 billion) in assets, as regulators push ailing lenders to merge with stronger partners.
“Looking ahead, we suspect contagion risks from the European sovereign debt crisis will remain front-brain for markets,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “With negative momentum firmly ingrained, we wouldn’t be surprised to see the euro re-test recent lows around $1.22 in coming sessions.”
The Bank of Spain said on May 22 it appointed a provisional administrator to run CajaSur, a savings bank crippled by property-loan defaults. The seizure is the first under a state- financed rescue plan that Standard & Poor’s estimates may cost as much as 35 billion euros, increasing the burden on Spain’s finances as the government tries to reduce its budget deficit.
South Korea broadcast a pop song extolling freedom of choice and a warning on the dangers of overeating into North Korea, ending a six-year moratorium on propaganda in retaliation for the sinking of a warship.The four-hour radio program yesterday evening included a speech by South Korean President Lee Myung Bak outlining his government’s response to the March 26 sinking, which an international panel concluded was caused by a North Korean torpedo. The South, which lost 46 sailors in the attack, will seek more United Nations Security Council sanctions, halt most trade, and bar North Korean vessels from its waters.
“We have always tolerated North Korea’s brutality, time and again,” Lee said yesterday. “Now, things are different.”
Lee’s cutting of ties will increase North Korea’s economic dependency on China, which has yet to accept the panel’s findings and yesterday urged all sides to remain “coolheaded.” Kim Jong Il’s regime said it will shell South Korean positions that use loudspeakers for “psychological warfare,” the official Korean Central News Agency reported.
South Korea’s won plunged to a 10-month low today as the Seoul-based Yonhap News Agency reported that Kim ordered his military to prepare for combat, citing a defector group. The benchmark Kospi index sank as much as 3.5 percent.
‘All-Out War’
North Korea last week threatened “all-out war” for any punitive action taking against its regime.
Lee’s actions mark “the end of an era of reconciliation and the beginning of a new Cold War,” said Yang Moo Jin, a professor at the University of North Korean studies in Seoul. “China will resist joining international condemnation of North Korea. It doesn’t need to be seen as bending to U.S. pressure.”
The propaganda broadcast made on FM radio began at 6 p.m. local time yesterday when a woman anchor announced what she called the “voice of freedom.” North Korean listeners were regaled with a song by a South Korean girl band, Four Minute.
In the tune, “Huh,” the band sings: “When I say I want to appear on TV, when I say I want to become prettier, everybody says I can’t do it. Baby, you’re kidding me? I do as I please.”
Food Propaganda
The broadcast then explained how South Koreans no longer experience hunger, and are more worried about getting fat.
“Always remember, we want to share our prosperity with you,” the anchor said, accusing North Korean officials of enriching themselves while the people go hungry.
The UN World Food Program said this month its aid to North Korea will run out by the end of next month.
Kim’s regime, which has been relying on handouts since the mid-1990s, is suffering from worsening shortages after a botched currency revaluation late last year. Academics including Rudiger Frank, professor of East Asian Economy and Society at the University of Vienna, said the reform was an attempt to roll back an experiment with free markets that had loosened the state’s control over jobs, food and patronage.
While the U.S., Japan and other allies of South Korea lined up in support of Lee, China said it was considering the results of the investigation. All sides should “exercise restraint,” Foreign Ministry spokesman Ma Zhaoxu said in Beijing yesterday.
Encouraging small business growth and initiating tax cuts are the keys to saving Georgia's economy, state Speaker of the House David Ralston said Thursday.
"I believe the best way out of the economic situation we're in is growth, not increasing taxes," said Ralston, who was the keynote speaker during a Columbia County Chamber of Commerce post-legislative breakfast at Savannah Rapids Pavilion.
Ralston, a Republican from Blue Ridge, Ga., said Georgia needs to be a pro-growth state and avoid economic catastrophes such as what is happening in California.
California lawmakers have "raised every conceivable tax" and as a result "small businesses are closing in droves and leaving," Ralston said.
"There we have the template of what not to do," he said. "We're committed to not do that."
During the recent legislative session, Ralston said the General Assembly formed a council modeled after the Base Realignment and Closure committee to scrutinize Georgia's tax code. He hopes their recommendations, due in January, will include relief for small businesses.
"We're going to grow our way out of it (the recession)," he said.
Despite the optimistic outlook, the first-year speaker called this year's legislative session a "monumental challenge."
During the past two years, lawmakers have cut the state budget by 20 percent, which equates to about $4 billion.
"We did what you do" when legislators are constitutionally obligated to balance the budget and revenues have declined, said Rep. Ben Harbin, who spoke before Ralston.
Harbin, R-Evans, said state departments were asked to cut expenses by 10 percent, except education, which endured a 6 percent cut in state funding.
Lawmakers eventually created a $17.8 billion budget for next fiscal year.
Still, there is reason for optimism, said Harbin, the chairman of the House Appropriations Committee.
Sales tax and motor fuel tax revenues are rising, which means consumers are spending more.
"The economy is moving in the right direction," he said.
The curriculum standards will now be published in a state register, opening them up for 30 days of public comment. A final vote will be taken in May, but given the Republican dominance of the board, it is unlikely that many changes will be made.
The standards, reviewed every decade, serve as a template for textbook publishers, who must come before the board next year with drafts of their books. The board’s makeup will have changed by then because Dr. McLeroy lost in a primary this month to a more moderate Republican, and two others — one Democrat and one conservative Republican — announced they were not seeking re-election.
There are seven members of the conservative bloc on the board, but they are often joined by one of the other three Republicans on crucial votes. There were no historians, sociologists or economists consulted at the meetings, though some members of the conservative bloc held themselves out as experts on certain topics.
The conservative members maintain that they are trying to correct what they see as a liberal bias among the teachers who proposed the curriculum. To that end, they made dozens of minor changes aimed at calling into question, among other things, concepts like the separation of church and state and the secular nature of the American Revolution.
“I reject the notion by the left of a constitutional separation of church and state,” said David Bradley, a conservative from Beaumont who works in real estate. “I have $1,000 for the charity of your choice if you can find it in the Constitution.”
They also included a plank to ensure that students learn about “the conservative resurgence of the 1980s and 1990s, including Phyllis Schlafly, the Contract With America, the Heritage Foundation, the Moral Majority and the National Rifle Association.”
Dr. McLeroy, a dentist by training, pushed through a change to the teaching of the civil rights movement to ensure that students study the violent philosophy of the Black Panthers in addition to the nonviolent approach of the Rev. Dr. Martin Luther King Jr. He also made sure that textbooks would mention the votes in Congress on civil rights legislation, which Republicans supported.
“Republicans need a little credit for that,” he said. “I think it’s going to surprise some students.”
Mr. Bradley won approval for an amendment saying students should study “the unintended consequences” of the Great Society legislation, affirmative action and Title IX legislation. He also won approval for an amendment stressing that Germans and Italians as well as Japanese were interned in the United States during World War II, to counter the idea that the internment of Japanese was motivated by racism.
Other changes seem aimed at tamping down criticism of the right. Conservatives passed one amendment, for instance, requiring that the history of McCarthyism include “how the later release of the Venona papers confirmed suspicions of communist infiltration in U.S. government.” The Venona papers were transcripts of some 3,000 communications between the Soviet Union and its agents in the United States.
Mavis B. Knight, a Democrat from Dallas, introduced an amendment requiring that students study the reasons “the founding fathers protected religious freedom in America by barring the government from promoting or disfavoring any particular religion above all others.”
It was defeated on a party-line vote.
After the vote, Ms. Knight said, “The social conservatives have perverted accurate history to fulfill their own agenda.”
In economics, the revisions add Milton Friedman and Friedrich von Hayek, two champions of free-market economic theory, among the usual list of economists to be studied, like Adam Smith, Karl Marx and John Maynard Keynes. They also replaced the word “capitalism” throughout their texts with the “free-enterprise system.”
“Let’s face it, capitalism does have a negative connotation,” said one conservative member, Terri Leo. “You know, ‘capitalist pig!’ ”
In the field of sociology, another conservative member, Barbara Cargill, won passage of an amendment requiring the teaching of “the importance of personal responsibility for life choices” in a section on teenage suicide, dating violence, sexuality, drug use and eating disorders.
“The topic of sociology tends to blame society for everything,” Ms. Cargill said.
Even the course on world history did not escape the board’s scalpel.
Cynthia Dunbar, a lawyer from Richmond who is a strict constitutionalist and thinks the nation was founded on Christian beliefs, managed to cut Thomas Jefferson from a list of figures whose writings inspired revolutions in the late 18th century and 19th century, replacing him with St. Thomas Aquinas, John Calvin and William Blackstone. (Jefferson is not well liked among conservatives on the board because he coined the term “separation between church and state.”)
“The Enlightenment was not the only philosophy on which these revolutions were based,” Ms. Dunbar said.
On behalf of those horrified — or at least mystified (”the Atlantic triangular trade“? Really?) — by the Texas Board of Education’s assault on, well, education, a California state legislator recently introduced a bill seeking to prevent these changes from reaching California students. The bill requires the California Education Board to “look out for any of the Texas content” in its own textbooks and “then report any findings to the legislature and the secretary of education.”Since California is the largest school textbook market (with Texas in at second), I had a moment of hope that such a measure could prevent textbook companies from going through with Texas-mandated distortions. Until I read this part:
California education officials say they aren’t worried about any spillover. Tom Adams, director of the state Education Department’s standards and curriculum division, was quoted by the Associated Press as saying that the Texas standards could make their way into national editions of textbooks, but that California uses its own.
Thus the only state with enough clout to actually counter the Texas changes already has cocooned itself with its own separate textbook standards. That other states could coordinate sufficiently to outweigh the Texas megamarket seems an unrealistic hope. Which means that one state can effectively mandate changes that will reach the entire non-California nation.
So where is the conservative outrage on this? Cato tells us that the federal government has no place in education because the “Founders wanted most aspects of life managed by those who were closest to them, either by state or local government or by families, businesses, and other elements of civil society.” The 2008 GOP platform lamented the diminishing local control over education; its nominee had once publicly called for the elimination of the Department of Education. The current darling of the right rejects federal education assistance because “competition breeds excellence.”
But so far, silence form the Right on this usurpation of local control. And it’s hard for me to think of really anything so antithetical to the Founding principles than for one state to mandate radical changes that all the other states are forced to swallow. Indeed, avoiding such an outcome was in large part the purpose of the Senate, not to mention the Supremacy Clause of the Constitution — really, the scrapping of the Articles of Confederation altogether.
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